NuStar Energy Covers Quarterly Distribution for the First Time Since the Third Quarter of 2011

  NuStar Energy Covers Quarterly Distribution for the First Time Since the
  Third Quarter of 2011

            On Track to Cover Distribution for the Full Year 2014

          Quarterly Results improved in all Three Operating Segments

            17% increase in Quarterly Pipeline Throughput Volumes

Business Wire

SAN ANTONIO -- July 25, 2014

NuStar Energy L.P. (NYSE: NS) today announced second quarter 2014
distributable cash flow from continuing operations available to limited
partners of $93.6 million, or $1.20 per unit, compared to 2013 second quarter
distributable cash flow from continuing operations available to limited
partners of $56.8 million, or $0.73 per unit. For the six months ended June
30, 2014, distributable cash flow from continuing operations available to
limited partners was $171.5 million, or $2.20 per unit, compared to $113.9
million, or $1.46 per unit for the six months ended June 30, 2013.

Second quarter earnings before interest, taxes, depreciation and amortization
(EBITDA) from continuing operations was $140.1 million compared to second
quarter 2013 EBITDA of $114.3 million. For the six months ended June 30, 2014,
EBITDA was $266.8 million, compared to $208.5 million for the six months ended
June 30, 2013.

The partnership reported second quarter net income applicable to limited
partners of $43.6 million, or $0.56 per unit, compared to $21.6 million, or
$0.28 per unit, earned in the second quarter of 2013. For the six months ended
June 30, 2014, net income applicable to limited partners was $71.7 million, or
$0.92 per unit, compared to net income applicable to limited partners of $34.9
million, or $0.45 per unit, for the six months ended June 30, 2013.

The partnership also announced that its board of directors has declared a
second quarter 2014 distribution of $1.095 per unit. The second quarter 2014
distribution will be paid on August 11, 2014, to holders of record as of
August 6, 2014. Distributable cash flow from continuing operations available
to limited partners covers the distribution to the limited partners by 1.10
times for the second quarter of 2014 and by 1.00 times for the six months
ended June 30, 2014.

“All three of our operating segments continued to perform well in the second
quarter,” said Brad Barron, President and Chief Executive Officer of NuStar
Energy L.P. and NuStar GP Holdings, LLC. “In May, we completed Phase 1 of our
South Texas Crude Oil Pipeline expansion and set a new single-vessel loading
record at our Corpus Christi North Beach Terminal, when we loaded over 750,000
barrels. These were significant milestones for us and contributed to improved
results in both our pipeline and storage segments.”

Barron went on to say, “Our coverage ratio in the second quarter was our
highest since the third quarter of 2011 and was better than we initially
projected. Higher than expected throughput volumes in both our pipeline and
storage segments, as well as the deferral of some maintenance expenses and
reliability capital spending to the back half of 2014 helped drive the
coverage ratio to 1.10 times.”

Internal Growth Project Update

Phase 2 of the South Texas Crude Oil Pipeline expansion is expected to come on
line during the first quarter of 2015 and will allow for increased throughputs
of up to 65,000 barrels per day. NuStar’s 12-inch pipeline between Mont
Belvieu and Corpus Christi, Texas began generating distributable cash flow in
the second quarter and is expected to be in full NGL service in the second
quarter of 2015, at which time it is expected to generate an incremental $23
million in annual EBITDA, based on committed volumes.

2014 Earnings Guidance

“NuStar’s third quarter EPU and EBITDA results as well as our coverage ratio
should exceed last year’s third quarter results. Similar to the second
quarter, third quarter EBITDA results in our pipeline, storage and fuels
marketing segments are all expected to be higher than last year’s third
quarter,” said Barron.

“In regard to full year 2014 guidance, we still expect our pipeline segment
EBITDA to be $40 to $60 million higher than 2013 and our storage segment
adjusted EBITDA to be comparable to 2013. However, we now expect our fuels
marketing segment to generate EBITDA in the range of $20 to $30 million. Based
on these projections, we expect to cover our distributions for the full year
2014,” Barron said.

Barron went on to say, “Our 2014 internal growth spending projections have
been reduced slightly to reflect the deferral of spending on some of our key
growth projects into 2015. Spending is now expected to be in the range of $330
to $350 million, the majority of which will be spent on projects in our
pipeline segment.”

Second Quarter 2014 Earnings Conference Call Details

A conference call with management is scheduled for 9:00 a.m. CT today, July
25, 2014, to discuss the financial and operational results for the second
quarter of 2014. Investors interested in listening to the presentation may
call 800/622-7620, passcode 63499232. International callers may access the
presentation by dialing 706/645-0327, passcode 63499232. The company intends
to have a playback available following the presentation, which may be accessed
by calling 800/585-8367, passcode 63499232. International callers may access
the playback by calling 404/537-3406, passcode 63499232.

Investors interested in listening to the live presentation or a replay via the
internet may access the presentation directly by clicking here or by logging
on to NuStar Energy L.P.’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 and 84
terminal and storage facilities that store and distribute crude oil, refined
products and specialty liquids. The partnership’s combined system has
approximately 92 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 2013 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 June 30,       Six Months Ended June 30,
                    2014          2013           2014          2013       
Statement of
Income Data:
Revenues:
Service revenues   $ 259,562        $ 231,451        $ 488,900        $ 457,210
Product sales       490,183        670,563        1,110,058      1,442,990  
Total revenues      749,745        902,014        1,598,958      1,900,200  
Costs and
expenses:
Cost of product      473,755          648,766          1,068,714        1,401,020
sales
Operating            115,537          111,315          221,602          224,832
expenses
General and
administrative       23,163           19,653           44,019           47,147
expenses
Depreciation and
amortization        47,936         45,308         94,166         86,871     
expense
Total costs and     660,391        825,042        1,428,501      1,759,870  
expenses
Operating income     89,354           76,972           170,457          140,330
Equity in
earnings (loss)      3,294            (10,128    )     (1,012     )     (21,271    )
of joint
ventures
Interest             (33,122    )     (31,035    )     (67,539    )     (62,026    )
expense, net
Interest income
from related         —                1,610            1,055            2,732
party
Other (expense)     (474       )    2,184          3,204          2,528      
income, net
Income from
continuing
operations           59,052           39,603           106,165          62,293
before income
tax expense
Income tax          1,865          4,891          5,982          7,982      
expense
Income from
continuing           57,187           34,712           100,183          54,311
operations
(Loss) income
from
discontinued        (1,788     )    (1,743     )    (5,147     )    3,062      
operations, net
of tax (Note 1)
Net income         $ 55,399        $ 32,969        $ 95,036        $ 57,373     
Net income
applicable to      $ 43,599        $ 21,619        $ 71,743        $ 34,887     
limited partners
Net income
(loss) per unit
applicable to
limited
partners:
Continuing         $ 0.58           $ 0.30           $ 0.98           $ 0.40
operations
Discontinued
operations (Note    (0.02      )    (0.02      )    (0.06      )    0.05       
1)
Total              $ 0.56          $ 0.28          $ 0.92          $ 0.45       
Weighted-average
limited partner     77,886,078     77,886,078     77,886,078     77,886,078 
units
outstanding
                                                                      
EBITDA from
continuing         $ 140,110        $ 114,336        $ 266,815        $ 208,458
operations (Note
2)
DCF from
continuing         $ 106,321        $ 69,565         $ 197,033        $ 139,451
operations (Note
2)
                                                                      
                   June 30,                                           December 31,
                    2014           2013                            2013       
Balance Sheet
Data:
Long-term debt     $ 2,726,629      $ 2,500,948                       $ 2,655,553
Partners’ equity   $ 1,809,359      $ 2,440,266                       $ 1,903,794
Consolidated
debt coverage      4.0x             4.3x                              4.4x
ratio (Note 3)

                                              
NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Barrel Data)
                                                 
                   Three Months Ended June 30,   Six Months Ended June 30,
                     2014        2013        2014         2013      
Pipeline:
Refined products
pipelines             521,391        459,663       497,315         465,446
throughput
(barrels/day)
Crude oil
pipelines            427,122      350,850     393,457       351,021   
throughput
(barrels/day)
Total throughput      948,513        810,513       890,772         816,467
(barrels/day)
Throughput         $  117,798      $ 96,976      $ 220,757       $ 190,253
revenues
Operating             38,072         29,101        69,689          66,507
expenses
Depreciation and
amortization         19,490       16,648      37,842        32,638    
expense
Segment            $  60,236      $ 51,227     $ 113,226      $ 91,108    
operating income
Storage:
Throughput            894,194        813,345       857,967         741,872
(barrels/day)
Throughput         $  31,216       $ 26,626      $ 58,686        $ 48,987
revenues
Storage lease        113,770      116,053     218,866       235,369   
revenues
Total revenues        144,986        142,679       277,552         284,356
Operating             69,091         72,212        134,358         136,865
expenses
Depreciation and
amortization         25,888       26,055      51,180        49,123    
expense
Segment            $  50,007      $ 44,412     $ 92,014       $ 98,368    
operating income
Fuels Marketing:
Product sales
and other          $  493,651      $ 670,604     $ 1,114,622     $ 1,443,612
revenue
Cost of product      477,830      654,202     1,077,305     1,412,934 
sales
Gross margin          15,821         16,402        37,317          30,678
Operating             10,996         12,964        22,927          28,826
expenses
Depreciation and
amortization         4            6           11            13        
expense
Segment            $  4,821       $ 3,432      $ 14,379       $ 1,839     
operating income
Consolidation
and Intersegment
Eliminations:
Revenues           $  (6,690   )   $ (8,245  )   $ (13,973   )   $ (18,021   )
Cost of product       (4,075   )     (5,436  )     (8,591    )     (11,914   )
sales
Operating            (2,622   )    (2,962  )    (5,372    )    (7,366    )
expenses
Total              $  7           $ 153        $ (10       )   $ 1,259     
Consolidated
Information:
Revenues           $  749,745      $ 902,014     $ 1,598,958     $ 1,900,200
Cost of product       473,755        648,766       1,068,714       1,401,020
sales
Operating             115,537        111,315       221,602         224,832
expenses
Depreciation and
amortization         45,382       42,709      89,033        81,774    
expense
Segment               115,071        99,224        219,609         192,574
operating income
General and
administrative        23,163         19,653        44,019          47,147
expenses
Other
depreciation and     2,554        2,599       5,133         5,097     
amortization
expense
Consolidated       $  89,354      $ 76,972     $ 170,457      $ 140,330   
operating 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, which we sold on January 1, 2013, 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 income from continuing operations to
EBITDA from continuing operations and DCF from continuing operations:

                      Three Months Ended June 30,  Six Months Ended June 30,
                         2014        2013        2014       2013    
Income from
continuing             $  57,187       $ 34,712      $ 100,183     $ 54,311
operations
Plus interest
expense, net and          33,122         29,425        66,484        59,294
interest income from
related party
Plus income tax           1,865          4,891         5,982         7,982
expense
Plus depreciation
and amortization         47,936       45,308      94,166      86,871  
expense
EBITDA from
continuing                140,110        114,336       266,815       208,458
operations
Equity in (earnings)
loss of joint             (3,294   )     10,128        1,012         21,271
ventures
Interest expense,
net and interest          (33,122  )     (29,425 )     (66,484 )     (59,294 )
income from related
party
Reliability capital       (7,239   )     (10,987 )     (11,998 )     (16,464 )
expenditures
Income tax expense        (1,865   )     (4,891  )     (5,982  )     (7,982  )
Distributions from        728            —             3,094         4,652
joint ventures
Other items (a)           4,311          (6,500  )     3,869         (6,500  )
Mark-to-market
impact of hedge          6,692        (3,096  )    6,707       (4,690  )
transactions (b)
DCF from continuing    $  106,321      $ 69,565      $ 197,033     $ 139,451
operations
                                                                   
Less DCF from
continuing
operations available     12,766       12,766      25,532      25,532  
to

general partner
DCF from continuing
operations available
to                     $  93,555      $ 56,799     $ 171,501    $ 113,919 

limited partners
                                                                   
DCF from continuing
operations per         $  1.20         $ 0.73        $ 2.20        $ 1.46
limited partner unit

(a) For 2014, other items consist of a net increase in deferred revenue
associated with throughput deficiency payments and construction
reimbursements. For 2013, other items consist of a $6.5 million reduction of
the contingent consideration recorded in association with an acquisition.

(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.

(3) The consolidated debt coverage ratio is calculated as consolidated
indebtedness to consolidated EBITDA, as defined in our $1.5 billion five-year
revolving credit agreement.

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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