NuStar Energy Reports Earnings Results for Fourth Quarter and Full Year 2012

  NuStar Energy Reports Earnings Results for Fourth Quarter and Full Year 2012

              Quarterly Distribution Remains at $1.095 Per Unit

Transportation Segment Continues to Benefit from NuStar’s Growth in the Eagle
                                  Ford Shale

 Expect to Close on Second Phase of TexStar Acquisition in First Quarter 2013

Business Wire

SAN ANTONIO -- February 1, 2013

NuStar Energy L.P. (NYSE: NS) today announced its fourth quarter distributable
cash flow from continuing operations available to limited partners was $57.1
million, or $0.73 per unit, compared to 2011 fourth quarter distributable cash
flow of $59.5 million, or $0.90 per unit. For the year ended December 31,
2012, distributable cash flow from continuing operations available to limited
partners was $202.6 million, or $2.77 per unit, down from the $305.3 million,
or $4.70 per unit earned in 2011.

Earnings before interest, taxes, depreciation and amortization (EBITDA) from
continuing operations were $77.6 million for the fourth quarter of 2012
compared to $91.9 million for the fourth quarter of 2011. For the year ended
December 31, 2012, EBITDA from continuing operations was $99.1 million, lower
than the $476.5 million in 2011.

The company reported a fourth quarter net loss applicable to limited partners
of $21.2 million, or $0.27 per unit, compared to net income applicable to
limited partners of $19.8 million, or $0.30 per unit, earned in the fourth
quarter of 2011. For the year ended December 31, 2012, the company reported a
net loss applicable to limited partners of $263.3 million, or $3.61 per unit,
compared to net income applicable to limited partners of $180.7 million, or
$2.78 per unit, in 2011.

The partnership also announced that its board of directors has declared a
fourth quarter 2012 distribution of $1.095 per unit. This fourth quarter 2012
distribution will be paid on February 14, 2013, to holders of record as of
February 11, 2013. Distributable cash flow available from continuing
operations to limited partners covers the distribution to the limited partners
by 0.67 times for the fourth quarter of 2012 and 0.63 times for the year ended
December 31, 2012.

“2012 was a critical transition year for our company as we made a lot of tough
decisions that put NuStar on the right track for the future,” said Curt
Anastasio, Chief Executive Officer and President of NuStar Energy L.P. and
NuStar GP Holdings, LLC. “We implemented a strategic redirection away from the
margin-based asphalt and fuels refining business in order to focus on growing
our storage and transportation operations through internal growth projects and
acquisitions. We are excited about expanding our presence in the lucrative
Eagle Ford Shale through recently announced transactions and expansion
projects in the region, all of which should have great rates of return. And we
believe that there are many more great opportunities for growth in the U.S.
shale plays that could be transformative for NuStar in the coming years.”

Fourth Quarter and Year-to-Date Adjustments

The fourth quarter 2012 results include $41.5 million, or $0.52 per unit, of
expense items that were not reflected in initial fourth quarter earnings
guidance. Approximately half of these expenses relate to hedge losses recorded
following our decision to sell the San Antonio refinery. The remaining expense
items relate primarily to costs related to cancelled capital projects,
employee benefit expenses associated with the asphalt joint venture and lease
buyout expenses for the company’s previous corporate office location.
Excluding these items and other adjustments, fourth quarter 2012 adjusted net
income applicable to limited partners would have been $19.5 million, or $0.25
per unit.

In addition to those fourth quarter expense items, results for the year ended
December 31, 2012 included $281.9 million, or $3.82 per unit, of expense items
primarily goodwill and long-lived asset impairments and a loss resulting from
deconsolidating the asphalt joint venture. Excluding these items and other
adjustments, such as the $18.7 million after tax gain on the second quarter
Grace legal settlement, adjusted net income applicable to limited partners for
the year ended December 31, 2012 would have been $53.6 million, or $0.73 per
unit.

2012 Segment Results

“Our transportation segment continues to perform better than last year as we
benefit from higher throughputs related to internal growth capital projects
completed in the Eagle Ford Shale over the past several months,” said
Anastasio. “In addition, in December 2012, the segment began to benefit from
incremental crude oil pipeline throughputs from the crude oil pipeline,
gathering and storage assets in the Eagle Ford Shale region that we acquired
from TexStar Midstream Services LP.”

In regard to the 2012 performance of the company’s storage segment Anastasio
said, “While full-year results were higher than 2011’s results, the increased
earnings associated with internal growth projects completed in 2011 and 2012,
primarily at the St. James, Louisiana terminal, were partially offset by
weaker than expected fourth quarter 2012 results in the segment. Cancelled
capital project costs, fewer vessel calls and higher maintenance costs at some
of our terminal facilities caused fourth quarter results to be lower than
expected.”

Addressing the performance of the asphalt and fuels marketing segment,
Anastasio went on to say, “Due to the third quarter 2012 sale of 50% of our
asphalt operations and the January 1, 2013 sale of our San Antonio refinery,
now reported as discontinued operations, the only operating results included
in this segment in the fourth quarter of 2012 relate to our fuels marketing
operations. The fuels marketing operations generated a profit during the
fourth quarter and are expected to continue to generate a profit in the
future.”

TexStar Acquisition Update

“Integration of the crude oil assets acquired from TexStar in December has
gone well,” said Anastasio. “We plan to close on the acquisition of TexStar’s
natural gas liquid (NGL) assets in the first quarter of 2013. The purchase
price on these NGL assets is expected to be $100 million, and we plan to spend
an additional $330 million of growth capital to fully integrate and complete
construction of some of the assets that we acquired.”

2013 Outlook

Commenting on the earnings outlook for 2013, Anastasio said, “We expect the
EBITDA results for all three of our segments to improve compared to last year.
Our transportation segment should benefit from two Eagle Ford internal growth
pipeline projects completed in 2012 and the crude oil assets acquired from
TexStar. The storage segment is projected to continue to benefit from the
April 2012 completion of a rail car offloading project at our St. James,
Louisiana terminal and begin to benefit from the first quarter 2013 completion
of a one million barrel expansion project at our St. Eustatius terminal as
well as a seven hundred thousand barrel storage expansion at our St. James,
Louisiana terminal.”

Anastasio went on to say, “We expect our asphalt and fuels marketing segment's
2013 results to improve compared to 2012, primarily due to higher earnings in
the bunkering and heavy fuel oil businesses.”

With regard to capital spending projections Anastasio added, “NuStar expects
to spend $600 to $625 million on internal growth projects during 2013,
primarily on projects in the Eagle Ford Shale, while our reliability capital
spending should be in the range of $35 to $45 million.”

A conference call with management is scheduled for 3:00 p.m. ET (2:00 p.m. CT)
today, February 1, 2013, to discuss the financial and operational results for
the fourth quarter of 2012. Investors interested in listening to the
presentation may call 800/622-7620, passcode 84162009. International callers
may access the presentation by dialing 706/645-0327, passcode 84162009. The
company intends to have a playback available following the presentation, which
may be accessed by calling 800/585-8367, passcode 84162009. International
callers may access the playback by calling 404/537-3406, passcode 84162009. 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 8,573 miles of pipeline; 87
terminal and storage facilities that store and distribute crude oil, refined
products and specialty liquids; 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 96 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.



NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information
(Unaudited, Thousands of Dollars, Except Unit Data and Per Unit Data)
                                                                           
                           Three Months Ended                    Year Ended
                           December 31,                          December 31,
                            2012             2011             2012             2011       
                                                                                    
Statement of Income
Data (Note 1):
Revenues:
Services revenues          $ 233,653          $ 220,980          $ 880,097          $ 834,809
Product sales               751,114          1,603,425        5,075,579        5,437,006  
Total revenues               984,767            1,824,405          5,955,676          6,271,815
                                                                                    
Costs and expenses:
Cost of product sales        718,208            1,567,793          4,930,174          5,175,710
Operating expenses           141,116            138,035            542,764            524,654
General and
administrative               29,502             33,538             104,756            103,050
expenses
Depreciation and             39,483             43,210             165,021            166,589
amortization expense
Asset impairment loss        -                  -                  249,646            -
Goodwill impairment          -                  -                  22,132             -
loss
Gain on legal               -                -                (28,738    )      -          
settlement
Total costs and             928,309          1,782,576        5,985,755        5,970,003  
expenses
Operating income             56,458             41,829             (30,079    )       301,812
(loss)
Equity in (loss)
earnings of joint            (13,194    )       4,461              (9,378     )       11,458
ventures
Interest expense, net        (21,552    )       (20,339    )       (89,670    )       (81,727    )
Other (expense)             (5,119     )      2,401            (26,511    )      (3,343     )
income, net
Income (loss) from
continuing operations
before income tax            16,593             28,352             (155,638   )       228,200
expense
Income tax expense          2,176            3,568            22,494           16,713     
Income (loss) from           14,417             24,784             (178,132   )       211,487
continuing operations
(Loss) income from
discontinued                (25,440    )      5,415            (49,105    )      10,114     
operations, net of
income tax
Net (loss) income          $ (11,023    )     $ 30,199          $ (227,237   )     $ 221,601    
                                                                                    
Net (loss) income
applicable to limited      $ (21,212    )     $ 19,782          $ (263,325   )     $ 180,714    
partners
                                                                                    
Net income (loss) per
unit applicable to
limited partners:
Continuing operations      $ 0.05             $ 0.22             $ (2.95      )     $ 2.63
Discontinued                (0.32      )      0.08             (0.66      )      0.15       
operations
Total                      $ (0.27      )     $ 0.30            $ (3.61      )     $ 2.78       
                                                                                    
Weighted average
limited partner units        77,886,078         66,226,386         72,957,417         65,018,301
outstanding
                                                                                    
EBITDA from continuing     $ 77,628           $ 91,901           $ 99,053           $ 476,516
operations (Note 2)
                                                                                    
Distributable cash
flow from continuing       $ 69,500           $ 71,140           $ 251,029          $ 348,649
operations (Note 2)
                                                                                    
                                                                                    
                           December 31,
                            2012             2011       
Balance Sheet Data:
Debt, including            $ 2,411,004        $ 2,293,030
current portion (a)
Partners' equity (b)         2,584,995          2,864,335
Debt-to-capitalization       48.3       %       44.5       %
ratio (a) / ((a)+(b))



NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Barrel Data)
                                                               
                    Three Months Ended                Year Ended
                    December 31,                      December 31,
                     2012          2011            2012            2011      
                                                                        
Segment Data:
Storage:
Throughput            794,335         735,521           765,556           693,269
(barrels/day)
Throughput          $ 27,933        $ 21,858          $ 95,612          $ 80,246
revenues
Storage lease        120,557       126,705         500,030         486,525   
revenues
Total revenues        148,490         148,563           595,642           566,771
Operating             90,895          72,409            305,500           285,639
expenses
Depreciation
and                   23,724          23,081            93,449            87,737
amortization
expense
Asset                -             -               2,126           -         
impairment loss
Segment
operating           $ 33,871       $ 53,073         $ 194,567        $ 193,395   
income
                                                                        
Transportation:
Refined
products
pipelines             520,796         528,818           498,321           514,261
throughput
(barrels/day)
Crude oil
pipelines            402,813       355,627         345,648         317,427   
throughput
(barrels/day)
Total
throughput            923,609         884,445           843,969           831,688
(barrels/day)
Revenues            $ 95,517        $ 85,043          $ 340,455         $ 311,514
Operating             33,775          29,111            128,987           113,946
expenses
Depreciation
and                  13,792        12,886          52,878          51,165    
amortization
expense
Segment
operating           $ 47,950       $ 43,046         $ 158,590        $ 146,403   
income
                                                                        
Asphalt and
fuels
marketing:
Product sales
and other           $ 752,022       $ 1,607,320       $ 5,086,383       $ 5,455,659
revenue
Cost of product      725,549       1,573,702       4,957,100       5,205,574 
sales
Gross margin          26,473          33,618            129,283           250,085
Operating             20,457          47,091            148,458           157,282
expenses
Depreciation
and                   18              5,416             11,253            20,949
amortization
expense
Asset and
goodwill             -             -               266,357         -         
impairment loss
Segment
operating           $ 5,998        $ (18,889   )     $ (296,785  )     $ 71,854    
income (loss)
                                                                        
Consolidation
and
intersegment
eliminations:
Revenues            $ (11,262 )     $ (16,521   )     $ (66,804   )     $ (62,129   )
Cost of product       (7,341  )       (5,909    )       (26,926   )       (29,864   )
sales
Operating            (4,011  )      (10,576   )      (40,181   )      (32,213   )
expenses
Total               $ 90           $ (36       )     $ 303            $ (52       )
                                                                        
Consolidated
Information:
Revenues            $ 984,767       $ 1,824,405       $ 5,955,676       $ 6,271,815
Cost of product       718,208         1,567,793         4,930,174         5,175,710
sales
Operating             141,116         138,035           542,764           524,654
expenses
Depreciation
and                   37,534          41,383            157,580           159,851
amortization
expense
Asset and
goodwill             -             -               268,483         -         
impairment loss
Segment
operating             87,909          77,194            56,675            411,600
income
General and
administrative        (29,502 )       (33,538   )       (104,756  )       (103,050  )
expenses
Other
depreciation
and                   (1,949  )       (1,827    )       (7,441    )       (6,738    )
amortization
expense
Other asset           -               -                 (3,295    )       -
impairment loss
Gain on legal        -             -               28,738          -         
settlement
Consolidated
operating           $ 56,458       $ 41,829         $ (30,079   )     $ 301,812   
income (loss)



NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Per Unit Data)
    
Notes:
       The results of operations for the San Antonio Refinery and related
  1.   assets have been reported as discontinued operations for all periods
       presented.
       
       NuStar Energy L.P. utilizes two financial measures, EBITDA from
       continuing operations and distributable cash flow from continuing
       operations, which are not defined in United States generally accepted
       accounting principles. Management uses these financial measures because
       they are widely accepted financial indicators used by investors to
       compare partnership performance. In addition, management believes that
       these measures provide investors an enhanced perspective of the
  2.   operating performance of the partnership's assets and the cash that the
       business is generating. Neither EBITDA from continuing operations nor
       distributable cash flow from continuing operations are intended to
       represent cash flows for the period, nor are they presented as an
       alternative to net income from continuing operations. They should not
       be considered in isolation or as substitutes for a measure of
       performance prepared in accordance with United States generally
       accepted accounting principles.
       
       The following is a reconciliation of income (loss) from continuing
       operations to EBITDA from continuing operations and distributable cash
       flow from continuing operations:

                                                           
                   Three Months Ended              Year Ended
                   December 31,                    December 31,
                    2012          2011          2012           2011    
                                                                    
Income (loss)
from               $ 14,417        $ 24,784        $ (178,132 )     $ 211,487
continuing
operations
Plus interest        21,552          20,339          89,670           81,727
expense, net
Plus income          2,176           3,568           22,494           16,713
tax expense
Plus
depreciation
and                 39,483        43,210        165,021        166,589 
amortization
expense
EBITDA from
continuing           77,628          91,901          99,053           476,516
operations
                                                                    
Less equity in
loss                 13,194          (4,461  )       9,378            (11,458 )
(earnings) of
joint ventures
Less interest        (21,552 )       (20,339 )       (89,670  )       (81,727 )
expense, net
Less
reliability          (15,180 )       (6,147  )       (33,572  )       (44,339 )
capital
expenditures
Less income          (2,176  )       (3,568  )       (22,494  )       (16,713 )
tax expense
Plus
distributions        -               4,977           6,364            14,374
from joint
venture
Plus other
non-cash items       13,304          -               287,981          5,093
(a)
Mark-to-market
impact on
hedge                4,282           8,777           (6,011   )       3,653
transactions
(b)
Contingent
loss                -             -             -              3,250   
adjustment
Distributable
cash flow from       69,500          71,140          251,029          348,649
continuing
operations
                                                                    
Distributable
cash flow from
continuing
operations
attributable
to                   (344    )       53              (300     )       441
noncontrolling
interest
Distributable
cash flow from
continuing
operations
available to
general             12,766        11,598        48,728         42,956  
partner
Distributable
cash flow from
continuing
operations
available to
limited            $ 57,078       $ 59,489       $ 202,601       $ 305,252 
partners
                                                                    
Distributable
cash flow from
continuing
operations
per limited        $ 0.73          $ 0.90          $ 2.77           $ 4.70
partner unit

      Other non-cash items for the year ended December 31, 2012 consist of (i)
      $271.8 million of long-lived asset impairment charges mainly related to
      our asphalt operations, including fixed assets, goodwill and intangible
      assets, (ii) a $21.6 million loss associated with the sale of 50% of our
(a)  asphalt operations on September 28, 2012, (iii) $13.3 million in costs
      written off due to cancelled capital projects and leasehold improvements
      associated with the termination of the lease of our previous corporate
      headquarters building and (iv) an $18.7 million gain, net of tax,
      resulting from a legal settlement.
      
      Distributable cash flow from continuing operations excludes the impact
      of unrealized mark-to-market gains and losses that arise from valuing
(b)   certain derivative contracts, as well as the associated hedged
      inventory. The gain or loss associated with these contracts is realized
      in distributable cash flow from continuing operations when the contracts
      are settled.

Contact:

NuStar Energy, L.P., San Antonio
Investors, Chris Russell, Vice President
Investor Relations: 210-918-3507
or
Media, Mary Rose Brown, Executive Vice President,
Corporate Communications: 210-918-2314
Web site: http://www.nustarenergy.com