NuStar Energy Reports Highest Quarterly Coverage Ratio Since 3rd Quarter 2011

  NuStar Energy Reports Highest Quarterly Coverage Ratio Since 3rd Quarter
  2011

   4^th Quarter 2013 EPU and EBITDA Negatively Impacted by Non-Cash Charges

         Corpus Dock Expansion to be Completed Earlier than Expected

   Plans to Close on Divestiture of Remaining 50% Interest in Asphalt Joint
                       Venture by end of February 2014

             Oxy to Begin Transporting NGLs on Idled 12” Pipeline

Business Wire

SAN ANTONIO -- February 5, 2014

NuStar Energy L.P. (NYSE: NS) today announced fourth quarter 2013
distributable cash flow from continuing operations available to limited
partners was $75.3 million, or $0.97 per unit, compared to 2012 fourth quarter
distributable cash flow from continuing operations available to limited
partners of $60.5 million, or $0.78 per unit. For the year ended December 31,
2013, distributable cash flow from continuing operations available to limited
partners was $257.8 million, or $3.31 per unit, higher than the $210.8
million, or $2.89 per unit earned in 2012.

“2013 was a major turning point for NuStar as we took steps to significantly
reduce our exposure to margin-based operations and continued to invest in the
growth of our more stable pipelines and terminals business,” said Brad Barron,
President and Chief Executive Officer of NuStar Energy L.P. and NuStar GP
Holdings, LLC. “We’re starting to see the results of this strategic
redirection as the first quarter is off to a good start.

“We’re excited about several important initiatives being announced today that
are expected to help improve our earnings in 2014 and beyond. We have made
tremendous progress on the expansion of our Corpus Christi dock, which is now
expected to be in service later this month – several months ahead of schedule.
We completed construction on our second rail-car offloading facility at our
St. James terminal. We forged an agreement with Lindsay Goldberg to divest our
remaining 50% interest in our Asphalt Joint Venture, and we completed an
agreement with Oxy to re-activate our idled 12” pipeline between Mont Belvieu
and Corpus Christi.

“We have made a lot of progress over the past couple of months, and we’re
going to keep up the pace as everyone is focused on our goal of returning to
one-to-one coverage of our distribution. Largely as a result of the improved
adjusted EBITDA results in all three of our segments in 2013, NuStar’s fourth
quarter distributable cash flow from continuing operations available to
limited partners covered the distribution to the limited partners by 0.89
times, the highest quarterly coverage ratio since the third quarter of 2011.
Based on our current projections, we expect to start exceeding a one-times
coverage ratio in the second half of 2014 and for the full year 2014,” said
Barron.

Fourth Quarter and Full Year Earnings Results

As a result of some of the non-cash charges described below, fourth quarter
earnings before interest, taxes, depreciation and amortization (EBITDA) from
continuing operations was negative $192.3 million compared to fourth quarter
2012 EBITDA of $81.8 million. For the year ended December 31, 2013, EBITDA
from continuing operations was $127.2 million, higher than the $107.6 million
in 2012.

NuStar Energy L.P. reported a fourth quarter net loss applicable to limited
partners of $368.3 million, or $4.73 per unit, compared to a net loss
applicable to limited partners of $21.2 million, or $0.27 per unit, reported
in the fourth quarter of 2012. Without certain adjustments in the fourth
quarters of both years, as described below, the fourth quarter of 2013 would
have generated adjusted net income applicable to limited partners of $16.6
million, or $0.21 per unit, compared to the fourth quarter 2012 adjusted net
income applicable to limited partners of $19.5 million, or $0.25 per unit.

For the year ended December 31, 2013, the company reported a net loss
applicable to limited partners of $311.5 million, or $4.00 per unit, compared
to a net loss applicable to limited partners of $263.3 million, or $3.61 per
unit, in 2012. Without certain adjustments in both years, as described below,
adjusted net income applicable to limited partners would have been $58.8
million, or $0.75 per unit, compared to 2012 adjusted net income applicable to
limited partners of $53.6 million, or $0.73 per unit.

As previously announced on January 30, 2014, the fourth quarter 2013
distribution of $1.095 per unit will be paid on February 14, 2014 to holders
of record as of February 10, 2014.

“Absent the impact of several non-cash adjustments, our fourth quarter 2013
results in both our fee-based pipeline and storage segments were higher than
last year’s fourth quarter,” said Barron. “The completion of several internal
growth projects in these segments contributed to the improved fourth quarter
results.”

“I am also happy to note that our fuels marketing segment results were higher
than last year’s fourth quarter as well.”

Fourth Quarter and Full Year Adjustments

Fourth quarter 2013 results include $403.6 million, or $4.94 per unit, of
adjustments, primarily non-cash charges associated with the write-down of
asset values and the value of goodwill assigned to several of the company’s
terminal facilities. Fourth quarter 2012 results included $41.5 million, or
$0.52 per unit, of expense items related primarily to hedge losses recorded
following NuStar’s decision to sell the San Antonio refinery in December 2012,
as well as a handful of cancelled capital projects.

Full year 2013 results include $388.8 million, or $4.75 per unit, of
adjustments, comprised of the fourth quarter 2013 non-cash adjustments
mentioned previously and other adjustment items. Full year 2012 results
included $323.4 million, or $4.34 per unit of adjustments, which included the
fourth quarter 2012 adjustments mentioned previously, and $281.9 million, or
$3.82 per unit, of expense items resulting from deconsolidating the asphalt
joint venture in September 2012 and other adjustment items.

Internal Growth Project Update

In November, the company completed the construction of a second rail-car
offloading facility at its St. James terminal in Louisiana. NuStar now has two
rail-car facilities in operation at the terminal with a total offloading
capacity of 100,000 to 200,000 barrels per day.

The construction of a new private dock at NuStar’s Corpus Christi North Beach
terminal should be completed by the end of February 2014, far earlier than
anticipated. The initial estimate for the completion of the dock was the
second quarter of 2014. This new dock will more than double the current
loading capacity of approximately 125,000 barrels per day and will allow
NuStar to handle all the new volume associated with the Phase 1 and Phase 2
expansions of the South Texas Crude Oil Pipeline expansion, as well as
additional volumes shipped to Corpus Christi.

Divestiture of 50% Interest in Asphalt Joint Venture

NuStar has entered into an agreement with an affiliate of Lindsay Goldberg
LLC, a private investment firm, to divest its 50% voting interest in an
asphalt joint venture that owns a refinery located in Paulsboro, New Jersey, a
terminal located in Savannah, Georgia and the related working capital. Closing
for the transaction is expected to be completed no later than February 28,
2014.

After the transaction is closed, a $250 million seven-year revolving credit
facility between NuStar Logistics and the joint venture will be immediately
converted to a $175 million term loan, dropping to a $150 million term loan
six months after closing. The transaction calls for the loan to be paid off in
full no later than September 2019. NuStar Logistics will continue to provide
up to $150 million of credit support to the asphalt business, in the form of
guarantees and letters of credit. This commitment begins declining two years
after closing and terminates in September 2019.

Reactivation of Mont Belvieu to Corpus Christi 12” Pipeline

NuStar and Occidental Petroleum Corporation (Oxy) have entered into a
long-term agreement in which Oxy will ship natural gas liquids (NGLs) on
NuStar’s currently idled, 200-mile, 12-inch pipeline between Mont Belvieu and
Corpus Christi, Texas. Oxy will use a majority of the line’s 110,000 barrel
per day capacity and NuStar will continue to market any remaining capacity to
third parties. The line will begin generating distributable cash flow in the
second quarter of 2014 and is expected to be placed into full NGL service in
the second quarter of 2015. Once the line is in full service, it is expected
to generate approximately $23 million per year of incremental EBITDA.

2014 Earnings Guidance

“First quarter 2014 EBITDA results for our pipeline and fuels marketing
segments should be higher than last year’s first quarter due to the benefit
from our Eagle Ford shale internal growth projects and improved results in our
bunkering operations,” said Barron. “However, our first quarter storage
segment results are expected to be lower than last year primarily due to
reduced LLS to WTI profit-sharing benefits at our St. James, Louisiana
terminal.”

Commenting on guidance for the full year 2014, Barron said, “Our pipeline
segment EBITDA should be $40 to $60 million higher than 2013 while our storage
segment EBITDA should be comparable to 2013. We expect our fuels marketing
segment to generate EBITDA in the range of $10 to $30 million. Based on these
projections, we expect our coverage ratio to start exceeding one-times in the
second half of 2014 and for the full year 2014.”

With regard to capital spending projections for 2014, Barron went on to say,
“We plan to spend $370 to $390 million on internal growth projects during
2014. Most of this spending should be focused on projects in our pipeline
segment. 2014 reliability capital spending is expected to be in the range of
$35 to $45 million.”

Fourth Quarter Earnings Conference Call Details

A conference call with management is scheduled for 9:00 a.m. CT today,
February 5, 2014, to discuss the financial and operational results for the
fourth quarter of 2013. Investors interested in listening to the presentation
may call 800/622-7620, passcode 32985588. International callers may access the
presentation by dialing 706/645-0327, passcode 32985588. The company intends
to have a playback available following the presentation, which may be accessed
by calling 800/585-8367, passcode 32985588. International callers may access
the playback by calling 404/537-3406, passcode 32985588. 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 8,643 miles of pipeline; 89
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 and Per Unit Data)
                                                           
                         Three Months Ended December 31,   Year Ended December 31,
                          2013          2012           2013          2012       
Statement of Income
Data (Note 1):
Revenues:
Service revenues         $ 237,216        $ 231,776        $ 938,138        $ 870,157
Product sales             548,171        751,114        2,525,594      5,075,579  
Total revenues            785,387        982,890        3,463,732      5,945,736  
Costs and expenses:
Cost of product sales      525,760          718,208          2,453,997        4,930,174
Operating expenses         112,463          136,859          454,396          526,145
General and
administrative             25,108           29,502           91,086           104,756
expenses
Depreciation and           45,805           38,196           178,921          159,789
amortization expense
Goodwill impairment        304,453          —                304,453          22,132
loss
Asset impairment loss      —                —                —                249,646
Gain on legal             —              —              —              (28,738    )
settlement
Total costs and           1,013,589      922,765        3,482,853      5,963,904  
expenses
Operating (loss)           (228,202   )     60,125           (19,121    )     (18,168    )
income
Equity in loss of          (13,341    )     (13,194    )     (39,970    )     (9,378     )
joint ventures
Interest expense, net      (34,270    )     (22,605    )     (127,119   )     (90,535    )
Interest income from       1,553            1,158            6,113            1,219
related party
Other income              3,424          (3,297     )    7,341          (24,689    )
(expense), net
(Loss) income from
continuing operations
before                     (270,836   )     22,187           (172,756   )     (141,551   )

income tax expense
Income tax expense        4,666          3,295          12,753         24,450     
(Loss) income from         (275,502   )     18,892           (185,509   )     (166,001   )
continuing operations
Loss from discontinued    (99,778    )    (29,915    )    (99,162    )    (61,236    )
operations, net of tax
Net loss                 $ (375,280   )   $ (11,023    )   $ (284,671   )   $ (227,237   )
Net loss applicable to   $ (368,327   )   $ (21,212    )   $ (311,516   )   $ (263,325   )
limited partners
Net (loss) income per
unit applicable to
limited partners
Continuing operations    $ (3.60      )   $ 0.10           $ (2.89      )   $ (2.79      )
Discontinued              (1.13      )    (0.37      )    (1.11      )    (0.82      )
operations
Total                    $ (4.73      )   $ (0.27      )   $ (4.00      )   $ (3.61      )
Weighted-average
limited partner units     77,886,078     77,886,078     77,886,078     72,957,417 
outstanding
                                                                            
EBITDA from continuing   $ (192,314   )   $ 81,830         $ 127,171        $ 107,554
operations (Note 2)
DCF from continuing      $ 88,115         $ 73,314         $ 308,877        $ 259,488
operations (Note 2)
                                                                            
                         December 31,
                          2013           2012       
Balance Sheet Data:
Debt, including          $ 2,655,553      $ 2,411,004
current portion (a)
Partners’ equity (b)       1,903,794        2,584,995
Debt-to-capitalization     58.2       %     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 December    Year Ended December 31,
                  31,
                    2013         2012        2013         2012      
Storage:
Throughput           807,414         794,335       781,213         765,556
(barrels/day)
Throughput        $  27,629        $ 27,933      $ 104,553       $ 95,612
revenues
Storage lease       105,956       117,480     451,996       482,454   
revenues
Total revenues       133,585         145,413       556,549         578,066
Operating            71,596          86,638        279,712         288,881
expenses
Depreciation
and                  24,439          22,437        99,868          88,217
amortization
expense
Goodwill and
asset               304,453       —           304,453       2,126     
impairment loss
Segment
operating         $  (266,903  )   $ 36,338     $ (127,484  )   $ 198,842   
(loss) income
Pipeline:
Refined
products
pipelines            514,975         520,796       487,021         498,321
throughput
(barrels/day)
Crude oil
pipelines           377,937       402,813     365,749       345,648   
throughput
(barrels/day)
Total
throughput           892,912         923,609       852,770         843,969
(barrels/day)
Throughput        $  109,768       $ 95,517      $ 411,529       $ 340,455
revenues
Operating            31,769          33,775        134,365         128,987
expenses
Depreciation
and                 18,832        13,792      68,871        52,878    
amortization
expense
Segment
operating         $  59,167       $ 47,950     $ 208,293      $ 158,590   
income
Fuels
Marketing:
Product sales     $  549,167       $ 752,022     $ 2,527,698     $ 5,086,383
Cost of product     530,197       725,549     2,474,612     4,957,100 
sales
Gross margin         18,970          26,473        53,086          129,283
Operating            11,849          20,457        53,185          148,458
expenses
Depreciation
and                  7               18            27              11,253
amortization
expense
Goodwill and
asset               —             —           —             266,357   
impairment loss
Segment
operating         $  7,114        $ 5,998      $ (126      )   $ (296,785  )
income (loss)
Consolidation
and
Intersegment
Eliminations:
Revenues          $  (7,133    )   $ (10,062 )   $ (32,044   )   $ (59,168   )
Cost of product      (4,437    )     (7,341  )     (20,615   )     (26,926   )
sales
Operating           (2,751    )    (4,011  )    (12,866   )    (40,181   )
expenses
Total             $  55           $ 1,290      $ 1,437        $ 7,939     
Consolidated
Information:
Revenues          $  785,387       $ 982,890     $ 3,463,732     $ 5,945,736
Cost of product      525,760         718,208       2,453,997       4,930,174
sales
Operating            112,463         136,859       454,396         526,145
expenses
Depreciation
and                  43,278          36,247        168,766         152,348
amortization
expense
Goodwill and
asset               304,453       —           304,453       268,483   
impairment loss
Segment
operating            (200,567  )     91,576        82,120          68,586
(loss) income
General and
administrative       25,108          29,502        91,086          104,756
expenses
Other
depreciation
and                  2,527           1,949         10,155          7,441
amortization
expense
Other asset          —               —             —               3,295
impairment loss
Gain on legal       —             —           —             (28,738   )
settlement
Consolidated
operating         $  (228,202  )   $ 60,125     $ (19,121   )   $ (18,168   )
(loss) income
                                                                             

                     NuStar Energy L.P. and Subsidiaries

                Consolidated Financial Information - Continued

           (Unaudited, Thousands of Dollars, Except Per Unit Data)

Notes:

(1) The results of operations for the following have been reported as
discontinued operations for all periods presented: (i) the San Antonio
Refinery and related assets and (ii) certain storage assets that were
classified as “Assets held for sale” on the consolidated balance sheet as of
December 31, 2013.

(2) NuStar Energy L.P. utilizes financial measures, earnings before interest,
taxes, depreciation and amortization (EBITDA) from continuing operations,
distributable cash flow (DCF) from continuing operations and DCF from
continuing operations per unit, which are not defined in U.S. 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 operating
performance of the partnership’s assets and the cash that the business is
generating. None of EBITDA from continuing operations, DCF from continuing
operations or DCF from continuing operations per unit are intended to
represent cash flows from operations for the period, nor are they presented as
an alternative to net income or income from continuing operations. They should
not be considered in isolation or as substitutes for a measure of performance
prepared in accordance with U.S. generally accepted accounting principles.

The following is a reconciliation of (loss) income from continuing operations
to EBITDA from continuing operations and DCF from continuing operations:

                                                
                  Three Months Ended December      Year Ended December 31,
                  31,
                    2013           2012        2013        2012     
(Loss) income
from continuing   $  (275,502  )     $ 18,892      $ (185,509 )   $ (166,001 )
operations
Plus interest
expense, net
and interest         32,717            21,447        121,006        89,316
income from
related party
Plus income tax      4,666             3,295         12,753         24,450
expense
Plus
depreciation
and                 45,805          38,196      178,921      159,789  
amortization
expense
EBITDA from
continuing           (192,314  )       81,830        127,171        107,554
operations
Equity in loss
of joint             13,341            13,194        39,970         9,378
ventures
Interest
expense, net
and interest         (32,717   )       (21,447 )     (121,006 )     (89,316  )
income from
related party
Reliability
capital              (11,600   )       (14,554 )     (39,939  )     (32,012  )
expenditures
Income tax           (4,666    )       (3,295  )     (12,753  )     (24,450  )
expense
Distributions
from joint           2,169             —             7,956          6,364
ventures
Other items (a)      315,718           13,304        311,675        287,981
Mark-to-market
impact on hedge     (1,816    )      4,282       (4,197   )    (6,011   )
transactions
(b)
DCF from
continuing        $  88,115          $ 73,314      $ 308,877      $ 259,488
operations
                                                                  
Less DCF from
continuing
operations          12,766          12,766      51,064       48,728   
available to

general partner
DCF from
continuing
operations        $  75,349         $ 60,548     $ 257,813     $ 210,760  
available to
limited
partners
                                                                  
DCF from
continuing
operations per    $  0.97            $ 0.78        $ 3.31         $ 2.89
limited partner
unit
                                                                             

(a) Other items for the three months and year ended December 31, 2013 mainly
consist of (i) a non-cash goodwill impairment charge totaling $304.5 million
and (ii) an increase in deferred revenue associated with throughput deficiency
payments and construction reimbursements received in the period.

Other items for the year ended December 31, 2012 consist of (i) $271.8 million
of non-cash 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 asphalt operations on
September28, 2012, (iii) $13.3 million in costs written off mainly due to
cancelled capital projects and (iv) an $18.7 million gain, net of tax,
resulting from a legal settlement.

(b) DCF from continuing operations excludes the impact of unrealized
mark-to-market gains and losses that arise from valuing certain derivative
contracts, as well as the associated hedged inventory. The gain or loss
associated with these contracts is realized in DCF from continuing operations
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
 
Press spacebar to pause and continue. Press esc to stop.