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Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______
Commission File Number 1-16417
_________________________________________
https://cdn.kscope.io/4fff2223fc571cd8013894b73659dc7d-ns-20210331_g1.jpg
NuStar Energy L.P.
(Exact name of registrant as specified in its charter)
_________________________________________
Delaware74-2956831
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
19003 IH-10 West
San Antonio, Texas
(Address of principal executive offices)
78257
(Zip Code)
Registrant’s telephone number, including area code (210918-2000
 _______________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common unitsNSNew York Stock Exchange
Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred UnitsNSprANew York Stock Exchange
Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred UnitsNSprBNew York Stock Exchange
Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred UnitsNSprCNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes þ    No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes þ    No o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filerþAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    o   
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes    No þ

The number of common units outstanding as of April 30, 2021 was 109,526,320.



Table of Contents

NUSTAR ENERGY L.P.
FORM 10-Q
TABLE OF CONTENTS
 
Item 1.
Item 2.
Item 3.
Item 4.
Item 1A.
Item 6.
2


Table of Contents

PART I – FINANCIAL INFORMATION

Item 1.Financial Statements
NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, Thousands of Dollars, Except Unit Data)
March 31,
2021
December 31,
2020
Assets
Current assets:
Cash and cash equivalents$28,246 $153,625 
Accounts receivable, net
121,253 133,473 
Inventories17,534 11,059 
Prepaid and other current assets15,719 25,400 
Total current assets182,752 323,557 
Property, plant and equipment, at cost6,205,276 6,164,742 
Accumulated depreciation and amortization(2,264,511)(2,207,230)
Property, plant and equipment, net3,940,765 3,957,512 
Intangible assets, net617,353 630,209 
Goodwill766,416 766,416 
Other long-term assets, net136,586 139,324 
Total assets$5,643,872 $5,817,018 
Liabilities, Mezzanine Equity and Partners’ Equity
Current liabilities:
Accounts payable$71,623 $71,731 
Current portion of finance lease obligations3,517 3,839 
Accrued interest payable77,996 50,847 
Accrued liabilities58,761 77,770 
Taxes other than income tax12,968 16,998 
Total current liabilities224,865 221,185 
Long-term debt, less current portion3,446,604 3,593,496 
Deferred income tax liability13,200 13,011 
Other long-term liabilities156,338 157,825 
Total liabilities3,841,007 3,985,517 
Commitments and contingencies (Note 6)
Series D preferred limited partners (23,246,650 preferred units outstanding as of
March 31, 2021 and December 31, 2020) (Note 8)
603,563 599,542 
Partners’ equity (Note 9):
Preferred limited partners
Series A (9,060,000 units outstanding as of March 31, 2021 and December 31, 2020)
218,307 218,307 
Series B (15,400,000 units outstanding as of March 31, 2021 and December 31, 2020)
371,476 371,476 
Series C (6,900,000 units outstanding as of March 31, 2021 and December 31, 2020)
166,518 166,518 
Common limited partners (109,526,248 and 109,468,127 common units outstanding
as of March 31, 2021 and December 31, 2020, respectively)
537,537 572,314 
Accumulated other comprehensive loss(94,536)(96,656)
Total partners’ equity1,199,302 1,231,959 
Total liabilities, mezzanine equity and partners’ equity$5,643,872 $5,817,018 
See Condensed Notes to Consolidated Financial Statements.
3


Table of Contents

NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited, Thousands of Dollars, Except Unit and Per Unit Data)
 Three Months Ended March 31,
 20212020
Revenues:
Service revenues$271,883 $316,746 
Product sales89,763 76,045 
Total revenues361,646 392,791 
Costs and expenses:
Costs associated with service revenues:
Operating expenses (excluding depreciation and amortization expense)
87,287 100,182 
Depreciation and amortization expense68,418 68,061 
Total costs associated with service revenues155,705 168,243 
Cost associated with product sales81,113 67,450 
Goodwill impairment loss
 225,000 
General and administrative expenses (excluding depreciation and amortization expense)
24,492 22,971 
Other depreciation and amortization expense2,047 2,186 
Total costs and expenses263,357 485,850 
Operating income (loss)98,289 (93,059)
Interest expense, net(54,918)(47,494)
Other income (expense), net398 (6,489)
Income (loss) before income tax expense43,769 (147,042)
Income tax expense1,512 599 
Net income (loss)$42,257 $(147,641)
Basic and diluted net income (loss) per common unit (Note 10)
$0.05 $(1.68)
Basic and diluted weighted-average common units outstanding109,506,222 108,897,400 
Comprehensive income (loss)$44,377 $(183,954)
See Condensed Notes to Consolidated Financial Statements.

4


Table of Contents

NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, Thousands of Dollars)
 Three Months Ended March 31,
 20212020
Cash Flows from Operating Activities:
Net income (loss)$42,257 $(147,641)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense70,465 70,247 
Amortization of unit-based compensation3,871 2,585 
Amortization of debt related items3,042 1,462 
Goodwill impairment loss 225,000 
Changes in current assets and current liabilities (Note 11)
24,397 (9,785)
Decrease in other long-term assets2,381 2,303 
(Decrease) increase in other long-term liabilities(1,678)948 
Other, net922 6,309 
Net cash provided by operating activities145,657 151,428 
Cash Flows from Investing Activities:
Capital expenditures(40,463)(56,283)
Change in accounts payable related to capital expenditures(5,449)(15,706)
Proceeds from sale or disposition of assets130 565 
Net cash used in investing activities(45,782)(71,424)
Cash Flows from Financing Activities:
Proceeds from long-term debt borrowings270,400 135,200 
Proceeds from short-term debt borrowings 52,000 
Long-term debt repayments(418,100)(104,615)
Short-term debt repayments (47,500)
Distributions to preferred unitholders(31,887)(30,423)
Distributions to common unitholders(43,811)(65,169)
Payment of tax withholding for unit-based compensation(601)(8,820)
Increase (decrease) in cash book overdrafts267 (1,194)
Other, net(1,997)(6,568)
Net cash used in financing activities(225,729)(77,089)
Effect of foreign exchange rate changes on cash475 (1,403)
Net (decrease) increase in cash, cash equivalents and restricted cash(125,379)1,512 
Cash, cash equivalents and restricted cash as of the beginning of the period162,426 24,980 
Cash, cash equivalents and restricted cash as of the end of the period$37,047 $26,492 
See Condensed Notes to Consolidated Financial Statements.
5


Table of Contents

NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY AND MEZZANINE EQUITY
(Unaudited, Thousands of Dollars, Except Per Unit Data)
Limited PartnersMezzanine Equity
 PreferredCommonAccumulated
Other
Comprehensive
Loss
Total Partners’ Equity
(Note 9)
Series D Preferred Limited Partners (Note 8)
Total
Balance as of January 1, 2021$756,301 $572,314 $(96,656)$1,231,959 $599,542 $1,831,501 
Net income16,033 10,370  26,403 15,854 42,257 
Other comprehensive income
  2,120 2,120 — 2,120 
Distributions to partners:
Series A, B and C preferred
(16,033)— — (16,033)— (16,033)
Common ($0.40 per unit)
— (43,811)— (43,811)— (43,811)
Series D preferred
— — — — (15,854)(15,854)
Unit-based compensation
 2,678  2,678 — 2,678 
Series D preferred unit accretion
— (4,021)— (4,021)4,021  
Other 7  7  7 
Balance as of March 31, 2021$756,301 $537,537 $(94,536)$1,199,302 $603,563 $1,802,865 

Balance as of January 1, 2020$756,301 $1,087,805 $(67,896)$1,776,210 $581,935 $2,358,145 
Net income (loss)16,033 (178,064) (162,031)14,390 (147,641)
Other comprehensive loss
  (36,313)(36,313)— (36,313)
Distributions to partners:
Series A, B and C preferred
(16,033)— — (16,033)— (16,033)
Common ($0.60 per unit)
— (65,169)— (65,169)— (65,169)
Series D preferred
— — — — (14,390)(14,390)
Unit-based compensation
 16,051  16,051 — 16,051 
Series D Preferred Unit accretion
 (4,902) (4,902)4,902  
Other 1  1  1 
Balance as of March 31, 2020$756,301 $855,722 $(104,209)$1,507,814 $586,837 $2,094,651 

See Condensed Notes to Consolidated Financial Statements.


6

Table of Contents
NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND BASIS OF PRESENTATION

Organization and Operations
NuStar Energy L.P. (NYSE: NS) is a Delaware limited partnership primarily engaged in the transportation of petroleum products and anhydrous ammonia, and the terminalling and storage of petroleum products and renewable fuels. Unless otherwise indicated, the terms “NuStar Energy,” “NS,” “the Partnership,” “we,” “our” and “us” are used in this report to refer to NuStar Energy L.P., to one or more of our consolidated subsidiaries or to all of them taken as a whole. Our business is managed under the direction of the board of directors of NuStar GP, LLC, the general partner of our general partner, Riverwalk Logistics, L.P., both of which are indirectly wholly owned subsidiaries of ours.

We conduct our operations through our subsidiaries, primarily NuStar Logistics, L.P. (NuStar Logistics) and NuStar Pipeline Operating Partnership L.P. (NuPOP). We have three business segments: pipeline, storage and fuels marketing.

Recent Developments
COVID-19. The coronavirus, or COVID-19, had a severe negative impact on global economic activity during 2020, significantly reducing demand for petroleum products and increasing the volatility of crude oil prices, beginning in March 2020. Amid signs of stabilization and improvement across the U.S. economy in 2021, ongoing uncertainty surrounding the COVID-19 pandemic has caused and may continue to cause volatility and could have a significant impact on management’s estimates and assumptions in 2021 and beyond.

Senior Notes. On February 1, 2021, we repaid our $300.0 million of 6.75% senior notes at maturity with borrowings under our revolving credit agreement.

Term Loan Credit Agreement. On February 16, 2021, we terminated an unsecured term loan credit agreement with certain lenders and Oaktree Fund Administration, LLC, as administrative agent for the lenders (the Term Loan). Please refer to Note 5 for further discussion about the Term Loan.

Selby Terminal Fire. On October 15, 2019, our terminal facility in Selby, California experienced a fire that destroyed two storage tanks and temporarily shut down the terminal. For the three months ended March 31, 2021, we received insurance proceeds of $20.5 million and for the year ended December 31, 2020, we received insurance proceeds of $35.0 million, including $11.9 million in the first quarter of 2020. Gains from business interruption insurance of $4.0 million and $3.1 million for the three months ended March 31, 2021 and March 31, 2020, respectively, are included in “Operating expenses” in the condensed consolidated statements of comprehensive income (loss). Insurance proceeds relate to cleanup costs and business interruption and are therefore included in “Cash flows from operating activities” in the consolidated statement of cash flows. We believe we have adequate insurance to offset additional costs.

Basis of Presentation
These unaudited condensed consolidated financial statements include the accounts of the Partnership and subsidiaries in which the Partnership has a controlling interest. Inter-partnership balances and transactions have been eliminated in consolidation.

These unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included, and all disclosures are adequate. All such adjustments are of a normal recurring nature unless disclosed otherwise. Operating results for the three months ended March 31, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020.

2. NEW ACCOUNTING PRONOUNCEMENT

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity
In August 2020, the Financial Accounting Standards Board (FASB) issued guidance intended to simplify the accounting for convertible instruments by eliminating certain accounting models for convertible debt instruments and convertible preferred stock. In addition, the guidance amends the derivatives scope exception for contracts in an entity’s own equity, the disclosure requirements for convertible instruments, and certain earnings-per-unit guidance. The guidance is effective for annual periods
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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
beginning after December 15, 2021, and early adoption is permitted for annual periods beginning after December 15, 2020. Amendments may be applied using either a modified retrospective approach or a fully retrospective approach. We plan to adopt the amended guidance on January 1, 2022 and are currently assessing the impact of this amended guidance on our financial position, results of operations and disclosures. We plan to provide additional information about the expected impact at a future date.

3. GOODWILL IMPAIRMENT

In March 2020, the COVID-19 pandemic and actions taken by the Organization of Petroleum Exporting Countries and other oil-producing nations (OPEC+) resulted in severe disruptions in the capital and commodities markets, which led to significant decline in our unit price. As a result, our equity market capitalization fell significantly. The decline in crude oil prices and demand for petroleum products also led to a decline in expected earnings from some of our goodwill reporting units. These factors and others related to COVID-19 and OPEC+ caused us to conclude there were triggering events that occurred in March 2020 that required us to perform a goodwill impairment test as of March 31, 2020. We recognized a goodwill impairment charge of $225.0 million in the first quarter of 2020, which is reported in the pipeline segment. Our assessment did not identify any other reporting units at risk of a goodwill impairment.

We calculated the estimated fair value of each of our reporting units using a weighted-average of values determined from an income approach and a market approach. The income approach involves estimating the fair value of each reporting unit by discounting its estimated future cash flows using a discount rate that would be consistent with a market participant’s assumption. The market approach bases the fair value measurement on information obtained from observed stock prices of public companies and recent merger and acquisition transaction data of comparable entities. In order to estimate the fair value of goodwill, management must make certain estimates and assumptions that affect the total fair value of the reporting unit including, among other things, an assessment of market conditions, projected cash flows, discount rates and growth rates. Management’s estimates of projected cash flows related to the reporting unit include, but are not limited to, future earnings of the reporting unit, assumptions about the use or disposition of assets included in the reporting unit, estimated remaining lives of those assets, and future expenditures necessary to maintain the asset’s existing service potential. The assumptions in the fair value measurement reflect the current market environment, industry-specific factors and company-specific factors.

We assess goodwill for impairment annually on October 1, or more frequently if events or changes in circumstances indicate it might be impaired, and completed our most recent quantitative assessment on October 1, 2020. Although we determined that no impairment charges resulted from our October 1, 2020 impairment assessment, the fair value of the crude oil pipelines reporting unit, which is included in the pipeline reporting segment, exceeded its carrying value by approximately 4.0%. The goodwill associated with the crude oil pipelines reporting unit totaled $308.6 million as of March 31, 2021 and October 1, 2020. Considering that the carrying value of the reporting unit was written down to its fair value with the first quarter of 2020 impairment charge discussed above, changes to certain assumptions used in our estimate could cause the fair value to be less than the carrying value of the crude oil pipelines reporting unit, resulting in an impairment. Through the filing date of this report, we did not identify any factors that warrant an evaluation of the recoverability of the carrying value of our long-lived assets or goodwill as of March 31, 2021.

Management’s estimates are based on numerous assumptions about future operations and market conditions, which we believe to be reasonable but are inherently uncertain. The uncertainties underlying our assumptions and estimates, including uncertainty surrounding the COVID-19 pandemic, could differ significantly from actual results and lead to a different determination of the fair value of our assets.

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NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
4. REVENUE FROM CONTRACTS WITH CUSTOMERS

Contract Assets and Contract Liabilities
The following table provides information about contract assets and contract liabilities from contracts with customers:
20212020
Contract AssetsContract LiabilitiesContract AssetsContract Liabilities
(Thousands of Dollars)
Balances as of January 1:
Current portion$2,694 $(22,019)$2,140 $(21,083)
Noncurrent portion932 (47,537)1,003 (40,289)
Total 3,626 (69,556)3,143 (61,372)
Activity:
Additions92 (9,658)1,357 (11,883)
Transfer to accounts receivable(1,990)— (1,289)— 
Transfer to revenues(125)15,877  10,765 
Total (2,023)6,219 68 (1,118)
Balances as of March 31:
Current portion733 (16,524)1,812 (20,421)
Noncurrent portion870 (46,813)1,399 (42,069)
Total $1,603 $(63,337)$3,211 $(62,490)

Remaining Performance Obligations
The following table presents our estimated revenue from contracts with customers for remaining performance obligations that has not yet been recognized, representing our contractually committed revenue as of March 31, 2021 (in thousands of dollars):
2021 (remaining)$374,191 
2022377,763 
2023266,357 
2024185,483 
2025128,561 
Thereafter176,465 
Total$1,508,820 

Our contractually committed revenue, for purposes of the tabular presentation above, is generally limited to customer service contracts that have fixed pricing and fixed volume terms and conditions, generally including contracts with payment obligations for take-or-pay minimum volume commitments.
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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Disaggregation of Revenues
The following table disaggregates our revenues:
Three Months Ended March 31,
20212020
(Thousands of Dollars)
Pipeline segment:
Crude oil pipelines $74,588 $91,722 
Refined products and ammonia pipelines (excluding lessor revenues)94,640 103,134 
Total pipeline segment revenues from contracts with customers
169,228 194,856 
Lessor revenues 825 
Total pipeline segment revenues169,228 195,681 
Storage segment:
Throughput terminals24,794 38,723 
Storage terminals (excluding lessor revenues)73,416 74,166 
Total storage segment revenues from contracts with customers
98,210 112,889 
Lessor revenues10,364 10,328 
Total storage segment revenues108,574 123,217 
Fuels marketing segment:
Revenues from contracts with customers
83,855 73,902 
Consolidation and intersegment eliminations(11)(9)
Total revenues$361,646 $392,791 

5. DEBT

Revolving Credit Agreement
On February 16, 2021, NuStar Logistics amended its $1.0 billion revolving credit agreement due October 27, 2023 (the Revolving Credit Agreement) to, among other things, expand certain adjustments related to our maximum consolidated debt coverage ratio and minimum consolidated interest coverage ratio.

As of March 31, 2021, we had $157.0 million of borrowings outstanding and $837.8 million available for borrowing under the Revolving Credit Agreement. Letters of credit issued under the Revolving Credit Agreement totaled $5.2 million as of March 31, 2021 and restrict the amount we can borrow under the Revolving Credit Agreement. Obligations under the Revolving Credit Agreement are guaranteed by NuStar Energy and NuPOP. The Revolving Credit Agreement provides for U.S. dollar borrowings, which bear interest, at our option, based on an alternative base rate or a LIBOR-based rate. The interest rate on the Revolving Credit Agreement is subject to adjustment if our debt rating is downgraded (or upgraded) by certain credit rating agencies. As of March 31, 2021, our weighted-average interest rate related to borrowings under the Revolving Credit Agreement was 2.7%.

The Revolving Credit Agreement is subject to maximum consolidated debt coverage ratio and minimum consolidated interest coverage ratio requirements, which may limit the amount we can borrow under the Revolving Credit Agreement to an amount less than the total amount available for borrowing. For the rolling period of four quarters ending March 31, 2021, the consolidated debt coverage ratio (as defined in the Revolving Credit Agreement) could not exceed 5.00-to-1.00 and the consolidated interest coverage ratio (as defined in the Revolving Credit Agreement) must not be less than 1.75-to-1.00. As of March 31, 2021, we believe that we are in compliance with the covenants in the Revolving Credit Agreement.
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NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
NuStar Logistics Senior Notes
Senior Note Repayment. We repaid our $300.0 million of 6.75% senior notes due February 1, 2021 with borrowings under our Revolving Credit Agreement.

Current Maturities. We expect to fund senior note maturities in February 2022 by utilizing borrowings under our Revolving Credit Agreement. Therefore, these senior note maturities are classified as long-term debt.

Term Loan Credit Agreement
On April 19, 2020, NuStar Energy and NuStar Logistics entered into an unsecured term loan credit agreement with certain lenders and Oaktree Fund Administration, LLC, as administrative agent for the lenders. The Term Loan provided for an aggregate commitment of up to $750.0 million pursuant to a three-year unsecured term loan credit facility. NuStar Logistics drew $500.0 million on April 21, 2020, which we repaid on September 16, 2020. On February 16, 2021, we terminated the Term Loan.

Receivables Financing Agreement
NuStar Energy and NuStar Finance LLC (NuStar Finance), a special purpose entity and wholly owned subsidiary of NuStar Energy, are parties to a $100.0 million receivables financing agreement with a third-party lender (the Receivables Financing Agreement) and agreements with certain of NuStar Energy’s wholly owned subsidiaries (collectively with the Receivables Financing Agreement, the Securitization Program). NuStar Energy provides a performance guarantee in connection with the Securitization Program. NuStar Finance’s sole activity consists of purchasing receivables from NuStar Energy’s subsidiaries that participate in the Securitization Program and providing these receivables as collateral for NuStar Finance’s revolving borrowings under the Securitization Program. NuStar Finance is a separate legal entity and the assets of NuStar Finance, including these accounts receivable, are not available to satisfy the claims of creditors of NuStar Energy, its subsidiaries selling receivables under the Securitization Program or their affiliates. The amount available for borrowing is based on the availability of eligible receivables and other customary factors and conditions.

Borrowings by NuStar Finance under the Receivables Financing Agreement bear interest at the applicable bank rate, as defined under the Receivables Financing Agreement. The weighted average interest rate related to outstanding borrowings under the Securitization Program as of March 31, 2021 was 2.3%. As of March 31, 2021, $111.2 million of our accounts receivable was included in the Securitization Program. The amount of borrowings outstanding under the Receivables Financing Agreement totaled $52.3 million as of March 31, 2021.

Fair Value of Long-Term Debt
The estimated fair values and carrying amounts of long-term debt, excluding finance leases, were as follows:
March 31, 2021December 31, 2020
 (Thousands of Dollars)
Fair value$3,666,778 $3,799,378 
Carrying amount$3,392,617 $3,539,258 

We have estimated the fair value of our publicly traded notes based upon quoted prices in active markets; therefore, we determined that the fair value of our publicly traded notes falls in Level 1 of the fair value hierarchy. With regard to our other debt, for which a quoted market price is not available, we have estimated the fair value using a discounted cash flow analysis using current incremental borrowing rates for similar types of borrowing arrangements and determined that the fair value falls in Level 2 of the fair value hierarchy. The carrying amount includes net fair value adjustments, unamortized discounts and unamortized debt issuance costs.

6. COMMITMENTS AND CONTINGENCIES

We have contingent liabilities resulting from various litigation, claims and commitments. We record accruals for loss contingencies when losses are considered probable and can be reasonably estimated. Legal fees associated with defending the Partnership in legal matters are expensed as incurred. We accrued $2.5 million and $2.6 million for contingent losses as of March 31, 2021 and December 31, 2020, respectively. The amount that will ultimately be paid related to such matters may differ from the recorded accruals, and the timing of such payments is uncertain. We evaluate each contingent loss at least quarterly, and more frequently as each matter progresses and develops over time, and we do not believe that the resolution of any particular claim or proceeding, or all matters in the aggregate, would have a material adverse effect on our results of operations, financial position or liquidity.
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NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
7. DERIVATIVES

We utilize various derivative instruments to manage our exposure to interest rate risk and commodity price risk. Our risk management policies and procedures are designed to monitor interest rates, futures and swap positions and over-the-counter positions, as well as physical commodity volumes, grades, locations and delivery schedules, to help ensure that our hedging activities address our market risks. Derivative financial instruments associated with commodity price risk with respect to our petroleum product inventories and related firm commitments to purchase and/or sell such inventories were not material for any periods presented.

We were a party to certain interest rate swap agreements to manage our exposure to changes in interest rates, which consisted of forward-starting interest rate swap agreements related to a forecasted debt issuance in 2020. We entered into these swaps in order to hedge the risk of fluctuations in the required interest payments attributable to changes in the benchmark interest rate during the period from the effective date of the swap to the issuance of the forecasted debt. Under the terms of the swaps, we paid a weighted-average fixed rate and received a rate based on the three-month USD LIBOR. These swaps qualified as cash flow hedges, and we designated them as such. We recorded mark-to-market adjustments as a component of “Accumulated other comprehensive loss” (AOCI), and the amount in AOCI is recognized in “Interest expense, net” as the forecasted interest payments occur or if the interest payments are probable not to occur. In June 2020, we terminated forward-starting interest rate swaps with an aggregate notional amount of $250.0 million and paid $49.2 million, which is amortized into “Interest expense, net” as the related forecasted interest payments occur.

Our forward-starting interest rate swaps had the following impact on earnings:
Three Months Ended March 31,
20212020
(Thousands of Dollars)
Loss recognized in other comprehensive loss on derivative$ $(29,830)
Loss reclassified from AOCI into interest expense, net
$(1,348)$(647)

As of March 31, 2021, we expect to reclassify a loss of $4.8 million to “Interest expense, net” within the next twelve months associated with unwound forward-starting interest rate swaps.

8. SERIES D CUMULATIVE CONVERTIBLE PREFERRED UNITS

Distributions on the Series D Cumulative Convertible Preferred Units (Series D Preferred Units) are payable out of any legally available funds, accrue and are cumulative from the original issuance dates, and are payable on the 15th day (or next business day) of each of March, June, September and December, to holders of record on the first business day of each payment month. The distribution rates on the Series D Preferred Units are as follows: (i) 9.75%, or $57.6 million, per annum ($0.619 per unit per distribution period) for the first two years (beginning with the September 17, 2018 distribution); (ii) 10.75%, or $63.4 million, per annum ($0.682 per unit per distribution period) for years three through five; and (iii) the greater of 13.75%, or $81.1 million, per annum ($0.872 per unit per distribution period) or the distribution per common unit thereafter. While the Series D Preferred Units are outstanding, the Partnership will be prohibited from paying distributions on any junior securities, including the common units, unless full cumulative distributions on the Series D Preferred Units (and any parity securities) have been, or contemporaneously are being, paid or set aside for payment through the most recent Series D Preferred Unit distribution payment date. Any Series D Preferred Unit distributions in excess of $0.635 per unit may be paid, in the Partnership’s sole discretion, in additional Series D Preferred Units, with the remainder paid in cash.

In April 2021, our board of directors declared distributions of $0.682 per Series D Preferred Unit to be paid on June 15, 2021.

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NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
9. PARTNERS' EQUITY

Series A, B and C Preferred Units
We allocate net income to our 8.50% Series A, 7.625% Series B and 9.00% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (collectively, the Series A, B and C Preferred Units) equal to the amount of distributions earned during the period. Distributions on our Series A, B and C Preferred Units are payable out of any legally available funds, accrue and are cumulative from the original issuance dates, and are payable on the 15th day (or next business day) of each of March, June, September and December of each year to holders of record on the first business day of each payment month as follows (until the distribution rate changes to a floating rate):

UnitsFixed Distribution Rate Per Unit Per QuarterFixed Distribution
Per Quarter
Date at Which Distribution
Rate Becomes Floating
(Thousands of Dollars)
Series A Preferred Units$0.53125 $4,813 December 15, 2021
Series B Preferred Units$0.47657 $7,339 June 15, 2022
Series C Preferred Units$0.56250 $3,881 December 15, 2022

In April 2021, our board of directors declared distributions with respect to the Series A, B and C Preferred Units to be paid on June 15, 2021.

Common Limited Partners
We make quarterly distributions to common unitholders of 100% of our “Available Cash,” generally defined as cash receipts less cash disbursements, including distributions to our preferred units, and cash reserves established by the general partner, in its sole discretion. These quarterly distributions are declared and paid within 45 days subsequent to each quarter-end. The common unitholders receive a distribution each quarter as determined by the board of directors, subject to limitation by the distributions in arrears, if any, on our preferred units.

The following table summarizes information about quarterly cash distributions declared for our common limited partners:
Quarter EndedCash Distributions
Per Unit
Total Cash
Distributions
Record DatePayment Date
(Thousands of Dollars)
March 31, 2021$0.40 $43,834 May 10, 2021May 14, 2021
December 31, 2020$0.40 $43,787 February 8, 2021February 12, 2021

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NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Accumulated Other Comprehensive Income (Loss)
The balance of and changes in the components included in AOCI were as follows:

Three Months Ended March 31,
20212020
Foreign Currency TranslationCash Flow HedgesPension and Other Postretirement BenefitsTotalForeign Currency TranslationCash Flow HedgesPension and Other Postretirement BenefitsTotal
(Thousands of Dollars)
Balance as of January 1$(42,362)$(42,150)$(12,144)$(96,656)$(43,772)$(16,124)$(8,000)$(67,896)
Other comprehensive income (loss):
Other comprehensive income (loss) before reclassification adjustments
957   957 (6,828)(29,830) (36,658)
Net gain on pension costs reclassified into other income, net
  (187)(187)  (305)(305)
Net loss on cash flow hedges reclassified into interest expense, net
 1,348  1,348  647  647 
Other
  2 2   3 3 
Other comprehensive income (loss)
957 1,348 (185)2,120 (6,828)(29,183)(302)(36,313)
Balance as of March 31$(41,405)$(40,802)$(12,329)$(94,536)$(50,600)$(45,307)$(8,302)$(104,209)


10. NET INCOME (LOSS) PER COMMON UNIT

Basic net income (loss) per common unit is determined pursuant to the two-class method. Under this method, all earnings are allocated to our limited partners and participating securities based on their respective rights to receive distributions earned during the period. Participating securities include restricted units awarded under our long-term incentive plans. We compute basic net income (loss) per common unit by dividing net income (loss) attributable to common units by the weighted-average number of common units outstanding during the period.

We compute diluted net income (loss) per common unit by dividing net income (loss) attributable to common units by the sum of (i) the weighted average number of common units outstanding during the period and (ii) the effect of dilutive potential common units outstanding during the period. Dilutive potential common units may include contingently issuable performance unit awards and the Series D Preferred Units.

The Series D Preferred Units are convertible into common units at the option of the holder at any time on or after June 29, 2020. As such, we calculated the dilutive effect of the Series D Preferred Units using the if-converted method. The effect of the assumed conversion of the Series D Preferred Units outstanding as of the end of each period presented was antidilutive; therefore, we did not include such conversion in the computation of diluted net income (loss) per common unit.

Contingently issuable performance units are included as dilutive potential common units if it is probable that that performance measures will be achieved, unless to do so would be antidilutive.
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NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The following table details the calculation of net income (loss) per common unit:
 Three Months Ended March 31,
 20212020
 (Thousands of Dollars, Except Unit and Per Unit Data)
Net income (loss)$42,257 $(147,641)
Distributions to preferred limited partners
(31,887)(30,423)
Distributions to common limited partners(43,834)(43,730)
Distribution equivalent rights to restricted units(598)(506)
Distributions in excess of income (loss)$(34,062)$(222,300)
Distributions to common limited partners$43,834 $43,730 
Allocation of distributions in excess of income (loss)(34,062)(222,300)
Series D Preferred Unit accretion(4,021)(4,902)
Net income (loss) attributable to common units$5,751 $(183,472)
Basic and diluted weighted-average common units outstanding109,506,222 108,897,400 
Basic and diluted net income (loss) per common unit$0.05 $(1.68)

11. SUPPLEMENTAL CASH FLOW INFORMATION

Changes in current assets and current liabilities were as follows:
 Three Months Ended March 31,
 20212020
 (Thousands of Dollars)
Decrease (increase) in current assets:
Accounts receivable$12,232 $7,778 
Inventories(6,471)1,648 
Other current assets9,689 7,007 
Increase (decrease) in current liabilities:
Accounts payable5,067 (18,082)
Accrued interest payable27,149 2,680 
Accrued liabilities(19,082)(5,679)
Taxes other than income tax(4,187)(5,137)
Changes in current assets and current liabilities$24,397 $(9,785)

The above changes in current assets and current liabilities differ from changes between amounts reflected in the applicable consolidated balance sheets due to:
the change in the amount accrued for capital expenditures;
the effect of foreign currency translation;
changes in the fair values of our interest rate swap agreements prior to termination; and
the effect of accrued compensation expense paid with fully vested common unit awards.

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NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Cash flows related to interest and income taxes were as follows:
 Three Months Ended March 31,
 20212020
 (Thousands of Dollars)
Cash paid for interest, net of amount capitalized$24,737 $43,172 
Cash paid for income taxes, net of tax refunds received$554 $90 

As of March 31, 2021 and December 31, 2020, restricted cash, representing legally restricted funds that are unavailable for general use, is included in "Other long-term assets, net" on the consolidated balance sheets. “Cash, cash equivalents and restricted cash” on the consolidated statements of cash flows was included in the consolidated balance sheets as follows:
March 31, 2021December 31, 2020
(Thousands of Dollars)
Cash and cash equivalents$28,246 $153,625 
Other long-term assets, net8,801 8,801 
Cash, cash equivalents and restricted cash$37,047 $162,426 

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NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
12. SEGMENT INFORMATION

Our reportable business segments consist of the pipeline, storage and fuels marketing segments. Our segments represent strategic business units that offer different services and products. We evaluate the performance of each segment based on its respective operating income (loss), before general and administrative expenses and certain non-segmental depreciation and amortization expense. General and administrative expenses are not allocated to the operating segments since those expenses relate primarily to the overall management at the entity level. Our principal operations include the transportation of petroleum products and anhydrous ammonia, and the terminalling, storage and marketing of petroleum products.
Results of operations for the reportable segments were as follows:
 Three Months Ended March 31,
 20212020
 (Thousands of Dollars)
Revenues:
Pipeline$169,228 $195,681 
Storage108,574 123,217 
Fuels marketing83,855 73,902 
Consolidation and intersegment eliminations(11)(9)
Total revenues$361,646 $392,791 
Operating income (loss):
Pipeline$79,379 $(122,924)
Storage42,718 48,579 
Fuels marketing2,731 6,443 
Total segment operating income (loss)124,828 (67,902)
General and administrative expenses24,492 22,971 
Other depreciation and amortization expense2,047 2,186 
Total operating income (loss)$98,289 $(93,059)

Total assets by reportable segment were as follows:
March 31,
2021
December 31,
2020
 (Thousands of Dollars)
Pipeline$3,568,565 $3,609,508 
Storage1,881,051 1,897,167 
Fuels marketing45,052 31,967 
Total segment assets5,494,668 5,538,642 
Other partnership assets149,204 278,376 
Total consolidated assets$5,643,872 $5,817,018 
 
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Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless otherwise indicated, the terms “NuStar Energy,” “NS,” “the Partnership,” “we,” “our” and “us” are used in this report to refer to NuStar Energy L.P., to one or more of our consolidated subsidiaries or to all of them taken as a whole.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
In this Form 10-Q, we make certain forward-looking statements, such as statements regarding our plans, strategies, objectives, expectations, estimates, predictions, projections, assumptions, intentions, resources and the future impact of the coronavirus, or COVID-19, the responses thereto, the decline in economic activity and the actions by oil producing nations on our business. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this report. These forward-looking statements can generally be identified by the words “anticipates,” “believes,” “expects,” “plans,” “intends,” “estimates,” “forecasts,” “budgets,” “projects,” “will,” “could,” “should,” “may” and similar expressions. These statements reflect our current views with regard to future events and are subject to various risks, uncertainties and assumptions, which may cause actual results to differ materially. Please read Item 1A. “Risk Factors” contained in our Annual Report on Form 10-K for the year ended December 31, 2020 and this Quarterly Report on Form 10-Q, as well as additional information provided from time to time in our subsequent filings with the Securities and Exchange Commission, for a discussion of certain of those risks, uncertainties and assumptions.

If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those described in any forward-looking statement. Other unknown or unpredictable factors could also have material adverse effects on our future results. Readers are cautioned not to place undue reliance on this forward-looking information, which is as of the date of this Form 10-Q. We do not intend to update these statements unless we are required by the securities laws to do so, and we undertake no obligation to publicly release the result of any revisions to any such forward-looking statements that may be made to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is presented in five sections:
Overview, including Trends and Outlook
Results of Operations
Liquidity and Capital Resources
Critical Accounting Policies
New Accounting Pronouncements

OVERVIEW
NuStar Energy L.P. (NYSE: NS) is primarily engaged in the transportation of petroleum products and anhydrous ammonia, and the terminalling and storage of petroleum products and renewable fuels. Our business is managed under the direction of the board of directors of NuStar GP, LLC, the general partner of our general partner, Riverwalk Logistics, L.P., both of which are indirectly wholly owned subsidiaries of ours.

Our operations consist of three reportable business segments: pipeline, storage and fuels marketing. As of March 31, 2021, our assets included 9,915 miles of pipeline and 73 terminal and storage facilities, which provide approximately 72 million barrels of storage capacity. We conduct our operations through our subsidiaries, primarily NuStar Logistics, L.P. (NuStar Logistics) and NuStar Pipeline Operating Partnership L.P. (NuPOP). We generate revenue primarily from:
tariffs for transporting crude oil, refined products and anhydrous ammonia through our pipelines;
fees for the use of our terminal and storage facilities and related ancillary services; and
sales of petroleum products.

The following factors affect the results of our operations:
economic factors and price volatility;
industry factors, such as changes in the prices of petroleum products that affect demand, or regulatory changes that could increase costs or impose restrictions on operations;
factors that affect our customers and the markets they serve, such as utilization rates and maintenance turnaround schedules of our refining company customers and drilling activity by our crude oil production customers;
company-specific factors, such as facility integrity issues, maintenance requirements and outages that impact the throughput rates of our assets; and
seasonal factors that affect the demand for products transported by and/or stored in our assets and the demand for products we sell.
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Recent Developments
COVID-19. The coronavirus, or COVID-19, had a severe negative impact on global economic activity during 2020, significantly reducing demand for petroleum products and increasing the volatility of crude oil prices, beginning in March 2020. While a number of countries, including the United States, have made significant progress in 2021 in deploying COVID-19 vaccines, which has improved economic conditions and outlook in those nations, many more continue to struggle to obtain and/or disseminate vaccinations to their populace, which is frustrating widespread global economic recovery. Even in the United States, if we are unable to vaccinate a sufficient proportion of people to reach herd immunity or if vaccine-resistant strains emerge, we may face additional resurgence in COVID-19 case count in some regions, which could slow the pace of domestic economic improvement and undermine rebounding demand in the markets our assets serve.

NuStar continues to take measures to ensure we operate safely and reliably and maintain a safe working environment for our employees at our locations across North America. In 2020, we implemented social distancing through revised shift schedules, work-from-home policies and designated remote work locations where appropriate, restricted non-essential business travel, required testing and self-screening for employees and contractors and other measures. Although the number of cases of COVID-19 has fallen across North America, we are continuing to closely monitor each of our locations to ensure the safety of our employees as well as the operational functionality of each location.

Senior Notes. On February 1, 2021, we repaid our $300.0 million of 6.75% senior notes at maturity with borrowings under our revolving credit agreement.

Term Loan Credit Agreement. On February 16, 2021, we terminated an unsecured term loan credit agreement with certain lenders and Oaktree Fund Administration, LLC, as administrative agent for the lenders (the Term Loan). Please refer to Note 5 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for further discussion.

Trends and Outlook
As America begins to recover from the impact of COVID-19 and begins returning to normal activity and growth, we are seeing signs of stabilization and improvement, across the U.S. and in NuStar’s footprint. U.S. refined product demand outlook has improved as COVID-19 vaccinations have continued to allow more and more Americans to return to normal day-to-day activities.

Within our pipeline segment, refined product demand on NuStar’s systems averaged near 100% of pre-pandemic demand in January and averaged 95% for the first quarter. We continue to expect our refined products systems to perform at around 100% of our pre-pandemic levels for the remainder of this year. Stronger refined product demand is contributing to higher crude prices, which are improving expectations for U.S. shale production, particularly in the Permian Basin. We believe the Permian Basin, and our system in particular, has geological advantages over other shale plays, including lower production costs and higher product quality, that have benefited and will continue to benefit our assets in 2021 as crude demand, price and production continue to recover. Sustained healthy U.S. shale production growth should drive U.S. export growth in the future, which should be positive for increased volumes on our Corpus Christi Crude System. We continue to expect our storage segment to benefit from growth of our renewable fuels distribution system on the West Coast, particularly as California replaces conventional fuels with renewable diesel and other renewable fuels, and other states, in the Northwest and beyond, adopt similar low-carbon fuel standards that prioritize the renewable fuels our assets are positioned to facilitate.

We expect our second quarter 2021 operational results and throughputs for our pipeline segment to be higher than the comparable period due to the precipitous decline in overall demand for refined petroleum products in the second quarter of 2020 following stay-home orders, business closures and other measures to reduce the spread of the virus. For our storage segment, we expect our second quarter 2021 results to be comparable to the prior year’s quarter as we continue to benefit from the contango market from last spring and renewable fuels-related projects at our West Coast terminals. We expect our full-year 2021 results to be comparable to 2020.

We plan to continue to manage our operations with fiscal discipline in this turbulent environment and to evaluate divestitures of non-core assets to reduce leverage. For the full-year 2021, we expect reliability and strategic capital expenditures to be comparable to 2020. We expect to fund all of our expenses, distribution requirements and capital expenditures for the full-year 2021 using internally generated cash flows.

Our outlook for the partnership, both overall and for any of our segments, may change, as we base our expectations on our continuing evaluation of several factors, many of which are outside our control. These factors include, but are not limited to, uncertainty surrounding the COVID-19 pandemic, including its duration and lingering impacts to the economy; uncertainty surrounding future production decisions by the Organization of Petroleum Exporting Countries and other oil-producing nations (OPEC+); the state of the economy and the capital markets; changes to our customers’ refinery maintenance schedules and
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unplanned refinery downtime; crude oil prices; the supply of and demand for crude oil, refined products and anhydrous ammonia; demand for our transportation and storage services; the availability of personnel, equipment and services essential to our operations; the ability to obtain timely permitting approvals; and changes in laws and regulations affecting our operations. Please read Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 and this Quarterly Report on Form 10-Q for additional discussion on how these factors could affect our operations.

RESULTS OF OPERATIONS
Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020
Consolidated Results of Operations
The following table presents our consolidated financial results:
 Three Months Ended March 31,Change
 20212020
(Unaudited, Thousands of Dollars, Except Per Unit Data)
Statement of Income Data:
Revenues:
Service revenues$271,883 $316,746 $(44,863)
Product sales89,763 76,045 13,718 
Total revenues361,646 392,791 (31,145)
Costs and expenses:
Costs associated with service revenues155,705 168,243 (12,538)
Cost associated with product sales81,113 67,450 13,663 
Goodwill impairment loss— 225,000 (225,000)
General and administrative expenses24,492 22,971 1,521 
Other depreciation and amortization expense2,047 2,186 (139)
Total costs and expenses263,357 485,850 (222,493)
Operating income (loss)98,289 (93,059)191,348 
Interest expense, net(54,918)(47,494)(7,424)
Other income (expense), net398 (6,489)6,887 
Income (loss) before income tax expense43,769 (147,042)190,811 
Income tax expense1,512 599 913 
Net income (loss)$42,257 $(147,641)$189,898 
Basic and diluted net income (loss) per common unit$0.05 $(1.68)$1.73 

Consolidated Overview. We recorded net income of $42.3 million for the three months ended March 31, 2021, compared to a net loss of $147.6 million for the three months ended March 31, 2020, mainly due to a non-cash goodwill impairment charge of $225.0 million related to our crude oil pipelines reporting unit in the first quarter of 2020. Please refer to Note 3 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for additional information on the goodwill impairment. Excluding the impact of the $225.0 million goodwill impairment, operating income decreased for the pipeline and storage segments. In the first quarter of 2021, we experienced lower throughput and lower revenue due to the continuing effects of the COVID-19 global pandemic that began in March 2020, mainly on our Corpus Christi Crude Pipeline System, compared to the strong first quarter of 2020. Additionally, Winter Storm Uri brought snow and damaging ice and caused widespread power outages in Texas and surrounding states in February 2021, which had a negative effect on operating income of $10.7 million in the first quarter of 2021, including $9.5 million in the pipeline segment and $1.2 million in the storage segment.

Corporate Items. General and administrative expenses increased $1.5 million for the three months ended March 31, 2021, compared to the three months ended March 31, 2020, mainly due to higher compensation costs.

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Interest expense, net, increased $7.4 million for the three months ended March 31, 2021, compared to the three months ended March 31, 2020, primarily due to the interest on the September 2020 issuance of $1.2 billion of senior notes and $322.1 million in revenue bonds issued pursuant to the Gulf Opportunity Zone Act of 2005 (GoZone Bonds) that were converted to a long-term interest rate in June 2020.

Other expense, net of $6.5 million for the three months ended March 31, 2020, consisted mainly of foreign currency exchange losses associated with our Mexico subsidiary.

Pipeline Segment
As of March 31, 2021, we own 3,205 miles of refined product pipelines and 2,210 miles of crude oil pipelines, as well as 5.6 million barrels of storage capacity, which comprise our Central West System. In addition, we own 2,500 miles of refined product pipelines, consisting of the East and North Pipelines, and a 2,000-mile ammonia pipeline (the Ammonia Pipeline), which comprise our Central East System. The East and North Pipelines have storage capacity of 7.4 million barrels. We charge tariffs on a per barrel basis for transporting refined products, crude oil and other feedstocks in our refined product and crude oil pipelines and on a per ton basis for transporting anhydrous ammonia in the Ammonia Pipeline.

The following table presents operating highlights for the pipeline segment:
 Three Months Ended March 31,Change
 20212020
(Thousands of Dollars, Except Barrels/Day Information)
Crude oil pipelines throughput (barrels/day)1,101,327 1,532,046 (430,719)
Refined products and ammonia pipelines throughput (barrels/day)508,726 594,432 (85,706)
Total throughput (barrels/day)1,610,053 2,126,478 (516,425)
Throughput and other revenues$169,228 $195,681 $(26,453)
Operating expenses45,055 50,246 (5,191)
Depreciation and amortization expense44,794 43,359 1,435 
Goodwill impairment loss— 225,000 (225,000)
Segment operating income (loss)$79,379 $(122,924)$202,303 

Total revenues decreased $26.5 million and throughputs decreased 516,425 barrels per day for the three months ended March 31, 2021, compared to the three months ended March 31, 2020, primarily due to the following:
a decrease in revenues of $13.2 million and a decrease in throughputs of 338,916 barrels per day on our Corpus Christi Crude Pipeline System, mainly due to lower demand for exports in the first quarter of 2021, compared to the first quarter of 2020;
a decrease in revenues of $8.8 million and a decrease in throughputs of 128,773 barrels per day across a majority of our pipeline systems in Texas, mainly due to Winter Storm Uri;
a decrease in revenues of $1.2 million and a decrease in throughputs of 7,295 barrels per day on our Valley Pipeline due to lower demand in the first quarter of 2021, compared to the first quarter of 2020; and
a decrease in revenues of $1.0 million and a decrease in throughputs of 3,457 barrels per day on our North Pipeline due to unfavorable weather conditions that delayed agricultural activity for several weeks in the first quarter of 2021.

Operating expenses decreased $5.2 million for the three months ended March 31, 2021, compared to the three months ended March 31, 2020, primarily due to the following:
a decrease in maintenance and regulatory expenses of $3.6 million during 2021 mainly as a result of maintenance and regulatory expenses on the Ammonia Pipeline and regulatory cleaning and repairs on certain tanks along our McKee System pipelines in the first quarter of 2020; and
a decrease in power and rental costs of $3.7 million, mainly as a result of the lower throughputs in the first quarter of 2021 described above, and the addition of permanent power on our Permian Crude System.
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These decreases were partially offset by an increase in compensation costs of $3.1 million in the first quarter of 2021.

Depreciation and amortization expense increased $1.4 million for the three months ended March 31, 2021, compared to the three months ended March 31, 2020, mainly due to projects associated with our Permian Crude System and other completed projects.

Storage Segment
Our storage segment is comprised of our facilities that provide storage, handling and other services for petroleum products, crude oil, specialty chemicals, renewable fuels and other liquids. As of March 31, 2021, we own and operate 38 terminals and storage facilities in the U.S., one terminal in Nuevo Laredo, Mexico and one terminal located in Point Tupper, Canada with an aggregate storage capacity of 59.0 million barrels. Revenues for the storage segment include fees for tank storage agreements, under which a customer agrees to pay for a certain amount of storage in a tank over a period of time (storage terminal revenues), and throughput agreements, under which a customer pays a fee per barrel for volumes moved through our terminals (throughput terminal revenues).

Sale of Texas City Terminals. On December 7, 2020, we sold the equity interests in our wholly owned subsidiaries that owned two terminals in Texas City, Texas for $106.0 million (the Texas City Sale). The two terminals have an aggregate storage capacity of 3.0 million barrels and were previously included in our storage segment.

Selby Terminal Fire. We recognized gains from business interruption insurance of $4.0 million and $3.1 million for the three months ended March 31, 2021 and March 31, 2020, respectively, included in “Operating expenses,” which relate to a fire in October 2019 at our terminal facility in Selby, California.

The following table presents operating highlights for the storage segment:
 Three Months Ended March 31,Change
 20212020
(Thousands of Dollars, Except Barrels/Day Information)
Throughput (barrels/day)400,302 678,830 (278,528)
Throughput terminal revenues$24,794 $38,723 $(13,929)
Storage terminal revenues83,780 84,494 (714)
Total revenues108,574 123,217 (14,643)
Operating expenses42,232 49,936 (7,704)
Depreciation and amortization expense23,624 24,702 (1,078)
Segment operating income$42,718 $48,579 $(5,861)

Throughput terminal revenues decreased $13.9 million and throughputs decreased 278,528 barrels per day for the three months ended March 31, 2021, compared to the three months ended March 31, 2020, mainly due to a decrease in throughput terminal revenues of $13.3 million and a decrease in throughputs of 264,999 barrels per day at our Corpus Christi North Beach terminal. Consistent with lower volumes on our Corpus Christi Crude Pipeline System, the decreases were mainly due to lower demand in the first quarter of 2021, compared to the first quarter of 2020.

Storage terminal revenues decreased $0.7 million for the three months ended March 31, 2021, compared to the three months ended March 31, 2020, primarily due to a decrease in revenues of $8.6 million as a result of the Texas City Sale in December 2020. This decrease was partially offset by the following:
an increase in revenues of $2.8 million at our West Coast Terminals, mainly due to completed projects, new contracts and rate escalations;
an increase in revenues of $1.9 million at our St. James and Jacksonville terminals, mainly due to an increase in reimbursable revenues and an increase in throughput and ancillary fees;
an increase in revenues of $2.3 million at our North East and Point Tupper terminals, primarily due to contango market conditions that led to new contracts and an increase in throughput and ancillary fees;
an increase in revenues of $1.0 million at our Nuevo Laredo terminal due to the reactivation of our refined products pipeline to transport diesel to our Nuevo Laredo terminal in Mexico, which began full service at the end of the first quarter of 2020.

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Operating expenses decreased $7.7 million for the three months ended March 31, 2021, compared to the three months ended March 31, 2020, primarily due to the following:
a decrease in operating expenses of $6.3 million due to the Texas City Sale;
a decrease in reimbursable expenses of $2.3 million, mainly due to a decrease in wharfage activity of $2.6 million at our Corpus Christi North Beach terminal, which was partially offset by an increase of $1.0 million due to higher tank cleaning expenses at our St. James terminal; and
a decrease in maintenance expense of $1.5 million across various terminals.

These decreases were partially offset by an increase in compensation expense of $2.1 million and an increase in insurance expense of $2.1 million due to higher premiums.

Depreciation and amortization expense decreased $1.1 million for the three months ended March 31, 2021, compared to the three months ended March 31, 2020, primarily due to the Texas City Sale.

Fuels Marketing Segment
The fuels marketing segment includes our bunkering operations in the Gulf Coast, as well as certain of our blending operations associated with our Central East System. The results of operations for the fuels marketing segment depend largely on the margin between our costs and the sales prices of the products we market. Therefore, the results of operations for this segment are more sensitive to changes in commodity prices compared to the operations of the pipeline and storage segments. We enter into derivative contracts to attempt to mitigate the effects of commodity price fluctuations. The financial impacts of the derivative financial instruments associated with commodity price risk were not material for any periods presented.

The following table presents operating highlights for the fuels marketing segment:
 Three Months Ended March 31,Change
 20212020
(Thousands of Dollars)
Product sales$83,855 $73,902 $9,953 
Cost of goods82,403 66,954 15,449 
Gross margin1,452 6,948 (5,496)
Operating expenses(1,279)