##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended June 30, 2011
 OR
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission file number 001-35230
 Oiltanking Partners, L.P.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    45-0684578(State or other jurisdiction of 
incorporation or organization)
    
    (IRS Employer
Identification number)15631 Jacintoport Blvd. 
Houston, TX
    
    77015(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code: (281) 457-7900
 o þ
 o o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer þ
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




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##### 



TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONExplanatory Note
    
    
    2Item 1.Financial StatementsOiltanking Partners, L.P.:Condensed Balance Sheets as of June 30, 2011 and March 14, 2011 (Inception)
(Unaudited)
    
    
    3Condensed Statements of Operations for the Three Months Ended June 30, 2011 and
from Inception (March 14, 2011) through June 30, 2011 (Unaudited)
    
    
    4Condensed Statement of Partners Deficit from Inception (March 14, 2011) through
June 30, 2011 (Unaudited)
    
    
    5Condensed Statement of Cash Flows from Inception (March 14, 2011) through
June 30, 2011 (Unaudited)
    
    
    6Notes to Unaudited Condensed Financial Statements
    
    
    7Oiltanking Houston, L.P. and Oiltanking Beaumont Partners, L.P. (Predecessor):Condensed Combined Balance Sheets as of June 30, 2011 and December 31, 2010
(Unaudited)
    
    
    8Condensed Combined Statements of Income and Comprehensive Income for the
Three and Six Months Ended June 30, 2011 and 2010 (Unaudited)
    
    
    9Condensed Combined Statement of Partners Capital for the Six Months Ended
June 30, 2011 (Unaudited)
    
    
    10Condensed Combined Statements of Cash Flows for the Six Months Ended
June 30, 2011 and 2010 (Unaudited)
    
    
    11Notes to Unaudited Condensed Combined Financial Statements
    
    
    12Item 2.Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    23Item 3.Quantitative and Qualitative Disclosures About Market Risk
    
    
    33Item 4.Controls and Procedures
    
    
    33PART II. OTHER INFORMATIONItem 1.Legal Proceedings
    
    
    33Item 1A.Risk Factors
    
    
    33Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    34Item 3.Defaults upon Senior Securities
    
    
    34Item 4.[Removed and Reserved.]
    
    
    34Item 5.Other Information
    
    
    34Item 6.Exhibits
    
    
    34Signatures
    
    
    36EX-31.1EX-31.2EX-32.1EX-32.2
  1




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PART I. FINANCIAL INFORMATION
 
 Explanatory Note
    2




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Item 1.
    
    Financial Statements
 
 OILTANKING PARTNERS, L.P.
 
 CONDENSED BALANCE SHEETS
 (In thousands)
 (Unaudited)
 (Inception)June 30,
    
    
    March 14,2011
    
    
    2011Assets:Other assets, net
    
    $
    245
    
    
    $
    Total assets
    
    $
    245
    
    
    $
    Liabilities and partners deficit:Current liabilities:Accounts payable, affiliates
    
    $
    295
    
    
    $
    Total liabilities
    
    
    295
    
    
    
    Commitments and contingenciesPartners deficit:Limited partners interest
    
    
    (48
    )
    
    
    1General partners interest
    
    
    (1
    )
    
    
    Receivables from partners
    
    
    (1
    )
    
    
    (1
    )Total partners deficit
    
    
    (50
    )
    
    
    Total liabilities and partners deficit
    
    $
    245
    
    
    $
    
  3




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OILTANKING PARTNERS, L.P.
 
 CONDENSED STATEMENTS OF OPERATIONS
 (In thousands)
 (Unaudited)
 From InceptionThree Months
    
    
    (March 14, 2011)Ended
    
    
    throughJune 30, 2011
    
    
    June 30, 2011Revenues
    
    $
    
    
    
    $
    Costs and expenses:Selling, general and administrative
    
    
    34
    
    
    
    34Total costs and expenses
    
    
    34
    
    
    
    34Operating loss
    
    
    (34
    )
    
    
    (34
    )Other expense:Interest expense
    
    
    (16
    )
    
    
    (16
    )Total other expense
    
    
    (16
    )
    
    
    (16
    )Net loss
    
    $
    (50
    )
    
    $
    (50
    )
  4




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OILTANKING PARTNERS, L.P.
 
 CONDENSED STATEMENT OF PARTNERS DEFICIT
 (In thousands)
 (Unaudited)
 Limited
    
    
    General
    
    
    ReceivablesPartners
    
    
    Partners
    
    
    FromInterest
    
    
    Interest
    
    
    Partners
    
    
    TotalBalance, March 14, 2011 (Inception)
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Contribution from partners
    
    
    1
    
    
    
    
    
    
    
    (1
    )
    
    
    Net loss
    
    
    (49
    )
    
    
    (1
    )
    
    
    
    
    
    
    (50
    )Balance, June 30, 2011
    
    $
    (48
    )
    
    $
    (1
    )
    
    $
    (1
    )
    
    $
    (50
    )
  5




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OILTANKING PARTNERS, L.P.
 
 CONDENSED STATEMENT OF CASH FLOWS
 (In thousands)
 (Unaudited)
 From Inception(March 14, 2011)throughJune 30, 2011Cash flows from operating activities:Net loss
    
    $
    (50
    )Adjustments to reconcile net loss to net cash provided by operating activities:Amortization of deferred financing costs
    
    
    5Changes in assets and liabilities:Other assets, net
    
    
    (250
    )Accounts payable, affiliates
    
    
    295Net cash provided by operating activities
    
    
    Net change in cash and cash equivalents
    
    
    Cash and cash equivalents  At inception (March 14, 2011)
    
    
    Cash and cash equivalents  End of period
    
    $
    
  6




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OILTANKING PARTNERS, L.P.
 
 NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
 1. NATURE OF OPERATIONS
   2. INITIAL PUBLIC OFFERING OF OILTANKING PARTNERS, L.P.
      7




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OILTANKING HOUSTON, L.P. AND OILTANKING BEAUMONT PARTNERS, L.P.
(WHOLLY OWNED SUBSIDIARIES OF OILTANKING HOLDING AMERICAS, INC.)
 
 CONDENSED COMBINED BALANCE SHEETS

(In thousands)
(Unaudited)
 June 30,
    
    
    
    
    
    
    December 31,2011
    
    
    
    
    
    
    2010Assets:Current assets:Cash and cash equivalents
    
    $
    2,853
    
    
    
    
    
    
    $
    8,746Receivables:Trade
    
    
    6,188
    
    
    
    
    
    
    
    7,573Affiliates
    
    
    8,830
    
    
    
    
    
    
    
    5,708Refundable federal income taxes due from parent
    
    
    
    
    
    
    
    
    
    
    2,964Other
    
    
    125
    
    
    
    
    
    
    
    466Note receivable, affiliate
    
    
    15,903
    
    
    
    
    
    
    
    12,903Prepaid expenses and other
    
    
    1,985
    
    
    
    
    
    
    
    1,584Deferred tax assets
    
    
    142
    
    
    
    
    
    
    
    349Total current assets
    
    
    36,026
    
    
    
    
    
    
    
    40,293Property, plant and equipment, net
    
    
    264,984
    
    
    
    
    
    
    
    265,616Other assets
    
    
    2,331
    
    
    
    
    
    
    
    4,560Total assets
    
    $
    303,341
    
    
    
    
    
    
    $
    310,469Liabilities and partners capital:Current liabilities:Accounts payable and accrued expenses
    
    $
    10,795
    
    
    
    
    
    
    $
    16,940Current maturities of long-term debt, affiliates
    
    
    18,757
    
    
    
    
    
    
    
    18,757Accounts payable, affiliates
    
    
    95
    
    
    
    
    
    
    
    3,706Federal income taxes due to parent
    
    
    1,423
    
    
    
    
    
    
    
    Total current liabilities
    
    
    31,070
    
    
    
    
    
    
    
    39,403Long-term debt, affiliates, less current maturities
    
    
    123,201
    
    
    
    
    
    
    
    129,501Deferred compensation
    
    
    
    
    
    
    
    
    
    
    3,033Accumulated postretirement benefit obligation
    
    
    
    
    
    
    
    
    
    
    7,952Deferred revenue
    
    
    3,115
    
    
    
    
    
    
    
    3,314Deferred income taxes
    
    
    27,400
    
    
    
    
    
    
    
    23,217Total liabilities
    
    
    184,786
    
    
    
    
    
    
    
    206,420Commitments and contingenciesPartners capital:Limited partners interest
    
    
    117,370
    
    
    
    
    
    
    
    104,595General partners interest
    
    
    1,185
    
    
    
    
    
    
    
    1,056Accumulated other comprehensive loss
    
    
    
    
    
    
    
    
    
    
    (1,602
    )Total partners capital
    
    
    118,555
    
    
    
    
    
    
    
    104,049Total liabilities and partners capital
    
    $
    303,341
    
    
    
    
    
    
    $
    310,469
  8




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OILTANKING HOUSTON, L.P. AND OILTANKING BEAUMONT PARTNERS, L.P.
(WHOLLY OWNED SUBSIDIARIES OF OILTANKING HOLDING AMERICAS, INC.)
 
 CONDENSED COMBINED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(In thousands)  (Unaudited)
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010Revenues
    
    $
    29,654
    
    
    $
    28,729
    
    
    $
    59,609
    
    
    $
    56,471Operating costs and expenses:Operating
    
    
    8,211
    
    
    
    8,231
    
    
    
    16,635
    
    
    
    16,182Depreciation and amortization
    
    
    4,077
    
    
    
    3,836
    
    
    
    7,952
    
    
    
    7,640Selling, general and administrative
    
    
    4,559
    
    
    
    4,296
    
    
    
    9,351
    
    
    
    8,392(Gain) loss on disposal of fixed assets
    
    
    
    
    
    
    (12
    )
    
    
    544
    
    
    
    (25
    )Gain on property casualty indemnification
    
    
    
    
    
    
    
    
    
    
    (247
    )
    
    
    (3,701
    )Total operating costs and expenses
    
    
    16,847
    
    
    
    16,351
    
    
    
    34,235
    
    
    
    28,488Operating income
    
    
    12,807
    
    
    
    12,378
    
    
    
    25,374
    
    
    
    27,983Other income (expense):Interest expense
    
    
    (2,309
    )
    
    
    (2,390
    )
    
    
    (4,588
    )
    
    
    (4,869
    )Interest income
    
    
    9
    
    
    
    6
    
    
    
    24
    
    
    
    9Other income (expense)
    
    
    45
    
    
    
    (180
    )
    
    
    141
    
    
    
    (28
    )Total other expense, net
    
    
    (2,255
    )
    
    
    (2,564
    )
    
    
    (4,423
    )
    
    
    (4,888
    )Income before income tax expense
    
    
    10,552
    
    
    
    9,814
    
    
    
    20,951
    
    
    
    23,095Income tax expense
    
    
    2,936
    
    
    
    2,575
    
    
    
    5,715
    
    
    
    5,017Net income
    
    
    7,616
    
    
    
    7,239
    
    
    
    15,236
    
    
    
    18,078Postretirement benefit plan adjustment, net of $43, $13, $33 and $33 tax benefit, respectively
    
    
    (80
    )
    
    
    (25
    )
    
    
    (62
    )
    
    
    (62
    )Total comprehensive income
    
    $
    7,536
    
    
    $
    7,214
    
    
    $
    15,174
    
    
    $
    18,016
  9




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OILTANKING HOUSTON, L.P. AND OILTANKING BEAUMONT PARTNERS, L.P.
(WHOLLY OWNED SUBSIDIARIES OF OILTANKING HOLDING AMERICAS, INC.)
 
 CONDENSED COMBINED STATEMENTS OF PARTNERS CAPITAL
 (In thousands)
(Unaudited)
 AccumulatedLimited
    
    
    General
    
    
    OtherPartners
    
    
    Partners
    
    
    ComprehensiveInterest
    
    
    Interest
    
    
    Loss
    
    
    TotalBalance, December 31, 2010
    
    $
    104,595
    
    
    $
    1,056
    
    
    $
    (1,602
    )
    
    $
    104,049Postretirement benefit plan adjustment, net of $33 tax benefit
    
    
    
    
    
    
    
    
    
    
    (62
    )
    
    
    (62
    )Net distribution of assets and liabilities
to partners
    
    
    (2,309
    )
    
    
    (23
    )
    
    
    1,664
    
    
    
    (668
    )Net income
    
    
    15,084
    
    
    
    152
    
    
    
    
    
    
    
    15,236Balance, June 30, 2011
    
    $
    117,370
    
    
    $
    1,185
    
    
    $
    
    
    
    $
    118,555
  10




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OILTANKING HOUSTON, L.P. AND OILTANKING BEAUMONT PARTNERS, L.P.
(WHOLLY OWNED SUBSIDIARIES OF OILTANKING HOLDING AMERICAS, INC.)
 
 CONDENSED COMBINED STATEMENTS OF CASH FLOWS

(In thousands)
(Unaudited)
 Six Months EndedJune 30,2011
    
    
    2010Cash flows from operating activities:Net income
    
    $
    15,236
    
    
    $
    18,078Adjustments to reconcile net income to net cash provided by operating
activities:Depreciation and amortization
    
    
    7,952
    
    
    
    7,640Deferred income taxes
    
    
    (108
    )
    
    
    622Postretirement net periodic benefit cost
    
    
    695
    
    
    
    761Unrealized (gain) loss on investment in mutual funds
    
    
    (96
    )
    
    
    168Increase in cash surrender value of life insurance policies
    
    
    (42
    )
    
    
    (21
    )(Gain) loss on disposal of fixed assets
    
    
    544
    
    
    
    (25
    )Gain on property casualty indemnification
    
    
    (247
    )
    
    
    (3,701
    )Changes in assets and liabilities:Trade and other receivables
    
    
    1,356
    
    
    
    806Refundable income taxes
    
    
    4,387
    
    
    
    4,047Prepaid expenses and other assets
    
    
    (210
    )
    
    
    (809
    )Accounts receivable/payable, affiliates
    
    
    (4,733
    )
    
    
    5,389Accounts payable and accrued expenses
    
    
    (6,108
    )
    
    
    (3,824
    )Deferred compensation
    
    
    453
    
    
    
    (654
    )Deferred revenue
    
    
    284
    
    
    
    1,846Total adjustments from operating activities
    
    
    4,127
    
    
    
    12,245Net cash provided by operating activities
    
    
    19,363
    
    
    
    30,323Cash flows from investing activities:Issuance of notes receivable
    
    
    (3,000
    )
    
    
    (32,500
    )Collections of notes receivable
    
    
    
    
    
    
    8,000Payments for purchase of property, plant and equipment
    
    
    (12,248
    )
    
    
    (5,535
    )Proceeds from sale of property, plant and equipment
    
    
    14
    
    
    
    47Payment for disposal of assets
    
    
    (544
    )
    
    
    Proceeds from property casualty indemnification
    
    
    617
    
    
    
    5,000Proceeds from surrender of life insurance policies
    
    
    
    
    
    
    2,525Payments for purchase of mutual funds
    
    
    
    
    
    
    (2,525
    )Investment in life insurance policies
    
    
    (1,378
    )
    
    
    Proceeds from sale of mutual funds
    
    
    1,378
    
    
    
    Net cash used in investing activities
    
    
    (15,161
    )
    
    
    (24,988
    )Cash flows from financing activities:Borrowings under notes payable, affiliates
    
    
    
    
    
    
    4,000Payments under notes payable, affiliates
    
    
    (6,300
    )
    
    
    (12,978
    )Payment of offering costs
    
    
    (1,795
    )
    
    
    Distributions paid to partners
    
    
    (2,000
    )
    
    
    Net cash used in financing activities
    
    
    (10,095
    )
    
    
    (8,978
    )Net decrease in cash and cash equivalents
    
    
    (5,893
    )
    
    
    (3,643
    )Cash and cash equivalents  Beginning of period
    
    
    8,746
    
    
    
    5,856Cash and cash equivalents  End of period
    
    $
    2,853
    
    
    $
    2,213
  11




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OILTANKING HOUSTON, L.P. AND OILTANKING BEAUMONT PARTNERS, L.P.
(WHOLLY OWNED SUBSIDIARIES OF OILTANKING HOLDING AMERICAS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 1. ORGANIZATION AND BASIS OF PRESENTATION
 Organization
  Basis of Presentation
     12




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OILTANKING HOUSTON, L.P. AND OILTANKING BEAUMONT PARTNERS, L.P.
(WHOLLY OWNED SUBSIDIARIES OF OILTANKING HOLDING AMERICAS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  June 30, 2011
    
    
    December 31, 2010OTB
    
    
    OTH
    
    
    Total
    
    
    OTH
    
    
    OTB
    
    
    TotalLimited partners interest
    
    $
    61,270
    
    
    $
    56,100
    
    
    $
    117,370
    
    
    $
    55,993
    
    
    $
    48,602
    
    
    $
    104,595General partners interest
    
    
    619
    
    
    
    566
    
    
    
    1,185
    
    
    
    566
    
    
    
    490
    
    
    
    1,056Accumulated other
comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,602
    )
    
    
    (1,602
    )Partners capital
    
    $
    61,889
    
    
    $
    56,666
    
    
    $
    118,555
    
    
    $
    56,559
    
    
    $
    47,490
    
    
    $
    104,049
 2. INITIAL PUBLIC OFFERING OF OILTANKING PARTNERS, L.P.
     13




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OILTANKING HOUSTON, L.P. AND OILTANKING BEAUMONT PARTNERS, L.P.
(WHOLLY OWNED SUBSIDIARIES OF OILTANKING HOLDING AMERICAS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Agreements with Affiliates
 Services Agreement .
  Omnibus Agreement.
  3. RELATED PARTY TRANSACTIONS
  14




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OILTANKING HOUSTON, L.P. AND OILTANKING BEAUMONT PARTNERS, L.P.
(WHOLLY OWNED SUBSIDIARIES OF OILTANKING HOLDING AMERICAS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010Storage and ancillary service fees
    
    $
    771
    
    
    $
    819
    
    
    $
    1,523
    
    
    $
    1,556Other revenues
    
    
    761
    
    
    
    613
    
    
    
    1,504
    
    
    
    1,144Total related party revenues
    
    $
    1,532
    
    
    $
    1,432
    
    
    $
    3,027
    
    
    $
    2,700
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010Operating
    
    $
    299
    
    
    $
    
    
    
    $
    299
    
    
    $
    Selling, general and administrative
    
    
    1,628
    
    
    
    1,146
    
    
    
    2,710
    
    
    
    2,224Interest income
    
    
    9
    
    
    
    24
    
    
    
    24
    
    
    
    27Interest expense (net of amounts capitalized)
    
    
    2,303
    
    
    
    2,382
    
    
    
    4,576
    
    
    
    4,853
     15




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OILTANKING HOUSTON, L.P. AND OILTANKING BEAUMONT PARTNERS, L.P.
(WHOLLY OWNED SUBSIDIARIES OF OILTANKING HOLDING AMERICAS, INC.)
NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
 4. PROPERTY, PLANT AND EQUIPMENT
  June 30,
    
    
    December 31,2011
    
    
    2010Land
    
    $
    9,125
    
    
    $
    12,483Office facilities
    
    
    31,458
    
    
    
    32,321Production facilities
    
    
    391,333
    
    
    
    391,163Rights-of-way
    
    
    30
    
    
    
    30Construction in progress
    
    
    14,056
    
    
    
    5,048Total property, plant and equipment
    
    
    446,002
    
    
    
    441,045Less: accumulated depreciation
    
    
    (181,018
    )
    
    
    (175,429
    )Total property, plant and equipment, net
    
    $
    264,984
    
    
    $
    265,616
   5. OTHER ASSETS
  June 30,
    
    
    December 31,2011
    
    
    2010Capitalized offering costs
    
    $
    1,995
    
    
    $
    Investments in mutual funds
    
    
    
    
    
    
    2,649Cash surrender value of life insurance policies
    
    
    
    
    
    
    1,224Other
    
    
    336
    
    
    
    687Total other assets
    
    $
    2,331
    
    
    $
    4,560
 16




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OILTANKING HOUSTON, L.P. AND OILTANKING BEAUMONT PARTNERS, L.P.
(WHOLLY OWNED SUBSIDIARIES OF OILTANKING HOLDING AMERICAS, INC.)
NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
 6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
  June 30,
    
    
    December 31,2011
    
    
    2010Accounts payable, trade
    
    $
    3,133
    
    
    $
    3,791Accrued salaries and benefits
    
    
    1,189
    
    
    
    4,553Accrued property taxes
    
    
    2,695
    
    
    
    5,289Related party interest and commitment fees payable
    
    
    992
    
    
    
    967Related party administrative fees payable
    
    
    681
    
    
    
    834Accrued offering costs
    
    
    200
    
    
    
    Deferred compensation
    
    
    
    
    
    
    637Deferred revenue
    
    
    852
    
    
    
    378Other
    
    
    1,053
    
    
    
    491Total accounts payable and accrued expenses
    
    $
    10,795
    
    
    $
    16,940
 7. DEFERRED REVENUE
    8. INCOME TAXES
   17




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##### Table of Contents



OILTANKING HOUSTON, L.P. AND OILTANKING BEAUMONT PARTNERS, L.P.
(WHOLLY OWNED SUBSIDIARIES OF OILTANKING HOLDING AMERICAS, INC.)
NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010Income from operations before
income tax expense
    
    $
    10,552
    
    
    $
    9,814
    
    
    $
    20,951
    
    
    $
    23,095U.S. Federal corporate statutory rate
    
    
    35
    %
    
    
    35
    %
    
    
    35
    %
    
    
    35
    %Expected income tax expense
    
    
    3,693
    
    
    
    3,435
    
    
    
    7,333
    
    
    
    8,083OTB income not subject to income tax
    
    
    (757
    )
    
    
    (874
    )
    
    
    (1,664
    )
    
    
    (3,129
    )Texas margin tax, net of federal
income tax benefit
    
    
    
    
    
    
    14
    
    
    
    46
    
    
    
    63Total income tax expense
    
    $
    2,936
    
    
    $
    2,575
    
    
    $
    5,715
    
    
    $
    5,017
 9. DEBT
   June 30,
    
    
    December 31,2011
    
    
    20105.93% Note due 2014
    
    $
    11,000
    
    
    $
    12,8006.81% Note due 2015
    
    
    10,000
    
    
    
    11,2005.96% Note due 2017
    
    
    11,500
    
    
    
    12,5006.63% Note due 2018
    
    
    2,858
    
    
    
    2,8586.63% Note due 2018
    
    
    15,000
    
    
    
    15,0006.88% Note due 2018
    
    
    6,000
    
    
    
    6,0004.90% Note due 2018
    
    
    22,500
    
    
    
    24,0004.90% Note due 2018
    
    
    24,000
    
    
    
    24,0007.59% Note due 2018
    
    
    4,000
    
    
    
    4,0006.78% Note due 2019
    
    
    8,100
    
    
    
    8,1006.35% Note due 2019
    
    
    12,600
    
    
    
    12,6007.45% Note due 2019
    
    
    6,800
    
    
    
    7,2007.02% Note due 2020
    
    
    7,600
    
    
    
    8,000Total debt
    
    
    141,958
    
    
    
    148,258Less current portion
    
    
    (18,757
    )
    
    
    (18,757
    )Total long-term debt, affiliates
    
    $
    123,201
    
    
    $
    129,501
  18




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OILTANKING HOUSTON, L.P. AND OILTANKING BEAUMONT PARTNERS, L.P.
(WHOLLY OWNED SUBSIDIARIES OF OILTANKING HOLDING AMERICAS, INC.)
NOTES TO UNAUDITED CONDENSED  COMBINED FINANCIAL STATEMENTS
   10. EMPLOYEE BENEFITS
 401(K) Retirement Plan
  Deferred Compensation Plan
   19




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OILTANKING HOUSTON, L.P. AND OILTANKING BEAUMONT PARTNERS, L.P.
(WHOLLY OWNED SUBSIDIARIES OF OILTANKING HOLDING AMERICAS, INC.)
NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
 11. FAIR VALUE MEASUREMENTS
      June 30, 2011
    
    
    December 31, 2010Significant
    
    
    
    
    
    
    SignificantQuoted Prices
    
    
    Other
    
    
    Quoted Prices
    
    
    Otherin Active
    
    
    Observable
    
    
    in Active
    
    
    ObservableMarkets
    
    
    Inputs
    
    
    Markets
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 1)
    
    
    (Level 2)Cash surrender value of life
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    1,224insurance policies (1)Investments in mutual funds (1)
    
    
    
    
    
    
    
    
    
    
    2,649
    
    
    
    Fair value
    
    $
    
    
    
    $
    
    
    
    $
    2,649
    
    
    $
    1,224
 
 (1)
    
    On June 1, 2011, in anticipation of the IPO, the deferred compensation plan obligations
along with the Partnerships employees were transferred to OTA. As a result, all assets
related to this plan were also transferred to OTA. 12. MEDICAL INSURANCE AND POSTRETIREMENT BENEFIT OBLIGATIONS
   20




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OILTANKING HOUSTON, L.P. AND OILTANKING BEAUMONT PARTNERS, L.P.
(WHOLLY OWNED SUBSIDIARIES OF OILTANKING HOLDING AMERICAS, INC.)
NOTES TO UNAUDITED CONDENSED COMBINED FINANCIAL STATEMENTS
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010Service cost
    
    $
    147
    
    
    $
    320
    
    
    $
    447
    
    
    $
    549Interest cost
    
    
    76
    
    
    
    78
    
    
    
    190
    
    
    
    157Amortization of unrecognized
amounts:Prior service cost
    
    
    18
    
    
    
    28
    
    
    
    47
    
    
    
    55Net actuarial loss
    
    
    11
    
    
    
    
    
    
    
    11
    
    
    
    Net periodic benefit costs
    
    $
    252
    
    
    $
    426
    
    
    $
    695
    
    
    $
    761
 13. SUPPLEMENTAL CASH FLOW INFORMATION
  Six Months EndedJune 30,2011
    
    
    2010Cash paid for interest (net of capitalized interest)
    
    $
    4,430
    
    
    $
    4,671Cash taxes paid
    
    
    1,366
    
    
    
    200Interest costs capitalized
    
    
    93
    
    
    
    12Non-cash transactions: (1)Distribution of certain land parcels and office building to OTA
    
    $
    5,075
    
    
    $
    Transfer of postretirement plan obligation to OTA (including $2.6 million of associated accumulated other comprehensive loss)
    
    
    (8,824
    )
    
    
    Transfer of deferred compensation plan obligations to OTA
    
    
    (4,124
    )
    
    
    Transfer of deferred compensation plan assets to OTA
    
    
    4,010
    
    
    
    Net deferred tax assets related to asset and liabilities transferred to OTA
    
    
    4,531
    
    
    
    
 
 (1)
    
    In June 2011, in connection with the anticipated IPO, the Partnerships made non-cash
distributions to OTA, consisting of certain land parcels and an office building. Also, the
postretirement benefit and deferred compensation plans and obligations and certain assets
to be used to fund the deferred compensation plan obligations were transferred to OTA. In
addition, related net deferred tax assets were transferred to OTA.  21




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OILTANKING HOUSTON, L.P. AND OILTANKING BEAUMONT PARTNERS, L.P.
(WHOLLY OWNED SUBSIDIARIES OF OILTANKING HOLDING AMERICAS, INC.)
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 14. SEGMENT REPORTING
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010Storage service fees
    
    $
    22,668
    
    
    $
    21,898
    
    
    $
    44,551
    
    
    $
    43,254Throughput fees
    
    
    5,706
    
    
    
    5,150
    
    
    
    12,299
    
    
    
    10,308Ancillary service fees
    
    
    1,280
    
    
    
    1,681
    
    
    
    2,759
    
    
    
    2,909Total revenues
    
    $
    29,654
    
    
    $
    28,729
    
    
    $
    59,609
    
    
    $
    56,471
 15. CONTINGENCIES
 Litigation
  Environmental Liabilities
  Other
   22




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   Cautionary Note Regarding Forward-Looking Statements
 This Quarterly Report on Form 10-Q contains certain forward-looking statements.
Forward-looking statements provide our current expectations, contain projections of results of
operations or of financial condition, or forecasts of future events. Words such as may, assume,
forecast, position, predict, strategy, expect, intend, plan, estimate,
anticipate, believe, project, budget, potential, or continue, and similar expressions
are used to identify forward-looking statements. Forward-looking statements can be affected by
assumptions used or by known or unknown risks or uncertainties. Consequently, no forward-looking
statements can be guaranteed. When considering these forward-looking statements, you should keep in
mind the risk factors and other cautionary statements in this Quarterly Report. Actual results may
vary materially. You are cautioned not to place undue reliance on any forward-looking statements.
You should also understand that it is not possible to predict or identify all such factors and
should not consider the following list to be a complete statement of all potential risks and
uncertainties.
 Factors that could cause our actual results to differ materially from the results contemplated
by such forward-looking statements include but are not limited to: (i) changes in general economic
conditions; (ii) competitive conditions in our industry; (iii) changes in the long-term supply and
demand of crude oil, refined petroleum products and liquefied petroleum gas in the markets in which
we operate; (iv) actions taken by our customers, competitors and third party operators; (v) changes
in the availability and cost of capital; (vi) operating hazards, natural disasters, weather-related
delays, casualty losses and other matters beyond our control; (vii) the effects of existing and
future laws and governmental regulations; and (viii) the effects of future litigation. These and
other risks are described in the Prospectus, included in our Registration Statement on Form S-1 , as
amended (SEC File No. 333-173199). In addition, we may be subject to unforeseen risks that may have
a materially adverse effect on us. Accordingly no assurances can be given that the actual events
and results will not be materially different than the anticipated results described in the
forward-looking statements. The forward-looking statements speak only as of the date made, and,
other than as required by federal and state securities laws, we undertake no obligation to publicly
update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise. All forward-looking statements are expressly qualified in their entirety by
the foregoing cautionary statements.
 Overview of Business
   23




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Outlook
  Recent Developments
 Initial Public Offering
    24




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Agreements with Affiliates
 Services Agreement
   Omnibus Agreement
   25




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Results of Operations
 Summary
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010Combined Statements of Income:Revenues
    
    $
    29,654
    
    
    $
    28,729
    
    
    $
    59,609
    
    
    $
    56,471Operating costs and expenses:Operating
    
    
    8,211
    
    
    
    8,231
    
    
    
    16,635
    
    
    
    16,182Depreciation and amortization
    
    
    4,077
    
    
    
    3,836
    
    
    
    7,952
    
    
    
    7,640Selling, general and administrative
    
    
    4,559
    
    
    
    4,296
    
    
    
    9,351
    
    
    
    8,392(Gain) loss on disposal of fixed assets
    
    
    
    
    
    
    (12
    )
    
    
    544
    
    
    
    (25
    )Gain on property casualty indemnification
    
    
    
    
    
    
    
    
    
    
    (247
    )
    
    
    (3,701
    )Total operating costs and expenses
    
    
    16,847
    
    
    
    16,351
    
    
    
    34,235
    
    
    
    28,488Other income (expense):Interest expense
    
    
    (2,309
    )
    
    
    (2,390
    )
    
    
    (4,588
    )
    
    
    (4,869
    )Interest income
    
    
    9
    
    
    
    6
    
    
    
    24
    
    
    
    9Other income (expense)
    
    
    45
    
    
    
    (180
    )
    
    
    141
    
    
    
    (28
    )Total other expense, net
    
    
    (2,255
    )
    
    
    (2,564
    )
    
    
    (4,423
    )
    
    
    (4,888
    )Income before income taxes
    
    
    10,552
    
    
    
    9,814
    
    
    
    20,951
    
    
    
    23,095Income tax expense
    
    
    2,936
    
    
    
    2,575
    
    
    
    5,715
    
    
    
    5,017Net income
    
    $
    7,616
    
    
    $
    7,239
    
    
    $
    15,236
    
    
    $
    18,078Adjusted EBITDA
    
    $
    16,884
    
    
    $
    16,202
    
    
    $
    33,623
    
    
    $
    31,897
 Reconciliation of Non-GAAP Financial Measure
   26




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Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010Reconciliation of Adjusted EBITDA to net
income:Net income
    
    $
    7,616
    
    
    $
    7,239
    
    
    $
    15,236
    
    
    $
    18,078Depreciation and amortization
    
    
    4,077
    
    
    
    3,836
    
    
    
    7,952
    
    
    
    7,640Income tax expense
    
    
    2,936
    
    
    
    2,575
    
    
    
    5,715
    
    
    
    5,017Interest expense, net
    
    
    2,300
    
    
    
    2,384
    
    
    
    4,564
    
    
    
    4,860(Gain) loss on disposal of fixed assets
    
    
    
    
    
    
    (12
    )
    
    
    544
    
    
    
    (25
    )Gain on property casualty indemnification
    
    
    
    
    
    
    
    
    
    
    (247
    )
    
    
    (3,701
    )Other (income) expense
    
    
    (45
    )
    
    
    180
    
    
    
    (141
    )
    
    
    28Adjusted EBITDA
    
    $
    16,884
    
    
    $
    16,202
    
    
    $
    33,623
    
    
    $
    31,897Reconciliation of Adjusted EBITDA to net cash
provided by operating activities:Net cash from operating activities
    
    $
    9,749
    
    
    $
    14,402
    
    
    $
    19,363
    
    
    $
    30,323Changes in assets and liabilities
    
    
    2,398
    
    
    
    (1,615
    )
    
    
    4,571
    
    
    
    (6,801
    )Deferred income taxes (non-cash)
    
    
    (327
    )
    
    
    (1,083
    )
    
    
    108
    
    
    
    (622
    )Postretirement net periodic benefit cost
    
    
    (252
    )
    
    
    (426
    )
    
    
    (695
    )
    
    
    (761
    )Income tax expense
    
    
    2,936
    
    
    
    2,575
    
    
    
    5,715
    
    
    
    5,017Interest expense, net
    
    
    2,300
    
    
    
    2,384
    
    
    
    4,564
    
    
    
    4,860Other income (excluding unrealized gain/loss on investments)
    
    
    80
    
    
    
    (35
    )
    
    
    (3
    )
    
    
    (119
    )Adjusted EBITDA
    
    $
    16,884
    
    
    $
    16,202
    
    
    $
    33,623
    
    
    $
    31,897
 Operating Data
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2011
    
    
    2010
    
    
    2011
    
    
    2010Storage capacity, end of period (mmbbls)
    
    
    16.8
    
    
    
    16.8
    
    
    
    16.8
    
    
    
    16.8Storage capacity, average (mmbbls)
    
    
    16.8
    
    
    
    16.6
    
    
    
    16.8
    
    
    
    16.6Terminal throughput (mbpd) (1)
    
    
    795.5
    
    
    
    810.7
    
    
    
    808.7
    
    
    
    775.9Vessels per period
    
    
    198
    
    
    
    198
    
    
    
    409
    
    
    
    369Barges per period
    
    
    645
    
    
    
    752
    
    
    
    1,291
    
    
    
    1,524Trucks per period (2)
    
    
    333
    
    
    
    
    
    
    
    333
    
    
    
    
 
 (1)
    
    Represents thousand barrels per day (mbpd).(2)
    
    Beginning in June 2011, one of our customers began unloading product by truck. 27




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Three Months Ended June 30, 2011 Compared to Three Months Ended June 30, 2010
 Adjusted EBITDA.
 Revenues
 Operating Expenses
 Depreciation Expense
 Selling, General and Administrative Expenses
 Interest Expense
 Income Tax Expense
 Six Months Ended June 30, 2011 Compared to Six Months Ended June 30, 2010
 Adjusted EBITDA.
 Revenues
 Operating Expenses
 28




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Depreciation Expense
 SG&A Expenses
 Loss on Disposal of Fixed Assets.
 Gain on Property Casualty Indemnification
 Interest Expense
 Income Tax Expense
 Liquidity and Capital Resources
 Liquidity
    29




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Term Borrowings
   Amount5.93% Note due 2014
    
    $
    11,0006.81% Note due 2015
    
    
    10,0005.96% Note due 2017
    
    
    11,5006.63% Note due 2018
    
    
    2,8586.63% Note due 2018
    
    
    15,0006.88% Note due 2018
    
    
    6,0004.90% Note due 2018
    
    
    22,5004.90% Note due 2018
    
    
    24,0007.59% Note due 2018
    
    
    4,0006.78% Note due 2019
    
    
    8,1006.35% Note due 2019
    
    
    12,6007.45% Note due 2019
    
    
    6,8007.02% Note due 2020
    
    
    7,600Total debt
    
    
    141,958Less current portion
    
    
    (18,757
    )Total long-term debt, affiliates
    
    $
    123,201
  Revolving Line of Credit
  30




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Cash Flows from Operating, Investing and Financing Activities
  Six Months EndedJune 30,2011
    
    
    2010Cash provided by (used in):Operating activities
    
    $
    19,363
    
    
    $
    30,323Investing activities
    
    
    (15,161
    )
    
    
    (24,988
    )Financing activities
    
    
    (10,095
    )
    
    
    (8,978
    )
 Operating Activities
  Investing Activities
  Financing Activities
  31




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Contractual Obligations
  Payments Due by PeriodLess than 1
    
    
    
    
    
    
    
    
    
    
    More than 5Total
    
    
    year
    
    
    1-3 years
    
    
    3-5 years
    
    
    yearsLong-term debt obligations
    
    $
    141,958
    
    
    $
    18,757
    
    
    $
    37,514
    
    
    $
    28,514
    
    
    $
    57,173Interest payments
    
    
    37,475
    
    
    
    8,243
    
    
    
    13,098
    
    
    
    8,879
    
    
    
    7,255Operating lease obligations
    
    
    14,100
    
    
    
    600
    
    
    
    1,200
    
    
    
    1,200
    
    
    
    11,100Total contractual cash
obligations
    
    $
    193,533
    
    
    $
    27,600
    
    
    $
    51,812
    
    
    $
    38,593
    
    
    $
    75,528
 Capital Expenditures
    Off-Balance Sheet Arrangements
  Related Party Transactions
  Overview of Critical Accounting Policies and Estimates
   32




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
 Item 4. Controls and Procedures
 (a)
    
    Evaluation of Disclosure Controls and Procedures.
  (b)
    
    Change in Internal Control Over Financial Reporting.
   
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  33




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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
 Recent Sales of Unregistered Securities
    
 Item 3. Defaults upon Senior Securities.
  
 Item 4. [Removed and Reserved.]
 
 Item 5. Other Information.
  
 Item 6. Exhibits
  3.1
    
    Certificate of Limited Partnership of Oiltanking Partners, L.P. (incorporated
by reference to Exhibit 3.1 to the Registration Statement on Form S-1 (File
No. 333-173199) filed on March 31, 2011).3.2
    
    First Amended and Restated Agreement of Limited Partnership of Oiltanking
Partners, L.P. dated July 19, 2011 (incorporated by reference to Exhibit 3.1
to the Current Report on Form 8-K (File No. 001-35230) filed on July 19,
2011).3.3
    
    Certificate of Formation of OTLP GP, LLC (incorporated by reference to Exhibit
3.4 to the Registration Statement on Form S-1 (File No. 333-173199) filed on
March 31, 2011).3.4
    
    Amended and Restated Limited Liability Company Agreement of OTLP GP, LLC,
dated July 19, 2011 (incorporated by reference to Exhibit 3.2 to the Current
Report on Form 8-K (File No. 001-35230) filed on July 19, 2011).10.1
    
    Contribution, Conveyance and Assumption Agreement by and among Oiltanking
Partners, L.P., OTLP GP, LLC, Oiltanking Holding Americas, Inc., OTB Holdco,
LLC, Oiltanking Beaumont GP, L.L.C., Oiltanking Beaumont Partners, L.P., OTB
GP, LLC, Oiltanking Houston, L.P. and OTH GP, LLC dated July 19, 2011
(incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K
(File No. 001-35230) filed on July 19, 2011).
 34




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##### Table of Contents



10.2
    
    Omnibus Agreement by and among Oiltanking Partners, L.P., OTLP GP, LLC and
Oiltanking Holding Americas, Inc., dated July 19, 2011 (incorporated by
reference to Exhibit 10.2 to the Current Report on Form 8-K (File No.
001-35230) filed on July 19, 2011).10.3
    
    Oiltanking Partners, L.P. Long-Term Incentive Plan, adopted as of July 19,
2011 (incorporated by reference to Exhibit 10.3 to the Current Report on Form
8-K (File No. 001-35230) filed on July 19, 2011).10.4
    
    Services Agreement by and among Oiltanking Partners, L.P., OTLP GP, LLC,
Oiltanking North America, LLC and Oiltanking Beaumont Specialty Products, LLC,
dated July 19, 2011 (incorporated by reference to Exhibit 10.4 to the Current
Report on Form 8-K (File No. 001-35230) filed on July 19, 2011).10.5
    
    Credit Agreement by and between Oiltanking Partners, L.P. as Borrower and
Oiltanking Finance B.V. as Lender, dated as of June 15, 2011, as amended by
Addendum No. 1 thereto, dated June 22, 2011 (incorporated herein by reference
to Exhibit 10.6 to the Registration Statement on Form S-1/A (File No.
333-173199), filed on June 23, 2011).10.6
    
    Tax Sharing Agreement by and between Oiltanking Partners, L.P. and Oiltanking
Holding Americas, Inc., dated as of July 19, 2011 (incorporated by reference
to Exhibit 10.6 to the Current Report on Form 8-K (File No. 001-35230) filed
on July 19, 2011).*31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14 (a) under the
Securities Exchange Act of 1934.*31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934.*32.1
    
    Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350.*32.2
    
    Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
 
 
    
    Represents management contract or compensatory plan or arrangement.*
    
    Filed herewith. 35




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##### Table of Contents



SIGNATURES
  By:
    OILTANKING PARTNERS, L.P.(Registrant)By:
    OTLP GP, LLC,
as General Partner Date:  August 19, 2011
    By:
    /s/ Carlin G. ConnerCarlin G. ConnerPresident and Chief Executive Officer
(Principal Executive Officer)Date:  August 19, 2011
    By:
    /s/ Kenneth F. OwenKenneth F. OwenChief Financial Officer

(Principal Financial Officer) 36