NuStar Energy Reports Increased Earnings Per Unit and Total Distributable Cash Flow in Second Quarte

NuStar Energy Reports Increased Earnings Per Unit and Total Distributable Cash Flow in Second Quarter of 2013

Pipeline and Fuels Marketing Segment Results Improved

Company Recently Announced Binding Open Season in the Eagle Ford Shale Region

SAN ANTONIO--(BUSINESS WIRE)-- NuStar Energy L.P. (NYS: NS) today announced second quarter distributable cash flow from continuing operations available to limited partners was $55.1 million, or $0.71 per unit, compared to 2012 second quarter distributable cash flow from continuing operations of $31.5 million, or $0.45 per unit. Second quarter earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations was $112.8 million compared to second quarter 2012 EBITDA of negative $161.4 million.

NuStar Energy L.P. reported second quarter net income applicable to limited partners of $21.6 million, or $0.28 per unit, compared to a net loss applicable to limited partners of $251.6 million, or $3.56 per unit, reported in the second quarter of 2012.

For the six months ended June 30, 2013, the company reported net income applicable to limited partners of $34.9 million, or $0.45 per unit, compared to a net loss applicable to limited partners of $235.6 million, or $3.33 per unit, for the six months ended June 30, 2012.

The second quarter 2012 results included $271.8 million, or $3.77 per unit, of non-cash expenses related to asset impairments. These asset impairment charges related primarily to a write down of PP&E, goodwill and other intangible assets associated with the company's asphalt operations, in anticipation of the September 2012 sale of 50% of these operations to an affiliate of Lindsay Goldberg LLC. Excluding these items and other adjustments, second quarter 2012 adjusted net income applicable to limited partners would have been $4.4 million, or $0.06 per unit.

The partnership also announced that its board of directors has declared a second quarter 2013 distribution of $1.095 per unit. The second quarter 2013 distribution will be paid on August 9, 2013, to holders of record as of August 5, 2013.

"NuStar's second quarter results improved compared to the same quarter last year primarily as a result of the company's recent growth in the Eagle Ford Shale region and the strategic redirection we undertook in 2012 and early 2013 to minimize our exposure to margin-based operations," said Curt Anastasio, President and Chief Executive Officer of NuStar Energy L.P. and NuStar GP Holdings, LLC.

Regarding the performance in the pipeline segment Anastasio said, "The completion of several internal growth projects in the Eagle Ford Shale region during the last half of 2012 and the December 2012 crude oil asset acquisition from TexStar contributed to increased throughputs as well as improved earnings for the second quarter and the first six months of 2013 as compared to the same periods last year."

Anastasio then added, "Internal growth projects completed at our St. James and St. Eustatius terminal facilities in 2012 and during the first quarter of 2013 benefited our second quarter 2013 storage segment results. However, these internal growth project benefits were more than offset by reduced demand for storage at several of our terminal facilities."

Anastasio then commented on the company's fuels marketing segment by saying, "Although our fuels marketing segment only represents about ten percent of our business, we were pleased to see it generate a small profit during the second quarter despite the continued weak demand for bunkers and increased competition in the Caribbean."

Eagle Ford Shale Region Open Season

"Last week NuStar announced the launch of an Open Season to assess shipper interest in committed space to transport Eagle Ford Shale crude oil from several terminal locations on our South Texas Crude Oil Pipeline System to our Corpus Christi North Beach facility," said Anastasio. "The Open Season has generated a lot of interest and is scheduled to continue until noon central time on August 30, 2013."

Describing the potential project associated with the Open Season, Anastasio said, "The proposed project would include pipeline capacity upgrades to segments of the South Texas Crude Oil Pipeline System and would be constructed in two phases. The first phase will add incremental throughput capacity of approximately 35,000 barrels per day and the second phase will add incremental throughput capacity of approximately 65,000 barrels per day, for a total aggregate incremental capacity of 100,000 barrels per day, of which 90,000 barrels per day will be available to committed shippers. The first phase should be available for service to committed shippers in the third quarter of 2014, while the second phase should be available during the first quarter of 2015."

Internal Growth Project Update

"We continue to work on a pipeline project for ConocoPhillips and continue to lay crude oil gathering lines that will supply additional crude oil volumes to our Eagle Ford crude oil pipeline system," said Anastasio. "In addition, NuStar continues the construction of a second rail-car offloading facility at our St. James terminal. We're excited that these projects are expected to be completed and contributing to pipeline and storage segment results by the end of 2013."

Full-Year 2013 Outlook

Commenting on the earnings outlook for 2013, Anastasio said, "We expect the EBITDA results for our pipeline and fuels marketing segments to be higher than last year, while our storage segment results should be comparable to 2012. Results in our pipeline segment should continue to benefit from our Eagle Ford Shale region internal growth pipeline projects completed in 2012 and later in 2013 as well as from the crude oil assets acquired from TexStar. Our fuels marketing segment's 2013 results should improve in the last half of 2013 as compared to 2012, primarily due to higher forecasted earnings in the bunkering and heavy fuel oil operations. The storage segment should benefit from the completion of the two rail car offloading projects at our St. James, Louisiana terminal and the completion of the storage expansion projects at our St. Eustatius terminal and our St. James, Louisiana terminal early in 2013. However, we expect the contributions from these projects to be offset by reduced demand for storage and services at several of our terminal facilities."

Anastasio then said, "Based on these segment projections we expect our 2013 earnings per unit, distributable cash flow and our coverage ratio to be higher than 2012."

With regard to capital spending projections Anastasio added, "NuStar expects to spend $350 to $400 million on internal growth projects during 2013 while our reliability capital spending should be in the range of $35 to $45 million."

A conference call with management is scheduled for 10:00 a.m. ET (9:00 a.m. CT) today, July 26, 2013, to discuss the financial and operational results for the second quarter of 2013. Investors interested in listening to the presentation may call 800/622-7620, passcode 14958501. International callers may access the presentation by dialing 706/645-0327, passcode 14958501. The company intends to have a playback available following the presentation, which may be accessed by calling 800/585-8367, passcode 14958501. International callers may access the playback by calling 404/537-3406, passcode 14958501. A live broadcast of the conference call will also be available on the company's Web site at

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 8,621 miles of pipeline; 87 terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids; and 50% ownership in a joint venture that owns a terminal and an asphalt refinery with a throughput capacity of 74,000 barrels per day. The partnership's combined system has approximately 97 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

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 2012 annual reports on Form 10-K and subsequent filings with the Securities and Exchange Commission.

NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information
(Unaudited, Thousands of Dollars, Except Unit Data and Per Unit Data)
  Three Months EndedSix Months Ended
June 30, June 30,
2013 20122013 2012
Statement of Income Data (Note 1):
Services revenues$233,633$211,657$460,916$421,376
Product sales 670,563  1,556,091  1,442,990  2,955,777 
Total revenues904,1961,767,7481,903,9063,377,153
Costs and expenses:
Cost of product sales648,7661,528,0591,401,0202,882,589
Operating expenses115,072134,497232,646259,611
General and administrative expenses19,65323,13447,14750,301
Depreciation and amortization expense46,66243,92689,58887,501
Asset impairment loss-249,646-249,646
Goodwill impairment loss-22,132-22,132
Gain on legal settlement -  (28,738) -  (28,738)
Total costs and expenses 830,153  1,972,656  1,770,401  3,523,042 
Operating income (loss)74,043(204,908)133,505(145,889)
Equity in (loss) earnings of joint ventures(10,128)2,381(21,271)4,767
Interest expense, net(29,678)(22,847)(59,791)(44,224)
Other income (expense), net 2,203  (2,816) 2,571  (1,449)

Income (loss) from continuing operations before income tax expense

Income tax expense 4,174  16,276  6,710  19,719 
Income (loss) from continuing operations32,266(244,466)48,304(206,514)
Income (loss) from discontinued operations 703  (2,344) 9,069  (14,042)
Net income (loss)$32,969 $(246,810)$57,373 $(220,556)
Net income (loss) applicable to limited partners$21,619 $(251,618)$34,887 $(235,610)
Net income (loss) per unit applicable to limited partners
Continuing operations$0.27$(3.53)$0.33$(3.14)
Discontinued operations 0.01  (0.03) 0.12  (0.19)
Total$0.28 $(3.56)$0.45 $(3.33)
Weighted average limited partner units outstanding 77,886,078  70,756,078  77,886,078  70,756,078 
EBITDA from continuing operations (Note 2)$112,780$(161,417)$204,393$(55,070)
Distributable cash flow from continuing operations (Note 2)$67,735$43,102$135,158$105,776
June 30,June 30,December 31,
Balance Sheet Data:
Debt, including current portion (a)$2,500,948$2,624,868$2,411,004
Partners' equity (b)2,440,2662,421,1172,584,995
Debt-to-capitalization ratio (a) / ((a)+(b))50.6%52.0%48.3%
NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Barrel Data)
  Three Months Ended Six Months Ended
June 30,June 30,
2013 20122013 2012
Segment Data:
Throughput (barrels/day)813,345747,774741,872743,425
Throughput revenues$26,626$22,193$48,987$44,457
Storage lease revenues 118,489  130,600  240,447  253,765 
Total revenues145,115152,793289,434298,222
Operating expenses75,96973,413144,679139,395
Depreciation and amortization expense27,40923,12751,84046,427
Asset impairment loss -  2,126  -  2,126 
Segment operating income$41,737 $54,127 $92,915 $110,274 
Refined products pipelines throughput (barrels/day)459,663459,163465,446475,367
Crude oil pipelines throughput (barrels/day) 350,850  291,880  351,021  310,980 
Total throughput (barrels/day)810,513751,043816,467786,347


Operating expenses29,10130,02766,50757,591
Depreciation and amortization expense 16,648  13,020  32,638  26,001 
Segment operating income$51,227 $31,560 $91,108 $68,776 
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