UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~_________________________________________~~

FORM10-Q

~~_________________________________________~~

(Mark One)



x☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
~~For the quarterly period ended September 30, 2017~~

ORFor the quarterly period ended March 31, 2022



o☐			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

~~NUSTAR ENERGY~~NuStar Energy L.P.

(Exact name of registrant as specified in its charter)



Delaware						74-2956831
(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

~~San Antonio, Texas~~

~~78257(Address of principal executive offices)~~(Zip Code)

Registrant’s telephone number, including area code (210) 918-2000

~~_________________________________________~~_______________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common units

New York Stock Exchange

Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units

NSprA

New York Stock Exchange

Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units

NSprB

New York Stock Exchange

Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units

NSprC

New 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 xþ No o

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ 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 ~~and post~~ such files). Yes xþ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated ~~filer”~~filer,” “smaller reporting company,” and ~~“smaller reporting~~“emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

Accelerated filer

☐

~~Large accelerated filer~~

~~Accelerated filer~~

Non-accelerated filer

o ~~(Do not check if a smaller reporting company)~~

☐

Smaller reporting company

o☐

Emerging growth company

o☐

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 o☐ No xþ

The number of common units outstanding as of ~~October 31, 2017~~April 30, 2022 was ~~93,032,836.~~110,303,252.

Table of Contents

NUSTAR ENERGY L.P.

FORM 10-Q

TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION

~~PART I – FINANCIAL INFORMATION~~

Item 1.	Financial Statements:

		Consolidated Balance Sheets as of ~~September 30, 2017~~March 31, 2022 and December 31, ~~2016~~2021	3

		Condensed Consolidated Statements of Comprehensive Income for the Three ~~and Nine~~ Months Ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021	4

		Consolidated Statements of Cash Flows for the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2022 and ~~2016~~2021	5

		Consolidated Statements of Partners’ Equity and Mezzanine Equity for the Three Months Ended March 31, 2022 and 2021	6

		Condensed Notes to Consolidated Financial Statements	67

Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations	2918

Item 3.		Quantitative and Qualitative Disclosures About Market Risk	4631

Item 4.		Controls and Procedures	4932

PART II – OTHER INFORMATION



Item 6.		Exhibits	5033

SIGNATURES			5134

Table of Contents

PART I – FINANCIAL INFORMATION


~~Item 1.~~	~~Financial Statements~~

Item 1.Financial Statements

NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited, Thousands of Dollars, Except Unit Data)


	September 30, 2017			December 31, 2016
	(Unaudited)							March 31, 2022		December 31, 2021
Assets							Assets
Current assets:							Current assets:
Cash and cash equivalents	$	33,615		$	35,942		Cash and cash equivalents	$	8,398	$	5,637
Accounts receivable, net of allowance for doubtful accounts of $7,807 and $7,756 as of September 30, 2017 and December 31, 2016, respectively	152,074			170,293
Receivable from related party	81			317
Accounts receivable, net							Accounts receivable, net	142,527		135,126

Inventories	23,297			37,945			Inventories	19,310		16,644
Other current assets	24,805			132,686

Prepaid and other current assets							Prepaid and other current assets	15,079		27,135
Assets held for sale							Assets held for sale	86,458		—
Total current assets	233,872			377,183			Total current assets	271,772		184,542
Property, plant and equipment, at cost	6,073,194			5,435,278			Property, plant and equipment, at cost	5,625,080		5,728,848
Accumulated depreciation and amortization	(1,885,045		)	(1,712,995		)	Accumulated depreciation and amortization	(2,171,692)		(2,187,206)
Property, plant and equipment, net	4,188,149			3,722,283			Property, plant and equipment, net	3,453,388		3,541,642
Intangible assets, net	797,339			127,083			Intangible assets, net	546,679		557,785
Goodwill	1,095,943			696,637			Goodwill	732,356		732,356
Deferred income tax asset	1,070			2,051

Other long-term assets, net	102,395			105,308			Other long-term assets, net	125,730		140,007
Total assets	$	6,418,768		$	5,030,545		Total assets	$	5,129,925	$	5,156,332
Liabilities and Partners’ Equity
Liabilities, Mezzanine Equity and Partners’ Equity							Liabilities, Mezzanine Equity and Partners’ Equity
Current liabilities:							Current liabilities:
Accounts payable	$	97,854		$	118,686		Accounts payable	$	70,360	$	82,446
Short-term debt	68,000			54,000
Current portion of long-term debt	350,007			—

Current portion of finance lease obligations							Current portion of finance lease obligations	4,000		3,848

Accrued interest payable	41,811			34,030			Accrued interest payable	72,107		34,139
Accrued liabilities	60,466			60,485			Accrued liabilities	54,447		79,818

Taxes other than income tax	19,940			15,685			Taxes other than income tax	10,196		14,475
Income tax payable	2,989			6,510

Liabilities held for sale							Liabilities held for sale	66,496		—
Total current liabilities	641,067			289,396			Total current liabilities	277,606		214,726
Long-term debt	3,232,599			3,014,364
Long-term debt, less current portion							Long-term debt, less current portion	3,168,425		3,183,555

Deferred income tax liability	23,166			22,204			Deferred income tax liability	2,848		11,831
Other long-term liabilities	102,074			92,964			Other long-term liabilities	137,763		147,956
Commitments and contingencies (Note 5)
Partners’ equity:
Series A preferred limited partners (9,060,000 preferred units outstanding as of September 30, 2017 and December 31, 2016)	218,307			218,400
Series B preferred limited partners (15,400,000 preferred units outstanding as of September 30, 2017)	371,613			—
Common limited partners (93,032,099 and 78,616,228 common units outstanding as of September 30, 2017 and December 31, 2016, respectively)	1,873,382			1,455,642
General partner	39,953			31,752
Total liabilities							Total liabilities	3,586,642		3,558,068

Commitments and contingencies (Note 6)							Commitments and contingencies (Note 6)	0		0

Series D preferred limited partners (23,246,650 preferred units outstanding as of March 31, 2022 and December 31, 2021) (Note 8)							Series D preferred limited partners (23,246,650 preferred units outstanding as of March 31, 2022 and December 31, 2021) (Note 8)	621,018		616,439

Partners’ equity (Note 9):							Partners’ equity (Note 9):
Preferred limited partners							Preferred limited partners
Series A (9,060,000 units outstanding as of March 31, 2022 and December 31, 2021)							Series A (9,060,000 units outstanding as of March 31, 2022 and December 31, 2021)	218,307		218,307
Series B (15,400,000 units outstanding as of March 31, 2022 and December 31, 2021)							Series B (15,400,000 units outstanding as of March 31, 2022 and December 31, 2021)	371,476		371,476
Series C (6,900,000 units outstanding as of March 31, 2022 and December 31, 2021)							Series C (6,900,000 units outstanding as of March 31, 2022 and December 31, 2021)	166,518		166,518
Common limited partners (110,297,849 and 109,986,273 common units outstanding as of March 31, 2022 and December 31, 2021, respectively)							Common limited partners (110,297,849 and 109,986,273 common units outstanding as of March 31, 2022 and December 31, 2021, respectively)	239,010		299,502

Accumulated other comprehensive loss	(83,393		)	(94,177		)	Accumulated other comprehensive loss	(73,046)		(73,978)
Total partners’ equity	2,419,862			1,611,617			Total partners’ equity	922,265		981,825
Total liabilities and partners’ equity	$	6,418,768		$	5,030,545

Total liabilities, mezzanine equity and partners’ equity							Total liabilities, mezzanine equity and partners’ equity	$	5,129,925	$	5,156,332

See Condensed Notes to Consolidated Financial Statements.

Table of Contents

NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

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

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Revenues:
Service revenues $ 295,102
$ 277,758
$ 845,264
$ 814,727
Product sales 145,464
163,660
518,220
470,198
Total revenues 440,566
441,418
1,363,484
1,284,925
Costs and expenses:
Cost of product sales 138,078
155,129
490,363
441,736
Operating expenses:
Third parties 116,590
117,432
334,016
313,634
Related party —
—
—
21,681
Total operating expenses 116,590
117,432
334,016
335,315
General and administrative expenses:
Third parties 25,003
26,957
83,202
62,906
Related party —
—
—
10,493
Total general and administrative expenses 25,003
26,957
83,202
73,399
Depreciation and amortization expense 69,178
53,946
193,643
160,739
Total costs and expenses 348,849
353,464
1,101,224
1,011,189
Operating income 91,717
87,954
262,260
273,736
Interest expense, net (45,256 ) (35,022 ) (127,282 ) (103,374 )
Other (expense) income, net (5,126 ) 362
(4,898 ) (10 )
Income before income tax expense 41,335
53,294
130,080
170,352
Income tax expense 2,743
2,153
7,298
9,293
Net income $ 38,592
$ 51,141
$ 122,782
$ 161,059

Basic and diluted net income per common unit (Note 11) $ 0.15
$ 0.49
$ 0.65
$ 1.58
Basic weighted-average common units outstanding 93,031,320
78,031,053
87,392,597
77,934,802
Diluted weighted-average common units outstanding 93,031,320
78,062,889
87,392,597
77,981,299

Comprehensive income $ 44,482
$ 48,652
$ 133,566
$ 120,453


	Three Months Ended March 31,
	2022		2021
Revenues:
Service revenues	$	265,305	$	271,883
Product sales	144,558		89,763
Total revenues	409,863		361,646
Costs and expenses:
Costs associated with service revenues:
Operating expenses (excluding depreciation and amortization expense)	86,402		87,287
Depreciation and amortization expense	63,303		68,418
Total costs associated with service revenues	149,705		155,705
Costs associated with product sales	126,715		81,113
Impairment loss	46,122		—

General and administrative expenses (excluding depreciation and amortization expense)	27,071		24,492
Other depreciation and amortization expense	1,824		2,047

Total costs and expenses	351,437		263,357
Operating income	58,426		98,289

Interest expense, net	(49,818)		(54,918)


Other income, net	3,671		398
Income before income tax (benefit) expense	12,279		43,769
Income tax (benefit) expense	(33)		1,512
Net income	$	12,312	$	42,257

Basic and diluted net (loss) income per common unit (Note 10)	$	(0.22)	$	0.05



Basic and diluted weighted-average common units outstanding	110,177,045		109,506,222


Comprehensive income	$	13,244	$	44,377

See Condensed Notes to Consolidated Financial Statements.

Table of Contents

NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, Thousands of Dollars)


	Nine Months Ended September 30,							Three Months Ended March 31,
	2017			2016				2022		2021
Cash Flows from Operating Activities:							Cash Flows from Operating Activities:
Net income	$	122,782		$	161,059		Net income	$	12,312	$	42,257
Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	193,643			160,739			Depreciation and amortization expense	65,127		70,465
Unit-based compensation expense	7,437			4,820
Amortization of unit-based compensation							Amortization of unit-based compensation	3,412		3,871
Amortization of debt related items	4,677			5,762			Amortization of debt related items	2,532		3,042
Loss (gain) from sale or disposition of assets	4,920			(14		)
Deferred income tax (benefit) expense	(106		)	2,989
Changes in current assets and current liabilities (Note 12)	(17,671		)	(12,477		)

Impairment loss							Impairment loss	46,122		—

Changes in current assets and current liabilities (Note 11)							Changes in current assets and current liabilities (Note 11)	17,512		24,397
Decrease in other long-term assets							Decrease in other long-term assets	3,644		2,381
Decrease in other long-term liabilities							Decrease in other long-term liabilities	(662)		(1,678)
Other, net	(4,667		)	(8,329		)	Other, net	(4,169)		922
Net cash provided by operating activities	311,015			314,549			Net cash provided by operating activities	145,830		145,657
Cash Flows from Investing Activities:							Cash Flows from Investing Activities:
Capital expenditures	(220,617		)	(145,414		)	Capital expenditures	(32,750)		(40,463)
Change in accounts payable related to capital expenditures	13,272			(15,504		)	Change in accounts payable related to capital expenditures	(14,498)		(5,449)
Proceeds from insurance recoveries							Proceeds from insurance recoveries	5,805		—
Proceeds from sale or disposition of assets	2,023			—			Proceeds from sale or disposition of assets	341		130
Proceeds from Axeon term loan	110,000			—
Acquisitions	(1,461,719		)	—

Net cash used in investing activities	(1,557,041		)	(160,918		)	Net cash used in investing activities	(41,102)		(45,782)
Cash Flows from Financing Activities:							Cash Flows from Financing Activities:

Proceeds from long-term debt borrowings	1,223,204			523,982			Proceeds from long-term debt borrowings	253,000		270,400
Proceeds from short-term debt borrowings	748,000			462,000
Proceeds from note offering, net of issuance costs	543,313			—

Long-term debt repayments	(1,204,739		)	(410,750		)	Long-term debt repayments	(268,800)		(418,100)
Short-term debt repayments	(734,000		)	(539,000		)
Proceeds from issuance of preferred units, net of issuance costs	371,802			—
Proceeds from issuance of common units, net of issuance costs	643,858			27,710
Contributions from general partner	13,597			575

Distributions to preferred unitholders	(26,681		)	—			Distributions to preferred unitholders	(31,025)		(31,887)
Distributions to common unitholders and general partner	(331,222		)	(294,153		)
Increase (decrease) in cash book overdrafts	1,564			(12,181		)
Distributions to common unitholders							Distributions to common unitholders	(44,041)		(43,811)

Other, net	(6,634		)	(1,418		)	Other, net	(8,848)		(2,331)
Net cash provided by (used in) financing activities	1,242,062			(243,235		)
Net cash used in financing activities							Net cash used in financing activities	(99,714)		(225,729)
Effect of foreign exchange rate changes on cash	1,637			3,404			Effect of foreign exchange rate changes on cash	176		475
Net decrease in cash and cash equivalents	(2,327		)	(86,200		)
Cash and cash equivalents as of the beginning of the period	35,942			118,862
Cash and cash equivalents as of the end of the period	$	33,615		$	32,662
Net increase (decrease) in cash, cash equivalents and restricted cash							Net increase (decrease) in cash, cash equivalents and restricted cash	5,190		(125,379)
Cash, cash equivalents and restricted cash as of the beginning of the period							Cash, cash equivalents and restricted cash as of the beginning of the period	14,439		162,426
Cash, cash equivalents and restricted cash as of the end of the period							Cash, cash equivalents and restricted cash as of the end of the period	$	19,629	$	37,047

See Condensed Notes to Consolidated Financial Statements.

Table of Contents

NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY AND MEZZANINE EQUITY

Three Months Ended March 31, 2022 and 2021

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


	Limited Partners								Mezzanine Equity
	Preferred		Common		Accumulated Other Comprehensive Loss		Total Partners’ Equity (Note 9)		Series D Preferred Limited Partners (Note 8)		Total
Balance as of January 1, 2022	$	756,301	$	299,502	$	(73,978)	$	981,825	$	616,439	$	1,598,264
Net income (loss)	15,238		(18,780)		—		(3,542)		15,854		12,312
Other comprehensive income	—		—		932		932		—		932
Distributions to partners:
Series A, B and C preferred	(15,238)		—		—		(15,238)		—		(15,238)
Common ($0.40 per unit)	—		(44,041)		—		(44,041)		—		(44,041)
Series D preferred	—		—		—		—		(15,854)		(15,854)



Unit-based compensation	—		6,910		—		6,910		—		6,910
Series D preferred unit accretion	—		(4,581)		—		(4,581)		4,581		—
Other	—		—		—		—		(2)		(2)
Balance as of March 31, 2022	$	756,301	$	239,010	$	(73,046)	$	922,265	$	621,018	$	1,543,283




Balance as of January 1, 2021	$	756,301	$	572,314	$	(96,656)	$	1,231,959	$	599,542	$	1,831,501
Net income	16,033		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

See Condensed Notes to Consolidated Financial Statements.

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 ~~publicly held~~ Delaware limited partnership primarily engaged in the transportation, terminalling and storage of petroleum products and ~~anhydrous ammonia,~~renewable fuels and the ~~terminalling, storage and marketing~~transportation of ~~petroleum products.~~anhydrous ammonia. 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, ~~Holdings,~~ LLC, ~~(NuStar GP Holdings or NSH) (NYSE: NSH) owns~~the general partner of our general partner, Riverwalk Logistics, L.P., ~~and owns an approximate 11% common limited partner interest in us as~~both of ~~September 30, 2017~~.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~~3 business segments: pipeline, storage and fuels marketing.

Recent Developments

~~Hurricane Activity.~~ InSale of Point Tupper Terminal. On April 29, 2022, we sold the ~~third~~equity interests in our wholly owned subsidiaries that own our Point Tupper terminal facility to EverWind Fuels for $60.0 million, plus working capital, which is subject to adjustment. The terminal facility has a storage capacity of 7.8 million barrels and has been included in the storage segment. We recognized a pre-tax impairment loss of $46.1 million in the first quarter of ~~2017, parts of~~2022 and expect to utilize the ~~Caribbean~~sales proceeds to reduce debt and ~~Gulf of Mexico~~thereby improve our debt metrics. Please refer to Note 3 for more information.

Debt Amendments. On January 28, 2022, we amended and restated our $1.0 billion unsecured revolving credit agreement to extend the maturity to April 27, 2025, replace the LIBOR-based interest rate and modify other terms. Also on January 28, 2022, we amended our $100.0 million receivables financing agreement to extend the scheduled termination date to January 31, 2025, replace the LIBOR-based interest rate and modify other terms. Please refer to Note 5 for more information.

Other Event

Selby Terminal Fire. On October 15, 2019, our terminal facility in Selby, California experienced ~~three major hurricanes. Several of our facilities were affected by the hurricanes, with the main impact at our St. Eustatius terminal, which was~~a fire that destroyed two storage tanks and temporarily shut ~~down.~~down the terminal. We received insurance proceeds of $5.8 million and $20.5 million for the three months ended March 31, 2022 and 2021, respectively. We recorded a ~~$5.0~~gain from business interruption insurance of $4.0 million ~~loss~~for the three months ended March 31, 2021, which is included in ~~“Other (expense) income, net”~~“Operating expenses” in the condensed consolidated statements of comprehensive ~~income~~income. Insurance proceeds for cleanup costs and business interruption are included in “Cash flows from operating activities” in the ~~third quarter~~consolidated statements of ~~2017 for property damage at our St. Eustatius terminal, which represents the amount of our deductible under our~~cash flows. We believe we have adequate insurance ~~policy. Additionally, we incurred approximately $0.7 million of operating expenses~~ to repair minor property damage at several of our domestic terminals. The shutdown of the St. Eustatius terminal also caused lower revenues for our bunker fuel operations in our fuels marketing segment and lower throughput and associated handling fees in our storage segment. We are still evaluating the extent of property damage at our St. Eustatius terminal, as well as the interruption to our operations; therefore, we are unable to estimate the total impact from the hurricanes at this time. However, we expect that losses incurred above our deductible amount will be covered by our insurance policies.offset additional costs.

~~Navigator Acquisition and Financing Transactions.~~ On May 4, 2017, we completed the acquisition of Navigator Energy Services, LLC for approximately $1.5 billion (the Navigator Acquisition). In order to fund the purchase price, we issued 14,375,000 common units for net proceeds of $657.5 million, issued $550.0 million of 5.625% senior notes for net proceeds of $543.3 million and issued 15,400,000 of our 7.625% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (Series B Preferred Units) for net proceeds of $371.8 million. Please refer to Notes 3, 4 and 10 for further discussion.

~~Axeon Term Loan.~~ On February 22, 2017, we settled and terminated the $190.0 million term loan to Axeon Specialty Products, LLC (the Axeon Term Loan), pursuant to which we also provided credit support, such as guarantees, letters of credit and cash collateral, as applicable, of up to $125.0 million to Axeon Specialty Products, LLC (Axeon). We received $110.0 million in settlement of the Axeon Term Loan, and our obligation to provide ongoing credit support to Axeon ceased. Please refer to Note 6 for further discussion of the Axeon Term Loan and credit support.

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. ~~Financial information for the three and nine months ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016~~ ~~included in these Condensed Notes to Consolidated Financial Statements is derived from our unaudited condensed consolidated financial statements.~~ Operating results for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2017. The consolidated balance sheet as of~~ ~~December 31, 2016~~ ~~has been derived from the audited consolidated financial statements as of that date.~~2022. 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, ~~2016~~.2021.

We have reclassified certain previously reported amounts in the consolidated financial statements and notes to conform to current-period presentation.

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NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

2. NEW ACCOUNTING ~~PRONOUNCEMENTS~~PRONOUNCEMENT

~~Derivatives~~Accounting for Convertible Instruments and ~~Hedging~~Contracts in an Entity’s Own Equity

In August ~~2017,~~2020, the Financial Accounting Standards Board (FASB) issued ~~amended~~ guidance intended to improve the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements. The amended guidance also makes certain targeted improvements to simplify the ~~application~~accounting for convertible instruments by eliminating certain accounting models for convertible debt instruments and convertible preferred stock, requiring the calculation of ~~current hedge accounting guidance.~~diluted earnings per unit to include the effect of potential unit settlement for any convertible instruments that may be settled in either cash or units, and amending the disclosure requirements for convertible instruments. The guidance is effective for annual ~~and interim~~ periods beginning after December 15, ~~2018, with early adoption permitted. Certain of the new requirements should be applied prospectively while others should~~2021. Amendments may be applied using either a modified retrospective ~~transition method.~~approach or a fully retrospective approach. We ~~currently expect to adopt~~adopted the amended guidance on January 1, ~~2019 and are assessing~~2022 using the ~~impact of this amended guidance on our financial position, results of operations and disclosures. We plan to provide additional information about the expected financial impact at a future date.~~

~~Unit-Based Payments~~

~~In May 2017, the FASB issued amended guidance that clarifies when a change to the terms and conditions of a unit-based payment award is accounted for as a modification. Under~~modified retrospective approach. While the amended guidance an entity will apply modification accounting if the value, vesting or classification of the unit-based payment award changes. The guidance is effective for annual and interim periods beginning after December 15, 2017, and amendments should be applied prospectively. We will adopt these provisions January 1, 2018, and we dodid not ~~expect the guidance to~~ have a material impact on our financial position, results of operations, or ~~disclosures.~~disclosures at adoption, changes to the earnings per unit guidance could result in changes to our diluted net income (loss) per common unit. Please refer to Note 10 for additional information.

~~Defined Benefit Plans~~Reference Rate Reform

In March ~~2017,~~2020, the FASB issued guidance intended to provide relief to companies impacted by reference rate reform. The amended guidance ~~that changes~~provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The publication of U.S. dollar LIBOR rates for the ~~presentation of net periodic pension cost related~~most common tenors is expected to ~~defined benefit plans. Under~~cease after publication on June 30, 2023, and, pursuant to the ~~amended guidance, the service cost component of net periodic benefit cost will be presented~~Adjustable Interest Rate (LIBOR) Act signed into law in the ~~same income statement line items~~U.S. on March 15, 2022, the Board of Governors of the Federal Reserve System has been directed to select a benchmark replacement rate to automatically replace LIBOR in LIBOR-based contracts that lack adequate fallback provisions upon cessation. As of March 31, 2022, $402.5 million of our variable-rate debt uses LIBOR as ~~other current employee compensation costs, but~~a benchmark for establishing the ~~remaining components~~interest rate. In addition, the distribution rate on our 8.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units is a floating rate based on LIBOR, and the distribution rates on our 7.625% Series B and 9.00% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units convert from fixed rates to floating rates based on LIBOR in June 2022 and December 2022, respectively. The FASB’s guidance is effective as of ~~net periodic benefit cost will be presented outside of operating income. The changes are effective for annual and interim periods beginning after~~March 12, 2020 through December ~~15, 2017, and amendments should be applied retrospectively.~~31, 2022. We ~~will adopt these provisions January 1, 2018, and we do not expect~~adopted the guidance toon a prospective basis. The guidance did not have ~~a material~~an impact on our financial position, results of operations or ~~disclosures.~~disclosures at transition, but we will continue to evaluate its impact on contracts modified on or before December 31, 2022.

~~Goodwill~~

~~In January 2017,~~3. DISPOSITION AND IMPAIRMENT

Sale of Point Tupper Terminal. On February 11, 2022, we entered into an agreement to sell the ~~FASB issued amended guidance~~equity interests in our wholly owned subsidiaries that ~~simplifies~~own our Point Tupper terminal facility in Nova Scotia, Canada (the Point Tupper Terminal Operations) to EverWind Fuels for $60.0 million, plus working capital, which is subject to adjustment. The terminal facility has a storage capacity of 7.8 million barrels and has been included in the ~~accounting for goodwill impairment by eliminating step 2~~storage segment. We completed the sale on April 29, 2022 and expect to utilize the sales proceeds to reduce debt and thereby improve our debt metrics as part of our strategic plan to strengthen our balance sheet. We compared the carrying value of the ~~goodwill impairment test. Under the amended guidance, goodwill impairment will be measured as the excess~~Point Tupper Terminal Operations, which includes $42.2 million in cumulative foreign currency translation losses accumulated since our acquisition of the ~~reporting unit’s carrying value over~~Point Tupper terminal facility in 2005, to its fair value ~~not~~less costs to exceed the carrying amount of goodwill for that reporting unit. The changes are effective for annual and interim periods beginning after December 15, 2019, and amendments should be applied prospectively. Early adoption is permitted for any impairment tests performed after January 1, 2017,sell, and we ~~are currently evaluating whether we will adopt these provisions early. Regardless~~recognized a pre-tax impairment loss of ~~our decision, we do not expect~~$46.1 million in the ~~guidance to have~~first quarter of 2022, which is presented in "Impairment loss" on the consolidated statement of comprehensive income. We believe that the sales price of $60.0 million provides a ~~material impact on our financial position, results of operations or disclosures.~~

~~Definition of a Business~~

In January 2017, the FASB issued amended guidance that clarifies the definition of a business used in evaluating whether a set of transferred assets and activities constitutes a business. Under the amended guidance, if substantially allreasonable indication of the fair value of the ~~gross~~Point Tupper Terminal Operations as it represents an exit price in an orderly transaction between market participants. The sales price is a quoted price for identical assets ~~acquired is concentrated~~and liabilities in a ~~single identifiable asset or a group~~market that is not active and, thus, our fair value estimate falls within Level 2 of ~~similar identifiable assets,~~ the ~~set~~fair value hierarchy.

Table of transferred assets and activities would not represent a business. To be considered a business, the set of assets transferred is also required to include at least one substantive process that together significantly contribute to the ability to create outputs. In addition, the amended guidance narrows the definition of outputs to be consistent with how outputs are described in the new revenue recognition standard. The changes are effective for annual and interim periods beginning after December 15, 2017, and amendments should be applied prospectively. We will adopt these provisions January 1, 2018, and we do not expect the guidance to have a material impact on our financial position, results of operations or disclosures.

~~Statement of Cash Flows~~

In August 2016, the FASB issued amended guidance that clarifies how entities should present certain cash receipts and cash payments on the statement of cash flows, including, but not limited to, debt prepayment or debt extinguishment costs, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims and distributions received from equity method investees. The changes are effective for annual and interim periods beginning after December 15, 2017, and amendments should be applied retrospectively. We will adopt these provisions January 1, 2018, and we do not expect the guidance to have a material impact on our statements of cash flows or disclosures.

Contents

NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

~~Credit Losses~~

~~In June 2016,~~During the ~~FASB issued amended guidance that requires~~first quarter of 2022, we determined the ~~use of a “current expected loss” model~~Point Tupper Terminal Operations met the criteria to be classified as held for ~~financial assets measured at amortized cost and certain off-balance~~sale. Accordingly, the consolidated balance sheet credit exposures. Under this model, entities will be required to estimate the lifetime expected credit losses on such instruments based on historical experience, current conditions, and reasonable and supportable forecasts. This amended guidance also expands the disclosure requirements to enable users of financial statements to understand an entity’s assumptions, models and methods for estimating expected credit losses. The changes are effective for annual and interim periods beginning after December 15, 2019, and amendments should be applied using a modified retrospective approach. We currently expect to adopt the amended guidance on January 1, 2020 and are 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 financial impact at a future date.

~~Leases~~

~~In February 2016, the FASB issued amended guidance that requires lessees to recognize~~reflects the assets and liabilities ~~that arise from most leases~~of the Point Tupper Terminal Operations as held for sale as of March 31, 2022. The following table provides the carrying amounts of the major classes of assets and liabilities included in “Assets held for sale” and “Liabilities held for sale” on the consolidated balance ~~sheet. For lessors, this amended guidance modifies the classification criteria~~sheet:


	March 31, 2022
	(Thousands of Dollars)
Cash	$	2,429
Accounts receivable	1,138
Inventories	399
Prepaid and other current assets	1,792
Property, plant and equipment, net of accumulated depreciation and impairment loss	65,716
Other long-term assets, net	14,984
Assets held for sale	$	86,458

Accounts payable	$	2,636
Deferred income tax liability	7,638
Accrued liabilities	4,355
Other long-term liabilities	9,640
Impairment reserve (cumulative translation losses)	42,227
Liabilities held for sale	$	66,496

4. REVENUE FROM CONTRACTS WITH CUSTOMERS

Contract Assets and ~~the accounting for sales-type and direct financing leases.~~ Contract Liabilities

The ~~changes are effective for annual and interim periods beginning after December 15,~~

2018, and amendments should be applied using a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements, with the option to use certain expedients. We currently expect to adopt these provisions on January 1, 2019. We have initiated a project to assess the impact of this amended guidance on our financial position, results of operations, disclosures and internal controls and plan to provide additionalfollowing table provides information about ~~the expected financial impact at a future date.~~contract assets and contract liabilities from contracts with customers:


	2022				2021
	Contract Assets		Contract Liabilities		Contract Assets		Contract Liabilities
	(Thousands of Dollars)
Balances as of January 1:
Current portion	$	2,336	$	(15,443)	$	2,694	$	(22,019)
Noncurrent portion	504		(46,027)		932		(47,537)
Total	2,840		(61,470)		3,626		(69,556)

Activity:
Additions	71		(9,645)		92		(9,658)
Transfer to accounts receivable	(2,037)		—		(1,990)		—
Transfer to revenues	(83)		12,117		(125)		15,877

Total	(2,049)		2,472		(2,023)		6,219

Balances as of March 31:
Current portion	277		(13,454)		733		(16,524)
Noncurrent portion	448		(45,544)		870		(46,813)
Held for sale	66		—		—		—
Total	$	791	$	(58,998)	$	1,603	$	(63,337)

~~Financial Instruments~~

~~In January 2016, the FASB issued new guidance that addresses certain aspects~~

Table of recognition, measurement, presentation and disclosure of financial instruments. The changes are effective for annual and interim periods beginning after December 15, 2017, and amendments should be applied by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. We will adopt these provisions January 1, 2018, and we do not expect the guidance to have a material impact on our financial position, results of operations or disclosures.

~~Revenue Recognition~~

In May 2014, the FASB and the International Accounting Standards Board jointly issued a comprehensive new revenue recognition standard. In August 2015, the FASB deferred the effective date by one year. The standard is now effective for public entities for annual and interim periods beginning after December 15, 2017, using one of two retrospective transition methods. Early adoption is permitted, but not before the original effective date. The FASB has subsequently issued several updates that amend and/or clarify the new revenue recognition standard. We expect to complete implementation of the new revenue recognition standard by the end of 2017. We currently expect to adopt the new guidance using the modified retrospective approach, under which the cumulative effect of initially applying the new guidance is recognized as an adjustment to the opening balance of retained earnings, in the first quarter of 2018. Based on our analysis completed to date, we do not believe the standard will significantly impact the amount or timing of revenues recognized under the vast majority of our revenue contracts; however, we are continuing to evaluate the impact of this new guidance on our financial position and results of operations. We also intend to provide additional disclosures as required by the new standard, which we are currently assessing.

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~~3. ACQUISITIONS~~

~~Navigator Acquisition~~

On April 11, 2017, we entered into a Membership Interest Purchase and Sale Agreement (the Acquisition Agreement) with FR Navigator Holdings LLC to acquire all of the issued and outstanding limited liability company interests in Navigator Energy Services, LLC (Navigator) for approximately $1.5 billion. We closed on the Navigator Acquisition on May 4, 2017 and funded the purchase price with the net proceeds of the equity and debt issuances described in Notes 4 and 10. We acquired crude oil transportation, pipeline gathering and storage assets located in the Midland Basin of West Texas consisting of: (i) more than 500 miles of crude oil gathering and transportation pipelines with approximately 92,000 barrels per day ship-or-pay volume commitments and deliverability of approximately 412,000 barrels per day; (ii) a pipeline gathering system with more than 200 connected producer tank batteries capable of more than 400,000 barrels per day of pumping capacity covering over 500,000 dedicated acres with fixed fee contracts; and (iii) approximately 1.0 million barrels of crude oil storage capacity with 440,000 barrels contracted to third parties. We collectively refer to the acquired assets as our Permian Crude System. The assets acquired are included in our pipeline segment.

NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Remaining Performance Obligations

The Navigator Acquisition broadens our geographic footprint by marking our entry into the Permian Basin and complements our existing asset base. We believe the Permian Crude System will provide a strong growth platform that, when coupled with our assets in the Eagle Ford region, serve to solidify our presence in two of the most prolific basins in the United States.

We accounted for the Navigator Acquisition using the acquisition method. The fair value estimates of the assets acquired and liabilities assumed are based on preliminary assumptions, pending the completion of an independent appraisal and other evaluations as information becomes available to us. The following table ~~reflects the preliminary purchase price allocation~~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 ~~September 30, 2017:~~March 31, 2022 (in thousands of dollars):


2022 (remaining)	$	315,545
2023	283,526
2024	189,426
2025	132,497
2026	90,396
Thereafter	93,490
Total	$	1,104,880

Preliminary Purchase Price Allocation
(Thousands of Dollars)
Accounts receivable $ 4,747
Other current assets 2,436
Property, plant and equipment, net 376,690
Intangible assets (a) 700,000
Goodwill (b) 399,306
Other long-term assets, net 2,125
Current liabilities (23,585 )
Preliminary purchase price allocation, net of cash acquired $ 1,461,719


~~(a)~~	~~Intangible assets, which consist of customer contracts and relationships, are expected to be amortized over a weighted average period of 20 years.~~


~~(b)~~	The goodwill acquired represents the expected benefit from entering new geographic areas and the anticipated opportunities to generate future cash flows from the assets acquired and potential future projects.

In the third quarter of 2017, goodwill increased by approximately $70.0 million due to valuation adjustments to property, plant and equipment and intangible assets. These adjustments had an immaterial effect on our results of operations. The values used in the purchase price allocation above and estimated useful lives are preliminary and subject to change after we finalize our reviewOur contractually committed revenue, for purposes of the ~~specific types, nature~~tabular presentation above, is limited to customer service contracts that have fixed pricing and ~~condition~~fixed volume terms and conditions. The revenue shown above includes $19.2 million relating to our Point Tupper Terminal Operations that was held for sale as of ~~Navigator’s property, plant and equipment and intangible assets, and pending the completion~~March 31, 2022.

Disaggregation of ~~an independent appraisal. A change in the value used for property, plant and equipment or intangible assets may be significant and would cause a corresponding increase or decrease in goodwill.~~

Revenues

The ~~condensed~~following table disaggregates our revenues:


	Three Months Ended March 31,
	2022		2021
	(Thousands of Dollars)
Pipeline segment:
Crude oil pipelines	$	86,124	$	74,588
Refined products and ammonia pipelines	102,559		94,640
Total pipeline segment revenues from contracts with customers	188,683		169,228



Storage segment:
Throughput terminals	26,441		24,794
Storage terminals (excluding lessor revenues)	50,719		73,416
Total storage segment revenues from contracts with customers	77,160		98,210
Lessor revenues	10,761		10,364
Total storage segment revenues	87,921		108,574

Fuels marketing segment:
Revenues from contracts with customers	133,260		83,855

Consolidation and intersegment eliminations	(1)		(11)

Total revenues	$	409,863	$	361,646

5. DEBT

Revolving Credit Agreement

On January 28, 2022, NuStar Logistics amended and restated its $1.0 billion unsecured revolving credit agreement (the Revolving Credit Agreement) to, among other things: (i) extend the maturity date from October 27, 2023 to April 27, 2025; (ii) increase the maximum amount of letters of credit capable of being issued from $400.0 million to $500.0 million; (iii) replace LIBOR benchmark provisions with customary secured overnight financing rate, or SOFR, benchmark provisions; (iv) remove the 0.50x increase permitted in our consolidated ~~statements~~debt coverage ratio for certain rolling periods in which an acquisition for aggregate net consideration of ~~comprehensive income include the results~~at least $50.0 million occurs; and (v) add baskets and exceptions to certain negative covenants.

Table of operations for Navigator commencing on May 4, 2017. The table below presents certain financial information included on the condensed consolidated statements of comprehensive income related to the Navigator Acquisition:

Three Months Ended September 30, 2017 Nine Months Ended September 30, 2017
(Thousands of Dollars)
Permian Crude System:
Revenues $ 15,663
$ 25,142
Operating income (loss) $ 1,050
$ (2,374 )

Transaction costs:
General and administrative expenses $ 169
$ 10,359
Interest expense, net —
3,688
Total transaction costs $ 169
$ 14,047

Contents

NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The unaudited pro forma information for the three and nine months ended September 30, 2017 and 2016 presented below combines the historical financial information for Navigator and the Partnership for those periods. The information assumesAs of March 31, 2022, we ~~completed the Navigator Acquisition on January 1, 2016 and the following:~~

~~we issued approximately 14.4 million common units;~~

~~we received a contribution from our general partner of $13.6 million to maintain its 2% interest;~~

~~we issued 15.4 million Series B Preferred Units;~~

~~we issued $550.0~~had $106.5 million of ~~5.625% senior notes;~~

~~additional depreciation~~borrowings outstanding and ~~amortization that would have been incurred assuming~~$888.7 million available for borrowing under the ~~fair value adjustments to property, plant and equipment and intangible assets reflected in the preliminary purchase price allocation above; and~~

~~we satisfied Navigator’s outstanding obligations under its revolving credit agreement.~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 (a) 2016 2017 2016
(Thousands of Dollars, Except Per Unit Data)
Revenues $ 440,566
$ 449,250
$ 1,377,883
$ 1,301,419
Net income $ 38,592
$ 34,417
$ 102,251
$ 104,535

Basic and diluted net income per common unit $ 0.15
$ 0.16
$ 0.31
$ 0.50

~~(a) Represents actual results of operations.~~

The pro forma information for the nine months ended September 30, 2017 includes transaction costs of approximately $14.0 million, which were directly attributable to the Navigator Acquisition. The pro forma information is unaudited and is not necessarily indicative of the results of operations that would have resulted had the Navigator Acquisition occurred on January 1, 2016 or that may result in the future.

~~4. DEBT~~

Revolving Credit ~~Agreement~~

~~On August 22, 2017, NuStar Logistics amended its revolving~~Agreement. Letters of credit ~~agreement (the Revolving Credit Agreement) to extend~~issued under the ~~maturity date from October 29, 2019 to October 29, 2020, and to increase the borrowing capacity from $1.50 billion to $1.75 billion. The~~ Revolving Credit Agreement ~~was also amended to increase the maximum allowed consolidated debt coverage ratio (as defined in the Revolving Credit Agreement) from 5.00-to-1.00 to 5.50-to-1.00 through the rolling period ending~~totaled $4.8 million as of March 31, 2018. Subsequently, the maximum allowed consolidated debt coverage ratio may not exceed 5.00-to-1.00 for any rolling period ending on or after June 30, 2018. If we complete one or more acquisitions for aggregate net consideration of at least $50.0 million, our maximum consolidated debt coverage ratio will increase to 5.50-to-1.00 for two rolling periods.

~~The requirement not to exceed a maximum consolidated debt coverage ratio may~~2022 and limit the amount we can borrow under the Revolving Credit ~~Agreement to an amount less than the total amount available for borrowing. As of September 30, 2017, letters of credit issued~~Agreement. Obligations under the Revolving Credit Agreement ~~totaled $7.7 million,~~are guaranteed by NuStar Energy and ~~we had $863.8 million available for borrowing. We believe that we are in compliance with the covenants in the Revolving Credit Agreement as of September 30, 2017.~~

~~During the nine months ended September 30, 2017, the balance under the Revolving Credit Agreement increased by $39.4 million.~~NuPOP. The Revolving Credit Agreement ~~bears~~provides for U.S. dollar borrowings, which bear interest, at our option, based on an alternative base rate ~~a LIBOR-based rate~~ or a ~~EURIBOR-based~~SOFR-based rate. The ~~interest rate on the~~ Revolving Credit Agreement isand certain fees under the Receivables Financing Agreement, defined below, are the only debt arrangements with interest rates that are subject to adjustment if our debt rating is downgraded (or upgraded) by certain credit rating agencies. As of ~~September 30, 2017,~~March 31, 2022, our weighted-average interest rate related to borrowings under the Revolving Credit Agreement was ~~2.9%,~~3.0%.

The Revolving Credit Agreement is subject to maximum consolidated debt coverage ratio and ~~we had $878.4 million outstanding.~~

~~Issuance of 5.625% Senior Notes~~

On April 28, 2017, NuStar Logistics issued $550.0 million of 5.625% senior notes due April 28, 2027. We used the net proceeds of $543.3 million from the offering to fund a portion of the purchase price for the Navigator Acquisition and to pay related fees and expenses. ~~The~~minimum consolidated interest on the 5.625% senior notes is payable semi-annually in arrears on April 28 and October 28 of each year beginning on October 28, 2017. The 5.625% senior notes do not have sinking fund requirements. These notes rank equally with existing senior unsecured indebtedness and senior to existing subordinated indebtedness of NuStar Logistics. The 5.625% senior notes contain restrictions on NuStar Logistics’ ability to incur secured indebtedness unless the same security is also provided for the benefit of holders of the senior notes. In addition, the senior notescoverage ratio requirements, which may limit ~~NuStar Logistics’ ability to~~

~~NUSTAR ENERGY L.P. AND SUBSIDIARIES~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~incur indebtedness secured by certain liens, engage in certain sale-leaseback transactions and engage in certain consolidations, mergers or asset sales.~~ ~~The 5.625% senior notes are fully and unconditionally guaranteed by NuStar Energy and NuPOP.~~

At the option of NuStar Logistics, the 5.625% senior notes may be redeemed in whole or in part at any time at a redemption price, plus accrued and unpaid interest to the redemption date. If we undergo a change of control, followed by a ratings decline within 60 days of a change of control, each holder of the notes may require us to repurchase all or a portion of its notes at a price equal to 101% of the principal amount of the notes, plus any accrued and unpaid interest to the date of repurchase.

~~Gulf Opportunity Zone Revenue Bonds~~

In 2008, 2010 and 2011, the Parish of St. James, Louisiana issued, pursuant to the Gulf Opportunity Zone Act of 2005, an aggregate $365.4 million of tax-exempt revenue bonds (the GoZone Bonds) associated with our St. James, Louisiana terminal expansions. The GoZone Bonds bear interest based on a weekly tax-exempt bond market interest rate, and interest is paid monthly. The weighted-average interest rate was 1.0% as of ~~September 30, 2017~~. Following the issuances, the proceeds were deposited with a trustee and are disbursed to us upon our request for reimbursement of expenditures related to our St. James terminal expansions. We include the amount ~~remaining in trust in “Other long-term assets, net,” and~~ we ~~include~~can borrow to an amount that is less than the total amount available for borrowing. For a rolling period of ~~bonds issued in “Long-term debt” on~~four quarters, the consolidated ~~balance sheets. For~~debt coverage ratio (as defined in the ~~nine months ended September 30, 2017,~~Revolving Credit Agreement) cannot 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, 2022, we ~~did not receive any proceeds from~~believe that we are in compliance with the ~~trustee, and as of September 30, 2017,~~covenants in the ~~amount remaining in trust totaled $42.5 million.~~Revolving Credit Agreement.

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 ~~$125.0~~$100.0 million receivables financing agreement with a third-party ~~lenders~~lender, with a scheduled termination date of January 31, 2025, (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 ~~Finance’s sole business consists~~Energy provides a performance guarantee in connection with the Securitization Program. Under the Securitization Program, certain of ~~purchasing receivables from~~ NuStar Energy’s wholly owned subsidiaries ~~that participate in~~sell their accounts receivable to NuStar Finance on an ongoing basis, and NuStar Finance provides the ~~Securitization Program and providing these receivables~~newly acquired accounts receivable as collateral for ~~NuStar Finance’s~~its revolving borrowings under the ~~Securitization Program.~~Receivables Financing Agreement. 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.

On ~~September 20, 2017,~~January 28, 2022, the ~~Securitization Program~~Receivables Financing Agreement was amended to, ~~add certain of NuStar Energy’s wholly owned subsidiaries resulting from the Navigator Acquisition and to~~among other things: (i) extend the ~~Securitization Program’s~~ scheduled termination date from ~~June 15, 2018 to~~ September 20, ~~2020,~~2023 to January 31, 2025; (ii) reduce the floor rate in the calculation of our borrowing rates; and (iii) replace provisions related to the LIBOR rate of interest with ~~the option~~references to ~~renew for additional 364-day periods thereafter.~~ SOFR rates of interest.

Borrowings ~~by NuStar Finance~~ under the Receivables Financing Agreement bear interest, at ~~the applicable bank~~NuStar Finance’s option, at a base rate or a SOFR rate, each as defined ~~under~~in the Receivables Financing Agreement. As of ~~September 30, 2017, $98.6 million of our accounts receivable are included in~~March 31, 2022, the ~~Securitization Program. The~~ amount of borrowings outstanding under the Receivables Financing Agreement totaled ~~$46.1~~$72.0 million, asthe weighted-average interest rate related to outstanding borrowings was 1.9% and $132.2 million of ~~September 30, 2017, which is~~our accounts receivable was included in ~~“Long-term debt” on~~ the ~~consolidated balance sheet.~~Securitization Program.

Fair Value of Long-Term Debt

5.The estimated fair values and carrying amounts of long-term debt, excluding finance leases, were as follows:


	March 31, 2022		December 31, 2021
	(Thousands of Dollars)
Fair value	$	3,222,517	$	3,459,153
Carrying amount	$	3,115,915	$	3,130,625

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.

Table of Contents

NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

6. COMMITMENTS, CONTINGENCIES AND ~~CONTINGENCIES~~UNCERTAINTIES

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 ~~had an accrual of $1.6~~accrued $0.9 million and $0.1 million for contingent losses as of ~~September 30, 2017~~March 31, 2022 and ~~none as of~~ December 31, ~~2016.~~2021, 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. ~~In addition, due to the inherent uncertainty of litigation, there can be no assurance~~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 ~~not~~ have a material adverse effect on our results of operations, financial position or liquidity.

COVID-19. 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 2022 and beyond.

~~6. FAIR VALUE MEASUREMENTS~~

We segregate the inputs used in measuring fair value into three levels: Level 1, defined as observable inputs, such as quoted prices for identical assets or liabilities in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets that are not active; and Level 3, defined as unobservable inputs for which little or no market data exists. We consider counterparty credit risk and our own credit risk in the determination of all estimated fair values.

~~NUSTAR ENERGY L.P. AND SUBSIDIARIES~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~Recurring Fair Value Measurements~~

~~The following assets and liabilities are measured at fair value on a recurring basis:~~

September 30, 2017
Level 1 Level 2 Level 3 Total
(Thousands of Dollars)
Assets:
Other current assets:
Product imbalances $ 6,960
$ —
$ —
$ 6,960
Liabilities:
Accrued liabilities:
Product imbalances $ (2,164 ) $ —
$ —
$ (2,164 )
Commodity derivatives (791 ) —
—
(791 )
Interest rate swaps —
(7,280 ) —
(7,280 )
Other long-term liabilities:
Interest rate swaps —
(4,043 ) —
(4,043 )
Total $ (2,955 ) $ (11,323 ) $ —
$ (14,278 )

December 31, 2016
Level 1 Level 2 Level 3 Total
(Thousands of Dollars)
Assets:
Other current assets:
Product imbalances $ 1,551
$ —
$ —
$ 1,551
Commodity derivatives —
155
—
155
Other long-term assets, net:
Interest rate swaps —
1,314
—
1,314
Total $ 1,551
$ 1,469
$ —
$ 3,020
Liabilities:
Accrued liabilities:
Product imbalances $ (1,577 ) $ —
$ —
$ (1,577 )
Commodity derivatives (4,887 ) (165 ) —
(5,052 )
Other long-term liabilities:
Guarantee liability —
—
(1,230 ) (1,230 )
Interest rate swaps —
(2,632 ) —
(2,632 )
Total $ (6,464 ) $ (2,797 ) $ (1,230 ) $ (10,491 )

~~Product Imbalances.~~Since we value our assets and liabilities related to product imbalances using quoted market prices in active markets as of the reporting date, we include these product imbalances in Level 1 of the fair value hierarchy.

~~Commodity Derivatives.~~We base the fair value of certain of our commodity derivative instruments on quoted prices on an exchange; accordingly, we include these items in Level 1 of the fair value hierarchy. We also had derivative instruments for which we determined fair value using industry pricing services and other observable inputs, such as quoted prices on an exchange for similar derivative instruments, and we included these derivative instruments in Level 2 of the fair value hierarchy. See Note 7 for a discussion of our derivative instruments.

~~Interest Rate Swaps.Because~~we estimate the fair value of our forward-starting interest rate swaps using discounted cash flows, which use observable inputs such as time to maturity and market interest rates, we include these interest rate swaps in Level 2 of the fair value hierarchy.

~~NUSTAR ENERGY L.P. AND SUBSIDIARIES~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~Guarantees.~~ In 2014, we sold our remaining 50% ownership interest in Axeon and agreed to provide them with credit support, such as guarantees, letters of credit and cash collateral, as applicable, of up to $125.0 million. As of December 31, 2016, we provided guarantees totaling $54.1 million, and one guarantee that did not specify a maximum amount. Our estimate of the fair value was based on significant inputs not observable in the market and thus fell within Level 3 of the fair value hierarchy. In conjunction with the termination of the Axeon Term Loan on February 22, 2017 discussed in the following section, our obligation to provide credit support to Axeon ceased.

~~Fair Value of Financial Instruments~~

We recognize cash equivalents, receivables, payables and debt in our consolidated balance sheets at their carrying amounts. The fair values of these financial instruments, except for long-term debt, approximate their carrying amounts.

~~The estimated fair values and carrying amounts of long-term debt, including the current portion, and the Axeon Term Loan were as follows:~~

September 30, 2017 December 31, 2016
Long-term Debt Long-term Debt Axeon Term Loan
(Thousands of Dollars)
Fair value $ 3,694,877
$ 3,084,762
$ 110,000
Carrying amount $ 3,582,606
$ 3,014,364
$ 110,000

~~Long-term Debt.~~ We estimated the fair value of our publicly traded senior notes based upon quoted prices in active markets; therefore, we determined that the fair value of our publicly traded senior notes falls in Level 1 of the fair value hierarchy. For our other debt, for which a quoted market price is not available, we 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.

~~Axeon Term Loan.~~ In December 2016, Lindsay Goldberg LLC, the private investment firm that owned Axeon, informed us that they entered into an agreement to sell Axeon’s retail asphalt sales and distribution business (the Axeon Sale), and we entered into an agreement with Axeon (the Axeon Letter Agreement) to settle and terminate the Axeon Term Loan for $110.0 million upon closing of the Axeon Sale. Therefore, we reduced the carrying amount of the Axeon Term Loan to $110.0 million and reclassified the Axeon Term Loan from “Other long-term assets, net” to “Other current assets” on the consolidated balance sheet as of December 31, 2016. The Axeon Sale closed on February 22, 2017, at which time we received the $110.0 million payment in accordance with the Axeon Letter Agreement. Furthermore, the Axeon Term Loan and our obligation to provide ongoing credit support to Axeon all terminated concurrently on February 22, 2017.

7. DERIVATIVES ~~AND RISK MANAGEMENT ACTIVITIES~~

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.

~~Interest Rate Risk~~

We ~~are~~were a party to certain interest rate swap agreements to manage our exposure to changes in interest rates, which ~~include~~included forward-starting interest rate swap agreements related to forecasted debt issuances in 2018 and 2020. We entered into these swaps in order to hedge the risk of changes in the 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 pay a fixed rate and receive a rate based on the three-month USD LIBOR. These swaps qualifythat qualified as cash flow hedges ~~and we designate them as such.~~prior to their termination. We ~~record~~reclassify the ~~effective portion of~~ mark-to-market adjustments ~~as a component of~~related to these cash flows hedges that were recorded in “Accumulated other comprehensive ~~income (loss)”~~loss” (AOCI)~~, and the amount in AOCI will be recognized in~~ into “Interest expense, net” as the underlying forecasted interest payments occur or if the interest payments are probable not to occur. ~~As of September 30, 2017 and December 31, 2016, the aggregate notional amount of forward-starting interest rate swaps totaled $600.0 million.~~

~~NUSTAR ENERGY L.P. AND SUBSIDIARIES~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~Commodity Price Risk~~

We are exposed to market risks related to the volatility of petroleum product prices. In order to reduce the risk of commodity price fluctuations with respect to our petroleum product inventories and related firm commitments to purchase and/or sell such inventories, we utilize commodity futures and swap contracts, which qualify, and we designate, as fair value hedges. Derivatives that are intended to hedge our commodity price risk, but fail to qualify as fair value orreclassified losses on cash flow hedges ~~are considered economic hedges, and we record associated gains and losses in net income. Our risk management committee oversees our trading controls and procedures and certain aspects~~to “Interest expense, net” of commodity and trading risk management. Our risk management committee also reviews all new commodity and trading risk management strategies in accordance with our risk management policy, as approved by our board of directors. We ceased marketing crude oil in the second quarter of 2017 and exited our heavy fuels trading operations in the third quarter of 2017, thereby reducing our overall hedging activity.

The volume of commodity contracts is based on open derivative positions and represents the combined volume of our long and short open positions on an absolute basis, which totaled 1.1 million barrels and 4.7 million barrels as of ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016, respectively. We had $0.3~~$0.5 million and ~~$1.8~~$1.3 million ~~of margin deposits as of September 30, 2017~~for the three months ended March 31, 2022 and ~~December 31, 2016,~~2021, respectively.

~~The fair values of our derivative instruments included in our consolidated balance sheets were as follows:~~

Asset Derivatives Liability Derivatives
Balance Sheet Location September 30,
2017 December 31,
2016 September 30,
2017 December 31,
2016
(Thousands of Dollars)
Derivatives Designated as
Hedging Instruments:

Interest rate swaps Other long-term assets, net $ —
$ 1,314
$ —
$ —
Commodity contracts Accrued liabilities 18
144
(2 ) (3,566 )
Interest rate swaps Accrued liabilities —
—
(7,280 ) —
Interest rate swaps Other long-term liabilities —
—
(4,043 ) (2,632 )
Total 18
1,458
(11,325 ) (6,198 )

Derivatives Not Designated
as Hedging Instruments:

Commodity contracts Other current assets —
265
—
(110 )
Commodity contracts Accrued liabilities 655
9,128
(1,462 ) (10,758 )
Total 655
9,393
(1,462 ) (10,868 )

Total Derivatives $ 673
$ 10,851
$ (12,787 ) $ (17,066 )

Certain of our derivative instruments are eligible for offset in the consolidated balance sheets and subject to master netting arrangements. Under our master netting arrangements, there is a legally enforceable right to offset amounts, and we intend to settle such amounts on a net basis. The following are the net amounts presented on the consolidated balance sheets:

Commodity Contracts September 30,
2017 December 31,
2016
(Thousands of Dollars)
Net amounts of assets presented in the consolidated balance sheets $ —
$ 155
Net amounts of liabilities presented in the consolidated balance sheets $ (791 ) $ (5,052 )

~~NUSTAR ENERGY L.P. AND SUBSIDIARIES~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~We recognize the impact of our commodity contracts on earnings in “Cost of product sales” on the condensed consolidated statements of comprehensive income, and that impact was as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(Thousands of Dollars)
Derivatives Designated as Fair Value Hedging Instruments:
(Loss) gain recognized in income on derivative $ (1,134 ) $ 558
$ 1,327
$ (6,246 )
Gain (loss) recognized in income on hedged item 1,111
329
(1,036 ) 10,134
(Loss) gain recognized in income for ineffective portion $ (23 ) $ 887
$ 291
$ 3,888

Derivatives Not Designated as Hedging Instruments:
Loss recognized in income on derivative $ (132 ) $ (153 ) $ (218 ) $ (157 )

~~Our interest rate swaps had the following impact on earnings:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(Thousands of Dollars)
Derivatives Designated as Cash Flow Hedging Instruments:
Loss recognized in other comprehensive income on derivative (effective portion) $ (2,064 ) $ (2,035 ) $ (10,005 ) $ (52,213 )
Loss reclassified from AOCI into interest expense, net (effective portion) $ (1,584 ) $ (2,011 ) $ (5,112 ) $ (6,391 )

As of ~~September 30, 2017~~,March 31, 2022, we expect to reclassify a loss of ~~$5.5~~$2.1 million to “Interest expense, net” within the next twelve months associated with unwound forward-starting interest rate swaps.

8. ~~RELATED PARTY TRANSACTIONS~~SERIES D CUMULATIVE CONVERTIBLE PREFERRED UNITS

~~Employee Transfer~~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 ~~NuStar GP, LLC.~~ Onthe original issuance dates, and are payable on the 15th day (or next business day) of each of March, ~~1, 2016, NuStar GP, LLC,~~June, September and December, to holders of record on the ~~general partner~~first business day of ~~our general partner~~each payment month. The number of Series D Preferred Units issued and ~~a wholly owned subsidiary~~outstanding as of ~~NuStar GP Holdings, transferred~~March 31, 2022 and ~~assigned to NuStar Services Company LLC (NuStar Services Co)~~December 31, 2021 totaled 23,246,650. The distribution rates on the Series D Preferred Units are as follows: (i) 9.75%, ~~a wholly owned subsidiary of NuStar Energy, all of NuStar GP, LLC’s employees and related benefit plans, programs, contracts and policies (the Employee Transfer). As a result of~~or $57.6 million, per annum ($0.619 per unit per distribution period) for the ~~Employee Transfer, we pay employee costs directly and sponsor the long-term incentive plan and other employee benefit plans. Please refer to Note 9 for a discussion of our employee benefit plans.~~

~~GP Services Agreement.~~ Prior to the Employee Transfer, our operations were managed by NuStar GP, LLC under a services agreement effective January 1, 2008, pursuant to which employees of NuStar GP, LLC performed services for our U.S. operations. Employees of NuStar GP, LLC provided services to us and NuStar GP Holdings; therefore, we reimbursed NuStar GP, LLC for all employee costs incurred prior to the Employee Transfer, other than the expenses allocated to NuStar GP Holdings. For the nine months ended September 30, 2016, we reimbursed NuStar GP, LLC $21.7 million and $10.5 million for operating expenses and general and administrative expenses, respectively.

~~In conjunction~~first two years (beginning with the ~~Employee Transfer, we entered into an Amended~~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 ~~Restated Services Agreement with NuStar GP, LLC, effective March 1, 2016 (the Amended GP Services Agreement). The Amended GP Services Agreement provides that we~~(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 ~~furnish administrative services necessary to conduct~~be prohibited from paying distributions on any junior securities, including the ~~business of NuStar GP Holdings. NuStar GP Holdings will compensate us for these services through an annual fee of $1.0 million, subject to adjustment based~~common units, unless full cumulative distributions on the ~~annual merit increase percentage applicable to our employees~~Series D Preferred Units (and any parity securities) have been, or contemporaneously are being, paid or set aside for payment through the most ~~recently completed fiscal year and for changes~~recent Series D Preferred Unit distribution payment date. Any Series D Preferred Unit distributions in ~~level~~excess of ~~service. The Amended GP Services Agreement will terminate~~$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 2022, our board of directors declared distributions of $0.682 per Series D Preferred Unit to be paid on ~~March 1, 2020 and will automatically renew for successive two-year terms, unless terminated by either party.~~June 15, 2022.

Table of Contents

NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

9. PARTNERS' EQUITY

~~9. EMPLOYEE BENEFIT PLANS~~

Series A, B and C Preferred Units

~~Effective March 1, 2016, in connection with~~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 ~~Employee Transfer, we assumed sponsorship~~Series A, B and ~~responsibility for the defined benefit plans and defined contribution plans described below. Prior~~C Preferred Units) equal to the ~~Employee Transfer, NuStar GP, LLC sponsored and maintained these employee benefit plans and we reimbursed all costs incurred by NuStar GP, LLC related to these employee benefit plans at cost.~~

The NuStar Pension Plan (the Pension Plan) is a qualified non-contributory defined benefit pension plan that provides eligible U.S. employees with retirement income as calculated under a cash balance formula. The NuStar Excess Pension Plan (the Excess Pension Plan) is a nonqualified deferred compensation plan that provides benefits to a select groupamount of ~~management or other highly compensated employees. The Pension Plan and Excess Pension Plan are collectively referred to as~~distributions earned during the ~~Pension Plans. In September 2017, we contributed $11.0 million to the Pension Plans.~~

~~We also sponsor a contributory medical benefits plan for U.S. employees that retired prior to April 1, 2014. For employees that retire~~period. Distributions on ~~or after April 1, 2014, we provide partial reimbursement for eligible third-party health care premiums.~~

The following table summarizes the components of net periodic benefit cost (income) for the Pension Plans and other postretirement benefits on a combined basis for periods prior to the Employee Transfer and after the Employee Transfer:

Pension Plans
Other Postretirement
Benefits
2017 2016 2017 2016
(Thousands of Dollars)
For the three months ended September 30:
Service cost $ 2,239
$ 1,926
$ 115
$ 105
Interest cost 1,127
1,006
107
100
Expected return on assets (1,603 ) (1,353 ) —
—
Amortization of prior service credit (515 ) (516 ) (286 ) (286 )
Amortization of net loss 371
273
47
45
Net periodic benefit cost (income) $ 1,619
$ 1,336
$ (17 ) $ (36 )

For the nine months ended September 30:
Service cost $ 6,717
$ 5,778
$ 341
$ 315
Interest cost 3,381
3,018
323
300
Expected return on assets (4,808 ) (4,056 ) —
—
Amortization of prior service credit (1,546 ) (1,549 ) (858 ) (858 )
Amortization of net loss 1,113
819
143
135
Net periodic benefit cost (income) $ 4,857
$ 4,010
$ (51 ) $ (108 )

~~10. PARTNERS’ EQUITY~~

~~Amendment of Partnership Agreement~~

In the second quarter of 2017, our general partner amended and restated our partnership agreement in connection with the issuance of the Series B Preferred Units as described below and the Navigator Acquisition to waive up to an aggregate $22.0 million of the quarterly incentive distributions to our general partner for any NS common units issued from the date of the Acquisition Agreement (other than those attributable to NS common units issued under any equity compensation plan) for ten consecutive quarters, starting with the distributions for the second quarter of 2017.

~~Issuance of Common Units~~

~~NUSTAR ENERGY L.P. AND SUBSIDIARIES~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~Issuance of Series B Preferred Units~~

On~~April 28, 2017, we issued 15,400,000 of~~ our Series A, B Preferred Units representing limited partner interests at a price of $25.00 per unit. We used the net proceeds of $371.8 million from the issuance of the Series B Preferred Units to fund a portion of the purchase price for the Navigator Acquisition and ~~to pay related fees and expenses.~~

~~Distributions on the Series B~~C Preferred Units are payable out of any legally available funds, accrue and are cumulative from the ~~date of~~ original issuance ~~of the Series B Preferred Units~~dates, and are payable on the 15^th15th 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.

Distribution information for our Series B and C Preferred Units is as follows:


Units	Fixed Distribution Rate Per Unit Per Quarter		Fixed Distribution Per Quarter		Date at Which Distribution Rate Becomes Floating	Floating Annual Rate (as a Percentage of the $25.00 Liquidation Preference per Unit)
			(Thousands of Dollars)

Series B Preferred Units	$	0.47657	$	7,339	June 15, 2022	Three-month LIBOR plus 5.643%
Series C Preferred Units	$	0.56250	$	3,881	December 15, 2022	Three-month LIBOR plus 6.88%

The ~~initial~~ distribution rate on ~~the~~our Series BA Preferred Units converted from a fixed rate to but not including, June 15, 2022 is 7.625% per annum of the $25.00 liquidation preference per unit (equal to $1.90625 per unit per annum). On and after June 15, 2022, distributions on the Series B Preferred Units accumulate at a ~~percentage of the $25.00 liquidation preference equal to an annual~~ floating rate of the three-month LIBOR plus ~~a spread of 5.643%. The Series B Preferred Units rank equal to~~6.766% on December 15, 2021. Distribution information for our Series A Preferred Units is as follows:


Period	Distribution Rate per Unit		Total Distribution
			(Thousands of Dollars)



March 15, 2022 - June 14, 2022	$	0.47817	$	4,332
December 15, 2021 - March 14, 2022	$	0.43606	$	3,951

In April 2022, our board of directors declared distributions with respect to the Series A, B and ~~senior~~C Preferred Units to be paid on June 15, 2022.

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. In April 2022, our board of directors declared distributions with respect to our common units ~~with respect to distribution rights and rights upon liquidation.~~for the quarter ended March 31, 2022.

At any time on or after June 15, 2022, we may redeem our Series B Preferred Units, in whole or in part, at a redemption price of $25.00 per unit plus an amount equal to all accumulated and unpaid distributions to, but not including, the date of redemption, whether or not declared. We may also redeem the Series B Preferred Units upon the occurrence of certain rating events or a change of control as defined in our partnership agreement. In the case of the latter instance, if we choose not to redeem the Series B Preferred Units, the preferred unitholders may have the ability to convert the Series B Preferred Units to common units at the then applicable conversion rate. Holders of the Series B Preferred Units have no voting rights except for certain exceptions set forth in our partnership agreement.

~~Partners’ Equity Activity~~

The following table summarizes ~~changes~~information about cash distributions to our ~~partners’ equity (in thousands~~common limited partners applicable to the period in which the distributions were earned:


Quarter Ended	Cash Distributions Per Unit		Total Cash Distributions		Record Date	Payment Date
			(Thousands of Dollars)


March 31, 2022	$	0.40	$	44,165	May 9, 2022	May 13, 2022
December 31, 2021	$	0.40	$	44,008	February 8, 2022	February 14, 2022

Table of ~~dollars):~~Contents

NUSTAR ENERGY L.P. AND SUBSIDIARIES

Balance as of January 1, 2017 $ 1,611,617
Net income 122,782
Unit-based compensation 4,164
Other comprehensive income 10,784
Distributions to partners (358,138 )
Issuance of preferred and common units, including contribution from general partner 1,029,257
Other (604 )
Balance as of September 30, 2017 $ 2,419,862
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,
	2022								2021
	Foreign Currency Translation		Cash Flow Hedges		Pension and Other Postretirement Benefits		Total		Foreign Currency Translation		Cash Flow Hedges		Pension and Other Postretirement Benefits		Total
	(Thousands of Dollars)
Balance as of January 1	$	(41,761)	$	(36,486)	$	4,269	$	(73,978)	$	(42,362)	$	(42,150)	$	(12,144)	$	(96,656)
Other comprehensive income before reclassification adjustments	829		—		—		829		957		—		—		957
Net gain on pension costs reclassified into other income, net	—		—		(420)		(420)		—		—		(187)		(187)
Net loss on cash flow hedges reclassified into interest expense, net	—		529		—		529		—		1,348		—		1,348
Other	—		—		(6)		(6)		—		—		2		2
Other comprehensive income (loss)	829		529		(426)		932		957		1,348		(185)		2,120
Balance as of March 31	$	(40,932)	$	(35,957)	$	3,843	$	(73,046)	$	(41,405)	$	(40,802)	$	(12,329)	$	(94,536)

Foreign
Currency
Translation

Cash Flow
Hedges

Pension and
Other
Postretirement
Benefits
Total
(Thousands of Dollars)
Balance as of January 1, 2017 $ (69,069 ) $ (22,258 ) $ (2,850 ) $ (94,177 )
Other comprehensive income (loss):
Other comprehensive income (loss) before
   reclassification adjustments
16,825
(10,005 ) —
6,820
Net gain on pension costs reclassified into operating
   expense
—
—
(858 ) (858 )
Net gain on pension costs reclassified into general and
   administrative expense
—
—
(290 ) (290 )
Net loss on cash flow hedges reclassified into interest
   expense, net
—
5,112
—
5,112
Other comprehensive income (loss) 16,825
(4,893 ) (1,148 ) 10,784
Balance as of September 30, 2017 $ (52,244 ) $ (27,151 ) $ (3,998 ) $ (83,393 )

~~NUSTAR ENERGY L.P. AND SUBSIDIARIES~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~Allocations of Net Income~~

Our partnership agreement sets forth the calculation to be used to determine the amount and priority of cash distributions that the unitholders and general partner will receive. The partnership agreement also contains provisions for the allocation of net income to the unitholders and the general partner. Our net income for each quarterly reporting period is first allocated to the preferred limited partner unitholders in an amount equal to the earned distributions for the respective reporting period and then to the general partner in an amount equal to the general partner’s incentive distribution calculated based upon the declared distribution for the respective reporting period. We allocate the remaining net income or loss among the common unitholders (98%) and general partner (2%), as set forth in our partnership agreement.

~~The following table details the calculation of net income applicable to the general partner:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(Thousands of Dollars, Except Percentage Data)
Net income attributable to NuStar Energy L.P. $ 38,592
$ 51,141
$ 122,782
$ 161,059
Less preferred limited partner interest 12,153
—
26,916
—
Less general partner incentive distribution 10,912
10,890
34,736
32,500
Net income after general partner incentive distribution and preferred limited partner interest 15,527
40,251
61,130
128,559
General partner interest allocation 2 % 2 % 2 % 2 %
General partner interest allocation of net income 311
805
1,223
2,571
General partner incentive distribution 10,912
10,890
34,736
32,500
Net income applicable to general partner $ 11,223
$ 11,695
$ 35,959
$ 35,071

~~Cash Distributions~~

~~General Partner and Common Limited Partners. The following table reflects the allocation of total cash distributions to the general partner and common limited partners applicable to the period in which the distributions were earned:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(Thousands of Dollars, Except Per Unit Data)
General partner interest $ 2,302
$ 1,976
$ 6,947
$ 5,898
General partner incentive distribution 10,912
10,890
34,736
32,500
Total general partner distribution 13,214
12,866
41,683
38,398
Common limited partners’ distribution 101,870
85,943
305,652
256,513
Total cash distributions $ 115,084
$ 98,809
$ 347,335
$ 294,911

Cash distributions per unit applicable to common limited partners $ 1.095
$ 1.095
$ 3.285
$ 3.285

~~The following table summarizes information related to our quarterly cash distributions to our general partner and common limited partners:~~

Quarter Ended
Cash
Distributions
Per Unit

Total Cash
Distributions
Record Date Payment Date
(Thousands of Dollars)
September 30, 2017 (a) $ 1.095
$ 115,084
November 9, 2017 November 14, 2017
June 30, 2017 $ 1.095
$ 115,083
August 7, 2017 August 11, 2017
March 31, 2017 $ 1.095
$ 117,168
May 8, 2017 May 12, 2017
December 31, 2016 $ 1.095
$ 98,971
February 8, 2017 February 13, 2017


~~(a)~~	~~The distribution was announced on October 18, 2017.~~

~~NUSTAR ENERGY L.P. AND SUBSIDIARIES~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~Preferred Units.~~ ~~The following table summarizes information related to our quarterly cash distributions on our Series A and Series B Preferred Units:~~

Period
Cash
Distributions
Per Unit

Total Cash
Distributions
Record Date Payment Date
(Thousands of Dollars)
Series A Preferred Units:
September 15, 2017 - December 14, 2017 (a) $ 0.53125
$ 4,813
December 1, 2017 December 15, 2017
June 15, 2017 - September 14, 2017 $ 0.53125
$ 4,813
September 1, 2017 September 15, 2017
March 15, 2017 - June 14, 2017 $ 0.53125
$ 4,813
June 1, 2017 June 15, 2017
November 25, 2016 - March 14, 2017 $ 0.64930556
$ 5,883
March 1, 2017 March 15, 2017

Series B Preferred Units:
September 15, 2017 - December 14, 2017 (a) $ 0.47657
$ 7,339
December 1, 2017 December 15, 2017
April 28, 2017 - September 14, 2017 $ 0.725434028
$ 11,172
September 1, 2017 September 15, 2017


~~(a)~~	~~The distribution was announced on October 18, 2017.~~

~~NUSTAR ENERGY L.P. AND SUBSIDIARIES~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~11.~~10. NET INCOME (LOSS) PER COMMON UNIT

Basic ~~and diluted~~ net income (loss) per common unit is determined pursuant to the two-class method. Under this method, all earnings are allocated to our ~~common~~ limited partners and participating securities based on their respective rights to receive distributions earned during the period. Participating securities include ~~our general partner interest and~~ restricted units awarded under our long-term incentive ~~plan.~~

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 ~~our~~ common ~~limited partners~~units by the sum of (i) the ~~weighted-average~~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 the Series D Preferred Units and contingently issuable performance ~~units awarded under our long-term incentive plan.~~unit awards.

The ~~following table details~~Series D Preferred Units contain certain unitholder conversion and redemption features, and we use the ~~calculation~~if-converted method to calculate the dilutive effect of the conversion or redemption feature that is most advantageous to our Series D preferred unitholders. The effect of the assumed conversion or redemption of the Series D Preferred Units outstanding was antidilutive for each of the three months ended March 31, 2022 and 2021; therefore, we did not include such conversion in the computation of diluted net (loss) income per common ~~unit:~~unit.

Contingently issuable performance units are included as dilutive potential common units if it is probable that performance measures will be achieved, unless to do so would be antidilutive.

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(Thousands of Dollars, Except Unit and Per Unit Data)
Net income attributable to NuStar Energy L.P. $ 38,592
$ 51,141
$ 122,782
$ 161,059
Less: Distributions to general partner (including incentive distribution rights) 13,214
12,866
41,683
38,398
Less: Distributions to common limited partners 101,870
85,943
305,652
256,513
Less: Distributions to preferred limited partners 12,153
—
26,916
—
Less: Distribution equivalent rights to restricted units 707
650
2,134
1,969
Distributions in excess of earnings $ (89,352 ) $ (48,318 ) $ (253,603 ) $ (135,821 )

Net income attributable to common units:
Distributions to common limited partners $ 101,870
$ 85,943
$ 305,652
$ 256,513
Allocation of distributions in excess of earnings (87,565 ) (47,351 ) (248,531 ) (133,103 )
Total $ 14,305
$ 38,592
$ 57,121
$ 123,410

Basic weighted-average common units outstanding 93,031,320
78,031,053
87,392,597
77,934,802

Diluted common units outstanding:
Basic weighted-average common units outstanding 93,031,320
78,031,053
87,392,597
77,934,802
Effect of dilutive potential common units —
31,836
—
46,497
Diluted weighted-average common units outstanding 93,031,320
78,062,889
87,392,597
77,981,299

Basic and diluted net income per common unit $ 0.15
$ 0.49
$ 0.65
$ 1.58

Table of Contents

NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The following table details the calculation of basic and diluted net (loss) income per common unit:

~~12. STATEMENTS OF~~


	Three Months Ended March 31,
	2022		2021
	(Thousands of Dollars, Except Unit and Per Unit Data)
Net income	$	12,312	$	42,257
Distributions to preferred limited partners	(31,092)		(31,887)
Distributions to common limited partners	(44,165)		(43,834)
Distribution equivalent rights to restricted units	(633)		(598)
Distributions in excess of income	$	(63,578)	$	(34,062)

Distributions to common limited partners	$	44,165	$	43,834
Allocation of distributions in excess of income	(63,578)		(34,062)
Series D Preferred Unit accretion	(4,581)		(4,021)
Net (loss) income attributable to common units	$	(23,994)	$	5,751


Basic and diluted weighted-average common units outstanding	110,177,045		109,506,222



Basic and diluted net (loss) income per common unit	$	(0.22)	$	0.05

11. SUPPLEMENTAL CASH ~~FLOWS~~FLOW INFORMATION

Changes in current assets and current liabilities were as follows:


	Three Months Ended March 31,
	2022		2021
	(Thousands of Dollars)
Decrease (increase) in current assets:
Accounts receivable	$	(13,704)	$	12,232

Inventories	(3,062)		(6,471)

Other current assets	10,289		9,689
Increase (decrease) in current liabilities:
Accounts payable	4,284		5,067

Accrued interest payable	37,968		27,149
Accrued liabilities	(14,178)		(19,082)
Taxes other than income tax	(4,085)		(4,187)

Changes in current assets and current liabilities	$	17,512	$	24,397

Nine Months Ended September 30,
2017 2016
(Thousands of Dollars)
Decrease (increase) in current assets:
Accounts receivable $ 24,538
$ (15,200 )
Receivable from related party 236
—
Inventories 15,497
3,767
Other current assets 1,176
4,809
Increase (decrease) in current liabilities:
Accounts payable (52,910 ) 7,706
Payable to related party, net —
806
Accrued interest payable 7,829
(6,672 )
Accrued liabilities (10,702 ) (7,477 )
Taxes other than income tax 279
3,670
Income tax payable (3,614 ) (3,886 )
Changes in current assets and current liabilities $ (17,671 ) $ (12,477 )

The above changes in current assets and current liabilities differ from changes between amounts reflected in the applicable consolidated balance sheets due to:

~~current assets and current liabilities acquired during the period;~~

•the change in the amount accrued for capital expenditures;

•the effect of foreign currency translation;

•the reclassification of certain assets and liabilities to “Assets held for sale” and “Liabilities held for sale” on the consolidated balance sheet (please refer to Note 3 for additional discussion); and

~~changes in~~ •the ~~fair values~~effect of ~~our interest rate swap agreements.~~accrued compensation expense paid with fully vested common unit awards.

Table of Contents

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,
	2022		2021
	(Thousands of Dollars)
Cash paid for interest, net of amount capitalized	$	9,320	$	24,737
Cash paid for income taxes, net of tax refunds received	$	185	$	554

As of March 31, 2022 and December 31, 2021, 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 is included in the consolidated balance sheets as follows:


	March 31, 2022		December 31, 2021
	(Thousands of Dollars)
Cash and cash equivalents	$	8,398	$	5,637
Assets held for sale	2,429		—
Other long-term assets, net	8,802		8,802
Cash, cash equivalents and restricted cash	$	19,629	$	14,439

Nine Months Ended September 30,
2017 2016
(Thousands of Dollars)
Cash paid for interest, net of amount capitalized $ 112,335
$ 112,796
Cash paid for income taxes, net of tax refunds received $ 10,090
$ 9,873

~~13.~~12. SEGMENT INFORMATION

Our reportable business segments consist of the pipeline, storage and fuels ~~marketing.~~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, 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~~

Results of operations ~~include~~for the ~~transportation~~reportable segments were as follows:


	Three Months Ended March 31,
	2022		2021
	(Thousands of Dollars)
Revenues:

Pipeline	$	188,683	$	169,228






Storage	87,921		108,574

Fuels marketing	133,260		83,855



Consolidation and intersegment eliminations	(1)		(11)
Total revenues	$	409,863	$	361,646

Operating income (loss):
Pipeline	$	95,752	$	79,379
Storage	(14,975)		42,718
Fuels marketing	6,544		2,731

Total segment operating income	87,321		124,828
General and administrative expenses	27,071		24,492
Other depreciation and amortization expense	1,824		2,047
Total operating income	$	58,426	$	98,289

Table of petroleum products and anhydrous ammonia, the terminalling and storage of petroleum products and the marketing of petroleum products. Intersegment revenues result from storage agreements with wholly owned subsidiaries of NuStar Energy at rates consistent with the rates charged to third parties for storage.Contents

NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

~~Results of operations for the reportable segments were as follows:~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
(Thousands of Dollars)
Revenues:
Pipeline $ 137,426
$ 122,481
$ 385,406
$ 362,929
Storage:
Third parties 155,677
152,746
453,995
445,497
Intersegment 2,394
5,021
10,066
16,543
Total storage 158,071
157,767
464,061
462,040
Fuels marketing 147,463
166,191
524,083
476,499
Consolidation and intersegment eliminations (2,394 ) (5,021 ) (10,066 ) (16,543 )
Total revenues $ 440,566
$ 441,418
$ 1,363,484
$ 1,284,925

Operating income (loss):
Pipeline $ 61,119
$ 58,922
$ 179,015
$ 186,739
Storage 59,323
58,420
169,131
166,496
Fuels marketing (1,532 ) (337 ) 3,897
282
Consolidation and intersegment eliminations (1 ) (1 ) —
—
Total segment operating income 118,909
117,004
352,043
353,517
General and administrative expenses 25,003
26,957
83,202
73,399
Other depreciation and amortization expense 2,189
2,093
6,581
6,382
Total operating income $ 91,717
$ 87,954
$ 262,260
$ 273,736

Total assets by reportable segment were as follows:


	September 30, 2017		December 31, 2016			March 31, 2022		December 31, 2021
	(Thousands of Dollars)					(Thousands of Dollars)
Pipeline	$	3,451,302	$	2,024,633	Pipeline	$	3,405,703	$	3,441,272
Storage	2,665,426		2,522,586		Storage	1,518,082		1,537,037
Fuels marketing	104,140		168,347		Fuels marketing	66,006		41,562
Total segment assets	6,220,868		4,715,566		Total segment assets	4,989,791		5,019,871
Other partnership assets	197,900		314,979		Other partnership assets	140,134		136,461
Total consolidated assets	$	6,418,768	$	5,030,545	Total consolidated assets	$	5,129,925	$	5,156,332

~~NUSTAR ENERGY L.P. AND SUBSIDIARIES~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~14. CONDENSED CONSOLIDATING FINANCIAL STATEMENTS~~

NuStar Energy has no operations and its assets consist mainly of its 100% indirectly owned subsidiaries, NuStar Logistics and NuPOP. The senior and subordinated notes issued by NuStar Logistics are fully and unconditionally guaranteed by NuStar Energy and NuPOP. As a result, the following condensed consolidating financial statements are presented as an alternative to providing separate financial statements for NuStar Logistics and NuPOP.

~~Condensed Consolidating Balance Sheets~~

~~September 30, 2017~~

~~(Thousands of Dollars)~~

NuStar
Energy

NuStar
Logistics
NuPOP
Non-Guarantor
Subsidiaries
Eliminations Consolidated
Assets
Cash and cash equivalents $ 894
$ 28
$ —
$ 32,693
$ —
$ 33,615
Receivables, net —
114
—
152,041
—
152,155
Inventories —
1,733
6,580
14,984
—
23,297
Other current assets 118
9,378
5,405
9,904
—
24,805
Intercompany receivable —
3,183,871
—
—
(3,183,871 ) —
Total current assets 1,012
3,195,124
11,985
209,622
(3,183,871 ) 233,872
Property, plant and equipment, net —
1,904,510
582,390
1,701,249
—
4,188,149
Intangible assets, net —
60,886
—
736,453
—
797,339
Goodwill —
149,453
170,652
775,838
—
1,095,943
Investment in wholly owned
subsidiaries
2,992,907
24,152
1,291,487
816,809
(5,125,355 ) —
Deferred income tax asset —
—
—
1,070
—
1,070
Other long-term assets, net 378
65,393
27,782
8,842
—
102,395
Total assets $ 2,994,297
$ 5,399,518
$ 2,084,296
$ 4,249,883
$ (8,309,226 ) $ 6,418,768
Liabilities and Partners’ Equity
Accounts payable $ 2,201
$ 24,752
$ 13,812
$ 57,089
$ —
$ 97,854
Short-term debt —
68,000
—
—
—
68,000
Current portion of long-term debt —
350,007
—
—
—
350,007
Accrued interest payable —
41,780
—
31
—
41,811
Accrued liabilities 822
19,980
10,527
29,137
—
60,466
Taxes other than income tax 63
7,551
4,922
7,404
—
19,940
Income tax payable —
704
3
2,282
—
2,989
Intercompany payable 487,956
—
1,228,444
1,467,471
(3,183,871 ) —
Total current liabilities 491,042
512,774
1,257,708
1,563,414
(3,183,871 ) 641,067
Long-term debt —
3,186,908
—
45,691
—
3,232,599
Deferred income tax liability —
1,862
13
21,291
—
23,166
Other long-term liabilities —
48,605
9,895
43,574
—
102,074
Total partners’ equity 2,503,255
1,649,369
816,680
2,575,913
(5,125,355 ) 2,419,862
Total liabilities and
partners’ equity
$ 2,994,297
$ 5,399,518
$ 2,084,296
$ 4,249,883
$ (8,309,226 ) $ 6,418,768

~~NUSTAR ENERGY L.P. AND SUBSIDIARIES~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~Condensed Consolidating Balance Sheets~~

~~December 31, 2016~~

~~(Thousands of Dollars)~~

NuStar
Energy

NuStar
Logistics
NuPOP
Non-Guarantor
Subsidiaries
Eliminations Consolidated
Assets
Cash and cash equivalents $ 870
$ 5
$ —
$ 35,067
$ —
$ 35,942
Receivables, net —
3,040
—
167,570
—
170,610
Inventories —
2,216
2,005
33,724
—
37,945
Other current assets 61
120,350
1,829
10,446
—
132,686
Intercompany receivable —
1,308,415
—
57,785
(1,366,200 ) —
Total current assets 931
1,434,026
3,834
304,592
(1,366,200 ) 377,183
Property, plant and equipment, net —
1,935,172
589,139
1,197,972
—
3,722,283
Intangible assets, net —
71,033
—
56,050
—
127,083
Goodwill —
149,453
170,652
376,532
—
696,637
Investment in wholly owned
subsidiaries
1,964,736
34,778
1,221,717
874,649
(4,095,880 ) —
Deferred income tax asset —
—
—
2,051
—
2,051
Other long-term assets, net 1,255
63,586
28,587
11,880
—
105,308
Total assets $ 1,966,922
$ 3,688,048
$ 2,013,929
$ 2,823,726
$ (5,462,080 ) $ 5,030,545
Liabilities and Partners’ Equity
Accounts payable $ 2,436
$ 24,272
$ 7,124
$ 84,854
$ —
$ 118,686
Short-term debt —
54,000
—
—
—
54,000
Accrued interest payable —
34,008
—
22
—
34,030
Accrued liabilities 1,070
7,118
10,766
41,531
—
60,485
Taxes other than income tax 125
6,854
3,253
5,453
—
15,685
Income tax payable —
1,326
5
5,179
—
6,510
Intercompany payable 257,497
—
1,108,703
—
(1,366,200 ) —
Total current liabilities 261,128
127,578
1,129,851
137,039
(1,366,200 ) 289,396
Long-term debt —
2,956,338
—
58,026
—
3,014,364
Deferred income tax liability —
1,862
13
20,329
—
22,204
Other long-term liabilities —
34,358
9,436
49,170
—
92,964
Total partners’ equity 1,705,794
567,912
874,629
2,559,162
(4,095,880 ) 1,611,617
Total liabilities and
partners’ equity
$ 1,966,922
$ 3,688,048
$ 2,013,929
$ 2,823,726
$ (5,462,080 ) $ 5,030,545

~~NUSTAR ENERGY L.P. AND SUBSIDIARIES~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~Condensed Consolidating Statements of Comprehensive Income (Loss)~~

~~For the Three Months Ended~~ ~~September 30, 2017~~

~~(Thousands of Dollars)~~

NuStar
Energy

NuStar
Logistics
NuPOP
Non-Guarantor
Subsidiaries
Eliminations Consolidated
Revenues $ —
$ 127,980
$ 58,871
$ 253,854
$ (139 ) $ 440,566
Costs and expenses 332
77,668
38,709
232,279
(139 ) 348,849
Operating (loss) income (332 ) 50,312
20,162
21,575
—
91,717
Equity in earnings (loss) of subsidiaries 38,896
(4,558 ) 20,809
39,508
(94,655 ) —
Interest income (expense), net 28
(46,247 ) (1,455 ) 2,418
—
(45,256 )
Other income (expense), net —
57
(8 ) (5,175 ) —
(5,126 )
Income (loss) before income tax
expense
38,592
(436 ) 39,508
58,326
(94,655 ) 41,335
Income tax expense —
115
1
2,627
—
2,743
Net income (loss) $ 38,592
$ (551 ) $ 39,507
$ 55,699
$ (94,655 ) $ 38,592

Comprehensive income (loss) $ 38,592
$ (1,031 ) $ 39,507
$ 62,069
$ (94,655 ) $ 44,482

~~Condensed Consolidating Statements of Comprehensive Income~~

~~For the Three Months Ended~~ ~~September 30, 2016~~

~~(Thousands of Dollars)~~

NuStar
Energy

NuStar
Logistics
NuPOP
Non-Guarantor
Subsidiaries
Eliminations Consolidated
Revenues $ —
$ 131,696
$ 53,158
$ 256,925
$ (361 ) $ 441,418
Costs and expenses 252
79,443
37,957
236,173
(361 ) 353,464
Operating (loss) income (252 ) 52,253
15,201
20,752
—
87,954
Equity in earnings (loss) of subsidiaries 51,397
(44 ) 25,819
43,205
(120,377 ) —
Interest (expense) income, net —
(43,832 ) 2,165
6,645
—
(35,022 )
Other (expense) income, net (4 ) 378
(8 ) (4 ) —
362
Income before income tax
expense (benefit)
51,141
8,755
43,177
70,598
(120,377 ) 53,294
Income tax expense (benefit) —
588
(29 ) 1,594
—
2,153
Net income $ 51,141
$ 8,167
$ 43,206
$ 69,004
$ (120,377 ) $ 51,141

Comprehensive income $ 51,141
$ 8,143
$ 43,206
$ 66,539
$ (120,377 ) $ 48,652

~~NUSTAR ENERGY L.P. AND SUBSIDIARIES~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~Condensed Consolidating Statements of Comprehensive Income (Loss)~~

~~For the Nine Months Ended September 30, 2017~~

~~(Thousands of Dollars)~~

NuStar
Energy

NuStar
Logistics
NuPOP
Non-Guarantor
Subsidiaries
Eliminations Consolidated
Revenues $ —
$ 380,504
$ 161,689
$ 822,064
$ (773 ) $ 1,363,484
Costs and expenses 1,327
237,086
106,296
757,288
(773 ) 1,101,224
Operating (loss) income (1,327 ) 143,418
55,393
64,776
—
262,260
Equity in earnings (loss) of
subsidiaries
124,073
(10,625 ) 69,770
121,002
(304,220 ) —
Interest income (expense), net 36
(129,551 ) (4,160 ) 6,393
—
(127,282 )
Other income (expense), net —
140
1
(5,039 ) —
(4,898 )
Income before income tax expense 122,782
3,382
121,004
187,132
(304,220 ) 130,080
Income tax expense —
81
3
7,214
—
7,298
Net income $ 122,782
$ 3,301
$ 121,001
$ 179,918
$ (304,220 ) $ 122,782

Comprehensive income (loss) $ 122,782
$ (1,592 ) $ 121,001
$ 195,595
$ (304,220 ) $ 133,566

~~Condensed Consolidating Statements of Comprehensive Income (Loss)~~

~~For the Nine Months Ended September 30, 2016~~

~~(Thousands of Dollars)~~

NuStar
Energy

NuStar
Logistics
NuPOP
Non-Guarantor
Subsidiaries
Eliminations Consolidated
Revenues $ —
$ 383,836
$ 159,272
$ 742,890
$ (1,073 ) $ 1,284,925
Costs and expenses 1,204
221,839
104,958
684,261
(1,073 ) 1,011,189
Operating (loss) income (1,204 ) 161,997
54,314
58,629
—
273,736
Equity in earnings (loss) of
subsidiaries
162,248
(5,362 ) 71,273
131,294
(359,453 ) —
Interest (expense) income, net —
(124,619 ) 5,699
15,546
—
(103,374 )
Other income (expense), net 18
400
(18 ) (410 ) —
(10 )
Income before income tax expense (benefit) 161,062
32,416
131,268
205,059
(359,453 ) 170,352
Income tax expense (benefit) 3
1,281
(24 ) 8,033
—
9,293
Net income $ 161,059
$ 31,135
$ 131,292
$ 197,026
$ (359,453 ) $ 161,059

Comprehensive income (loss) $ 161,059
$ (14,687 ) $ 131,292
$ 202,242
$ (359,453 ) $ 120,453

~~NUSTAR ENERGY L.P. AND SUBSIDIARIES~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~Condensed Consolidating Statements of Cash Flows~~

~~For the~~ ~~Nine~~ ~~Months Ended~~ ~~September 30, 2017~~

~~(Thousands of Dollars)~~

NuStar
Energy

NuStar
Logistics
NuPOP
Non-Guarantor
Subsidiaries
Eliminations Consolidated
Net cash provided by operating
activities
$ 355,864
$ 128,395
$ 72,711
$ 290,917
$ (536,872 ) $ 311,015
Cash flows from investing activities:
Capital expenditures —
(34,964 ) (18,138 ) (167,515 ) —
(220,617 )
Change in accounts payable
related to capital expenditures
—
(1,223 ) 4,445
10,050
—
13,272
Proceeds from sale or disposition
of assets
—
1,947
17
59
—
2,023
Investment in subsidiaries (1,262,000 ) —
—
(126 ) 1,262,126
—
Proceeds from Axeon term loan —
110,000
—
—
—
110,000
Acquisitions —
—
—
(1,461,719 ) —
(1,461,719 )
Net cash (used in) provided by investing activities (1,262,000 ) 75,760
(13,676 ) (1,619,251 ) 1,262,126
(1,557,041 )
Cash flows from financing activities:
Debt borrowings —
1,901,504
—
69,700
—
1,971,204
Note offering, net of
issuance costs
—
543,313
—
—
—
543,313
Debt repayments —
(1,856,739 ) —
(82,000 ) —
(1,938,739 )
Issuance of preferred units,
net of issuance costs
371,802
—
—
—
—
371,802
Issuance of common units,
net of issuance costs
643,858
—
—
—
—
643,858
General partner contribution 13,597
—
—
—
—
13,597
Distributions to preferred unitholders (26,681 ) (13,340 ) (13,341 ) (13,342 ) 40,023
(26,681 )
Distributions to common unitholders and general partner (331,222 ) (165,611 ) (165,611 ) (165,627 ) 496,849
(331,222 )
Contributions from affiliates —
1,262,000
—
126
(1,262,126 ) —
Net intercompany activity 238,172
(1,873,773 ) 119,917
1,515,684
—
—
Other, net (3,366 ) (1,486 ) —
(218 ) —
(5,070 )
Net cash provided by (used in) financing activities 906,160
(204,132 ) (59,035 ) 1,324,323
(725,254 ) 1,242,062
Effect of foreign exchange rate changes on cash —
—
—
1,637
—
1,637
Net increase (decrease) in cash
and cash equivalents
24
23
—
(2,374 ) —
(2,327 )
Cash and cash equivalents as of the
beginning of the period
870
5
—
35,067
—
35,942
Cash and cash equivalents as of the
end of the period
$ 894
$ 28
$ —
$ 32,693
$ —
$ 33,615

~~NUSTAR ENERGY L.P. AND SUBSIDIARIES~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~Condensed Consolidating Statements of Cash Flows~~

~~For the~~ ~~Nine~~ ~~Months Ended~~ ~~September 30, 2016~~

~~(Thousands of Dollars)~~

NuStar
Energy

NuStar
Logistics
NuPOP
Non-Guarantor
Subsidiaries
Eliminations Consolidated
Net cash provided by operating
activities
$ 292,572
$ 97,253
$ 118,436
$ 281,544
$ (475,256 ) $ 314,549
Cash flows from investing activities:
Capital expenditures —
(53,491 ) (43,329 ) (48,594 ) —
(145,414 )
Change in accounts payable
related to capital expenditures
—
(15,086 ) 2,645
(3,063 ) —
(15,504 )
Investment in subsidiaries —
—
(212,900 ) —
212,900
—
Net cash used in investing activities —
(68,577 ) (253,584 ) (51,657 ) 212,900
(160,918 )
Cash flows from financing activities:
Debt borrowings —
965,082
—
20,900
—
985,982
Debt repayments —
(918,550 ) —
(31,200 ) —
(949,750 )
Issuance of common units, net of
issuance costs
27,710
—
—
—
—
27,710
General partner contribution 575
—
—
—
—
575
Distributions to common unitholders and general partner (294,153 ) (147,076 ) (147,077 ) (147,093 ) 441,246
(294,153 )
Contributions from affiliates —
—
—
178,890
(178,890 ) —
Net intercompany activity (25,372 ) 75,165
282,226
(332,019 ) —
—
Other, net (1,406 ) (3,298 ) (1 ) (8,894 ) —
(13,599 )
Net cash (used in) provided by
financing activities
(292,646 ) (28,677 ) 135,148
(319,416 ) 262,356
(243,235 )
Effect of foreign exchange rate
changes on cash
—
—
—
3,404
—
3,404
Net decrease in cash and
cash equivalents
(74 ) (1 ) —
(86,125 ) —
(86,200 )
Cash and cash equivalents as of the
beginning of the period
885
4
—
117,973
—
118,862
Cash and cash equivalents as of the
end of the period
$ 811
$ 3
$ —
$ 31,848
$ —
$ 32,662

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~~Item 2.~~	~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

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 ~~STATEMENTS~~INFORMATION

~~This~~In this Form 10-Q, ~~contains~~we make certain forward-looking statements, such as statements regarding our plans, strategies, objectives, expectations, estimates, predictions, projections, assumptions, intentions, resources and ~~other forward-looking statements that involve various risks~~the future impact of the coronavirus, or COVID-19, the responses thereto, the Russia-Ukraine conflict, economic activity and ~~uncertainties.~~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.~~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, ~~2016~~2021, ~~Part I, Item 1A “Risk Factors,”~~ as well as additional information provided from time to time in our subsequent ~~current~~filings with the Securities and ~~quarterly reports,~~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.

~~OVERVIEW~~

NuStar Energy L.P. (NYSE: NS) is engaged in the transportation of petroleum products and anhydrous ammonia, and the terminalling, storage and marketing of petroleum products. 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. NuStar GP Holdings, LLC (NuStar GP Holdings or NSH) (NYSE: NSH) owns our general partner, Riverwalk Logistics, L.P., and owns an approximate 11% common limited partner interest in us as of ~~September 30, 2017~~. Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is presented in ~~seven~~five sections:

•Overview, including Trends and Outlook

•Results of Operations

~~Trends and Outlook~~

•Liquidity and Capital Resources

~~Related Party Transactions~~

•Critical Accounting Policies

•New Accounting Pronouncements

~~Recent Developments~~

~~Hurricane Activity.~~ InOVERVIEW

NuStar Energy L.P. (NYSE: NS) is primarily engaged in the ~~third quarter~~transportation, terminalling and storage of ~~2017, parts~~petroleum products and renewable fuels and the transportation of anhydrous ammonia. Our business is managed under the direction of the ~~Caribbean and Gulf~~board of ~~Mexico experienced three major hurricanes. Several~~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, 2022, our assets included 9,940 miles of pipeline and 64 terminal and storage facilities, ~~were affected by the hurricanes,~~which provided approximately 57 million barrels of storage capacity. As described below, on April 29, 2022 we sold our Point Tupper terminal facility with ~~the main impact at our St. Eustatius terminal, which was temporarily shut down. We recorded~~ a ~~$5.0~~storage capacity of 7.8 million loss in “Other (expense) income, net” in the condensed consolidated statements of comprehensive income in the third quarter of 2017 for property damage at our St. Eustatius terminal, which represents the amount of our deductible under our insurance policy. Additionally, we incurred approximately $0.7 million of operating expenses to repair minor property damage at several of our domestic terminals. The shutdown of the St. Eustatius terminal also caused lower revenues for our bunker fuel operations in our fuels marketing segment and lower throughput and associated handling fees in our storage segment. We are still evaluating the extent of property damage at our St. Eustatius terminal, as well as the interruption to our operations; therefore, we are unable to estimate the total impact from the hurricanes at this time. However, we expect that losses incurred above our deductible amount will be covered by our insurance policies.

~~Navigator Acquisition and Financing Transactions.~~ On May 4, 2017, we completed the acquisition of Navigator Energy Services, LLC for approximately $1.5 billion (the Navigator Acquisition). In order to fund the purchase price, we issued 14,375,000 common units for net proceeds of $657.5 million, issued $550.0 million of 5.625% senior notes for net proceeds of $543.3 million and issued 15,400,000 of our 7.625% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (Series B Preferred Units) for net proceeds of $371.8 million. We collectively refer to the acquired assets as our Permian Crude System. The assets acquired are included in our pipeline segment. Please refer to Notes 3, 4 and 10 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for further discussion.

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~~Axeon Term Loan.~~ On February 22, 2017, we settled and terminated the $190.0 million term loan to Axeon Specialty Products, LLC (the Axeon Term Loan), pursuant to which we also provided credit support, such as guarantees, letters of credit and cash collateral, as applicable, of up to $125.0 million to Axeon Specialty Products, LLC (Axeon). We received $110.0 million in settlement of the Axeon Term Loan, and our obligation to provide ongoing credit support to Axeon ceased. Please refer to Note 6 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for further discussion of the Axeon Term Loan and credit support.

~~Operations~~

barrels. 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 transportation 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 production, 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;

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•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.

Recent Developments

Sale of Point Tupper Terminal. On April 29, 2022, we sold the equity interests in our wholly owned subsidiaries that own our Point Tupper terminal facility (the Point Tupper Terminal Operations) to EverWind Fuels for $60.0 million, plus working capital, which is subject to adjustment. The terminal facility has a storage capacity of 7.8 million barrels and has been included in the storage segment. We recognized a non-cash pre-tax impairment loss of $46.1 million in the first quarter of 2022 and expect to utilize the sales proceeds to reduce debt and thereby improve our debt metrics. Please refer to Note 3of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for additional information.

Other Events

Eastern U.S. Terminals Disposition. On October 8, 2021, we completed the sale of nine U.S. terminal and storage facilities, including all our North East Terminals and one terminal in Florida (the Eastern U.S. Terminal Operations) to Sunoco LP for $250.0 million in cash (the Eastern U.S. Terminals Disposition). The terminals had an aggregate storage capacity of 14.8 million barrels and were included in the storage segment. We utilized the proceeds from the sale to reduce debt and improve our debt metrics.

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Trends and Outlook

While 2022 marks the third year of the COVID-19 pandemic in the U.S., we continue to see signs of stabilization and improvement, across the U.S. and in NuStar’s footprint. U.S. refined product demand outlook has seen some sustained improvement, as COVID-19 vaccinations have continued to allow more people go about normal day-to-day activities and traveling. However, variants may emerge that could significantly increase COVID-19 case counts, which may further impact the overall demand recovery in 2022.

Since Russia’s military invasion of Ukraine in late February 2022, prices for a number of the commodities produced in those countries, including oil and gas, rose sharply and have been volatile, on market concerns about worldwide supply constraints. The long-term impact of the ongoing Russia-Ukraine conflict, along with the lingering impact of COVID-19, on the global and U.S. economy remains uncertain; however, at this time, we do not expect a significant impact to our operations or financial position.

Although U.S. oil production has been slow to respond to the recent increase in crude oil prices due to a variety of factors, including supply chain challenges, we expect sustained healthy U.S. shale production growth in 2022 from improving global demand as well as supply constraints from the Russia-Ukraine conflict. We expect our Permian system volumes to see healthy growth in 2022. Refined product demand on NuStar’s pipeline systems rebounded in 2021 to pre-pandemic levels or higher, and we expect our refined products pipeline systems to perform at or above 100% of our pre-pandemic levels through 2022; however, if prices for motor fuels continue to rise and remain at those levels for a sustained period, consumer demand could fall, which would reduce demand for the transportation and storage services we provide. So far this year, the sustained recovery in refined product demand has increased U.S. refiners’ utilization and demand for crude oil, which has contributed to increased throughputs on certain of our crude oil pipelines, which we expect to continue through 2022. In addition, we continue to expect to benefit from the growth of our renewable fuels distribution system on the West Coast, where we expect to provide an increasing share of California’s renewable fuels as we complete our planned tank conversion projects.

The lingering impact of the COVID-19 pandemic continues to ripple through the U.S. economy, notably in the form of rising inflation and supply chain issues, which affected certain industries and geographic areas to varying degrees during 2021; the Russia-Ukraine conflict seems to have only amplified inflation and supply chain constraints so far in 2022. The U.S. Federal Reserve has raised interest rates and is expected to implement several more increases in 2022, which will increase the cost of our variable-rate debt. In addition, the distribution rates of our Series A, B and C Preferred Units have converted, or will convert in 2022, from fixed rates to floating rates that increase or decrease with prevailing interest rates. On the other hand, our ability to pass along rate increases reflecting changes in producer and/or consumer price indices to our customers, under our tariffs and contracts, should counterbalance the impact of inflation on our costs. We plan to continue to manage our operations with fiscal discipline and to evaluate our capital expenditures as we remain committed to improving our debt metrics and strengthening our balance sheet. We expect to continue to fund all of our expenses, distribution requirements and capital expenditures for the full-year 2022 using internally generated cash flows.

Our ~~operations~~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 and the Russia-Ukraine conflict; 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 unplanned refinery downtime; crude oil prices; the supply of and demand for petroleum products, renewable fuels and anhydrous ammonia; demand for our transportation and storage services; the availability and costs of personnel, equipment, supplies and services essential to our operations; the ability to obtain timely permitting approvals; and changes in laws and regulations affecting our operations.

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RESULTS OF OPERATIONS

Consolidated Results of Operations

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021


	Three Months Ended March 31,				Change
	2022		2021
	(Unaudited, Thousands of Dollars, Except Per Unit Data)
Statement of Income Data:
Revenues:
Service revenues	$	265,305	$	271,883	$	(6,578)
Product sales	144,558		89,763		54,795
Total revenues	409,863		361,646		48,217

Costs and expenses:
Costs associated with service revenues	149,705		155,705		(6,000)
Costs associated with product sales	126,715		81,113		45,602
Impairment loss	46,122		—		46,122

General and administrative expenses	27,071		24,492		2,579
Other depreciation and amortization expense	1,824		2,047		(223)

Total costs and expenses	351,437		263,357		88,080

Operating income	58,426		98,289		(39,863)

Interest expense, net	(49,818)		(54,918)		5,100


Other income, net	3,671		398		3,273
Income before income tax (benefit) expense	12,279		43,769		(31,490)
Income tax (benefit) expense	(33)		1,512		(1,545)


Net income	$	12,312	$	42,257	$	(29,945)

Basic and diluted net (loss) income per common unit	$	(0.22)	$	0.05	$	(0.27)

Consolidated Overview. Net income decreased $29.9 million for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, mainly due to a non-cash pre-tax impairment loss of $46.1 million recorded in the first quarter of 2022 related to our Point Tupper Terminal Operations and lower operating income from our storage segment, excluding the impairment loss. These decreases were partially offset by higher operating income from our pipeline segment.

Corporate Items.General and administrative expenses increased $2.6 million for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, mainly due to higher compensation costs.

Interest expense, net, decreased $5.1 million for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, primarily due to lower overall debt balances following the repayment of outstanding debt, partially with the proceeds from October 2021 and December 2020 asset sales.

Other income, net increased $3.3 million for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, primarily due to foreign exchange rate fluctuations.

Pipeline Segment

As of March 31, 2022, our pipeline assets consist of ~~three reportable business segments:~~9,940 miles of pipeline with 33 terminals and 13.0 million barrels of storage ~~and fuels marketing.~~

~~Pipeline.~~ ~~We own 3,140~~capacity. Our Central West System includes 3,205 miles of refined product pipelines and ~~1,830~~2,235 miles of crude oil ~~pipelines and gathering lines, as well as approximately 5.0 million barrels of storage capacity, which comprise~~pipelines. In addition, our Central ~~West System. In addition, we own 2,370~~East System includes 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 together comprise our Central East System. The East and North Pipelines have storage capacity of approximately 6.7 million barrels.~~. We charge tariffs on a per barrel basis for ~~transporting refined products, crude oil and other feedstocks~~transportation in our refined product and crude oil pipelines and on a per ton basis for ~~transporting anhydrous ammonia~~transportation in the Ammonia Pipeline. Other revenues include product sales of surplus pipeline loss allowance (PLA) volumes.

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Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021


	Three Months Ended March 31,				Change
	2022		2021
Pipeline Segment:	(Thousands of Dollars, Except Barrels/Day Information)
Crude oil pipelines throughput (barrels/day)	1,309,085		1,101,327		207,758
Refined products and ammonia pipelines throughput (barrels/day)	563,248		508,726		54,522
Total throughput (barrels/day)	1,872,333		1,610,053		262,280

Throughput and other revenues	$	188,683	$	169,228	$	19,455
Operating expenses	48,103		45,055		3,048
Depreciation and amortization expense	44,828		44,794		34


Segment operating income	$	95,752	$	79,379	$	16,373

Pipeline segment revenues increased $19.5 million and throughputs increased 262,280 barrels per day for the three months ended March 31, 2022, compared to the three months ended March 31, 2021. The results for the first quarter of 2021 were negatively affected by Winter Storm Uri, which brought snow and damaging ice and caused widespread power outages in Texas and surrounding states in February 2021, as well as the lingering effects from the COVID-19 pandemic, as demand did not recover to pre-pandemic levels until the second quarter of 2021. Revenues and throughputs increased primarily due to the following:

•an increase in revenues of $13.2 million and an increase in throughputs of 118,660 barrels per day on our Permian Crude System, mainly due to the negative impacts on the first quarter of 2021 described above, as well as an increase of $4.9 million in sales of PLA volumes in the first quarter of 2022 compared to the first quarter of 2021;

•an increase in revenues of $2.9 million and an increase in throughputs of 12,516 barrels per day on our North and East pipelines combined, due to supply disruptions from the conversion of a Wyoming refinery, resulting in higher volumes on our East Pipeline and a rebound in demand in 2022, compared to lower demand in 2021 due to the lingering impacts from COVID-19;

•an increase in revenues of $1.5 million and an increase in throughputs of 14,183 barrels per day on our McKee System pipelines, mainly due to the negative impacts in the first quarter of 2021 described above;

•an increase in revenues of $1.4 million and an increase in throughputs of 15,090 barrels per day on our Three Rivers System, primarily due to an increase in demand on our Nuevo Laredo and San Antonio pipelines;

•an increase in revenues of $1.1 million and an increase in throughputs of 13,899 barrels per day on our Houston Pipeline due to a new contract with a customer that began at the end of March 2021; and

•although revenues remained comparable as a result of minimum volume commitments, throughputs increased 65,421 barrels per day on our Corpus Christi Crude Pipeline System, mainly due to a rebound in demand.

These increases were partially offset by a decrease in revenues of $1.3 million on our Ardmore System, despite an increase in throughputs of 22,227 barrels per day. Revenues decreased mainly due to the expiration of a customer contract at the end of the first quarter of 2021, while throughputs increased primarily due to the negative impacts in the first quarter of 2021 described above.

Operating expenses increased $3.0 million for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, mainly due to an increase in power costs of $2.5 million, primarily due to higher throughputs.

Storage~~. We own terminals~~ Segment

Our storage segment is comprised of our facilities that provide storage, handling and other services for refined products, crude oil, specialty chemicals, renewable fuels and other liquids. As of March 31, 2022, we owned and operated 29 terminal and storage facilities in the ~~United States,~~U.S., one terminal in Nuevo Laredo, Mexico and one terminal located in Point Tupper, Canada, ~~Mexico, the Netherlands, including St. Eustatius in the Caribbean, and the United Kingdom (UK),~~ with ~~approximately 84.7~~an aggregate storage capacity of 44.2 million ~~barrels of storage capacity.~~barrels. Revenues for the storage segment include fees for tank storage agreements, ~~whereby~~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, ~~whereby~~under which a customer pays a fee per barrel for volumes ~~moving~~moved through our terminals (throughput terminal revenues).

Sale of Point Tupper Terminal. In the first quarter of 2022, we recorded a non-cash pre-tax impairment loss of $46.1 million related to our Point Tupper terminal facility, which was sold on April 29, 2022 for $60.0 million.

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Selby Terminal Fire. We recognized a gain from business interruption insurance of $4.0 million for the three months ended March 31, 2021, which is included in “Operating expenses” in the condensed consolidated statements of comprehensive income and relates to a fire in October 2019 at our terminal facility in Selby, California.

Three Months Ended March 31, 2022 Compared to Three Months Ended March 31, 2021


	Three Months Ended March 31,				Change
	2022		2021
Storage Segment:	(Thousands of Dollars, Except Barrels/Day Information)
Throughput (barrels/day)	395,803		400,302		(4,499)

Throughput terminal revenues	$	26,441	$	24,794	$	1,647
Storage terminal revenues	61,480		83,780		(22,300)
Total revenues	87,921		108,574		(20,653)
Operating expenses	38,299		42,232		(3,933)
Depreciation and amortization expense	18,475		23,624		(5,149)
Impairment loss	46,122		—		46,122

Segment operating (loss) income	$	(14,975)	$	42,718	$	(57,693)

Throughput terminal revenues increased $1.6 million for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, primarily due to an increase in revenues of $1.4 million at our Corpus Christi North beach terminal.

Storage terminal revenues decreased $22.3 million for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, primarily due to the following:

•a decrease in revenues of $16.3 million due to the Eastern U.S. Terminals Disposition in October 2021; and

•a decrease in revenues of $5.5 million and $1.1 million at our St. James and Point Tupper terminals, respectively, mainly due to the expiration of customer contracts.

Operating expenses decreased $3.9 million for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, primarily due to a decrease in operating expenses of $9.3 million due to the Eastern U.S. Terminals Disposition in October 2021. This decrease was partially offset by an increase in maintenance and regulatory expense of $1.0 million in 2022 and a $4.0 million recovery in the first quarter of 2021 for business interruption insurance related to the Selby terminal.

Depreciation and amortization expense decreased $5.1 million for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, mainly due to the Eastern U.S. Terminals Disposition in October 2021.

Fuels Marketing~~. Within our~~ Segment

The fuels marketing segment includes our bunkering operations ~~we purchase petroleum products for resale.~~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.

~~We ceased marketing crude oil in~~ The financial impacts of the ~~second quarter of 2017 and exited our heavy fuels trading operations in the third quarter of 2017. These actions are in line~~derivative financial instruments associated with our goal of reducing our exposure to commodity margins, and instead focusing on our core, fee-based pipeline and storage segments. Going forward, the only operations remaining in our fuels marketing segment will be our bunkering operations at our St. Eustatius and Texas City terminals, as well as our butane blending operations.

~~The following factors affect the results of our operations:~~

~~company-specific factors, such as facility integrity issues and maintenance requirements that impact the throughput rates of our assets;~~

~~seasonal factors that affect the demand for products transported by and/or stored in our assets and the demand for products we sell;~~

~~industry factors, such as changes in the prices of petroleum products that affect demand and operations of our competitors;~~

~~economic factors, such as~~ commodity price ~~volatility that impact our fuels marketing segment and the drilling activity by our crude oil production customers; and~~risk were not material for any periods presented.

factors that impact the operations served by our pipeline and storage assets, such as utilization rates and maintenance turnaround schedules of our refining company customers and drilling activity by our crude oil production customers.

~~Current Market Conditions~~

The price of crude oil has recovered only modestly since its sharp initial decline in 2014 and subsequent historic lows during 2015 and 2016. This year, global supply and demand have moved into balance, which seems to have reduced crude price volatility, but crude prices remain stalled at approximately 50% of their 2014 levels. Most energy industry experts now project only modest price recovery through the end of 2018.

Table of Contents

Increases or decreases in the price of crude oil affect sectors across the energy industry, including our customers in crude oil production, refining and trading, in different ways at different points in any given price cycle. For example, U.S. crude oil producers reduced their capital spending relatively early in this sustained low price cycle, which reduced drilling activity and lowered production, particularly in shale play regions with higher relative drilling costs. As this cycle has continued, producers focused their trimmed-back spending on the most capital-efficient regions, such as, notably, the Permian Basin. Refiners, on the other hand, have benefitted from lower crude oil prices, to the extent they have been able to take advantage of the combination of lower feedstock prices, especially those positioned for healthy regional demand for their refined products; however, as refined product inventories increase, refiners are incentivized to reduce their production levels, which in turn may reduce their ability to benefit from low crude prices. Crude oil traders focus less on the current market commodity price than on whether that price is higher or lower than future market prices: if the future price for a product is believed to be higher than the current market price, or a “contango market,” traders are more likely to purchase and store products to sell in the future at the higher price. On the other hand, when the current price of crude oil nears or exceeds the expected future market price, or “backwardation,” as is currently the case, traders are no longer incentivized to purchase and store product for future sale.

~~RESULTS OF OPERATIONS~~

Three Months Ended ~~September 30, 2017~~March 31, 2022 Compared to Three Months Ended ~~September 30, 2016~~March 31, 2021

~~Financial Highlights~~


	Three Months Ended March 31,				Change
	2022		2021
Fuels Marketing Segment:	(Thousands of Dollars)
Product sales	$	133,260	$	83,855	$	49,405
Cost of goods	126,123		82,403		43,720
Gross margin	7,137		1,452		5,685
Operating expenses	593		(1,279)		1,872


Segment operating income	$	6,544	$	2,731	$	3,813

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

Three Months Ended September 30, Change
2017 2016
Statement of Income Data:
Revenues:
Service revenues $ 295,102
$ 277,758
$ 17,344
Product sales 145,464
163,660
(18,196 )
Total revenues 440,566
441,418
(852 )

Costs and expenses:
Cost of product sales 138,078
155,129
(17,051 )
Operating expenses 116,590
117,432
(842 )
General and administrative expenses 25,003
26,957
(1,954 )
Depreciation and amortization expense 69,178
53,946
15,232
Total costs and expenses 348,849
353,464
(4,615 )

Operating income 91,717
87,954
3,763
Interest expense, net (45,256 ) (35,022 ) (10,234 )
Other (expense) income, net (5,126 ) 362
(5,488 )
Income before income tax expense 41,335
53,294
(11,959 )
Income tax expense 2,743
2,153
590
Net income $ 38,592
$ 51,141
$ (12,549 )
Basic and diluted net income per common unit $ 0.15
$ 0.49
$ (0.34 )
Basic weighted-average common units outstanding 93,031,320
78,031,053
15,000,267

~~Overview~~

~~Net~~Segment operating income ~~decreased $12.5~~increased $3.8 million for the three months ended ~~September 30, 2017,~~March 31, 2022, compared to the three months ended ~~September 30, 2016, primarily due to increased interest expense and other expense, net, which were partially offset by a slight increase in segment operating income.~~

~~Table of Contents~~

~~Segment Operating Highlights~~

~~(Thousands of Dollars, Except Barrels/Day Information)~~

Three Months Ended September 30, Change
2017 2016
Pipeline:
Refined products pipelines throughput (barrels/day) 527,148
536,509
(9,361 )
Crude oil pipelines throughput (barrels/day) 679,721
384,359
295,362
Total throughput (barrels/day) 1,206,869
920,868
286,001
Throughput revenues $ 137,426
$ 122,481
$ 14,945
Operating expenses 41,463
41,331
132
Depreciation and amortization expense 34,844
22,228
12,616
Segment operating income $ 61,119
$ 58,922
$ 2,197
Storage:
Throughput (barrels/day) 294,544
810,470
(515,926 )
Throughput terminal revenues $ 21,120
$ 30,239
$ (9,119 )
Storage terminal revenues 136,951
127,528
9,423
Total revenues 158,071
157,767
304
Operating expenses 66,603
69,722
(3,119 )
Depreciation and amortization expense 32,145
29,625
2,520
Segment operating income $ 59,323
$ 58,420
$ 903
Fuels Marketing:
Product sales and other revenue $ 147,463
$ 166,191
$ (18,728 )
Cost of product sales 140,110
157,567
(17,457 )
Gross margin 7,353
8,624
(1,271 )
Operating expenses 8,885
8,961
(76 )
Segment operating loss $ (1,532 ) $ (337 ) $ (1,195 )
Consolidation and Intersegment Eliminations:
Revenues $ (2,394 ) $ (5,021 ) $ 2,627
Cost of product sales (2,032 ) (2,438 ) 406
Operating expenses (361 ) (2,582 ) 2,221
Total $ (1 ) $ (1 ) $ —
Consolidated Information:
Revenues $ 440,566
$ 441,418
$ (852 )
Cost of product sales 138,078
155,129
(17,051 )
Operating expenses 116,590
117,432
(842 )
Depreciation and amortization expense 66,989
51,853
15,136
Segment operating income 118,909
117,004
1,905
General and administrative expenses 25,003
26,957
(1,954 )
Other depreciation and amortization expense 2,189
2,093
96
Consolidated operating income $ 91,717
$ 87,954
$ 3,763

~~Table of Contents~~

~~Pipeline~~

Total revenues increased $14.9 million and throughputs increased 286,001 barrels per day for the three months ended September 30, 2017, compared to the three months ended September 30, 2016, primarily due to:

~~an increase in revenues of $15.7 million and an increase in throughputs of 282,145 barrels per day resulting from our Permian Crude System acquired in the Navigator Acquisition;~~

an increase in revenues of $1.9 million and an increase in throughputs of 4,998 barrels per day due to maintenance downtime in 2016 on a portion of the Ammonia Pipeline, as well as operational issues in 2016 at certain plants served by the pipeline; and

~~an increase in revenues of $1.7 million and an increase in throughputs of 5,162 barrels per day due to increased production at the refinery served by our North Pipeline.~~

~~These increases were partially offset by:~~

a decrease in revenues of $2.1 million and a decrease in throughputs of 15,995 barrels per day due to a turnaround and operational issues at the refineries served by the East Pipeline in the third quarter of 2017;

~~a decrease in revenues of $1.9 million and a decrease in throughputs of 3,113 barrels per day due to operational issues at the refinery served by our McKee Systems; and~~

a decrease in revenues of $0.5 million and a decrease in throughputs of 7,126 barrels per day on our Eagle Ford System mainly due to reduced production in this sustained low crude oil price environment.

Operating expenses remained flat for the three months ended September 30, 2017, compared to the three months ended September 30, 2016. Increased operating expenses of $3.6 million resulting from our recently acquired Permian Crude System were offset by a decrease of $2.4 million in maintenance and regulatory expenses and a decrease of $1.2 million from product imbalances on the East Pipeline.

Depreciation and amortization expense increased $12.6 million for the three months ended September 30, 2017, compared to the three months ended September 30, 2016, mainly due to our acquisition of the Permian Crude System.

~~Storage~~

Beginning January 1, 2017, our agreements for our refinery crude storage tanks at Corpus Christi, TX, Texas City, TX and Benicia, CA changed from throughput-based to storage-based. Excluding the effect from the change to these agreements, throughput terminal revenues would have increased $1.6 million and throughputs would have decreased 24,525 barrels per day for the three months ended September 30, 2017, compared to the three months ended September 30, 2016. Throughput terminal revenues increased $3.3 million, despite decreased throughputs of 9,780 barrels per day, at our Corpus Christi North Beach terminal, mainly resulting from our acquisition of assets from Martin Operating Partnership L.P. in December 2016 (the Martin Terminal Acquisition). The benefit of the Martin Terminal Acquisition was partially offset by lower revenues and throughputs resulting from a decrease in Eagle Ford Shale crude oil being shipped to Corpus Christi. Also, revenues decreased $1.6 million and throughputs decreased 32,439 barrels per day at our Paulsboro, NJ terminal as a customer diverted barrels to other terminals.

Excluding the effect of the change to the refinery storage tank agreements described above, storage terminal revenues would have decreased $0.4 million for the three months ended September 30, 2017, compared to the three months ended September 30, 2016, primarily due to:

a decrease of $4.4 million in domestic revenues, mainly at our St. James, LA terminal due to reduced unit train activity and at our Texas City, TX terminal as a result of the exit from our heavy fuels trading operations and tanks out of service; and

~~a decrease in revenues of $1.3 million at our Point Tupper terminal mainly due to a loss in customer base, tanks out of service and lower reimbursable revenues.~~

These decreases were mostly offset by an increase in revenues of $4.7 million at our St. Eustatius terminal, mainly due to new customer contracts and rate escalations, partially offset by decreased lower throughput and associated handling fees as a result of the shutdown of the terminal and damage caused by hurricane activity in the third quarter of 2017.

~~Operating expenses decreased $3.1 million for the three months ended September 30, 2017, compared to the three months ended September 30, 2016, mainly due to:~~

~~a decrease of $2.0 million in reimbursable expenses mainly at our Texas City, TX and Point Tupper terminals, consistent with the decrease in reimbursable revenues;~~

~~a decrease of $1.4 million in maintenance and regulatory expenses, spread across various terminals; and~~

~~a decrease of $1.1 million in internal overhead expenses,~~March 31, 2021, mainly due to higher ~~capitalized overhead related to capital storage projects in 2017.~~

~~Table of Contents~~

~~These decreases were partially offset by an increase in operating expenses of $1.8 million resulting from the Martin Terminal Acquisition.~~

Depreciation and amortization expense increased $2.5 million for the three months ended September 30, 2017, compared to the three months ended September 30, 2016, as a result of the Martin Terminal Acquisition and the completion of various storage projects.

~~Fuels Marketing~~

~~Segment operating loss increased $1.2 million for the three months ended September 30, 2017, compared to the three months ended September 30, 2016, mainly due to lower~~ gross margins from our ~~bunker fuel operations at our St. Eustatius terminal, as well as the temporary shutdown~~bunkering operations. We received a credit loss recovery of ~~the terminal caused by hurricane activity~~$1.7 million in the ~~third~~first quarter of ~~2017.~~2021, which is included in “Operating expenses.”

~~Consolidation and Intersegment Eliminations~~

Revenue and operating expense eliminations primarily relate to storage fees charged to the fuels marketing segment by the storage segment. Cost of product sales eliminations represent expenses charged to the fuels marketing segment for costs associated with inventory that are expensed once the inventory is sold.

~~General~~

General and administrative expenses decreased $2.0 million for the three months ended September 30, 2017, compared to the three months ended September 30, 2016, primarily due to a reduction in employee benefit costs.

Interest expense, net increased $10.2 million for the three months ended September 30, 2017, compared to the three months ended September 30, 2016, mainly due to the issuance of $550.0 million of 5.625% senior notes in April 2017. Interest expense also increased as a result of lower interest income due to the termination of the Axeon Term Loan in February 2017. Please refer to Note 6 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for a discussion of the Axeon Term Loan and related credit support.

For the three months ended September 30, 2017, we recognized other expense, net of $5.1 million mainly due to property damage at our St. Eustatius terminal resulting from hurricane activity in the third quarter of 2017.

Income tax expense increased $0.6 million for the three months ended September 30, 2017, compared to the three months ended September 30, 2016, primarily due to an increase in the margin tax in Texas as a result of the Navigator Acquisition.

~~Table of Contents~~

~~Nine Months Ended September 30, 2017 Compared to Nine Months Ended September 30, 2016~~

~~Financial Highlights~~

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

Nine Months Ended September 30, Change
2017 2016
Statement of Income Data:
Revenues:
Service revenues $ 845,264
$ 814,727
$ 30,537
Product sales 518,220
470,198
48,022
Total revenues 1,363,484
1,284,925
78,559

Costs and expenses:
Cost of product sales 490,363
441,736
48,627
Operating expenses 334,016
335,315
(1,299 )
General and administrative expenses 83,202
73,399
9,803
Depreciation and amortization expense 193,643
160,739
32,904
Total costs and expenses 1,101,224
1,011,189
90,035

Operating income 262,260
273,736
(11,476 )
Interest expense, net (127,282 ) (103,374 ) (23,908 )
Other expense, net (4,898 ) (10 ) (4,888 )
Income before income tax expense 130,080
170,352
(40,272 )
Income tax expense 7,298
9,293
(1,995 )
Net income $ 122,782
$ 161,059
$ (38,277 )
Basic and diluted net income per common unit $ 0.65
$ 1.58
$ (0.93 )
Basic weighted-average common units outstanding 87,392,597
77,934,802
9,457,795

~~Overview~~

Net income decreased $38.3 million for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016, primarily due to increases in interest expense, general and administrative expenses and other expense, net. Segment operating income remained flat as a decline in the pipeline segment was mostly offset by increases in the fuels marketing and storage segments.

~~Table of Contents~~

~~Segment Operating Highlights~~

~~(Thousands of Dollars, Except Barrels/Day Information)~~

Nine Months Ended September 30, Change
2017 2016
Pipeline:
Refined products pipelines throughput (barrels/day) 524,277
532,275
(7,998 )
Crude oil pipelines throughput (barrels/day) 549,898
398,229
151,669
Total throughput (barrels/day) 1,074,175
930,504
143,671
Throughput revenues $ 385,406
$ 362,929
$ 22,477
Operating expenses 114,734
110,494
4,240
Depreciation and amortization expense 91,657
65,696
25,961
Segment operating income $ 179,015
$ 186,739
$ (7,724 )
Storage:
Throughput (barrels/day) 315,616
788,963
(473,347 )
Throughput terminal revenues $ 63,932
$ 88,307
$ (24,375 )
Storage terminal revenues 400,129
373,733
26,396
Total revenues 464,061
462,040
2,021
Operating expenses 199,525
206,883
(7,358 )
Depreciation and amortization expense 95,405
88,661
6,744
Segment operating income $ 169,131
$ 166,496
$ 2,635
Fuels Marketing:
Product sales and other revenue $ 524,083
$ 476,499
$ 47,584
Cost of product sales 497,722
450,705
47,017
Gross margin 26,361
25,794
567
Operating expenses 22,464
25,512
(3,048 )
Segment operating income $ 3,897
$ 282
$ 3,615
Consolidation and Intersegment Eliminations:
Revenues $ (10,066 ) $ (16,543 ) $ 6,477
Cost of product sales (7,359 ) (8,969 ) 1,610
Operating expenses (2,707 ) (7,574 ) 4,867
Total $ —
$ —
$ —
Consolidated Information:
Revenues $ 1,363,484
$ 1,284,925
$ 78,559
Cost of product sales 490,363
441,736
48,627
Operating expenses 334,016
335,315
(1,299 )
Depreciation and amortization expense 187,062
154,357
32,705
Segment operating income 352,043
353,517
(1,474 )
General and administrative expenses 83,202
73,399
9,803
Other depreciation and amortization expense 6,581
6,382
199
Consolidated operating income $ 262,260
$ 273,736
$ (11,476 )

~~Table of Contents~~

~~Pipeline~~

Total revenues increased $22.5 million and total throughputs increased 143,671 barrels per day for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016, primarily due to:

~~an increase in revenues of $25.1 million and an increase in throughputs of 151,481 barrels per day from our recently acquired Permian Crude System;~~

an increase in revenues of $6.7 million and an increase in throughputs of 5,130 barrels per day due to maintenance downtime in 2016 on a portion of the Ammonia Pipeline, as well as operational issues in 2016 at certain plants served by the pipeline;

an increase in revenues of $2.6 million, despite a decrease in throughputs of 3,247 barrels per day, on our East Pipeline due to the completion of various storage projects along the pipeline, as well as an increase in long-haul deliveries resulting in higher average tariffs. A turnaround and operational issues at the refineries served by the East Pipeline in the third quarter of 2017 contributed to the decrease in throughputs; and

an increase in revenues of $2.1 million and an increase in throughputs of 21,781 barrels per day due to increased production at the refinery served by the Ardmore System in 2017, as well as a result of a turnaround and operational issues at the refinery in 2016.

These increases were partially offset by a decrease in revenues of $7.2 million and a decrease in throughputs of 10,115 barrels per day due to a turnaround in the second quarter of 2017 at the refinery served by the North Pipeline. Revenues decreased $6.1 million due to a decrease in throughputs of 24,078 barrels per day on our Eagle Ford System mainly due to reduced production in this sustained low crude oil price environment.

Operating expenses increased $4.2 million for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016. Operating expenses increased $6.3 million as a result of our acquisition of the Permian Crude System, which was partially offset by a decrease of $2.0 million from product imbalances on the East Pipeline.

Depreciation and amortization expense increased $26.0 million for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016, due to our acquisition of the Permian Crude System and the completion of various pipeline projects.

~~Storage~~

Beginning January 1, 2017, our agreements for our refinery crude storage tanks at Corpus Christi, TX, Texas City, TX and Benicia, CA changed from throughput-based to storage-based. Excluding the effect from the change to these agreements, throughput terminal revenues would have increased $6.0 million and throughputs would have decreased 2,207 barrels per day for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016. Throughput terminal revenues increased at our Corpus Christi North Beach terminal by $11.3 million due to an increase in throughputs of 15,898 barrels per day, mainly resulting from the Martin Terminal Acquisition. The benefit of the Martin Terminal Acquisition was partially offset by lower revenues and throughputs resulting from a decrease in Eagle Ford Shale crude oil being shipped to Corpus Christi. Revenues increased by $0.3 million and throughputs increased 17,128 barrels per day at our McKee System terminals mainly due to new customer contracts, partially offset by lower additive revenues in 2017. These increases in revenues and throughputs were partially offset by decreased revenues of $5.0 million and decreased throughputs of 32,612 barrels per day at our Paulsboro, NJ terminal as a customer diverted barrels to other terminals.

Storage terminal revenues would have decreased $2.9 million for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016, excluding the effect of the change to the refinery storage tank agreements described above. Domestic throughput and associated handling fees decreased $5.0 million, mainly at our St. James, LA terminal due to reduced unit train activity and at our Texas City, TX terminal as a result of the exit from our heavy fuels trading operations. Domestic reimbursable revenues decreased $2.5 million, mainly at our Texas City, TX terminal. These decreases were partially offset by an increase in revenues of $4.3 million due to new customer contracts and rate escalations, primarily at our West Coast, North East and St. James, LA terminals.

Storage terminal revenues also increased $5.5 million at our St. Eustatius terminal, mainly due to new customer contracts and rate escalations, partially offset by decreased lower throughput and associated handling fees as a result of the shutdown of the terminal and damage caused by hurricane activity in the third quarter of 2017. This increase was partially offset by a decrease in revenues of $4.6 million at our Point Tupper terminal, mainly resulting from a decrease in customer base, tanks out of service and lower reimbursable revenues.

~~Table of Contents~~

~~Operating expenses decreased $7.4 million for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016, primarily due to:~~

~~a decrease of $5.1 million in reimbursable expenses, mainly at our Texas City, TX and Point Tupper terminals, consistent with the decrease in reimbursable revenues;~~

~~a decrease of $4.5 million in maintenance and regulatory expenses primarily at our North East and Point Tupper terminals;~~

~~a decrease of $2.4 million in contractor services, mainly at our St. James, LA terminal as a result of reduced unit train activity; and~~

~~a decrease of $2.3 million in compensation expenses resulting from changes in our revenue agreements for our crude refinery storage tanks.~~

~~These decreases were partially offset by increased operating expenses of $6.5 million as a result of the Martin Terminal Acquisition.~~

Depreciation and amortization expense increased $6.7 million for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016, as a result of the Martin Terminal Acquisition and the completion of various storage projects.

~~Fuels Marketing~~

Segment operating income increased $3.6 million for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016, primarily due to a reduction in losses of $5.8 million from our heavy fuels trading operations following our exit of that business in 2017. Segment operating income from our bunker fuel operations decreased $3.4 million, mainly at our St. Eustatius terminal, resulting from lower gross margins and the temporary shutdown of the terminal caused by hurricane activity in the third quarter of 2017.

~~Consolidation and Intersegment Eliminations~~

~~General~~

General and administrative expenses increased $9.8 million for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016, primarily due to transaction costs related to the Navigator Acquisition.

Interest expense, net increased $23.9 million for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016, mainly due to the issuance of $550.0 million of 5.625% senior notes in April 2017 and as a result of fees for a bridge loan commitment to potentially assist with the financing of the Navigator Acquisition. We did not enter into or borrow under the bridge loan. Interest expense also increased as a result of lower interest income due to the termination of the Axeon Term Loan in February 2017. Please refer to Note 6 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for a discussion of the Axeon Term Loan and related credit support.

For the nine months ended September 30, 2017, we recognized other expense, net of $4.9 million mainly due to property damage at our St. Eustatius terminal resulting from hurricane activity in the third quarter of 2017.

Income tax expense decreased $2.0 million for the nine months ended September 30, 2017, compared to the nine months ended September 30, 2016, primarily due to a reduction in withholding taxes related to certain of our foreign subsidiaries.

~~Table of Contents~~

~~TRENDS AND OUTLOOK~~

As a master limited partnership, our core business strategy is to build long-term unitholder value through stable, consistent growth: to that end, we provide a broad array of logistical solution services to a diverse customer base in sectors across the energy industry with our portfolio of assets positioned in geographic markets around the globe, under primarily fee-based, long-term contractual arrangements. This strategy is intended to mitigate the impact of negative market conditions on our results and position us for the financial health necessary to grow as market conditions improve.

We believe that the fact that we provide both storage and pipeline services, for crude and refined products, to customers across the country and around the world, offers some insulation from the impact of commodity market price fluctuations on our results of operations. Since higher crude oil prices have tended to benefit our producer customers, high prices have also correlated with increased demand for our crude oil pipeline services. On the other hand, lower crude oil prices, when coupled with an industry expectation of higher prices in the future, or a contango market, has historically correlated with increased demand from trading companies for our storage services. In the locations at which our assets are integrated physically with the refineries the assets serve, we believe the results generated by those assets depend to a greater degree on each refinery’s continuing need to receive, store and transport the crude and refined products than on crude or refined product prices.

The Navigator Acquisition broadened our geographic footprint and marked our entry into the Permian Basin, one of the fastest-growing basins in the United States. The Permian Basin currently represents approximately forty percent of all onshore rig activity in the United States, and rig count growth in the Permian continues to outpace all other domestic shale plays. Our Permian Crude System is located in the most economic and highest growth counties in the basin, with some of the lowest break-even values in the United States, and offers our customers access to multiple downstream end-markets. We believe this system provides a strong growth platform in the most prolific basin in the United States. While the addition of the Permian Crude System to our asset portfolio could increase the impact of crude oil prices on our results of operations, we believe that our contracts, many of which are long-term, take-or-pay arrangements for committed storage or throughput capacity, should continue to help to blunt the impact of volatility of crude oil prices on our results of operations.

At the time of the Navigator Acquisition in May, we anticipated that our issuance of common units, senior notes and preferred units to fund the purchase price would increase our ongoing costs of funding our quarterly distribution, as well as our interest expense, but we made the decision to move forward because we believed, and continue to believe, that the Permian Crude System’s future growth will outweigh those costs in the long run.

The Permian Basin and our Permian Crude System have been growing since the acquisition, and we expect that growth to continue, even in a continued low price environment. In contrast, during 2017, our pipeline systems and storage assets outside of the Permian Basin (collectively, our Base Business) have been faced with several unanticipated challenges, on top of the continuing burden of the third year of sustained low crude prices. In September, hurricanes caused damage in the Gulf and significant destruction in the Caribbean. While we successfully prevented severe damage from Hurricane Harvey’s heavy rainfall to our six affected Gulf Coast facilities, Hurricane Irma passed almost directly over our facility at St. Eustatius, which sustained substantial damage inflicted by the storm’s 146-mph winds and 30-foot seas. The facility, which will be fully operational by mid-December, resumed some operations within weeks of the storm, but the repairs will continue into 2018 and beyond. On top of the unanticipated costs of the hurricane damage, our Base Business has also faced significant unanticipated and unplanned turnarounds and downtime at our customers’ refineries in 2017. Further, in the course of our ongoing pipeline integrity program, we identified a 50-mile segment of our ammonia pipeline that we must replace over the next five years. Due to the fact that completing the large, unanticipated reliability project in two years will reduce our overall cost, we plan to complete this project by the end of 2018.

Beyond the challenges to our Base Business that have arisen in 2017, if this current low crude price cycle continues in 2018, our pipeline segment could suffer from decreased throughput in our Base Business pipeline systems. For example, our current committed customers on our South Texas Crude System may decline to renew their commitments as those expire over the next few years and may ship only at lower rates. If backwardation continues into next year, our storage segment results could also decline, due to downward pressure on rates and contract renewals driven by lower demand for capacity, at our St. James terminal and at other locations.

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 a number of factors, many of which are outside our control. These factors include, but are not limited to, the state of the economy and the capital markets, changes to our customers’ refinery maintenance schedules and 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 and changes in laws or regulations affecting our assets.

~~Table of Contents~~

LIQUIDITY AND CAPITAL RESOURCES

~~Overview~~OVERVIEW

Our primary cash requirements are for distributions to our partners, debt service, capital expenditures ~~acquisitions~~ and operating expenses. Our partnership agreement requires that we distribute all “Available Cash” to our common limited partners ~~and general partner~~ each ~~quarter, and this term~~quarter. “Available Cash” is defined in the partnership agreement generally as cash on hand at the end of the quarter, plus certain permitted borrowings made subsequent to the end of the quarter, less cash reserves determined by our board of ~~directors.~~

~~Each year,~~directors, subject to requirements for distributions for our objective is to fund our total annual reliability capital expenditures and distribution requirements with our net cash provided by operating activities during that year. If we do not generate sufficient cash from operations to meet that objective, we utilize cash on hand or other sources of cash flow, which in the past have primarily included borrowings under our revolving credit agreement, sales of non-strategic assets and, to the extent necessary, funds raised through equity or debt offerings under our shelf registration statements.preferred units. We have typically funded our strategic capital expenditures and acquisitions from external sources, primarily borrowings under our revolving credit agreement or funds raised through equity or debt offerings. However, our ability to raise funds by issuing debt or equity depends on many factors beyond our control. Our risk factors in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2016 describe the risks inherent to these sources of funding and the availability thereof.

~~During periods when our cash flow from operations is less than our distribution and reliability capital requirements, we~~ may maintain our distribution level ~~because we can utilize~~with other sources of Available Cash, as provided in our partnership agreement, including borrowings under our revolving credit agreement and proceeds from the sales of assets.

Prior to 2021, we funded our strategic capital expenditures primarily from borrowings under our revolving credit agreement, funds raised through debt or equity offerings and/or sales of non-strategic assets. However, our ability to raise funds by issuing debt or equity depends on many factors beyond our control. Our risk factors in Item 1A1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2021 describe the risks inherent into these sources of funding and the availability thereof.

In the first quarter of 2022, we continued to prioritize liquidity by extending the maturity on our ~~ability~~$1.0 billion revolving credit agreement to ~~maintain or grow~~April 27, 2025, extending the scheduled termination date on our ~~distribution.~~

$100.0 million receivables financing agreement to January 31, 2025 and entering an agreement to sell our Point Tupper Terminal. For ~~2017,~~the full-year 2022, we expect to fund all of our expenses, distribution requirements and capital expenditures using internally generated cash flows as we did for 2021.

Beyond 2022, absent a return of access to the equity capital markets, we plan to continue to fund our expenses, distribution requirements and capital expenditures with internally generated cash flows, which could include proceeds from asset dispositions. We have no long-term debt maturities until 2025, and we have been and expect to continue to be able to access debt capital markets to refinance those maturities. Our Series D Cumulative Convertible Preferred Units (Series D Preferred Units) become redeemable, at our option, beginning in 2023, which coincides with an increase in ~~total cash distributed~~the distribution rate of those units. Beginning in 2028, the holders of the Series D Preferred Units have the option to require us to redeem their units, and we have begun taking steps to position ourselves to redeem the Series D Preferred Units gradually over the next several years in advance of the possible mandatory redemption. By reducing our ~~unitholders~~leverage, primarily through the disposition of non-strategic assets in recent years, and ~~higher interest costs due~~continuing to increase the amount by which our ~~issuances of debt and equity securities in 2017. See below for additional discussion of our April 2017 equity and debt issuances. However, we expect~~internally generated cash flows ~~from operations, combined with a portion~~exceed our expenses, distribution requirements and capital expenditures, we are increasing our financial flexibility. Beyond those items, we will also continue to evaluate other sources of liquidity to manage the optional or mandatory redemption of the ~~proceeds from the termination~~Series D Preferred Units.

Table of ~~the Axeon Term Loan of $110.0 million to exceed our distribution and reliability capital requirements for 2017.~~Contents

~~Cash Flows for the~~ ~~Nine~~ ~~Months Ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016~~CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 2021

The following table summarizes our cash flows from operating, investing and financing ~~activities:~~activities (please refer to our Consolidated Statements of Cash Flows in Item 1. “Financial Statements”):


	Three Months Ended March 31,
	2022		2021
	(Thousands of Dollars)
Net cash provided by (used in):
Operating activities	$	145,830	$	145,657
Investing activities	(41,102)		(45,782)
Financing activities	(99,714)		(225,729)
Effect of foreign exchange rate changes on cash	176		475
Net increase (decrease) in cash, cash equivalents and restricted cash	$	5,190	$	(125,379)

Nine Months Ended September 30,
2017 2016
(Thousands of Dollars)
Net cash provided by (used in):
Operating activities $ 311,015
$ 314,549
Investing activities (1,557,041 ) (160,918 )
Financing activities 1,242,062
(243,235 )
Effect of foreign exchange rate changes on cash 1,637
3,404
Net decrease in cash and cash equivalents $ (2,327 ) $ (86,200 )

Net cash provided by operating activities was comparable for the ~~nine~~three months ended ~~September 30, 2017 was $311.0 million,~~March 31, 2022, compared to ~~$314.5~~the three months ended March 31, 2021, as lower net income in the first quarter of 2022 was driven by a non-cash impairment loss and offset by changes in working capital.

Our working capital decreased $17.5 million for the ~~nine~~three months ended ~~September 30, 2016. Although net income decreased,~~March 31, 2022, compared to a decrease of $24.4 million for the ~~decrease was largely attributable~~three months ended March 31, 2021. Working capital requirements are mainly affected by our accounts receivable and accounts payables balances, which vary depending on the timing of payments. Cash flows from operating activities for the three months ended March 31, 2021 include $20.5 million related to ~~non-cash expenses.~~ cleanup costs and business interruption for the 2019 Selby terminal fire. Additionally, the timing of payments related to accrued interest payable changed due to the $250.0 million of 4.75% senior notes repaid on November 1, 2021 and the $300.0 million of 6.75% senior notes repaid February 1, 2021.

For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2022, net cash provided by operating activities ~~and a portion of the proceeds from the termination of the Axeon Term Loan of $110.0 million were used to fund~~exceeded our distributions to unitholders and ~~our general partner~~capital expenditures.

Net cash used in investing activities decreased by $4.7 million for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, primarily due to proceeds from insurance recoveries of $5.8 million received in the ~~aggregate amount~~first quarter of ~~$357.9~~2022.

Net cash used in financing activities decreased $126.0 million ~~and reliability capital expenditures of $30.2 million. Proceeds from our~~for the three months ended March 31, 2022, compared to the three months ended March 31, 2021, mainly due to a decrease in net debt ~~and equity issuances of approximately $1.5 billion were used to fund the purchase price of the Navigator Acquisition. Please refer to page 5 for our Consolidated Statements of Cash Flows.~~

repayments. For the ~~nine~~three months ended ~~September 30, 2016,~~March 31, 2022, we had net ~~cash provided by operating activities and cash on hand was used~~debt repayments of $15.8 million, compared to ~~fund our distributions to unitholders and our general partner~~$147.7 million in net debt repayments for the aggregate amount of $294.2 million and reliability capital expenditures of $25.8 million. The proceeds from debt borrowings, net of repayments, proceeds from the issuance of common units and cash on hand were used to fund our strategic capital expenditures.three months ended March 31, 2021.

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SOURCES OF LIQUIDITY

Revolving Credit Agreement

On ~~August 22, 2017, NuStar Logistics~~January 28, 2022, we amended ~~its~~and restated our unsecured $1.0 billion revolving credit agreement (the Revolving Credit Agreement) to, among other things: (i) extend the maturity date from October ~~29, 2019~~27, 2023 to ~~October 29, 2020, and to~~April 27, 2025; (ii) increase the ~~borrowing capacity~~maximum amount of letters of credit capable of being issued from ~~$1.50 billion~~$400.0 million to ~~$1.75 billion.~~ $500.0 million; (iii) replace LIBOR benchmark provisions with customary secured overnight financing rate, or SOFR, benchmark provisions; (iv) remove the 0.50x increase permitted in our consolidated debt coverage ratio for certain rolling periods in which an acquisition for aggregate net consideration of at least $50.0 million occurs; and (v) add baskets and exceptions to certain negative covenants.

The Revolving Credit Agreement ~~was also amended~~is subject to ~~increase~~maximum consolidated debt coverage ratio and minimum consolidated interest coverage ratio requirements, which may limit the ~~maximum allowed~~amount we can borrow to an amount that is less than the total amount available for borrowing. For a rolling period of four quarters, the consolidated debt coverage ratio (as defined in the Revolving Credit Agreement) ~~from~~cannot exceed 5.00-to-1.00, ~~to 5.50-to-1.00 through~~and the ~~rolling period ending March 31, 2018. Subsequently, the maximum allowed~~ consolidated ~~debt~~interest coverage ratio may not exceed 5.00-to-1.00 for any rolling period ending on or after June 30, 2018. If we complete one or more acquisitions for aggregate net consideration of at least $50.0 million, our maximum consolidated debt coverage ratio will increase to 5.50-to-1.00 for two rolling periods.

~~The requirement not to exceed a maximum consolidated debt coverage ratio may limit the amount we can borrow under~~(as defined in the Revolving Credit ~~Agreement to an amount~~Agreement) must not be less than ~~the total amount available for borrowing.~~1.75-to-1.00. As of ~~September 30, 2017,~~March 31, 2022, our consolidated debt coverage ratio was ~~4.8x,~~3.92x and our consolidated interest coverage ratio was 2.16x. As of March 31, 2022, we had ~~$863.8~~$888.7 million available for borrowing. Letters of credit issued under the Revolving Credit Agreement totaled ~~$7.7~~$4.8 million as of ~~September 30, 2017. Please refer to Note 4~~March 31, 2022 and limit the amount we can borrow under the Revolving Credit Agreement.

Table of ~~the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for a discussion on our revolving credit agreement.~~Contents

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 ~~$125.0~~$100.0 million receivables financing agreement with a third-party ~~lenders~~lender (the Receivables Financing Agreement) and agreements with certain of NuStar Energy’s wholly owned ~~subsidiaries (collectively with~~subsidiaries. As of March 31, 2022, $132.2 million of our accounts receivable was included in the Securitization Program and the amount of borrowings outstanding under the Receivables Financing Agreement the Securitization Program). On September 20, 2017, the Securitization Program was amended to add certain of NuStar Energy’s wholly owned subsidiaries resulting from the Navigator Acquisition and to extend the Securitization Program’s scheduled termination date from June 15, 2018 to September 20, 2020, with the option to renew for additional 364-day periods thereafter.totaled $72.0 million. The amount available for borrowing under the Receivables Financing Agreement is based on the availability of eligible receivables and other customary factors and conditions.

On January 28, 2022, the Receivables Financing Agreement was amended to, among other things: (i) extend the scheduled termination date from September 20, 2023 to January 31, 2025; (ii) reduce the floor rate in the calculation of our borrowing rates; and (iii) replace provisions related to the LIBOR rate of interest with references to SOFR rates of interest. Following the amendment, borrowings under the Receivables Financing Agreement bear interest, at NuStar Finance’s option, at a base rate or a SOFR rate, each as defined in the Receivables Financing Agreement.

The interest rate on the Revolving Credit Agreement and certain fees under the Receivables Financing Agreement are the only debt arrangements that are subject to adjustment if our debt rating is downgraded (or upgraded) by certain credit rating agencies. Please refer to Note ~~4 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for additional discussion.~~

~~Other Sources of Liquidity~~

~~Other sources of liquidity as of September 30, 2017 consist of the following:~~

$365.4 million in revenue bonds pursuant to the Gulf Opportunity Zone Act of 2005 (the GoZone Bonds), with $42.5 million remaining in trust as of September 30, 2017, supported by $370.2 million in letters of credit; and

~~two short-term line of credit agreements with an uncommitted borrowing capacity of up to $85.0 million, with $68.0 million of borrowings outstanding as of September 30, 2017.~~

We are also a party to a $100.0 million uncommitted letter of credit agreement, which provides for standby letters of credit or guarantees with a term of up to one year (LOC Agreement). As of September 30, 2017, we had no letters of credit issued under the LOC Agreement. Please refer to Note 4 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for a discussion of certain of our debt agreements.

~~Issuance of Common Units~~

On April 18, 2017, we issued 14,375,000 common units representing limited partner interests at a price of $46.35 per unit. We used the net proceeds from this offering of $657.5 million, including a contribution of $13.6 million from our general partner to maintain its 2% general partner interest, to fund a portion of the purchase price for the Navigator Acquisition. Beginning with the distribution earned for the second quarter of 2017, our general partner will not receive incentive distributions with respect to these common units. Our general partner amended and restated our partnership agreement to waive up to an aggregate $22.0 million of the quarterly incentive distributions to our general partner for any NS common units issued from the date of the Acquisition Agreement (other than those attributable to NS common units issued under any equity compensation plan) for ten consecutive quarters. Please refer to Note 105 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for further ~~discussion.~~

~~Issuance~~discussion of ~~Series B Preferred Units~~

On~~April 28, 2017, we issued 15,400,000~~certain of our ~~Series B Preferred Units representing limited partner interests at a price of $25.00 per unit.~~ debt agreements.

Asset Sale

We ~~used~~expect to utilize the ~~net~~ proceeds ~~of $371.8 million~~ from the ~~issuance~~sale of our Point Tupper terminal to reduce debt and thereby improve our debt metrics. We closed the ~~Series B Preferred Units to fund a portion of the purchase price for the Navigator Acquisition and to pay related fees and expenses.~~

Distributions on the Series B Preferred Units are payable out of any legally available funds, accrue and are cumulative from the date of original issuance of the Series B Preferred Units and are payable on the 15^th day of each of March, June, September and December of each year to holders of record on the first day of each payment month. The initial distribution rate on the Series B Preferred Units to, but not including, June 15, 2022 is 7.625% per annum of the $25.00 liquidation preference per unit (equal to $1.90625 per unit per annum). On and after June 15, 2022, distributions on the Series B Preferred Units accumulate at a

~~Table of Contents~~

percentage of the $25.00 liquidation preference equal to an annual floating rate of the three-month LIBOR plus a spread of 5.643%. Please refer to Note 10 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for further discussion.

~~Issuance of 5.625% Senior Notes~~

On April 28, 2017, NuStar Logistics issued $550.0 million of 5.625% senior notes due April 28, 2027. We used the net proceeds of $543.3 million from the offering to fund a portion of the purchase price for the Navigator Acquisition and to pay related fees and expenses. ~~The interest on the 5.625% senior notes is payable semi-annually in arrears~~sale on April 28 and October 28 of each year beginning on October 28, 2017. The 5.625% senior notes do not have sinking fund requirements. These notes rank equally with existing senior unsecured indebtedness and senior to existing subordinated indebtedness of NuStar Logistics. The 5.625% senior notes contain restrictions on NuStar Logistics’ ability to incur secured indebtedness unless the same security is also provided for the benefit of holders of the senior notes. In addition, the senior notes limit NuStar Logistics’ ability to incur indebtedness secured by certain liens, engage in certain sale-leaseback transactions and engage in certain consolidations, mergers or asset sales.~~Please refer to Note 4 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for further discussion.~~29, 2022.

MATERIAL CASH REQUIREMENTS

Capital ~~Requirements~~Expenditures

Our operations require significant investments to maintain, upgrade or enhance the operating capacity of our existing assets. Our capital expenditures consist of:

•strategic capital expenditures, such as those to expand or upgrade the operating capacity, increase efficiency or increase the earnings potential of existing assets, whether through construction or acquisition, as well as certain capital expenditures related to support functions; and

•reliability capital expenditures, such as those required to maintain the ~~existing~~current operating capacity of existing assets or extend their useful lives, as well as those required to maintain equipment reliability and safety.

The following table summarizes our capital expenditures:


	Strategic Capital Expenditures		Reliability Capital Expenditures		Total
	(Thousands of Dollars)
For the three months ended March 31:
2022	$	26,041	$	6,709	$	32,750
2021	$	31,974	$	8,489	$	40,463

Expected for the year ended December 31, 2022	$115,000 - 145,000		$35,000 - 45,000

Strategic capital expenditures for the three months ended March 31, 2022 and 2021 mainly consisted of expansion projects on our Permian Crude System and Central West Refined Products Pipelines, as well as our West Coast bio-fuels terminal projects. Reliability capital expenditures for the ~~amount we expect~~three months ended March 31, 2022 and 2021 primarily related to ~~spend for 2017:~~maintenance upgrade projects at our terminals.

Strategic Capital
Expenditures

Reliability Capital
Expenditures
Total
(Thousands of Dollars)
For the nine months ended September 30:
2017 $ 190,417
$ 30,200
$ 220,617
2016 $ 119,580
$ 25,834
$ 145,414

Expected for the year ended December 31, 2017 (a) $ 360,000 - 380,000
$ 50,000 - 70,000
$ 410,000 - 450,000

~~(a) Excludes the purchase price of the Navigator Acquisition.~~

We continue to evaluate our capital ~~spending forecast~~budget and ~~make changes as economic conditions warrant, and our actual capital expenditures for~~ ~~2017~~ may increase or decrease from our current projections. We believe we can fund our currently expected capital expenditures with cash on hand, combined with the sources of liquidity previously described. Our internal growth projects can be accelerated or scaled back depending on market conditions or customer demand. Therefore, our actual capital expenditures for 2022 may increase or decrease from the expected amounts noted above. We expect to self-fund all of our capital expenditures in 2022.

~~Working Capital Requirements~~Distributions

~~Working capital requirements, particularly in~~Preferred Units. Distributions on our ~~fuels marketing segment, may vary with~~preferred units are payable out of any legally available funds, accrue and are cumulative from the ~~seasonality of demand~~original issuance dates, and ~~the volatility of commodity prices for the products we market. This seasonality in demand and the volatility of commodity prices affect our accounts receivable and accounts~~are payable ~~balances, which vary depending~~ on the ~~timing~~15th day (or next business day) of ~~payments.~~each of March, June, September and December of each year to holders of record on the first business day of each payment month.

~~Axeon Term Loan and Credit Support~~

On February 22, 2017, we settled and terminated the $190.0 million Axeon Term Loan, pursuant to which we also provided credit support, such as guarantees, letters of credit and cash collateral, as applicable, of up to $125.0 million to Axeon. We received $110.0 million in settlement of the Axeon Term Loan, and our obligation to provide ongoing credit support to Axeon ceased. Please refer to Note 6 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for a discussion of the Axeon Term Loan and credit support.

~~Defined Benefit Plans Funding~~

~~In September 2017, we contributed $11.0 million to our pension plans.~~

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~~Distributions~~

~~General Partner and Common Limited Partners~~. The following table ~~reflects~~provides the ~~allocation~~terms related to distributions for our Series B and Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (collectively, the Series B and C Preferred Units):


Units	Fixed Distribution Rate Per Annum (as a Percentage of the $25.00 Liquidation Preference Per Unit)	Fixed Distribution Rate Per Unit Per Annum		Fixed Distribution Per Annum		Optional Redemption Date/Date at Which Distribution Rate Becomes Floating	Floating Annual Rate (as a Percentage of the $25.00 Liquidation Preference Per Unit)
				(Thousands of Dollars)

Series B Preferred Units	7.625%	$	1.90625	$	29,357	June 15, 2022	Three-month LIBOR plus 5.643%
Series C Preferred Units	9.00%	$	2.25	$	15,525	December 15, 2022	Three-month LIBOR plus 6.88%

The distribution rate on our Series A Preferred Units converted from a fixed rate to a floating rate of ~~total cash~~the three-month LIBOR plus 6.766% on December 15, 2021. Distribution information for our Series A Preferred Units is as follows:


Period	Distribution Rate per Unit		Total Distribution
			(Thousands of Dollars)



March 15, 2022 - June 14, 2022	$	0.47817	$	4,332
December 15, 2021 - March 14, 2022	$	0.43606	$	3,951

The distribution rates on the Series D Cumulative Convertible Preferred Units (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. The number of Series D Preferred Units issued and outstanding as of March 31, 2022 and December 31, 2021 totaled 23,246,650. 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 may be paid, in the Partnership’s sole discretion, in additional Series D Preferred Units, with the remainder paid in cash.

In April 2022, our board of directors declared distributions with respect to the ~~general partner~~Series A, B and C Preferred Units and the Series D Preferred Units to be paid on June 15, 2022.

Common Units. Distribution payments are made to our common limited partners ~~applicable to the period in which the distributions were earned:~~

~~Distribution payments to our general partner and common limited partners are made~~ within 45 days after the end of each quarter as of a record date that is set after the end of each quarter. In April 2022, our board of directors declared distributions with respect to our common units for the quarter ended March 31, 2022. The following table summarizes information ~~related to our~~about quarterly cash distributions to our ~~general partner and~~ common limited ~~partners:~~partners applicable to the period in which the distributions were earned:


Quarter Ended	Cash Distributions Per Unit		Total Cash Distributions		Record Date	Payment Date
			(Thousands of Dollars)


March 31, 2022	$	0.40	$	44,165	May 9, 2022	May 13, 2022
December 31, 2021	$	0.40	$	44,008	February 8, 2022	February 14, 2022

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~~(a)~~	~~The distribution was announced on October 18, 2017.~~

Debt Obligations

~~Preferred Units.~~ The following table summarizes ~~information related to~~ our ~~quarterly cash distributions on our Series A and Series B Preferred Units:~~

debt obligations:


	Maturity			Outstanding Obligations as of March 31, 2022
				(Thousands of Dollars)
Receivables Financing Agreement, 1.9% as of March 31, 2022	January 31, 2025			$	72,000
Revolving Credit Agreement, 3.0% as of March 31, 2022	April 27, 2025			$	106,500
5.75% senior notes	October 1, 2025			$	600,000
6.00% senior notes	June 1, 2026			$	500,000
5.625% senior notes	April 28, 2027			$	550,000
6.375% senior notes	October 1, 2030			$	600,000
GoZone Bonds 5.85% - 6.35%	2038	thru	2041	$	322,140
Subordinated Notes, 7.0% as of March 31, 2022	January 15, 2043			$	402,500

Period
Cash
Distributions
Per Unit

Total Cash
Distributions
Record Date Payment Date
(Thousands of Dollars)
Series A Preferred Units:
September 15, 2017 - December 14, 2017 (a) $ 0.53125
$ 4,813
December 1, 2017 December 15, 2017
June 15, 2017 - September 14, 2017 $ 0.53125
$ 4,813
September 1, 2017 September 15, 2017
March 15, 2017 - June 14, 2017 $ 0.53125
$ 4,813
June 1, 2017 June 15, 2017
November 25, 2016 - March 14, 2017 $ 0.64930556
$ 5,883
March 1, 2017 March 15, 2017

Series B Preferred Units:
September 15, 2017 to December 14, 2017 (a) $ 0.47657
$ 7,339
December 1, 2017 December 15, 2017
April 28, 2017 - September 14, 2017 $ 0.725434028
$ 11,172
September 1, 2017 September 15, 2017


~~(a)~~	~~The distribution was announced on October 18, 2017.~~

~~Table of Contents~~

~~Debt Obligations~~

~~As of~~ ~~September 30, 2017, we were a party to the following debt agreements:~~

~~Revolving Credit Agreement due October 29, 2020, with $878.4 million of borrowings outstanding as of September 30, 2017;~~

7.65% senior notes due April 15, 2018 with a face value of $350.0 million; 4.80% senior notes due September 1, 2020 with a face value of $450.0 million; 6.75% senior notes due February 1, 2021 with a face value of $300.0 million; 4.75% senior notes due February 1, 2022 with a face value of $250.0 million; ~~5.625%senior notes dueApril 28, 2027 with a face value of $550.0 million; and~~ ~~7.625% subordinated notes due January 15, 2043 with a face value of $402.5 million.~~

~~$365.4 million in GoZone Bonds due from 2038 to 2041;~~

~~Line of credit agreements with $68.0 million of borrowings outstanding as of September 30, 2017; and~~

~~Receivables Financing Agreement due September 20, 2020, with $46.1 million of borrowings outstanding as of September 30, 2017.~~

~~Management believes~~We believe that, as of ~~September 30, 2017~~,March 31, 2022, we are in compliance with the ratios and covenants ~~contained in~~applicable to our debt ~~instruments.~~obligations. A default under certain of our debt ~~agreements~~obligations would be considered an event of default under other of our debt ~~instruments.~~obligations. Please refer to Note 45 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for a discussion of certain of our debt ~~agreements.~~obligations.

~~Credit Ratings~~

Guarantor Summarized Financial Information. NuStar Energy has no operations, and its assets consist mainly of its 100% ownership interest in its indirectly owned subsidiaries, NuStar Logistics and NuPOP. The ~~following table reflects the current outlook~~senior and ~~ratings that have been assigned to our debt:~~



	~~Standard & Poor’s~~ ~~Ratings Services~~	~~Moody’s Investor~~ ~~Service Inc.~~	~~Fitch, Inc.~~

~~Ratings~~	~~BB+~~	~~Ba1~~	BB
~~Outlook~~	~~Stable~~	~~Negative~~	~~Stable~~

~~Following the announcement of the Navigator Acquisition, Standard & Poor’s Ratings Services~~subordinated notes issued by NuStar Logistics are fully and ~~Fitch, Inc. affirmed their ratings and outlook, and Moody’s Investor Service Inc. (Moody’s) announced that it was reviewing~~unconditionally guaranteed by NuStar Energy and NuPOP. Each guarantee of the senior notes by NuStar Energy and NuPOP ranks equally in right of payment with all other existing and future unsecured senior indebtedness of that guarantor, is structurally subordinated to all existing and any future indebtedness and obligations of any subsidiaries of that guarantor that do not guarantee the notes and ranks senior to its guarantee of our subordinated indebtedness. Each guarantee of the subordinated notes by NuStar Energy and NuPOP ranks equal in right of payment with all other existing and future subordinated indebtedness of that guarantor and subordinated in right of payment and upon liquidation to the prior payment in full of all other existing and future senior indebtedness of that guarantor. NuPOP will be released from its guarantee when it no longer guarantees any obligations of NuStar Energy or any of its subsidiaries, including NuStar Logistics, ~~for a downgrade. Following its review in~~under any bank credit facility or public debt instrument. The rights of holders of our senior and subordinated notes may be limited under the ~~second quarter of 2017, Moody’s affirmed its rating and changed its outlook to “Negative.” The change in outlook had no impact on the interest rates payable on the 7.65% senior notes due 2018~~U.S. Bankruptcy Code or ~~the revolving credit agreement, which are subject to adjustment if our debt rating is downgraded (or upgraded) by certain credit rating agencies, but are not impacted by a change in the outlook.~~

~~Interest Rate Swaps~~

As of September 30, 2017 and December 31, 2016, we were a party to forward-starting interest rate swap agreements for the purpose of hedging interest rate risk. As of September 30, 2017 and December 31, 2016, the aggregate notional amount of these forward-starting interest rate swaps was $600.0 million.state fraudulent transfer or conveyance law. Please refer to Note 75 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for a ~~more detailed~~ discussion of certain of our ~~interest rate swaps.~~debt obligations.

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The following table presents summarized combined income statement and balance sheet information for NuStar Energy, NuStar Logistics and NuPOP (collectively, the Guarantor Issuer Group). Intercompany items among the Guarantor Issuer Group have been eliminated in the summarized combined financial information below, as well as intercompany balances and activity for the Guarantor Issuer Group with non-guarantor subsidiaries, including the Guarantor Issuer Group’s investment balances in non-guarantor subsidiaries.


	March 31, 2022		December 31, 2021
	(Thousands of Dollars)
Summarized Combined Balance Sheet Information:
Current assets	$	27,791	$	33,645
Long-term assets	$	2,770,973	$	2,791,481
Current liabilities (a)	$	147,145	$	119,841
Long-term liabilities, including long-term debt	$	3,158,526	$	3,162,351
Series D preferred limited partners interests	$	621,018	$	616,439

			Three Months Ended March 31, 2022
			(Thousands of Dollars)
Summarized Combined Income Statement Information:
Revenues			$	195,218
Operating income			$	67,575
Interest expense, net			$	(49,877)

Net income			$	18,825

(a)Excludes $1,003.5 million and $1,004.5 million of net intercompany payables as of March 31, 2022 and December 31, 2021, respectively, due to the non-guarantor subsidiaries from the Guarantor Issuer Group.

Long-term assets for the non-guarantor subsidiaries totaled $2,087.2 million and $2,180.3 million as of March 31, 2022 and December 31, 2021, respectively. Revenue and net loss for the non-guarantor subsidiaries totaled $214.6 million and $6.5 million, respectively, for the three months ended March 31, 2022.

Series D Preferred Units Redemption Features

We may redeem all or any portion of the 23,246,650 Series D Preferred Units issued and outstanding in an amount not less than $50.0 million for cash at a redemption price equal to, as applicable: (i) $31.73 per Series D Preferred Unit, or up to $737.6 million, at any time on or after June 29, 2023 but prior to June 29, 2024; (ii) $30.46 per Series D Preferred Unit, or up to $708.1 million, at any time on or after June 29, 2024 but prior to June 29, 2025; (iii) $29.19 per Series D Preferred Unit, or up to $678.6 million, at any time on or after June 29, 2025; plus, in each case, the sum of any unpaid distributions on the applicable Series D Preferred Unit plus the distributions prorated for the number of days elapsed (not to exceed 90) in the period of redemption (Series D Partial Period Distributions). The holders have the option to convert the units prior to such redemption.

Additionally, at any time on or after June 29, 2028, each holder of Series D Preferred Units will have the right to require us to redeem all of the Series D Preferred Units held by such holder at a redemption price equal to $29.19 per Series D Preferred Unit, or approximately $678.6 million if all Series D Preferred Units are tendered, plus any unpaid Series D distributions plus the Series D Partial Period Distributions. If a holder of Series D Preferred Units exercises its redemption right, we may elect to pay up to 50% of such amount in common units (which shall be valued at 93% of a volume-weighted average trading price of the common units); provided, that the common units to be issued do not, in the aggregate, exceed 15% of NuStar Energy’s common equity market capitalization at the time.

Environmental, Health and Safety

Our operations are subject to extensive international, federal, state and local environmental laws and regulations, in the U.S. and in the other countries in which we operate, including those relating to the discharge of materials into the environment, waste management, remediation, the characteristics and composition of fuels, climate change and ~~pollution prevention measures, among others.~~greenhouse gases. Our operations are also subject to extensive ~~federal, state~~health, safety and ~~local health and safety~~security laws and regulations, including those relating to worker and pipeline safety, pipeline and storage tank integrity and ~~operator qualifications.~~operations security. Because more stringent environmental and safety laws and regulations are continuously being enacted or proposed, the level of expenditures required for environmental, health and safety matters is expected to increase in the future.

Table of Contents

Contingencies

We are subject to certain loss contingencies, and we believe that the ~~outcomes~~resolution of ~~which could~~any particular claim or proceeding, or all matters in the aggregate, would not have ana material adverse effect on our ~~cash flows and~~ results of operations, financial position or liquidity, as further disclosed in Note 56 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements.”

~~Table of Contents~~

~~RELATED PARTY TRANSACTIONS~~

~~Please refer to Note 8 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for a discussion of our related party transactions.~~

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions related thereto that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Our critical accounting policies are disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~.2021.

NEW ACCOUNTING PRONOUNCEMENTS

Please refer to Note 2 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for a discussion of new accounting pronouncements.

Table of Contents


~~Item 3.~~	Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~Interest Rate Risk~~

We manage our exposure to changing interest rates principally through the use of a combination of fixed-rate debt and variable-rate debt. ~~In addition, we utilize forward-starting interest rate swap agreements to lock in the rate on the interest payments related to forecasted debt issuances.~~ Borrowings under our variable-rate debt expose us to increases in interest rates.

On January 28, 2022, we amended and restated our $1.0 billion unsecured revolving credit agreement to extend the maturity to April 27, 2025, replace the LIBOR-based interest rate and modify other terms. Also on January 28, 2022, we amended our $100.0 million receivables financing agreement to extend the scheduled termination date to January 31, 2025, replace the LIBOR-based interest rate and modify other terms. Please refer to Note 75 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for a more ~~detailed discussion of our interest rate swaps.~~ information.

The following tables present principal cash flows and related weighted-average interest rates by expected maturity dates for our long-term ~~debt:~~

debt, excluding finance leases:

September 30, 2017
Expected Maturity Dates
2017 2018 2019 2020 2021
There-
after
Total
Fair
Value
(Thousands of Dollars, Except Interest Rates)
Long-term Debt:
Fixed-rate $ —
$ 350,000
$ —
$ 450,000
$ 300,000
$ 1,202,500
$ 2,302,500
$ 2,403,835
Weighted-average
interest rate
—
8.2 % —
4.8 % 6.8 % 6.1 % 6.2 %
Variable-rate $ —
$ —
$ —
$ 924,539
$ —
$ 365,440
$ 1,289,979
$ 1,291,042
Weighted-average
interest rate
—
—
—
2.8 % —
1.0 % 2.3 %


	March 31, 2022
	Expected Maturity Dates
	2022		2023		2024		2025			2026			Thereafter			Total			Fair Value
	(Thousands of Dollars, Except Interest Rates)
Fixed-rate debt	$	—	$	—	$	—	$	600,000		$	500,000		$	1,472,140		$	2,572,140		$	2,641,192
Weighted-average rate	—		—		—		5.8		%	6.0		%	6.0		%	6.0		%	—
Variable-rate debt	$	—	$	—	$	—	$	178,500		$	—		$	402,500		$	581,000		$	581,325
Weighted-average rate	—		—		—		2.6		%	—			7.0		%	5.6		%	—


	December 31, 2021
	Expected Maturity Dates
	2022		2023			2024		2025			2026			Thereafter			Total			Fair Value
	(Thousands of Dollars, Except Interest Rates)
Fixed-rate debt	$	—	$	—		$	—	$	600,000		$	500,000		$	1,472,140		$	2,572,140		$	2,858,794
Weighted-average rate	—		—			—		5.8		%	6.0		%	6.0		%	6.0		%	—
Variable-rate debt	$	—	$	194,300		$	—	$	—		$	—		$	402,500		$	596,800		$	600,359
Weighted-average rate	—		2.5		%	—		—			—			6.9		%	5.4		%	—

December 31, 2016
Expected Maturity Dates
2017 2018 2019 2020 2021
There-
after
Total
Fair
Value
(Thousands of Dollars, Except Interest Rates)
Long-term Debt:
Fixed-rate $ —
$ 350,000
$ —
$ 450,000
$ 300,000
$ 652,500
$ 1,752,500
$ 1,821,261
Weighted-average
interest rate
—
8.2 % —
4.8 % 6.8 % 6.5 % 6.4 %
Variable-rate $ —
$ 58,400
$ 838,992
$ —
$ —
$ 365,440
$ 1,262,832
$ 1,263,501
Weighted-average
interest rate
—
1.6 % 2.5 % —
—
0.7 % 1.9 %

Distributions on 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) 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 the 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. The Series A, B and C Preferred Units expose us to changes in interest rates as the distribution rate on our Series A Preferred Units converted to a floating rate of the applicable LIBOR plus a spread on December 15, 2021, and the distribution rates on our Series B and C Preferred Units convert from fixed rates to floating rates of the applicable LIBOR plus a spread on June 15, 2022 and December 15, 2022, respectively. Based upon the 9,060,000 Series A Preferred Units outstanding at March 31, 2022 and the $25.00 liquidation preference per unit, an increase of 100 basis points, or 1.0%, in interest rates would increase the annual distributions on our Series A Preferred Units by $2.3 million. Please see Note 9 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for additional information on our Series A, B and C Preferred Units.

~~The following table presents information regarding our forward-starting interest rate swap agreements:~~

Notional Amount Weighted-Average Fixed Rate Fair Value
September 30, 2017 December 31, 2016 Period of Hedge September 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016
(Thousands of Dollars) (Thousands of Dollars)
$ 350,000
$ 350,000
04/2018 - 04/2028 2.6 % 2.6 % $ (7,280 ) $ (1,333 )
250,000
250,000
09/2020 - 09/2030 2.8 % 2.8 % (4,043 ) 15
$ 600,000
$ 600,000
2.7 % 2.7 % $ (11,323 ) $ (1,318 )

~~Table of Contents~~

~~Commodity Price Risk~~

Since the operations of our fuels marketing segment expose us to commodity price risk, we also use derivative instruments to attempt to mitigate the effects of commodity price fluctuations. ~~The derivative~~Derivative financial instruments we use consist primarily of commodity futures and swap contracts. We have a risk management committee that oversees our trading policies and procedures and certain aspects of risk management. Our risk management committee also reviews all new risk management strategies in accordanceassociated with ~~our risk management policy, as approved by our board of directors.~~

We record commodity derivative instruments in the consolidated balance sheets at fair value. We recognize mark-to-market adjustments for derivative instruments designated and qualifying as fair value hedges (Fair Value Hedges) and the related change in the fair value of the associated hedged physical inventory or firm commitment within “Cost of product sales.” For derivative instruments that have associated underlying physical inventory but do not qualify for hedge accounting (Economic Hedges and Other Derivatives), we record the mark-to-market adjustments in “Cost of product sales.”

~~The commodity contracts disclosed below represent only those contracts exposed to~~ commodity price risk ~~at the end of the period. Please refer to Note 7 of Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements”~~were not material for ~~the volume and related fair value of all commodity contracts.~~any periods presented.

September 30, 2017

Contract
Volumes
Weighted Average
Fair Value of
Current
Asset (Liability)
Pay Price Receive Price

(Thousands
of Barrels)

(Thousands of
Dollars)
Fair Value Hedges:
Futures – long:
     (refined products) 4
$ 76.62
N/A
$ (2 )
Futures – short:

     (refined products) 15
N/A
$ 77.21
$ 18

Economic Hedges and Other Derivatives:
Futures – long:

     (refined products) 7
$ 76.62
N/A
$ (4 )
Futures – short:

     (refined products) 12
N/A
$ 76.91
$ 11
Swaps – long:

     (refined products) 254
$ 48.38
N/A
$ (5 )
Swaps – short:

     (refined products) 364
N/A
$ 46.91
$ (499 )

Total fair value of open positions exposed to
commodity price risk
$ (481 )

Table of Contents

December 31, 2016

Contract
Volumes
Weighted Average
Fair Value of
Current
Asset (Liability)
Pay Price Receive Price

(Thousands
of Barrels)

(Thousands of
Dollars)
Fair Value Hedges:
Futures – long:
     (crude oil and refined products) 47
$ 55.53
N/A
$ 2
Futures – short:

     (crude oil and refined products) 107
N/A
$ 58.79
$ (243 )
Swaps – long:

     (refined products) 84
$ 45.99
N/A
$ 141
Swaps – short:

     (refined products) 573
N/A
$ 41.87
$ (3,322 )

Economic Hedges and Other Derivatives:

Futures – long:

     (crude oil and refined products) 18
$ 72.06
N/A
$ 10
Futures – short:

     (crude oil and refined products) 9
N/A
$ 71.88
$ (7 )
Swaps – long:

     (refined products) 869
$ 42.20
N/A
$ 4,737
Swaps – short:

     (refined products) 874
N/A
$ 41.40
$ (5,459 )
Forward purchase contracts:

     (crude oil) 310
$ 52.78
N/A
$ 499
Forward sales contracts:

     (crude oil) 310
N/A
$ 52.76
$ (507 )

Total fair value of open positions exposed to
commodity price risk
$ (4,149 )

~~Table of Contents~~


~~Item 4.~~	~~Controls and Procedures~~

Item 4. Controls and Procedures


~~(a)~~	~~Evaluation of disclosure controls and procedures.~~

(a)Evaluation of disclosure controls and procedures.

Our management has evaluated, with the participation of the principal executive officer and principal financial officer of NuStar GP, LLC, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report, and has concluded that our disclosure controls and procedures were effective as of ~~September 30, 2017~~.March 31, 2022.


~~(b)~~	~~Changes in internal control over financial reporting.~~

(b)Changes in internal control over financial reporting.

There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Table of Contents

PART II - OTHER INFORMATION

Item 6.Exhibits


~~Item 6.~~	~~Exhibits~~



Exhibit Number		Description

~~10.01~~				Maturity Extension Letter (Amendment No. 4) to Letter of Credit Agreement and Subsidiary Guaranty Agreement dated as of July 13, 2017 among NuStar Logistics, L.P., NuStar Energy L.P., the Lenders party thereto and The Bank of Tokyo-Mitsubishi UFJ, Ltd., as Issuing Bank and Administrative Agent (incorporated by reference to Exhibit 10.02 to NuStar Energy L.P.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 (File No. 001-16417))

*10.02				~~First Amendment to Amended and Restated Aircraft Time Sharing Agreement, dated as of August 18, 2017, between NuStar Logistics, L.P. and William E. Greehey~~
10.01
~~10.03~~	Second ~~Amendment to~~ Amended and Restated 5-Year Revolving Credit Agreement, dated as of ~~August 22, 2017,~~January 28, 2022, among NuStar Logistics, L.P., NuStar Energy L.P., ~~JPMorgan Chase~~NuStar Pipeline Operating Partnership L.P., Wells Fargo Bank, ~~N.A.,~~National Association, as Administrative Agent, and the ~~Lenders~~lenders party thereto (incorporated by reference to Exhibit ~~10.01~~10.1 to NuStar Energy L.P.’s Current Report on Form 8-K filed ~~August 22, 2017~~January 31 , 2022 (File No. 001-16417))

~~10.04~~10.02			Second Amendment to Purchase and Sale Agreement, dated as of September 20, 2017, by and among the Originators listed therein, NuStar Energy L.P., NuStar Finance LLC, Mizuho Bank, Ltd. and PNC Bank, National Association (incorporated by reference to Exhibit 10.01 to NuStar Energy L.P.’s Current Report on Form 8-K filed September 20, 2017 (File No. 001-16417))

~~10.05~~	~~Second~~Sixth Amendment to Receivables Financing Agreement, dated as of ~~September 20, 2017,~~January 28, 2022, by and among NuStar Finance, LLC, as Borrower, NuStar Energy L.P., as initial Servicer, ~~Mizuho Bank, Ltd.~~ and PNC Bank, National Association (incorporated by reference to Exhibit ~~10.02~~10.2 to NuStar Energy L.P.’s Current Report on Form 8-K filed ~~September 20, 2017~~January 31 , 2022 (File No. 001-16417))

*~~12.01~~10.03			~~Statement~~Form of ~~Computation of Ratio of Earnings to Fixed Charges~~2022 Performance Cash Award Agreement under the Amended and Restated NuStar Energy L.P. 2019 Long-Term Incentive Plan

*31.0122.01			Subsidiary Guarantors and Issuers of Guaranteed Securities (incorporated by reference to Exhibit 22.01 to NuStar Energy L.P.’s Annual Report on Form 10-K for yea r ended December 31, 2021 (File No. 001-16417))

*31.01		Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal executive officer

*31.02			Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal financial officer

**32.01			Section 1350 Certification (under Section 906 of the Sarbanes-Oxley Act of 2002) of principal executive officer

**32.02			Section 1350 Certification (under Section 906 of the Sarbanes-Oxley Act of 2002) of principal financial officer

*101.INS				Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

*101.SCH				Inline XBRL Taxonomy Extension Schema Document

*101.CAL				Inline XBRL Taxonomy Extension Calculation Linkbase Document

*101.DEF				Inline XBRL Taxonomy Extension Definition Linkbase Document

*101.LAB				Inline XBRL Taxonomy Extension Label Linkbase Document

*101.PRE				Inline XBRL Taxonomy Extension Presentation Linkbase Document
*		~~Filed herewith.~~
*104		Cover Page Interactive Data File - Formatted in Inline XBRL and contained in Exhibit 101
*	Filed herewith.
**				Furnished herewith.

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NUSTAR ENERGY L.P.

(Registrant)

By: Riverwalk Logistics, L.P., its general partner

By: NuStar GP, LLC, its general partner



By:						/s/ Bradley C. Barron
						Bradley C. Barron
						President and Chief Executive Officer
						~~November 8, 2017~~May 6, 2022

By:						/s/ Thomas R. Shoaf
						Thomas R. Shoaf
						Executive Vice President and Chief Financial Officer
						~~November 8, 2017~~May 6, 2022

By:						/s/ Jorge A. del Alamo
						Jorge A. del Alamo
						Senior Vice President and Controller
						~~November 8, 2017~~May 6, 2022

5134



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Revenues:
Service revenues	$	295,102		$	277,758		$	845,264		$	814,727
Product sales	145,464			163,660			518,220			470,198
Total revenues	440,566			441,418			1,363,484			1,284,925
Costs and expenses:
Cost of product sales	138,078			155,129			490,363			441,736
Operating expenses:
Third parties	116,590			117,432			334,016			313,634
Related party	—			—			—			21,681
Total operating expenses	116,590			117,432			334,016			335,315
General and administrative expenses:
Third parties	25,003			26,957			83,202			62,906
Related party	—			—			—			10,493
Total general and administrative expenses	25,003			26,957			83,202			73,399
Depreciation and amortization expense	69,178			53,946			193,643			160,739
Total costs and expenses	348,849			353,464			1,101,224			1,011,189
Operating income	91,717			87,954			262,260			273,736
Interest expense, net	(45,256		)	(35,022		)	(127,282		)	(103,374		)
Other (expense) income, net	(5,126		)	362			(4,898		)	(10		)
Income before income tax expense	41,335			53,294			130,080			170,352
Income tax expense	2,743			2,153			7,298			9,293
Net income	$	38,592		$	51,141		$	122,782		$	161,059

Basic and diluted net income per common unit (Note 11)	$	0.15		$	0.49		$	0.65		$	1.58
Basic weighted-average common units outstanding	93,031,320			78,031,053			87,392,597			77,934,802
Diluted weighted-average common units outstanding	93,031,320			78,062,889			87,392,597			77,981,299

Comprehensive income	$	44,482		$	48,652		$	133,566		$	120,453



	Preliminary Purchase Price Allocation
	(Thousands of Dollars)
Accounts receivable	$	4,747
Other current assets	2,436
Property, plant and equipment, net	376,690
Intangible assets (a)	700,000
Goodwill (b)	399,306
Other long-term assets, net	2,125
Current liabilities	(23,585		)
Preliminary purchase price allocation, net of cash acquired	$	1,461,719



	Three Months Ended September 30, 2017		Nine Months Ended September 30, 2017
	(Thousands of Dollars)
Permian Crude System:
Revenues	$	15,663	$	25,142
Operating income (loss)	$	1,050	$	(2,374	)

Transaction costs:
General and administrative expenses	$	169	$	10,359
Interest expense, net	—		3,688
Total transaction costs	$	169	$	14,047



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017 (a)		2016		2017		2016
	(Thousands of Dollars, Except Per Unit Data)
Revenues	$	440,566	$	449,250	$	1,377,883	$	1,301,419
Net income	$	38,592	$	34,417	$	102,251	$	104,535

Basic and diluted net income per common unit	$	0.15	$	0.16	$	0.31	$	0.50



	September 30, 2017
	Level 1			Level 2			Level 3		Total
	(Thousands of Dollars)
Assets:
Other current assets:
Product imbalances	$	6,960		$	—		$	—	$	6,960
Liabilities:
Accrued liabilities:
Product imbalances	$	(2,164	)	$	—		$	—	$	(2,164	)
Commodity derivatives	(791		)	—			—		(791		)
Interest rate swaps	—			(7,280		)	—		(7,280		)
Other long-term liabilities:
Interest rate swaps	—			(4,043		)	—		(4,043		)
Total	$	(2,955	)	$	(11,323	)	$	—	$	(14,278	)



	December 31, 2016
	Level 1			Level 2			Level 3			Total
	(Thousands of Dollars)
Assets:
Other current assets:
Product imbalances	$	1,551		$	—		$	—		$	1,551
Commodity derivatives	—			155			—			155
Other long-term assets, net:
Interest rate swaps	—			1,314			—			1,314
Total	$	1,551		$	1,469		$	—		$	3,020
Liabilities:
Accrued liabilities:
Product imbalances	$	(1,577	)	$	—		$	—		$	(1,577	)
Commodity derivatives	(4,887		)	(165		)	—			(5,052		)
Other long-term liabilities:
Guarantee liability	—			—			(1,230		)	(1,230		)
Interest rate swaps	—			(2,632		)	—			(2,632		)
Total	$	(6,464	)	$	(2,797	)	$	(1,230	)	$	(10,491	)



		Asset Derivatives				Liability Derivatives
	Balance Sheet Location	September 30, 2017		December 31, 2016		September 30, 2017			December 31, 2016
		(Thousands of Dollars)
Derivatives Designated as Hedging Instruments:
Interest rate swaps	Other long-term assets, net	$	—	$	1,314	$	—		$	—
Commodity contracts	Accrued liabilities	18		144		(2		)	(3,566		)
Interest rate swaps	Accrued liabilities	—		—		(7,280		)	—
Interest rate swaps	Other long-term liabilities	—		—		(4,043		)	(2,632		)
Total		18		1,458		(11,325		)	(6,198		)

Derivatives Not Designated as Hedging Instruments:
Commodity contracts	Other current assets	—		265		—			(110		)
Commodity contracts	Accrued liabilities	655		9,128		(1,462		)	(10,758		)
Total		655		9,393		(1,462		)	(10,868		)

Total Derivatives		$	673	$	10,851	$	(12,787	)	$	(17,066	)



	Pension Plans						Other Postretirement Benefits
	2017			2016			2017			2016
	(Thousands of Dollars)
For the three months ended September 30:
Service cost	$	2,239		$	1,926		$	115		$	105
Interest cost	1,127			1,006			107			100
Expected return on assets	(1,603		)	(1,353		)	—			—
Amortization of prior service credit	(515		)	(516		)	(286		)	(286		)
Amortization of net loss	371			273			47			45
Net periodic benefit cost (income)	$	1,619		$	1,336		$	(17	)	$	(36	)

For the nine months ended September 30:
Service cost	$	6,717		$	5,778		$	341		$	315
Interest cost	3,381			3,018			323			300
Expected return on assets	(4,808		)	(4,056		)	—			—
Amortization of prior service credit	(1,546		)	(1,549		)	(858		)	(858		)
Amortization of net loss	1,113			819			143			135
Net periodic benefit cost (income)	$	4,857		$	4,010		$	(51	)	$	(108	)



Balance as of January 1, 2017	$	1,611,617
Net income	122,782
Unit-based compensation	4,164
Other comprehensive income	10,784
Distributions to partners	(358,138		)
Issuance of preferred and common units, including contribution from general partner	1,029,257
Other	(604		)
Balance as of September 30, 2017	$	2,419,862



	Foreign Currency Translation			Cash Flow Hedges			Pension and Other Postretirement Benefits			Total
	(Thousands of Dollars)
Balance as of January 1, 2017	$	(69,069	)	$	(22,258	)	$	(2,850	)	$	(94,177	)
Other comprehensive income (loss):
Other comprehensive income (loss) before reclassification adjustments	16,825			(10,005		)	—			6,820
Net gain on pension costs reclassified into operating expense	—			—			(858		)	(858		)
Net gain on pension costs reclassified into general and administrative expense	—			—			(290		)	(290		)
Net loss on cash flow hedges reclassified into interest expense, net	—			5,112			—			5,112
Other comprehensive income (loss)	16,825			(4,893		)	(1,148		)	10,784
Balance as of September 30, 2017	$	(52,244	)	$	(27,151	)	$	(3,998	)	$	(83,393	)



Quarter Ended	Cash Distributions Per Unit		Total Cash Distributions		Record Date	Payment Date
			(Thousands of Dollars)
September 30, 2017 (a)	$	1.095	$	115,084	November 9, 2017	November 14, 2017
June 30, 2017	$	1.095	$	115,083	August 7, 2017	August 11, 2017
March 31, 2017	$	1.095	$	117,168	May 8, 2017	May 12, 2017
December 31, 2016	$	1.095	$	98,971	February 8, 2017	February 13, 2017



	NuStar Energy		NuStar Logistics		NuPOP		Non-Guarantor Subsidiaries		Eliminations			Consolidated
Assets
Cash and cash equivalents	$	894	$	28	$	—	$	32,693	$	—		$	33,615
Receivables, net	—		114		—		152,041		—			152,155
Inventories	—		1,733		6,580		14,984		—			23,297
Other current assets	118		9,378		5,405		9,904		—			24,805
Intercompany receivable	—		3,183,871		—		—		(3,183,871		)	—
Total current assets	1,012		3,195,124		11,985		209,622		(3,183,871		)	233,872
Property, plant and equipment, net	—		1,904,510		582,390		1,701,249		—			4,188,149
Intangible assets, net	—		60,886		—		736,453		—			797,339
Goodwill	—		149,453		170,652		775,838		—			1,095,943
Investment in wholly owned subsidiaries	2,992,907		24,152		1,291,487		816,809		(5,125,355		)	—
Deferred income tax asset	—		—		—		1,070		—			1,070
Other long-term assets, net	378		65,393		27,782		8,842		—			102,395
Total assets	$	2,994,297	$	5,399,518	$	2,084,296	$	4,249,883	$	(8,309,226	)	$	6,418,768
Liabilities and Partners’ Equity
Accounts payable	$	2,201	$	24,752	$	13,812	$	57,089	$	—		$	97,854
Short-term debt	—		68,000		—		—		—			68,000
Current portion of long-term debt	—		350,007		—		—		—			350,007
Accrued interest payable	—		41,780		—		31		—			41,811
Accrued liabilities	822		19,980		10,527		29,137		—			60,466
Taxes other than income tax	63		7,551		4,922		7,404		—			19,940
Income tax payable	—		704		3		2,282		—			2,989
Intercompany payable	487,956		—		1,228,444		1,467,471		(3,183,871		)	—
Total current liabilities	491,042		512,774		1,257,708		1,563,414		(3,183,871		)	641,067
Long-term debt	—		3,186,908		—		45,691		—			3,232,599
Deferred income tax liability	—		1,862		13		21,291		—			23,166
Other long-term liabilities	—		48,605		9,895		43,574		—			102,074
Total partners’ equity	2,503,255		1,649,369		816,680		2,575,913		(5,125,355		)	2,419,862
Total liabilities and partners’ equity	$	2,994,297	$	5,399,518	$	2,084,296	$	4,249,883	$	(8,309,226	)	$	6,418,768



	Strategic Capital Expenditures		Reliability Capital Expenditures		Total
	(Thousands of Dollars)
For the nine months ended September 30:
2017	$	190,417	$	30,200	$	220,617
2016	$	119,580	$	25,834	$	145,414

Expected for the year ended December 31, 2017 (a)	$ 360,000 - 380,000		$ 50,000 - 70,000		$ 410,000 - 450,000



Notional Amount					Weighted-Average Fixed Rate				Fair Value
September 30, 2017		December 31, 2016		Period of Hedge	September 30, 2017		December 31, 2016		September 30, 2017			December 31, 2016
(Thousands of Dollars)									(Thousands of Dollars)
$	350,000	$	350,000	04/2018 - 04/2028	2.6	%	2.6	%	$	(7,280	)	$	(1,333	)
250,000		250,000		09/2020 - 09/2030	2.8	%	2.8	%	(4,043		)	15
$	600,000	$	600,000		2.7	%	2.7	%	$	(11,323	)	$	(1,318	)



	September 30, 2017
	Contract Volumes	Weighted Average				Fair Value of Current Asset (Liability)
	Contract Volumes	Pay Price		Receive Price		Fair Value of Current Asset (Liability)
	(Thousands of Barrels)					(Thousands of Dollars)
Fair Value Hedges:
Futures – long:
(refined products)	4	$	76.62	N/A		$	(2	)
Futures – short:
(refined products)	15	N/A		$	77.21	$	18

Economic Hedges and Other Derivatives:
Futures – long:
(refined products)	7	$	76.62	N/A		$	(4	)
Futures – short:
(refined products)	12	N/A		$	76.91	$	11
Swaps – long:
(refined products)	254	$	48.38	N/A		$	(5	)
Swaps – short:
(refined products)	364	N/A		$	46.91	$	(499	)

Total fair value of open positions exposed to commodity price risk						$	(481	)