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

  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

Business Wire

SAN ANTONIO -- July 26, 2013

NuStar Energy L.P. (NYSE: 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 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 8,621 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 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 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 Ended                Six Months Ended
                           June 30,                         June 30,
                           2013            2012             2013            2012
                                                                              
Statement of Income
Data (Note 1):
Revenues:
Services revenues          $ 233,633        $ 211,657        $ 460,916        $ 421,376
Product sales               670,563        1,556,091      1,442,990      2,955,777  
Total revenues               904,196          1,767,748        1,903,906        3,377,153
                                                                              
Costs and expenses:
Cost of product sales        648,766          1,528,059        1,401,020        2,882,589
Operating expenses           115,072          134,497          232,646          259,611
General and
administrative               19,653           23,134           47,147           50,301
expenses
Depreciation and             46,662           43,926           89,588           87,501
amortization expense
Asset impairment loss        -                249,646          -                249,646
Goodwill impairment          -                22,132           -                22,132
loss
Gain on legal               -              (28,738    )    -              (28,738    )
settlement
Total costs and             830,153        1,972,656      1,770,401      3,523,042  
expenses
Operating income             74,043           (204,908   )     133,505          (145,889   )
(loss)
Equity in (loss)
earnings of joint            (10,128    )     2,381            (21,271    )     4,767
ventures
Interest expense, net        (29,678    )     (22,847    )     (59,791    )     (44,224    )
Other income                2,203          (2,816     )    2,571          (1,449     )
(expense), net
Income (loss) from
continuing operations        36,440           (228,190   )     55,014           (186,795   )
before income tax
expense
Income tax expense          4,174          16,276         6,710          19,719     
Income (loss) from           32,266           (244,466   )     48,304           (206,514   )
continuing operations
Income (loss) from
discontinued                703            (2,344     )    9,069          (14,042    )
operations
Net income (loss)          $ 32,969        $ (246,810   )   $ 57,373        $ (220,556   )
                                                                              
Net income (loss)
applicable to limited      $ 21,619        $ (251,618   )   $ 34,887        $ (235,610   )
partners
                                                                              
Net income (loss) per
unit applicable to
limited partners
Continuing operations      $ 0.27           $ (3.53      )   $ 0.33           $ (3.14      )
Discontinued                0.01           (0.03      )    0.12           (0.19      )
operations
Total                      $ 0.28          $ (3.56      )   $ 0.45          $ (3.33      )
                                                                              
Weighted average
limited partner units       77,886,078     70,756,078     77,886,078     70,756,078 
outstanding
                                                                              
EBITDA from continuing     $ 112,780        $ (161,417   )   $ 204,393        $ (55,070    )
operations (Note 2)
                                                                              
Distributable cash
flow from continuing       $ 67,735         $ 43,102         $ 135,158        $ 105,776
operations (Note 2)
                                                                              
                                                                              
                                                                              
                           June 30,         June 30,                          December 31,
                           2013             2012                              2012
Balance Sheet Data:
Debt, including            $ 2,500,948      $ 2,624,868                       $ 2,411,004
current portion (a)
Partners' equity (b)         2,440,266        2,421,117                         2,584,995
Debt-to-capitalization       50.6       %     52.0       %                      48.3       %
ratio (a) / ((a)+(b))
                                                                                           


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         2012            2013           2012
                                                                 
Segment Data:
Storage:
Throughput           813,345       747,774         741,872         743,425
(barrels/day)
Throughput         $ 26,626      $ 22,193        $ 48,987        $ 44,457
revenues
Storage lease       118,489     130,600       240,447       253,765   
revenues
Total revenues       145,115       152,793         289,434         298,222
Operating            75,969        73,413          144,679         139,395
expenses
Depreciation
and                  27,409        23,127          51,840          46,427
amortization
expense
Asset
impairment          -           2,126         -             2,126     
loss
Segment
operating          $ 41,737     $ 54,127       $ 92,915       $ 110,274   
income
                                                                 
Pipeline:
Refined
products
pipelines            459,663       459,163         465,446         475,367
throughput
(barrels/day)
Crude oil
pipelines           350,850     291,880       351,021       310,980   
throughput
(barrels/day)
Total
throughput           810,513       751,043         816,467         786,347
(barrels/day)
Revenues           $ 96,976      $ 74,607        $ 190,253       $ 152,368
Operating            29,101        30,027          66,507          57,591
expenses
Depreciation
and                 16,648      13,020        32,638        26,001    
amortization
expense
Segment
operating          $ 51,227     $ 31,560       $ 91,108       $ 68,776    
income
                                                                 
Fuels
marketing:
Product sales      $ 670,604     $ 1,559,166     $ 1,443,612     $ 2,962,426
Cost of             654,202     1,534,391     1,412,934     2,894,909 
product sales
Gross margin         16,402        24,775          30,678          67,517
Operating            12,964        43,551          28,826          86,206
expenses
Depreciation
and                  6             5,740           13              11,220
amortization
expense
Asset and
goodwill            -           266,357       -             266,357   
impairment
loss
Segment
operating          $ 3,432      $ (290,873  )   $ 1,839        $ (296,266  )
income (loss)
                                                                 
Consolidation
and
intersegment
eliminations:
Revenues           $ (8,499  )   $ (18,818   )   $ (19,393   )   $ (35,863   )
Cost of              (5,436  )     (6,332    )     (11,914   )     (12,320   )
product sales
Operating           (2,962  )    (12,494   )    (7,366    )    (23,581   )
expenses
Total              $ (101    )   $ 8            $ (113      )   $ 38        
                                                                 
Consolidated
Information:
Revenues           $ 904,196     $ 1,767,748     $ 1,903,906     $ 3,377,153
Cost of              648,766       1,528,059       1,401,020       2,882,589
product sales
Operating            115,072       134,497         232,646         259,611
expenses
Depreciation
and                  44,063        41,887          84,491          83,648
amortization
expense
Asset and
goodwill            -           268,483       -             268,483   
impairment
loss
Segment
operating            96,295        (205,178  )     185,749         (117,178  )
income (loss)
General and
administrative       19,653        23,134          47,147          50,301
expenses
Other
depreciation
and                  2,599         2,039           5,097           3,853
amortization
expense
Other asset
impairment           -             3,295           -               3,295
loss
Gain on legal       -           (28,738   )    -             (28,738   )
settlement
Consolidated
operating          $ 74,043     $ (204,908  )   $ 133,505      $ (145,889  )
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 from continuing operations
       to EBITDA from continuing operations and distributable cash flow from
       continuing operations:
       

                                                
                       Three Months Ended           Six Months Ended
                       June 30,                    June 30,
                       2013         2012           2013         2012
                                                                  
Income (loss) from
continuing             $ 32,266      $ (244,466 )   $ 48,304      $ (206,514 )
operations
Plus interest            29,678        22,847         59,791        44,224
expense, net
Plus income tax          4,174         16,276         6,710         19,719
expense
Plus depreciation
and amortization        46,662      43,926       89,588      87,501   
expense
EBITDA from
continuing               112,780       (161,417 )     204,393       (55,070  )
operations
Equity in loss
(earnings) of            10,128        (2,381   )     21,271        (4,767   )
joint ventures
Interest expense,        (29,678 )     (22,847  )     (59,791 )     (44,224  )
net
Reliability
capital                  (11,725 )     (5,244   )     (17,467 )     (9,872   )
expenditures
Income tax expense       (4,174  )     (16,276  )     (6,710  )     (19,719  )
Distributions from       -             3,266          4,652         3,266
joint ventures
Other non-cash           (6,500  )     253,098        (6,500  )     253,098
items (a)
Mark-to-market
impact on hedge         (3,096  )    (5,097   )    (4,690  )    (16,936  )
transactions (b)
Distributable cash
flow from              $ 67,735      $ 43,102       $ 135,158     $ 105,776
continuing
operations
                                                                  
Less distributable
cash flow from
continuing
operations               (88     )     12             (180    )     14
attributable to
noncontrolling
interest
Less distributable
cash flow from
continuing              12,766      11,598       25,532      23,196   
operations
available to
general partner
Distributable cash
flow from
continuing             $ 55,057     $ 31,492      $ 109,806    $ 82,566   
operations
available to
limited partners
                                                                  
Distributable cash
flow from
continuing             $ 0.71        $ 0.45         $ 1.41        $ 1.17
operations per
limited partner
unit
                                                                  


     
        Other non-cash items for 2013 relate to the reduction of a contingent
        consideration recorded in association with an acquisition. The amount
        for 2012 primarily consists of $271.8 million of long-lived asset
(a)     impairment charges mainly related to our asphalt operations, including
        fixed assets, goodwill and intangible assets. The 2012 impairment
        charges were partially offset by 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 operaitons when
        the contracts are settled.
        

Contact:

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