USD Partners LP (USDP): PESTLE Analysis [Nov-2025 Updated]

You're likely looking at USD Partners LP (USDP) for strategic insight, but honestly, the PESTLE lens here isn't about future growth; it's a post-mortem on a business model that collapsed. The company is defintely in the process of dissolution in 2025, having sold its final operating asset, which is why its market capitalization plummeted to only about $243.18 thousand. This analysis breaks down the Political, Economic, and other macro-forces that compelled the sale of the Hardisty Rail Terminal and forced the partnership's wind-down, giving you clear context on the risks that sunk this crude-by-rail player.

USD Partners LP (USDP) - PESTLE Analysis: Political factors

Government permits and approvals are now focused on the dissolution process

You need to understand that for USD Partners LP, the political landscape in 2025 is no longer about securing new infrastructure permits; it's about managing the regulatory exit. Since the Partnership expects to complete the sale of its final operating asset, the Hardisty Rail Terminal, on or prior to mid-April 2025, the entire focus shifts to the wind-down and dissolution process. This requires a different set of government and third-party approvals, primarily centered on satisfying creditors and legally terminating the entity.

The core political and legal action was the filing of a Form 15 with the Securities and Exchange Commission (SEC) in December 2023 to voluntarily deregister and suspend its reporting obligations. This immediately suspended the requirement to file periodic reports like Forms 10-K and 10-Q, cutting a significant regulatory burden and cost. The final steps require securing third-party consents and managing the legal dissolution of the partnership, which is a final, complex set of regulatory filings.

Delisting from the NYSE in late 2023 due to low market capitalization (<$15 million)

The delisting from the New York Stock Exchange (NYSE) in late 2023 was a clear political signal of the Partnership's financial distress and reduced public market relevance. The NYSE suspended trading on November 16, 2023, and formally delisted the common units on December 1, 2023. This action was triggered because the Partnership failed to maintain the required average global market capitalization of at least $15 million over a consecutive 30 trading-day period.

The financial reality today is stark: as of November 2025, USD Partners LP's market capitalization is approximately $0.24 Million USD. That's a defintely a huge drop from the minimum NYSE requirement. This move to the over-the-counter (OTC) Pink Market under the ticker USDP significantly reduces the regulatory scrutiny and compliance costs associated with a major exchange listing, which is a small but necessary cost-saving measure in the dissolution phase.

Regulatory pressure on crude-by-rail logistics increased operating costs

Historically, the crude-by-rail business faced intense regulatory pressure following high-profile incidents, demanding stricter safety standards, which translated directly into higher operating costs. For USD Partners LP, these pressures manifested in general and administrative (G&A) expenses, which cover regulatory compliance, legal, and administrative services.

Here's the quick math on the administrative expense scale: the total amounts charged to the Partnership for general and administrative services under the Omnibus Agreement were $9.1 million for the year ended December 31, 2022, and $7.1 million for the year ended December 31, 2023. While this isn't solely crude-by-rail regulation, it shows the scale of the administrative overhead that included regulatory compliance. By 2025, this regulatory cost pressure has effectively vanished for the Partnership because it has sold all its operating assets, eliminating the need for crude-by-rail logistics compliance.

US-Canada energy policy shifts impact cross-border heavy crude oil flows

The political relationship between the U.S. and Canada is crucial for the heavy crude oil flows that USD Partners LP's terminals historically facilitated. The most significant near-term policy shift affecting cross-border flows in 2025 is the implementation of new U.S. tariffs.

Canadian energy products, including the heavy crude oil transported by rail, are now subject to a 10% tariff as of March 2025. This is a direct political intervention that increases the cost of Canadian crude for U.S. refiners.

• Canadian energy products face a 10% tariff rate, lower than the general 25% tariff on other Canadian imports.
• Approximately 70% of Canadian crude is exported to the U.S., making the tariff a major cost factor for the entire supply chain.
• The tariff forces Canadian producers to offer deeper price discounts to remain competitive, impacting the economics of rail transport.

USD Partners LP (USDP) - PESTLE Analysis: Economic factors

You're looking at USD Partners LP (USDP) and trying to map the economic reality of a company in wind-down mode. The economic picture for USDP in the 2025 fiscal year is one of extreme financial distress, driven by an unsustainable debt load and the forced liquidation of its operating assets. This isn't a turnaround story; it's a controlled dissolution, which is a critical distinction for any financial model you build.

Sale of the final operating asset, Hardisty Rail Terminal, completed by April 2025.

The most significant economic event of 2025 was the completion of the Hardisty Rail Terminal sale, the Partnership's last remaining operating asset. This transaction was finalized on April 10, 2025. [cite: 10, 15, 16 from step 1] This action effectively eliminated the company's primary source of operating cash flow, transitioning the entity from a midstream operator to a shell focused solely on debt resolution and eventual winding down or dissolution. [cite: 4, 8 from step 1]

High debt load forced a Forbearance Agreement with lenders, compelling asset sales.

The company's high debt load was the core driver of the 2025 economic actions. The Partnership entered into a Forbearance Agreement with its lenders, initially in June 2024, because it had failed to satisfy certain milestones under its revolving credit facility. [cite: 5 from step 1, 7 from step 1, 12 from step 1] The lenders used this agreement to compel the sale of the Hardisty Rail Terminal. [cite: 4, 8, 10 from step 1] Honestly, the debt position was untenable.

Here's the quick math on the debt situation:

Substantial remaining borrowings under the revolving credit facility after asset sales.

Despite the proceeds from the Hardisty Rail Terminal sale, the Partnership expected to have substantial remaining borrowings outstanding under its revolving credit facility. [cite: 4, 8 from step 1] The critical step following the sale was the expectation that lenders would terminate the revolving credit facility and write off the remaining debt balance, which would then allow the Partnership to move toward its intended wind-down or dissolution. [cite: 4, 8 from step 1] What this estimate hides is the zero-sum nature of the remaining entity-there is no path to operational recovery; only to liquidation.

Q4 2024 revenue was $10.9 million, a sharp decline reflecting a distressed business model.

The company's operational distress was evident long before the final asset sale. For context, the revenue in the quarter ended September 30, 2023 (Q3 2023), was $10.90 million. This figure, and the subsequent annual unaudited financial statements for the year ended December 31, 2024, posted in March 2025, reflect the sharp decline in revenue as the business model became distressed and assets were sold off. The full-year revenue for the last twelve months leading up to October 24, 2025, stood at $71.79 million, a figure that includes the last of the operating cash flows before the Hardisty sale. [cite: 3 from step 1]

Extreme market capitalization of approximately $243.18 thousand in late 2025.

The market's view on this economic reality is clear and brutal. By late 2025, the market capitalization (market cap) of USD Partners LP had fallen to an extremely low level, hovering around $243.18 thousand. [cite: 11 from step 1] This figure, or the similar $254.29 thousand recorded on November 14, 2025, [cite: 2 from step 1] places the company far outside the realm of a viable public entity, even having been delisted from the NYSE in late 2023 for failing to maintain a minimum market cap of $15 million. [cite: 1 from step 2, 5 from step 3] This is a micro-cap valuation signaling near-total equity impairment.

• Market Cap (late 2025): Approximately $243.18 thousand. [cite: 11 from step 1]
• Shares Outstanding: 33.77 million as of March 31, 2024. [cite: 1 from step 2]
• Prior Delisting Trigger: Failure to maintain $15 million average market cap. [cite: 1 from step 2]

The small market cap is the final verdict on the economic viability of the original business model.

USD Partners LP (USDP) - PESTLE Analysis: Social factors

Sociological

The social factors impacting USD Partners LP are overwhelmingly negative and directly tied to the Partnership's core business model of crude-by-rail, which has led directly to its dissolution in 2025. The shift in public and investor sentiment away from fossil fuels and high-risk logistics assets has created a hostile environment for the company's operations and valuation. It is a clear example of how social pressure can force a business model to become financially unviable.

Public and investor sentiment is rapidly shifting away from fossil fuel logistics.

Investor sentiment is defintely moving against fossil fuel logistics, which is a major headwind for any remaining assets in this sector. For instance, an analysis comparing the STOXX Global 1800 Socially Responsible Investment (SRI) Index to a Global Fossil Fuel Basket showed that the SRI Index delivered more consistent, long-term returns over the last decade, even though the fossil fuel basket had a higher 3-year annualized return of 17.80% compared to the SRI's 11.54%. This volatility and long-term underperformance push major institutional investors, including large pension funds, to challenge fossil fuel engagement strategies and push for divestment. You simply cannot ignore the ESG (Environmental, Social, and Governance) mandate anymore; it is driving capital allocation decisions, and midstream players like USD Partners LP are on the wrong side of that trend.

Negative perception of crude-by-rail due to high-profile safety and environmental incidents.

The business of transporting crude oil by rail carries a significant social and environmental cost that is now widely recognized. Communities view crude-by-rail as a major safety risk, especially since the volatility of Bakken crude oil has been a known issue. The perception is grounded in catastrophic events, including accidents that have caused 47 deaths since 2013. An analysis of the external costs of transportation highlights this risk starkly:

• Estimated cost of spills and accidents for pipelines: $62 per million barrel miles.
• Estimated cost of spills and accidents for rail: $381 per million barrel miles.

That is a cost difference of over 6X, driven largely by the higher likelihood of an expensive, high-casualty disaster when trains pass through densely populated urban areas. The social license to operate for companies relying on this model is essentially gone.

Minimal full-time employees, as the company is winding down operations.

With the sale of the Hardisty Rail Terminal in April 2025, the Partnership sold its last remaining operating asset and announced its intent to wind down or dissolve. This action means the number of active, full-time employees has been reduced to a minimal core team, primarily focused on legal, financial, and administrative tasks required for the final dissolution process. The pre-dissolution total employee count was cited as around 85, but post-April 2025, this number is a fraction of that, limited to the executive and legal staff necessary to manage the remaining debt and formal wind-down. You are managing a balance sheet, not a logistics operation.

Focus on stakeholder communication during the dissolution phase.

The company's communication strategy in 2025 is solely focused on managing the dissolution process and providing the minimum required disclosure to remaining stakeholders. This is a critical social factor because it dictates transparency and investor relations during a period of extreme uncertainty.

The key communication decisions include:

• Deregistration: The filing of a Form 15 in December 2023 to suspend its SEC reporting obligations, moving the company from a major exchange to the OTC market.
• Asset Sales: Issuing press releases in January and April 2025 to communicate the expected and final sale of the Hardisty Rail Terminal, the last operating asset.

This shift means that public financial information is less frequent and less detailed than for a fully reporting public company, placing a greater burden on investors to track the liquidation process and increasing the liquidity risk for common unit holders. The communication is transactional and final.

USD Partners LP (USDP) - PESTLE Analysis: Technological factors

New or expanded pipeline capacity significantly reduced demand for crude-by-rail transport.

You can't talk about crude-by-rail without talking about pipeline egress (the ability to get crude oil out of a region), and the technology shift here was brutal for USD Partners LP. The fundamental value proposition for rail terminals-moving crude when pipelines are full-evaporated with major pipeline expansions. The most critical blow was the completion of the Trans Mountain pipeline twin, which increased its capacity to as much as 890,000 barrels a day in the year leading up to June 2025.

This massive new capacity, which runs from Alberta to the Vancouver area, directly competed with the long-haul rail services USD Partners LP facilitated from Hardisty. Honestly, the market signaled this for years: pipeline transport is simply more cost-effective and technologically superior for high-volume, long-distance movements. Plus, the Trans Mountain system is even eyeing a further capacity increase of 75,000 barrels of crude a day by early 2027 through drag-reducing agents (chemicals that help crude flow more easily).

The technological advantage of pipelines over rail, especially for Canadian heavy crude, is a structural problem that rail terminals couldn't overcome. Here's the quick math on the competitive landscape:

• Trans Mountain Pipeline Capacity (Post-Expansion): Up to 890,000 bpd
• Hardisty Rail Terminal Designed Capacity: Approximately 262,500 bpd
• Future Pipeline Competition (Planned): Canadian Prosperity Project Pipeline with a proposed capacity of 1,099,271 bpd (expected 2030).

Lack of capital expenditure (CapEx) for terminal upgrades or automation in 2025.

The Partnership's financial situation in 2025 meant that any substantial capital expenditure (CapEx) for technological upgrades or automation was a non-starter. The business model historically relied on 'minimal capex requirements' to drive free cash flow, but in 2025, the focus shifted entirely to survival and debt management. The company was operating under a Forbearance Agreement with its lenders due to defaults on its credit facility.

This agreement obligated the Partnership to adhere to a strict operating budget and repay borrowings with any cash in excess of an agreed maximum. This kind of financial constraint chokes off any investment in modernizing terminal operations, like advanced automation or digital logistics systems, which are key for efficiency and attracting new customers. You can't invest in the future when you are selling your last asset to pay down the past. The lack of CapEx wasn't a strategic choice in 2025; it was a financial mandate.

Terminal assets like Hardisty have designed takeaway capacity of approximately 262,500 barrels per day, but utilization was insufficient to service debt.

The Hardisty Rail Terminal, USD Partners LP's last operating asset, had a robust design capacity, but its actual utilization was a fraction of that, which ultimately led to the company's inability to meet its financial obligations. The terminal was designed to handle approximately 262,500 barrels per day (bpd), equating to three and one-half unit trains per day.

However, commercial contracts in early 2025 showed a stark reality. An extension with a long-term customer only contracted 7% of the Hardisty Terminal's capacity through the end of January 2025, with an option for an incremental 4% monthly. This low utilization rate, likely driven by the new pipeline competition, meant revenue was insufficient to manage the debt load.

The financial consequence of this technological obsolescence and low utilization was clear: the Partnership was forced to sell the Hardisty Rail Terminal. The sale was completed on April 10, 2025, as a condition set by the lenders to address the failure to satisfy credit facility milestones. At the time, the Partnership had $185.4 million outstanding under its Credit Agreement as of March 10, 2025, a debt burden that the terminal's low-tech, low-utilization cash flow simply could not service.

Action: Finance: Draft a final asset liquidation and debt write-off reconciliation report by year-end 2025.

USD Partners LP (USDP) - PESTLE Analysis: Legal factors

The legal landscape for USD Partners LP is dominated by the consequences of its financial distress, specifically the legal agreements that forced the sale of its core assets and the subsequent shift in its regulatory compliance obligations. You need to understand that the Forbearance Agreement with its lenders was not a bridge to recovery; it was the legal framework for an orderly wind-down.

Lenders required the sale of the Hardisty Terminal as a condition of the Forbearance Agreement.

The Partnership's financial stability crumbled, triggering events of default under its revolving credit facility. To avoid immediate action from lenders, USDP entered into a Forbearance Agreement on June 21, 2024, which legally required the sale of the Hardisty Rail Terminal, its last major operating asset, as a non-negotiable condition. The initial deadline for this sale was December 30, 2024, but the transaction was ultimately completed on April 10, 2025.

This sale was the result of an extensive, lender-approved marketing process. The legal mandate ensured the lenders could recover capital, effectively overriding any other strategic options for the asset. This is a classic example of debt covenants dictating corporate strategy when liquidity runs dry.

Partnership is taking steps to formally wind down or dissolve following the final asset sale.

With the Hardisty Rail Terminal sold, the Partnership has disposed of substantially all of its operating assets. The legal next step, as outlined in the January 21, 2025, announcement, is to formally wind down or dissolve the Partnership.

The expectation is that upon the sale's closing, the lenders will terminate the revolving credit facility and legally write off the substantial remaining debt balance. The subsequent dissolution process involves complex legal steps to settle all remaining liabilities and distribute any residual value to unitholders, though the expectation of a significant distribution is low given the circumstances. This is the final legal stage for the Master Limited Partnership (MLP) structure.

Compliance with OTC Markets Group (OTC) disclosure requirements after NYSE delisting.

The Partnership's financial decline led to its common units being delisted from the New York Stock Exchange (NYSE) on December 1, 2023, because it failed to maintain the required average global market capitalization of at least $15 million over a consecutive 30 trading-day period.

This forced a move to the less regulated OTC Pink Market under the ticker USDP. While USDP filed a Form 15 in December 2023 to voluntarily deregister and suspend its obligations to file periodic reports with the Securities and Exchange Commission (SEC) (like Forms 10-K and 10-Q), it continues to provide disclosure to remain compliant with the OTC Markets Group.

The key disclosure documents for 2025 are:

• Annual Unaudited Financial Statements for the year ended December 31, 2024 (posted March 10, 2025).
• Annual OTC Disclosure Statement for the year ended December 31, 2024.

Honestly, the legal burden here is minimal, but it's a necessary step to maintain a semblance of transparency for the remaining unitholders trading on the Pink Market.

Multi-year, take-or-pay contracts with customers were not enough to stave off financial distress.

The Partnership was structured as a fee-based MLP, generating substantially all its operating cash flows from multi-year, take-or-pay contracts with primarily investment grade customers. This structure is meant to provide stable, predictable revenue, but it clearly wasn't a bulletproof shield against financial distress.

The legal strength of these contracts, which obligate customers to pay a minimum fee regardless of actual volume (the 'take-or-pay' clause), was insufficient to offset the Partnership's high debt load and other operational challenges that led to the credit facility defaults. For example, the transaction price allocated to remaining performance obligations for the Terminal services segment for the fiscal year 2025 was still a notable $10,365 thousand as of December 31, 2024, demonstrating that the contractual revenue was still legally on the books, but the overall financial structure was too fragile.

USD Partners LP (USDP) - PESTLE Analysis: Environmental factors

Increased environmental scrutiny and risk associated with transporting crude oil by rail.

The core environmental risk for USD Partners LP has always been the transportation of crude oil, particularly heavy crude from Western Canada, by rail. This method faces intense public and regulatory scrutiny due to the catastrophic potential of derailments, which can lead to significant environmental damage and loss of life. While the company has focused on providing safer logistics, the entire crude-by-rail model carries a high-profile risk premium.

The risk is amplified by the Partnership's imminent wind-down, expected after the sale of its final operating asset, the Hardisty Rail Terminal, by mid-April 2025. Any major incident before or during the dissolution process would immediately convert a contingent liability into a massive, uninsurable remediation cost, potentially exhausting remaining capital and complicating the debt write-off process. The industry continues to push for safer, greener processes, but the inherent volatility of the product transported remains the central, defintely unchangeable risk.

Pressure to meet stricter environmental standards for terminal operations and storage.

Terminal operations, which involve crude oil storage and loading, are under continuous pressure to minimize emissions and prevent spills. The Hardisty Terminal, for instance, has already incorporated technology to address this.

• Vapor Management: The facility utilizes an onsite vapor management system. This is a critical operational measure designed to minimize hydrocarbon loss, which directly reduces volatile organic compound (VOC) emissions and improves safety during the railcar loading process.
• Compliance Cost: Maintaining this level of compliance requires ongoing capital expenditure and operational expense, which, in the context of a wind-down, becomes a short-term cost burden that must be managed until the final sale and transfer of the asset.

Climate change policies reduce the long-term viability of dedicated fossil fuel infrastructure.

For most energy companies, climate change policies represent a long-term threat to asset utilization (stranded assets). For USD Partners LP, this threat has accelerated into a near-term reality, contributing to the decision to dissolve. The partnership's infrastructure is dedicated to fossil fuels, and while US federal policy has recently seen a 'climate pullback' in early 2025, with potential rollbacks of clean energy incentives, the global and corporate push for net-zero carbon emissions continues.

The market's long-term view of fossil fuel logistics assets has already devalued the company's infrastructure. This is evident in the forced sale of the Hardisty Terminal as a condition of a forbearance agreement with lenders, which is a clear signal that the value of dedicated crude infrastructure is rapidly eroding in the face of transition risk. The company is now focused on exiting the business, not on long-term viability.

Environmental remediation liabilities remain a risk during the wind-down process.

This is the most significant financial risk as the Partnership winds down. Environmental remediation liabilities, including Asset Retirement Obligations (AROs), represent the future cost of dismantling and cleaning up the sites.

Honestly, the biggest concern here is the unquantified nature of the risk. We know the Partnership has substantial debt-approximately $185.4 million outstanding under its Credit Agreement as of March 10, 2025-which is expected to be written off upon the final asset sale and dissolution. However, the Partnership's financial statements state that the Asset Retirement Obligation cost is considered indeterminate.

Here's the quick math on the risk: Since the economic life of the terminal facilities cannot be reasonably estimated, the Partnership cannot recognize the fair value of the ARO on its balance sheet. This means a major, unquantified environmental cleanup cost could emerge during the wind-down or after the sale, potentially creating a significant, unexpected liability for the dissolving entity and its stakeholders.

What this estimate hides is that even a small, unexpected remediation requirement could derail the clean termination of the Partnership, making the environmental due diligence on the Hardisty Terminal sale absolutely crucial.