Good day, ladies and gentlemen, and welcome to the Fourth Quarter 2016 Calumet Specialty Products Partners LP Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions] As a reminder, today's conference maybe recorded. I would like to introduce your for today's conference, Mr. Joe Caminiti. Sir, please go ahead.

Thank you, Michelle. Good morning everyone and thank you for joining us today for our fourth quarter and year-end 2016 earnings results call. With us on today's call are Tim Go, CEO; West Griffin, CFO; Pat Murray, Chief Accounting Officer; Bill Anderson, Head of Specialty Product Sales; and Bruce Fleming, who leads our Strategy and Growth functions. 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 these 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 a reminder, you may now download a PDF of the presentation slides that will accompany the remarks made on today's conference call as indicated in the press release we issued earlier today. You may access these slides in the Investor Relations section of our Web site at calumetspecialty.com. Also, a webcast replay of this call will also be available on our site within a few hours, and you can contact Alpha IR Group for Investor Relations support at 312-445-2870. With that, I'd like to pass the call to Tim. Tim?

Thanks, Joe, and thanks to all of you for joining us today. Before we get into our slide presentation, let's talk big picture about fiscal 2016. This morning, we are going to walk you through a balanced picture of the challenges we faced last year, as well as the key successes we accomplished. But the takeaway, for all of our investors today is the following: In 2016, we set the foundation for our recovery, and we believe we are turning the corner. Our sales volumes are up, and our inventory is down. SG&A expense is down as we eliminated waste, while simultaneously increasing our efficiencies in all facets of the business. We've changed our culture and significantly upgraded our leadership team, and the bottom line is our strategy is working and we're ready to enter the second phase of our strategic plan as we look to drive several new growth opportunities in 2017. With that, let's start on slide four. Last year, at this time, I hosted my first conference call with you and talked about a number of critical changes we need to make as an organization. A year ago, our industry was under intense pressure particularly on the fuel side of our business. And while we saw slight improvement as 2016 progressed, overall the environment remained and still remains fairly challenged. While WTI crude oil prices fell below $30 per barrel in January, they maintained a steady and upward trajectory throughout the rest of 2016 which impacted our margin capture in our Specialty Product segment during the year. In addition, oil drilling rig counts, a primary driver of our Oilfield Services segment, fell to lows not seen since the last recession, and bottomed during the summer months. As a result of these industry conditions our financial performance wasn't…

Thanks, Tim. I've had a chance to speak to a handful of you, but I’m looking forward to getting more involved with all of our investors and analysts over the coming few quarters. I can't tell you how happy I am to be here. I've been incredibly impressed by the high-quality team Tim has assembled to drive this business forward and I'm excited to be on board. Calumet has a tremendous product slate. My son and I, both like working on cars and Calumet makes a tremendous amount of products that we've trusted and used, from Marvel Mystery Oil for my old MG TD to the Royal Purple for our modern performance cars. I'm looking at the display case of all the products Calumet makes directly or provides key ingredients for. It's an incredible portfolio, from WD40 to clean my shotguns, to TruFuel for my chainsaw and chopstick that I use on my ski trips. We spent much of the first month, I was here continuing Tim's effort to lower the cash burn rate and improve the profitability profile. Everyone pitched in to identify areas for cost reductions to eliminate duplicative efforts and streamline processes. We have a very solid plan to build on our recent success and drive the recovery forward. Everyone is working with a great sense of urgency to position Calumet for its recovery. [End] Tim's leadership and the unique opportunity we all have here did not only turn Calumet around, but to grow this business into being the premier produce of petroleum-based specialty products in the market today are what drew me to this opportunity. Before Tim got here, Calumet was largely a rollup of independent businesses that was integrated for Specialty Products' production and sales, but not so integrated with respect to systems and other…

Thanks, West, and again, welcome to the team. Let's get more granular and talk through the specifics of our performance in 2016 and on the fourth quarter. Please move to slide six. Calumet is moving to more efficient operations while hitting record volume and minimizing inventory. Headcount is down nearly 6% year-over-year and was actually taken a few steps early in the first quarter to better align our resources even further. SG&A was also down 21% driven in large part by organizations commitment to our operations excellence mantra. Inventory for a company like ours is also a critical balance sheet item to manage and we took some great initial steps in 2016 to become more efficient here with an 8% reduction in our overall inventories. We did it at the time as we post an 11% increase in our sales volumes during the year but as West said, we can do better in 2017 and we will do better as West will provide us with tools and processes to help manage this function even more effectively. Looking at slide seven, we believe that we started to turn the corner as an organization and we are also cautiously optimistic that 2016 will be seeing as a trough year for Calumet. Our trailing 12 month adjusted EBITDA turned up in the fourth quarter given our improved year-over-year performance. Before I ask Pat to talk you through a few more specific details about our performance this last quarter, I want to take this opportunity to recognize Pat's contribution to this organization over the last 19 years. Pat has been a true friend and partner over the last year and has been instrumental in onboarding not only me but all of the new leadership. His legacy knowledge of all of our businesses will continue to be an asset to this company. Throughout 2016 Pat and I had extensive talks about the steps we needed to take as an organization to implement best practices in our accounting operations business process and control functions. These include critical items that needed a much higher level of focus like our SAP project, auditing controls, improved balance sheet management, and further SG&A discipline. While our team did a great job last year in taking the first steps to improve these functions, it became cleared to both Pat and I that this was an area that needed dedicated executive focus. Thus we created the new position of Chief Accounting Officer for which Pat was the obvious candidate. Pat remains a trusted member of our executive team and I want to thank him again for his commitment to this organization. With that, Pat, can you please walk us through a few more specific about our financial performance for the fourth quarter and the year.

Thanks Tim. Good morning everyone, thank you for joining us today. On slide nine, you can see our longer-term adjusted EBITDA performance by segment. In terms of highlights during the fourth quarter, let's start with our specialty products business whose performance was in line with our expectations. We delivered segment adjusted EBITDA of 28 million which was negatively impacted by roughly 8.9 million in net LIFO inventory liquidation and lower of cost or market inventory adjustment impact. Our sales volumes were up 9% year-over-year during the fourth quarter and increased over 6% during 2016 compared to 2015 primarily driven by growth in our branded and packaged product line. Our segment gross profit declined for both the quarter and the year as higher crude oil feedstock prices outpaced the adjustments we made in product pricing. Moving to our fuel products segment, we delivered adjusted EBITDA of 3.2 million which included 7.4 million in unfavorable LIFO inventory liquidation and lower cost to market inventory adjustment impacts. Despite typical seasonal patterns we hit the improved gross profit and adjusted EBITDA performance during the fourth quarter compared to the 2015 quarter driven primarily by 21% year-over-year increase in the benchmark Gulf Coast 211 crack spread, 14% increase in total fuel products sales volumes and lower rent expense. For the year, the Gulf Coast 211 crack spread averaged roughly $12 per barrel compared to an average of $18 per barrel in 2015 and $17 per barrel in 2014. As a result our fuel products segment annual gross profit and adjusted EBITDA were down significantly in 2016 compared to the prior year. We remain focused on continuing to run more heavy crude in our northern refineries as WCS averaged $13 per barrel below nine WTI in 2016. Finally, let's talk about our oilfield services segment. This…

Thanks, Pat. Slide five outlines the original strategy we presented to you last year, and provides the roadmap to support our vision to become the premier specialty petroleum products company in the world. To get there, we planned to leverage and build high-return niche businesses through innovation, unmatched customer service, and best-in-class operations to deliver quality products that meet the unique needs and specifications of our customers and leveraging our strong brands, including Royal Purple, Bel-Ray, Quantum, and Penreco. There are three components to our strategy. In 2016, we focused on the foundation of the pyramid, which was our operations excellence program, where we focused to optimize the base business, improve our asset management and system integration and build organizational efficiencies. In 2017, we will move firmly into the middle part of the pyramid as we drive opportunistic growth projects. These will be internally-driven growth projects capable of generating one to two year payouts with low to moderate capital requirements. I will talk more about the specifics of these in a few minutes. The two foundation levels of the pyramid together make up our self-help initiatives. The top layer of our strategy is focused on strategic M&A, where we can add to our leadership positions and high-return niche specialty markets, where we are competitively advantaged. Bruce and his team remain focused on this long-term opportunity, but now I would like to talk you through how we will execute the self-help categories of operations excellence and opportunistic growth in 2017. Let me begin with operations excellence. In 2016, we were engaged in settling our foundation for the recovery of our business. We focused intently on our operations excellence platform, which generated an estimated 89 million of our annually adjusted EBITDA and surpassed our 2016 goal of $60 million to $75 million.…

Thank you. [Operator Instructions] Our first question comes from the line of Brad Heffern from RBC Capital Markets. Your line is open, please go ahead.

Good morning, everyone. Tim, you kind of led me into my question with the last of your comments there, but a lot of positive commentary around the Oilfield Services business. It seems like things are really improving there. And I think historically you've talked about it as being less core than a lot of the rest of the assets that Calumet has. So are we nearing a point when you might want to market that business a little more heavily? And more broadly, how necessary do you think some sort of divestitures are at this point?

Brad, thanks for your question. I think we've talked before on previous calls that as we developed our hold strategies and hold values, and as we've included our self-help and five-year outlooks for those assets, we have a good feel, including Anchor, of what that asset holds in our portfolio. That is our base strategy. Our base strategy is to optimize and get full value out of our assets. The Oilfield Services has improved as you've noted, Brad, over the last three quarters. In fact, if you look at the EBITDA contribution after adjusting for LCM and LIFO impacts, we've shown improvement in each of those three quarters in our Oilfield Services results. We continue to look at all of our assets, Brad. In fact I'll tell you, we get called daily on just about every one of our assets. And Bruce is chuckling a little bit here because he's the one fielding those calls. And we continue to talk to interested parties, and compare the value that they see in our assets in their portfolio to the value that we hold in our portfolio looking at the outlook of these assets. If we see someone who has a portfolio, like the Dakota Prairie refinery example that we talk a lot about last year, we will certainly entertain and talk through opportunities to realize the best value for that asset. I think Anchor just is part of that portfolio that we discussed, Brad. I wouldn't say it's got any priority over the other assets we have. But I will tell you that we are looking at all options we have to de-lever the balance sheet.

Okay, thanks for that. And then a question about, I guess, the new administration and regulatory reform, and so on, any thoughts around the border tax and potential impact on Calumet. And then I was also wondering, if we do see a big corporate tax reduction, is there the potential that Calumet might think about going to being a C-Corp rather than MLP?

Yes, Brad, there's obviously a lot of chatter right now on the border tax, and really corporate tax reform in general. Let me turn it over to Bruce Fleming, Head of Strategy and Growth to give you some thoughts on that.

Hi, Brad. Interesting question, and so there's a lot of moving targets in that space. We have a dedicated team that watches this and mainly thinks about how competition plays out. I think that's the root interest. And there's a lot of conjecture. But there's an emerging consensus I think that domestic ENP will benefit from the border adjustability. That's good for us. More feedstock supplies and particularly the qualities that come from the shale fracking are useful in our Specialty Products businesses. So that's helpful. Deductibility of capital expenditures, as Tim mentioned, that would be helpful. Partnership tax rate caps may come down. So that's all good. On the border adjustability, frankly, if it's implemented in a way that's a level playing field it's not going to matter. The proposed size of that quote tax is smaller than normal market volatility, it’s smaller than existing taxes on petroleum products. I think what is interesting though, and you went to this maybe with your C-Corp question, Calumet as an MLP is in a different position, and these are all passed through to our LP holders. And we've done an analysis, and it's -- again, this is conjecture on proposed implementation rules, but we don't see that there's any material impact to net income or distributable cash flow, or EBITDA, or any of the metrics that we normally steward the business with. We think overall it's likely positive for our LP holders given all of the other moving parts. So I think that we certainly advocate a level playing field. We certainly want to see a fair regulatory regime in all of these respects. But right now we don't see a problem.

Okay, thanks.

Thank you. And our next question comes from the line of Roger Roger Read with Wells Fargo. Your line is open, please go ahead.

Yes, thank you, and good morning.

Good morning, Roger.

Okay, yes, sorry about that. I guess can we talk a little bit about the margins in the Specialty Products segment, recognize seasonality also recognize oil prices went up at the end of the quarter. You mentioned in your opening comments raising prices here, but what is the right way to think about the margins in this business for '17, and what that might do to either offset or enhance the self-help target this year of $40 million to $60 million of EBITDA?

Yes, Roger thanks for the question. We're still very bullish on our Specialties business. As you noted, Specialty margins tend to lag rising crude prices. And especially the significant price increase we saw in December, which I think was up, whatever, $6 to $8 a barrel just within 30 days. When you see rapid increases like that it does squeeze specialty margins short-term until we can adjust product pricing accordingly. And you can see with that rapid increase in the lubes and oils publications that many companies adjusted their pricing, like we did. That took affect primarily in January, and really by the end of the first quarter we should see the effects of those price adjustments. But that type of increase was rapid enough and was high enough that really we passed on some adjustments in just basically every one of our specialty product categories.

So what's the right way, I guess, to think about the margins, I mean is it a Q1 looks a lot like Q4, and then we see maybe a normalization back to kind of the first three quarters of '16. I mean, and all this obviously presumes oil prices stabilize at the right prices here. Or is there anything else we should be thinking about? Has there been any -- maybe a change in the competitive nature of this business that would affect these margins?

Yes, okay, Roger, let me share a little bit more. I think Q4 historically is a seasonally weak quarter. We do think Q1 will be a little bit better volume-wise. We expect to see some higher volumes. We're also seeing some global turnaround activity in the lubes industry that is affecting the lubes and specialties balances here in the first quarter. So we expect probably a better first quarter margin result in the Specialties business than we did in the fourth quarter for those reasons. But I will tell you that these pricing adjustments do take time to go through all the pricing mechanisms that we have with all of our customers. And so by the end of the first quarter we would expect to be fully caught up from a crude price standpoint.

Okay, appreciate that. And then maybe a follow-up to Brad's question on Oilfield Services business, but a little more on the operational front, obviously everybody had to cut costs aggressively in that sector. I'm sure you did the same. What is your ability to ramp back up consistent with what you see as the improvement in rig count for you? You mentioned 30% versus a 15% sort of realized nation-wide count. But from a capacity standpoint or hiring of headcount back into the business standpoint, can we see this business on a, let's say, a comparable rig count level getting back to the kind of performance that it had before the downturn? Or have you structurally reduced it so much that maybe that's a little bit optimistic on our part?

Roger, historically if you look back at Anchor's performance through previous downtimes has a track record of being a first responder as the market has improved. We've had the ability and our management knows how to position themselves to be able to respond quickly as the market returns. That's really the basis for the stat I just mentioned to you. While industry rig count is up about 15% year-to-date, and you can even look at 2016 and look at similar stats, our Anchor business is actually up 30%. And that's because our management has positioned themselves to respond well to this uptick. We have taken some very significant cuts, Roger, so I don't want to underestimate that. I think the employees at Anchor have done a fantastic job of managing the cost pressures of this downturn. But I think they're all poised and ready to come back as the activity starts to increase, particularly in the Permian basin, which is one of our core strengths where we have most of our capability. So, from that standpoint I would say we've got our employees focused on the basins that we think are going to recover the fastest, and really in the process of recovering now. And we feel like we're going to be able to manage that growth better than our competition.

Okay, let me just fine-tune my question then I'll turn it over to somebody else. But given your CapEx guidance, your obvious focus on generating free cash, is there going to be any restriction on Oilfield services or maybe potentially in the Specialty business on access to capital that might otherwise in a less constrained environment would've been an easier decision?

Yes, no, we've had discussions with our management at Anchor, and they believe that they are in good position to respond to the increased demand, Roger. We've got some additional hiring that's going on mostly in the contractor ranks right now as we are still early in the recovery. But at this point they do not anticipate needing any cash from us, nor any capital. They're going to be able to self fund, and we're excited to watch and support them as they grow in this recovery phase here in 2017.

Okay, great. Thank you.

Thank you. And our next question comes from the line of Neil Mehta with Goldman Sachs. Your line is open, please go ahead.

Hi, good morning.

Hi, good morning, Neil.

I wanted to follow up -- good morning, Tim, on the leverage question. And Tim, is there an absolute debt level that you have in mind at this point of where you want to target the company getting to, and in terms of absolute debt or leverage metrics. And do you need to do asset dispositions in order to get to that target or you think you can get there organically in a P50 case for margins?

Neil, as I mentioned earlier, we are committed to restoring the balance in our balance sheet and getting our leverage down. Long-term that leverage is or that debt is significantly lower than where it is today. So, long-term, I would say we're looking at either an asset sale or long-term growth. But that's going to help us get our debt levels significantly lower than where we are today. Short-term, we're focused solely on our self-help initiatives to drive improved cash flow, and to help us drive debt down. Short-term, we don't have to sell assets, Neil. But as we consider to talk to interested parties, as we continue to compare what our hold values are versus what their values and their portfolios are, we are actively looking for those unique partners that have a portfolio where it makes sense to sell those assets. So I know people are very interested in this. I can tell you we're very active in this space. But I can also tell you that we don't feel like we have to sell any asset short-term. And we won't feel like we have a gun to our head. Basically, the approach we take at management here is we'll sell the right asset at the right time at the right price. And I'll turn it over to Bruce, our Strategy and Growth leader to provide some more color on that.

Hi, Neil. Not much more color. I just want to comment. Tim answered your question on leverage, but our mantra is going to be maximizing stockholder value, maximizing the value of our LP units if a particular tax for debt reduction serves that end it'll be chosen. But I think we've got a balanced approach. We've got the organic growth; we've got the possibility of finding an uplift if our businesses are worth more to others than our keep value. And of course, Tim has touched on partnering initiatives, such as BP. And all of these are designed for value enhancement for the stockholders. And simply focusing on leverage is probably a little bit narrower than our actual strategy.

Appreciate that. And then the follow-up is capital spending. And this is less a 2017 question, but more thinking about the business on a run rate 2018 plus basis, how do you think about what normal is from both the maintenance perspective and a growth perspective that we should be dialing into our cash flow miles?

Well, Neil, we've forecast again in this 120 to 140 range here, kind of explaining that as some of the growth capital form, for example, our SAP project from 2016 rolls off. We've got turnaround capital from our next wave of turnaround efforts kind of rolling in. I kind of think the run rates that we're looking at right now are probably fairly consistent with what we're going to see going forward. In 2018, we do see a little bit of a higher turnaround load that's going to hit our books. We've leveled our turnarounds between 2017, '18, and '19 a little bit more so that we can not concentrate at all in one year. But at the same time it will still peak in 2018. That being said, we have quite a bit allocated for growth projects in 2017, of which in outlined a few of those items. We don't necessarily want to say that growth capital spending will be at that level every year. So in 2018, I anticipate turnaround spending to be a little higher. I would guess that growth spending might be a little bit lower. But I think it's going to be in the same range that we're talking about.

And last question for me is related to rigs. Rigs prices have come off quite a bit. They're down to $0.50 on a T6 basis. Do you see that accreting to your bottom line or do you think that just comes off the cracks in this corresponding way?

Well, I think the adjustment in RINs pricing has happened pretty quickly here over the last several weeks, as you point out. I think it does show how volatile the RINs market is. And I don't think the market has fully caught up with the pricing drop that's happened in RINs. I do think overall it goes back into product pricing. The markets will balance, and we're still waiting to see how all that will shakeout.

All right, great. Thanks so much Tim and everyone.

Thank you. And our next question comes from the line of Ed Westlake with Credit Suisse. Your line is open, please go ahead.

Hi, thank you for taking my call, it's Johannes here. Just want to welcome West Griffin. And I had a quick question about something that he had mentioned, and for the team as a whole. West said that there's a desire to make Calumet consistently cash flow positive. Now the refining business, as everybody knows, has a history of kind of volatile earnings, and it's a cyclical business. So does that imply a specific sort of balance between the Fuels business and the Specialties Product business in your portfolio on a kind of mid cycle EBITDA basis in the long run, and how do you think about that?

Yes, West, why don't you jump in?

Sure. Thanks for your question, it's a great question. So as Tim has mentioned repeatedly, the core of our business long-term is our Specialty Products business, and so that's what we're driving towards. The assets that are not core or part of the deep core of the business are all things that at some stage we may consider doing something with to the extent as Tim said, someone values it more than what we value those assets for. And so, I think very directly to your question, one of the things that we want to do is focus our portfolio of businesses down to long-term to focus more on our specialties business, because that provides very, very level and steady cash flow that is fairly predictable, et cetera. And so that's kind of where we're going long-term, is to more steady cash flow and higher predictability, and positive cash flow.

Yes, Johannes, I would just jump in and say, a couple years ago we looked at the portfolio, and I think maybe this is what you're referencing as kind of Specialties contributing 50%, and fuels contributing 50% of the adjusted EBITDA. I'd say going forward, as I continue to focus this organization on our core specialties business, we see most of our growth, and we're focusing most of our attention in growing our specialties' EBITDA. We like the stability of that cash flow stream, as you mentioned. We think our strength and our competitive advantage is in the specialties area, and we're going to continue to focus in that specialties business as we continue to grow Calumet. Now, having said that, we're not going to ignore our fuels business; a lot of -- the Superior Flexibility Project that I just mentioned to you is specifically focused on improving our fuels cash flows as well, and we've got similar improvement efforts focused at our other fuels refineries. So, without ethane, we're going to continue to improve in fuels, but we anticipate most of our focus to be on growing our specialties business.

Is there an optimal mix that you have in your mind at this point? You've mentioned at 50-50 that has been talked about a few years back, but going forward is kind of what you think the true balance in the long run should be?

No. Johannes, I don't think there's an optimal mix right now. We're looking for value. And so, as these ideas are being generated by our business teams, we are doing that equally rigorous at our specialties business teams as well as our fuels business teams and we're looking for the best ideas that will generate the most stockholder value, and those are the ones that we're going to be driving for here in the near term.

Okay. And then just as a second question, this goes to the balance sheet leverage, it was mentioned that there are options to create a de-lever, aside from the traditional things that everybody talks about or thinks about, which is just increasing underlying growth in cash flow and de-levering organically, or selling assets over time, whether they be improved or not depending on how strategically best to do that, are there other options that people are just not thinking about that would be viable for a company like Calumet as time goes on?

Yes. Let me ask Bruce to jump again.

No, absolutely. And it's a great question. Right now, we're looking at a wide range of different things. We don't -- as you might imagine, looking at all the various options to de-lever. There are a number of additional options to de-lever that we haven't really publicly talked about and really not prepared to talk about them right now, but we are looking at, if you can imagine it, we're probably looking at it, is what I would say.

Okay. Thank you very much for taking my questions.

Okay, Johannes. Thanks.

Thank you. And our next question comes from the line of Sean Sneeden with Oppenheimer. Your line is open. Please go ahead.

Hi, good morning. Thank you for taking the questions.

Hey, good morning, Sean.

Tim or Pat, maybe just to start off on turnaround, can you just give us a breakdown of how much of that is maintenance versus how much you're spending at Superior and Great Falls turnaround, and how much is for growth?

Yes. Sean, when we get the CapEx guidance for 2017, we are not providing that detail at this time. We will be reporting historically the quarterly levels into those categories, but we're not providing that type of detail at this time.

Okay. I guess, maybe just thinking about it from a big picture perspective, and I think, Tim, you touched on this in your prepared remarks, but conceptually, is the plan to fund your program this year is within cash flow, or are you anticipating MUs [technical difficulty] spent?

Yes, Sean, we spend along in rigorous process this year in our 2017 budgeting process, as well as in our three-year outlook. Our management team has been very engaged, and really we're driving cash flow as our key metric that we are watching. So, we believe 2017 will be a better year than 2016, and right now our target is to be -- is not to be cash flow negative.

Okay. That's helpful. I guess, when you think about strategic M&A, which I think is something that you had mentioned, Tim, I guess, one, are there opportunities that you're looking at now? And two, just given the current shape of the balance sheet, how would you think about funding it and/or how do you kind of conceptually think about size of those opportunities?

Yes, it's an interesting question, Sean. And as you see from the pyramid that I talked about earlier in the session, M&A continues to be part of our plan, and I mentioned that Bruce and his group continue to focus on that. We are involved in the deal flows, and we continue to look at opportunities. We think we can play in that market, and I'll turn it over to Bruce just to see what he would like to say on that topic.

Well, yes, thanks. The manner that we pay for it is going to be customized. I wouldn't actually want to speculate, but we've got -- on a larger opportunity, we're going to have to go a nontraditional route, we're obviously not going to go to the debt markets for that. Depending upon the nature, we've had a history as Calumet finding private companies, and they may want to be folded into our larger business in a different manner than simply being acquired for cash. So, we have a lot of creative ideas on how to source the funds necessary.

Okay. And presumably it could be, for instance, in partnership with the Heritage Group among others. Is that sort of part of the conversation?

I wouldn't say it has to be a related party. I would say we've talked with plenty of investors that would like to partner with us on various joint ventures. We have a lot of capability and a lot of know-how in this space, and there are lots of folks that are interested in partnering with us.

Okay. That's helpful. I guess, just on asset sales, I'll try to perhaps from a different angle, but I think you mentioned a couple of times that you've gotten almost on daily basis proposals for different assets. Qualitatively, can you talk about the valuations that you guys are being shown? And I think perhaps more importantly, can you talk about the trajectory of the differential, what people are showing you, and what you think internally those assets are worth, in particular, is that valuation gap, if you will, shrinking?

Well, I think as you see the market recovering, Sean, certainly the things like services as well as the fuels market, they are may or may not be closing at the gap. Quite honestly, it's really a difference in how we view the future versus how someone else views the future, and what our portfolio and the synergies associated with our portfolio offer as well as what a potential buyer's portfolio may offer. So I'm not sure if this is dependent on the time difference like you're, there is it is just finding the right partners with the right portfolios. But again, let me turn it over to Bruce, and let him comment on that.

Tim, I think that is the answer. What I would probably add to it is, the bid ask spread a year ago was pretty wide. That was I think more indicative of the industry conditions. There was just a freefall on crude price, the MLPs were all losing their growth prospects as an industry sector, and the bid ask spreads I think have come in much more reasonably in line with the future sector performance expectations. So, broadly speaking, if I gave guidance, I'll tell our fuels refineries are worth the -- refining multiple especially the specialties multiple, which is as you are aware considerably higher. So, I think that the value proposition is going to turn on someone who can out bid our keep value. It's pretty simple.

Okay. That's helpful. Perhaps lastly, we read anything into your choice of having a Superior and Great Falls go through the turnaround first in terms of strategically how you're thinking about quality of your assets and what have you?

No, Sean, I can tell you, you shouldn't read anything into that that at all. This is just purely unique conditions, and when we have to take a turnaround from an operations standpoint. So, this has nothing to do with portfolio management.

Great, I appreciate the color. Thank you, guys.

Great.

Thank you. And we only have time for one more question, and our next question comes from the line of Mike Gyure with Janney. Your line is open. Please go ahead.

Yes. On the turnaround timing maybe for this year and then maybe specifically on Superior, how the turnaround either impacts, doesn't impact the Superior Flexibility Project? I think the flexibility project is sort of ongoing today, and the turnaround is later, but maybe if you can talk about that.

Yes, Mike, the turnarounds that we have scheduled for 2017, Superior is going to be some time in the first half of the year, Great Falls will be some time in the second half. What I would tell us is, in 2018 the timing of that will probably be in the first half of the year for 2018 for Superior.

Okay, thank you.

Thank you. And I'm showing no further questions, and I would like to turn the conference back over to Mr. Tim Go for any further remarks.

Thanks again for your time today, guys. We appreciate your continued support. Have a great day.

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect. Everyone have a great day.