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SEC Filings
10-Q
NUSTAR ENERGY L.P. filed this Form 10-Q on 05/15/2002
Entire Document
 
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Equity income from Skelly-Belvieu  Pipeline Company represents the Partnership's
50%  interest  in the net  income  of  Skelly-Belvieu  Pipeline  Company,  which
operates the Skellytown to Mont Belvieu refined product pipeline.  Equity income
from  Skelly-Belvieu  Pipeline  Company  for the  quarter  ended  March 31, 2002
approximated the amount of equity income recognized in the first quarter of 2001
as  throughput  volumes  did not change  significantly.  Distributions  from the
Skelly-Belvieu  Pipeline  Company totaled $771,000 for the first quarter of 2002
as compared to $639,000 in the first quarter of 2001.

Interest  expense for the quarter  ended  March 31,  2002 was  $556,000,  net of
interest  income of $19,000,  as compared to $2,244,000 of interest  expense for
the same period in 2001.  Interest  expense  decreased  due to the payoff of the
debt due to parent in April 2001 with  proceeds from the  Partnership's  initial
public  offering.  During the first quarter of 2002,  the  Partnership  incurred
$447,000 of interest  expense related to borrowings  under the revolving  credit
facility and $128,000 of interest  expense related to the Port of Corpus Christi
note payable.  The  acquisition of the Wichita Falls Business from Valero Energy
on  February  1,  2002 was  funded  with  $64,000,000  of  borrowings  under the
revolving credit facility.

Income  tax  expense  for the first  quarter  of 2002  represents  income  taxes
incurred by the Wichita Falls Business  during the month ended January 31, 2002,
prior to the transfer of the Business to the Partnership.

Outlook for the Second Quarter and Remainder of 2002

So far during the second quarter of 2002, throughput levels in the Partnership's
pipelines and terminals  have returned to more normal levels since Valero Energy
increased  production at the McKee,  Three Rivers and Ardmore  refineries.  With
supply and demand  fundamentals in the refining and marketing  industry becoming
more balanced, the Partnership  anticipates that throughput levels will continue
at normal  levels for the balance of 2002;  however,  there can be no  assurance
that throughput will stay at these levels.

Based on the throughput  improvements,  the additional  cash flow generated from
the Wichita Falls Business  acquired on February 1, 2002 and the additional cash
flow anticipated from a crude hydrogen pipeline to be acquired in late May 2002,
the Partnership expects to generate higher levels of distributable cash flow for
the balance of 2002.

Liquidity and Capital Resources

Financing
As of March 31, 2002, the  Partnership  had  $80,000,000  outstanding  under its
$120,000,000  revolving credit  facility.  During the first quarter of 2002, the
Partnership borrowed $64,000,000 under the revolving credit facility to purchase
the Wichita Falls  Business from Valero  Energy.  In addition,  the  Partnership
expects to fund the acquisition of an $11,000,000  crude hydrogen  pipeline from
Praxair, Inc. in May 2002 with borrowings under the revolving credit facility.

The revolving  credit facility  expires on January 15, 2006 and borrowings under
the revolving  credit facility bear interest at either an alternative  base rate
or the LIBOR rate at the option of the Partnership.

The revolving  credit facility  requires that the Partnership  maintain  certain
financial  ratios  and  includes  other  restrictive   covenants,   including  a
prohibition on  distributions  by the Partnership if any default,  as defined in
the revolving  credit  facility,  exists or would result from the  distribution.
Management  believes that the  Partnership  is in  compliance  with all of these
ratios and covenants.

The  Partnership's  ability to complete future debt and equity offerings and the
timing  of any  such  offerings  will  depend  upon  various  factors  including
prevailing market  conditions,  interest rates and the  Partnership's  financial
condition.


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