NuStar Energy Reports Earnings Results for Third Quarter of 2012

NuStar Energy Reports Earnings Results for Third Quarter of 2012

Storage and Transportation Segments Continue to Perform Better Than Last Year

Recently Completed Fourth Internal Growth Project in the Eagle Ford Shale

Declared Distribution of $1.095 Per Unit

SAN ANTONIO--(BUSINESS WIRE)-- NuStar Energy L.P. (NYS: NS) today announced third quarter distributable cash flow available to limited partners of $54.6 million, or $0.75 per unit, compared to 2011 third quarter distributable cash flow of $80.3 million, or $1.24 per unit. For the nine months ended September 30, 2012, distributable cash flow available to limited partners was $114.2 million, or $1.59 per unit, compared to $244.8 million, or $3.79 per unit for the nine months ended September 30, 2011.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was $69.5 million for the third quarter of 2012 compared to $138.8 million for the third quarter of 2011. For the nine months ended September 30, 2012, EBITDA was $5.1 million, compared to $391.7 million for the nine months ended September 30, 2011.

The company reported a third quarter net loss applicable to limited partners of $6.5 million, or $0.09 per unit, compared to net income applicable to limited partners of $59.8 million, or $0.92 per unit, earned in the third quarter of 2011. For the nine months ended September 30, 2012, the company reported a net loss applicable to limited partners of $242.1 million, or $3.40 per unit, compared to net income applicable to limited partners of $160.9 million, or $2.49 per unit, for the nine months ended September 30, 2011.

The partnership also announced that its board of directors has declared a third quarter 2012 distribution of $1.095 per unit. The third quarter 2012 distribution will be paid on November 14, 2012, to holders of record as of November 9, 2012. Distributable cash flow available to limited partners covers the distribution to the limited partners by 0.68 times for the third quarter of 2012.

"Our storage and transportation segments continue to perform better than last year as we realize the benefits of completing several internal growth capital projects over the past year," said Curt Anastasio, Chief Executive Officer and President of NuStar Energy L.P. and NuStar GP Holdings, LLC. "However losses in our Asphalt and Fuels Marketing segment as a result of continued high crude oil prices and weak demand in our asphalt operations, hedging losses associated with the company's San Antonio refinery and reduced margins on the sales of products in the company's fuels marketing operations more than offset the improved performance in our storage and transportation segments causing NuStar's third quarter results to be lower than last year."

Anastasio added, "The September 28, 2012 closing of the sale of a 50% interest in our asphalt operations will reduce our investment in the margin based side of our business while our investment in the fee based side of our business continues to grow as a result of our internal growth capital program."

Third Quarter and Year to Date Adjustments

The third quarter 2012 results included $21.6 million, or $0.29 per unit, of non-cash losses related primarily to inventory resulting from the September 28, 2012 sale of a 50% voting interest in the company's asphalt operations to an affiliate of Lindsay Goldberg LLC. Excluding these items and other adjustments, third quarter 2012 adjusted net income applicable to limited partners would have been $14.1 million, or $0.19 per unit.

Results for the nine months ended September 30, 2012 included $287.9 million, or $3.95 per unit, of non-cash items for an asset impairment and inventory losses resulting from the asphalt joint venture transaction. Excluding these items and other adjustments, adjusted net income applicable to limited partners for the nine months ended would have been $34.1 million, or $0.47 per unit.

Internal Growth Project Update

"Early in October we completed the construction of a fifty-five mile twelve-inch pipeline that will transport Eagle Ford crude to the Corpus Christi area," said Anastasio. "This is the fourth internal growth project we have completed in the Eagle Ford Shale in the past eighteen months giving NuStar the ability to transport approximately 300,000 barrels per day of Eagle Ford crude to the Corpus Christi market."

Anastasio went on to say, "We also expect to complete a one million barrel tank expansion project at our St. Eustatius terminal facility later this quarter. This will expand the storage capacity of this facility to close to fourteen million barrels."

Earnings Outlook for the Fourth Quarter of 2012

In regard to the fourth quarter 2012 outlook for NuStar Energy L.P.'s business segments Anastasio commented, "We expect EBITDA in both our transportation and asphalt and fuels marketing segments to be higher than last year. The transportation segment should continue to benefit from our Eagle Ford Shale internal growth projects while the asphalt and fuels marketing segment will benefit from the deconsolidation of the asphalt operations as a result of the asphalt joint venture transaction. EBITDA in our storage segment should be comparable to last year's fourth quarter."

A conference call with management is scheduled for 10:00 a.m. ET (9:00 a.m. CT) today, October 25, 2012, to discuss the financial and operational results for the third quarter of 2012. Investors interested in listening to the presentation may call 800/622-7620, passcode 35510410. International callers may access the presentation by dialing 706/645-0327, passcode 35510410. The company intends to have a playback available following the presentation, which may be accessed by calling 800/585-8367, passcode 35510410. International callers may access the playback by calling 404/537-3406, reservation passcode 35510410. A live broadcast of the conference call will also be available on the company's Web site at www.nustarenergy.com.

NuStar Energy L.P., a publicly traded master limited partnership based in San Antonio, is one of the largest independent liquids terminal and pipeline operators in the nation. NuStar currently has 8,433 miles of pipeline; 82 terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids; a fuels refinery with a throughput capacity of 14,500 barrels per day; and 50% ownership in two asphalt refineries with a combined throughput capacity of 104,000 barrels per day. The partnership's combined system has approximately 94 million barrels of storage capacity, and NuStar has operations in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, the United Kingdom and Turkey. For more information, visit NuStar Energy L.P.'s Web site at www.nustarenergy.com.

This release serves as qualified notice to nominees under Treasury Regulation Sections 1.1446-4(b)(4) and (d). Please note that 100% of NuStar's distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of NuStar's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate for individuals and corporations, as applicable. Nominees, and not NuStar, are treated as the withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.

Cautionary Statement Regarding Forward-Looking Statements

This press release includes forward-looking statements regarding future events.All forward-looking statements are based on the partnership and company's beliefs as well as assumptions made by and information currently available to the partnership and company.These statements reflect the partnership and company's current views with respect to future events and are subject to various risks, uncertainties and assumptions.These risks, uncertainties and assumptions are discussed in NuStar Energy L.P. and NuStar GP Holdings, LLC's 2011 annual reports on Form 10-K and subsequent filings with the Securities and Exchange Commission.