NuStar Energy L.P. 2011 Full Year Distributable Cash Flow, EBITDA and Operating Income Higher than 2010

Fourth Quarter 2011 Results Benefit from the Completion of Internal Growth Projects

Expect Results to Continue to Improve in 2012

SAN ANTONIO--(BUSINESS WIRE)--Jan. 27, 2012-- NuStar Energy L.P. (NYSE: NS) today announced its fourth quarter distributable cash flow available to limited partners was $63.1 million, or $0.95 per unit, compared to 2010 fourth quarter distributable cash flow of $66.7 million, or $1.03 per unit. For the year ended December 31, 2011, distributable cash flow available to limited partners was $307.9 million, or $4.74 per unit, up from the $280.7 million, or $4.43 per unit earned in 2010.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $98.7 million for the fourth quarter of 2011 compared to $113.6 million for the fourth quarter of 2010. For the year ended December 31, 2011, EBITDA was $490.4 million, higher than the $482.8 million in 2010.

Operating income was $47.9 million for the fourth quarter of 2011 compared to $70.5 million for the fourth quarter of 2010. For the year ended December 31, 2011, operating income was $314.0 million, outpacing the $302.6 million generated in 2010.

Net income applicable to limited partners for the fourth quarter was $19.8 million, or $0.30 per unit, compared to $41.9 million, or $0.65 per unit, earned in the fourth quarter of 2010. For the year ended December 31, 2011, net income applicable to limited partners was $180.7 million, or $2.78 per unit, compared to $200.9 million, or $3.19 per unit, in 2010.

The partnership also announced that its board of directors has declared a fourth quarter 2011 distribution of $1.095 per unit. This fourth quarter 2011 distribution will be paid on February 10, 2012, to holders of record as of February 7, 2012. For 2011, NuStar Energy L.P. declared a distribution of $4.36 per unit, which was $0.08 per unit or approximately 2% higher than the $4.28 per unit distribution declared in 2010. Distributable cash flow available to limited partners covers the distribution to the limited partners by 0.87 times for the fourth quarter of 2011 and 1.09 times for the year ended December 31, 2011.

"Even though the U.S. and global economic conditions continued to be very challenging this past year and oil and gas volatility remained high, NuStar was able to generate more distributable cash flow, EBITDA and operating income in 2011 than in 2010," said Curt Anastasio, President and Chief Executive Officer of NuStar Energy L.P. and NuStar GP Holdings, LLC. “Additional earnings produced by the completion of several internal growth projects, the acquisition of the San Antonio refinery and crude oil trading in our fuels marketing operations more than offset the negative impact of reduced pipeline throughput volumes and lower than expected asphalt demand.”

With regard to fourth quarter 2011 results Anastasio added, “Results in both our storage and transportation segments were higher than last year’s fourth quarter. Our storage segment benefited primarily from the 3^rd quarter 2011 completion of a storage expansion project at our St. James, Louisiana terminal facility. Increased tariffs and new revenue streams from two Eagle Ford shale internal growth projects contributed to improved results in our transportation segment.”

Anastasio noted that, “While lower results in our asphalt and fuels marketing segment, primarily due to lower margins in our asphalt operations, offset the increased fourth quarter results in our storage and transportation segments, the non-recurring hedging gains associated with our San Antonio refinery, of approximately $16.4 million helped partially offset the negative impact of the lower asphalt operations margins.”

2012 Outlook

Commenting on the 2012 outlook for NuStar Energy L.P., Anastasio said, “We expect NuStar's EBITDA to be higher than 2011. EBITDA in all three of our segments is also expected to exceed 2011 results."

In regard to internal growth spending Anastasio added, “NuStar continues to identify internal growth projects that should contribute to our EBITDA growth over the next several years. Currently we expect to spend $350 - $400 million on internal growth projects during 2012.”

A conference call with management is scheduled for 10:00 a.m. ET (9:00 a.m. CT) today, January 27, 2012, to discuss the financial and operational results for the fourth quarter of 2011. Investors interested in listening to the presentation may call 800/622-7620, passcode 39023181. International callers may access the presentation by dialing 706/645-0327, passcode 39023181. The company intends to have a playback available following the presentation, which may be accessed by calling 800/585-8367, passcode 39023181. A live broadcast of the conference call will also be available on the company’s Web site at http://www.nustarenergy.com.

NuStar Energy L.P. is a publicly traded, limited partnership based in San Antonio, with 8,417 miles of pipeline; 89 terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids; and two asphalt refineries and a fuels refinery with a combined throughput capacity of 118,500 barrels per day. The partnership’s combined system has approximately 98 million barrels of storage capacity. One of the largest asphalt refiners and marketers in the U.S. and the second largest independent liquids terminal operator in the nation, 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 http://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 2010 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,
		2011			2010			2011			2010
Statement of Income Data:
Revenues:
	Services revenues	$	217,249		$	205,542		$	825,938		$	791,314
	Product sales		1,709,856			988,670			5,749,317			3,611,747
	Total revenues		1,927,105			1,194,212			6,575,255			4,403,061

Costs and expenses:
	Cost of product sales		1,663,096			927,678			5,460,520			3,350,429
	Operating expenses		138,522			123,004			529,002			486,032
	General and administrative expenses		33,620			33,917			103,453			110,241
	Depreciation and amortization expense		43,932			39,149			168,286			153,802
	Total costs and expenses		1,879,170			1,123,748			6,261,261			4,100,504
Operating income			47,935			70,464			313,994			302,557
	Equity in earnings of joint venture		4,461			2,929			11,458			10,500
	Interest expense, net		(21,037	)		(20,221	)		(83,681	)		(78,280	)
	Other income (expense), net		2,408			1,052			(3,291	)		15,934
Income before income tax expense			33,767			54,224			238,480			250,711
	Income tax expense		3,568			2,689			16,879			11,741
Net income		$	30,199		$	51,535		$	221,601		$	238,970

Net income applicable to limited partners		$	19,782		$	41,936		$	180,714		$	200,886

Net income per unit applicable to limited partners:		$	0.30		$	0.65		$	2.78		$	3.19

Weighted average limited partner units outstanding			66,226,386			64,610,549			65,018,301			62,946,987

EBITDA (Note 1)		$	98,736		$	113,594		$	490,447		$	482,793

Distributable cash flow (Note 1)		$	74,739		$	76,854		$	351,263		$	320,226



		December 31,			December 31,
		2011			2010
Balance Sheet Data:
Debt, including current portion (a)		$	2,293,030		$	2,137,080
Partners' equity (b)			2,864,335			2,702,700
Debt-to-capitalization ratio (a) / ((a)+(b))			44.5	%		44.2	%


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,
				2011			2010			2011			2010

Segment Data:
	Storage:
	Throughput (barrels/day)				735,521			677,736			693,269			669,435
	Throughput revenues			$	21,858		$	19,520		$	80,246		$	75,605
	Storage lease revenues				126,705			113,740			486,525			444,233
	Total revenues				148,563			133,260			566,771			519,838
	Operating expenses				72,409			65,634			285,639			263,820
	Depreciation and amortization expense				23,081			20,067			87,737			77,071
			Segment operating income	$	53,073		$	47,559		$	193,395		$	178,947

	Transportation:
	Refined products pipelines throughput (barrels/day)				528,818			531,626			514,261			529,946
	Crude oil pipelines throughput (barrels/day)				333,899			342,417			305,890			371,726
	Total throughput (barrels/day)				862,717			874,043			820,151			901,672
	Revenues			$	85,043		$	83,255		$	311,514		$	316,072
	Operating expenses				29,345			28,100			114,726			116,884
	Depreciation and amortization expense				12,893			12,588			51,175			50,617
			Segment operating income	$	42,805		$	42,567		$	145,613		$	148,571

	Asphalt and fuels marketing:
	Product sales			$	1,710,020		$	989,896		$	5,759,099		$	3,615,890
	Cost of product sales				1,669,005			933,151			5,490,384			3,371,854
		Gross margin			41,015			56,745			268,715			244,036
	Operating expenses				47,344			35,994			160,850			132,918
	Depreciation and amortization expense				6,131			5,003			22,636			20,257
			Segment operating (loss) income	$	(12,460	)	$	15,748		$	85,229		$	90,861

	Consolidation and intersegment eliminations:
	Revenues			$	(16,521	)	$	(12,199	)	$	(62,129	)	$	(48,739	)
	Cost of product sales				(5,909	)		(5,473	)		(29,864	)		(21,425	)
	Operating expenses				(10,576	)		(6,724	)		(32,213	)		(27,590	)
			Total	$	(36	)	$	(2	)	$	(52	)	$	276

	Consolidated Information:
	Revenues			$	1,927,105		$	1,194,212		$	6,575,255		$	4,403,061
	Cost of product sales				1,663,096			927,678			5,460,520			3,350,429
	Operating expenses				138,522			123,004			529,002			486,032
	Depreciation and amortization expense				42,105			37,658			161,548			147,945
			Segment operating income		83,382			105,872			424,185			418,655
	General and administrative expenses				33,620			33,917			103,453			110,241
	Other depreciation and amortization expense				1,827			1,491			6,738			5,857
			Consolidated operating income	$	47,935		$	70,464		$	313,994		$	302,557


NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Per Unit Data)


Notes:
	1.	NuStar Energy L.P. utilizes two financial measures, EBITDA and distributable cash flow, 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 operating performance of the partnership's assets and the cash that the business is generating. Neither EBITDA nor distributable cash flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income. 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 net income to EBITDA and distributable cash flow:

			Three Months Ended						Year Ended
			December 31,						December 31,
			2011			2010			2011			2010

		Net income	$	30,199		$	51,535		$	221,601		$	238,970
		Plus interest expense, net		21,037			20,221			83,681			78,280
		Plus income tax expense		3,568			2,689			16,879			11,741
		Plus depreciation and amortization expense		43,932			39,149			168,286			153,802
		EBITDA		98,736			113,594			490,447			482,793
		Less equity in earnings of joint venture		(4,461	)		(2,929	)		(11,458	)		(10,500	)
		Less interest expense, net		(21,037	)		(20,221	)		(83,681	)		(78,280	)
		Less reliability capital expenditures		(9,082	)		(15,704	)		(50,339	)		(54,031	)
		Less income tax expense		(3,568	)		(2,689	)		(16,879	)		(11,741	)
		Plus distributions from joint venture		4,977			2,125			14,374			9,625
		Mark-to-market impact on hedge transactions (a)		9,174			2,678			456			(17,640	)
		Contingent loss adjustment		-			-			3,250			-
		Other non-cash items		-			-			5,093			-
		Distributable cash flow	$	74,739		$	76,854		$	351,263		$	320,226

		EBITDA	$	98,736		$	113,594		$	490,447		$	482,793
		EBITDA attributable to noncontrolling interest		29			-			415			-
		EBITDA attributable to NuStar Energy L.P.	$	98,707		$	113,594		$	490,032		$	482,793

		Distributable cash flow	$	74,739		$	76,854		$	351,263		$	320,226
		Distributable cash flow attributable to noncontrolling interest		53			-			441			-
		Distributable cash flow attributable to NuStar Energy L.P.	$	74,686		$	76,854		$	350,822		$	320,226

		General partner's interest in distributable cash flow		11,598			10,160			42,956			39,531
		Limited partners' interest in distributable cash flow	$	63,088		$	66,694		$	307,866		$	280,695

		Distributable cash flow per limited partner unit	$	0.95		$	1.03		$	4.74		$	4.43

		(a) Distributable cash flow 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 distributable cash flow when the contracts are settled.

Source: NuStar Energy L.P.

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

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NuStar Energy L.P. 2011 Full Year Distributable Cash Flow, EBITDA and Operating Income Higher than 2010

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News Release

NuStar Energy L.P. 2011 Full Year Distributable Cash Flow, EBITDA and Operating Income Higher than 2010

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CONTACT MEDIA

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