Exhibit 99.1
NuStar Energy L.P. Reports Second Quarter 2007 Earnings
and Announces Quarterly Distribution Increase
SAN ANTONIO, July 30, 2007 – NuStar Energy L.P. (NYSE:NS) today announced net income applicable to limited partners of $34.6 million, or $0.74 per unit, for the second quarter of 2007 compared to $27.5 million, or $0.59 per unit, earned in the second quarter of 2006. For the six months ended June 30, 2007, net income applicable to limited partners was $61.2 million, or $1.31 per unit, compared to $62.8 million, or $1.34 per unit, for the six months ended June 30, 2006.
Distributable cash flow available to limited partners from continuing operations for the second quarter of 2007 was $53.6 million, or $1.15 per unit, compared to $41.4 million, or $0.88 per unit, for the second quarter of 2006. For the six months ended June 30, 2007, distributable cash flow available to limited partners from continuing operations was $101.0 million, or $2.16 per unit, compared to $94.8 million, or $2.03 per unit, for the six months ended June 30, 2006. As of June 30, 2007, the partnership’s debt-to-capitalization ratio was 43.7 percent compared to 41.9 percent as of December 31, 2006.
NuStar Energy L.P. also announced that its board of directors has declared an increase in the quarterly distribution rate to $0.95 per unit, or $3.80 per unit on an annual basis, which will be paid on August 14, 2007, to holders of record as of August 7, 2007. This quarterly distribution represents an increase of $0.065 per unit, or 7.3 percent, over the $0.885 distribution for the second quarter of 2006 and an increase of $0.035 per unit, or 3.8 percent, over the $0.915 distribution for the first quarter of 2007. Distributable cash flow available to limited partners covers the distribution to the limited partners by 1.21 times for the second quarter of 2007.
Included in the second quarter 2007 results in other income is a $13.0 million gain, or $0.27 per unit, related to a fee paid to NuStar Energy L.P. as a result of Valero Energy Corporation exercising its option in the second quarter to terminate the 2007 Services Agreement early. Also, included in the second quarter 2007 results in other income is $7.1 million of income, or $0.15 per unit, related to the business interruption insurance claim for the impact of the fire at Valero Energy’s McKee refinery that started in mid-February. Despite recording $7.1 million of business interruption income, the Valero Energy McKee refinery incident still negatively impacted earnings by approximately $6.8 million, or $0.14 per unit in the second quarter.
“We are pleased to report yet another increase in the quarterly distribution,” said Curt Anastasio, NuStar Energy L.P.’s Chief Executive Officer. “With this increase, our quarterly distribution is nearly 60 percent higher than it was when the partnership went public in 2001.
-More-
“By the end of this year, we will be on track to complete an additional $116 million of internal growth projects, several of which are expected to be in-service in the next couple of months. These projects, which will add over 2.7 million barrels of additional committed storage to our existing 80 million barrel storage capacity, are located at our terminals in Amsterdam, St. Eustatius, Portland, Texas City, Linden (New York Harbor), Vancouver and Stockton. In addition, by February 2008, another $49 million of storage expansion projects are expected to be complete, including other storage projects at our terminals in Amsterdam and St. Eustatius. We are also now moving forward with a storage expansion project at our terminal in Jacksonville, Florida, where we are looking to spend around $21 million to expand this facility by nearly 500,000 barrels under a committed storage agreement.
“Looking ahead to the third quarter of 2007, we believe results will be in the range of $0.75 to $0.85 per unit. We continue to expect that earnings before interest, taxes, depreciation and amortization (“EBITDA”) will be higher in 2007 than in 2006. With the majority of our internal growth projects coming online in late 2007 and in 2008, and the new marketing, supply and trading businesses we have started in asphalt and other products, we feel confident that next year is lining up to be a great year for the partnership,” said Anastasio.
A conference call with management is scheduled for 2:30 p.m. ET (1:30 p.m. CT) today to discuss the financial results for the second quarter of 2007. Investors interested in listening to the presentation may call 800/622-7620, passcode 6576918. International callers may access the presentation by dialing 706/645-0327, passcode 6576918. The company intends to have a playback available following the presentation, which may be accessed by calling 800/642-1687, passcode 6576918. A live broadcast of the conference call will also be available on the partnership’s Web site at www.nustarenergy.com.
NuStar Energy L.P. is a publicly traded, limited partnership based in San Antonio, with 9,113 miles of pipeline, 86 terminal facilities and four crude oil storage tank facilities. One of the largest independent terminal and petroleum liquids pipeline operators in the nation, the partnership has operations in the United States, the Netherlands Antilles, Canada, Mexico, the Netherlands and the United Kingdom. The partnership’s combined system has approximately 80 million barrels of storage capacity, and includes crude oil and refined product pipelines, refined product terminals, a petroleum and specialty liquids storage and terminaling business, as well as crude oil storage facilities. For more information, visit NuStar Energy L.P.’s Web site at www.nustarenergy.com.
-More-
Cautionary Statement Regarding Forward-Looking Statements
This press release includes forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995 regarding future events and the future financial performance of NuStar Energy L.P. All forward-looking statements are based on the partnership’s beliefs as well as assumptions made by and information currently available to the partnership. These statements reflect the partnership’s current views with respect to future events and are subject to various risks, uncertainties and assumptions. These risks, uncertainties and assumptions are discussed in NuStar Energy L.P.’s 2006 annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission.
-30-
NuStar Energy L.P.
Consolidated Financial Information
June 30, 2007 and 2006
(unaudited, thousands of dollars, except unit data and per unit data)
Three Months Ended | Six Months Ended | |||||||||||||
June 30, | June 30, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||
| Statement of Income Data: | ||||||||||||||
| Revenues: | ||||||||||||||
| Services revenues | $ | 160,060 | $ | 152,094 | $ | 317,342 | $ | 300,023 | ||||||
| Product sales | 160,446 | 127,874 | 299,988 | 253,949 | ||||||||||
| Total revenues | 320,506 | 279,968 | 617,330 | 553,972 | ||||||||||
| Costs and expenses: | ||||||||||||||
| Cost of product sales | 148,061 | 118,283 | 275,988 | 232,501 | ||||||||||
| Operating expenses | 85,444 | 79,155 | 166,656 | 150,225 | ||||||||||
| General and administrative expenses | 17,581 | 10,375 | 32,489 | 18,935 | ||||||||||
| Depreciation and amortization | 27,860 | 24,839 | 55,202 | 49,028 | ||||||||||
| Total costs and expenses | 278,946 | 232,652 | 530,335 | 450,689 | ||||||||||
| Operating income | 41,560 | 47,316 | 86,995 | 103,283 | ||||||||||
| Equity earnings from joint ventures | 1,746 | 1,844 | 3,357 | 3,050 | ||||||||||
| Interest expense, net | (19,452 | ) | (16,604 | ) | (38,306 | ) | (32,300 | ) | ||||||
| Other income (expense), net | 17,626 | (272 | ) | 24,249 | (41 | ) | ||||||||
| Income from continuing operations | ||||||||||||||
| before income tax expense | 41,480 | 32,284 | 76,295 | 73,992 | ||||||||||
| Income tax expense | 1,783 | 492 | 5,475 | 2,611 | ||||||||||
| Income from continuing operations | 39,697 | 31,792 | 70,820 | 71,381 | ||||||||||
| Loss from discontinued operations, net of income tax | — | (239 | ) | — | (377 | ) | ||||||||
| Net income applicable to general partner | ||||||||||||||
| and limited partners' interest | 39,697 | 31,553 | 70,820 | 71,004 | ||||||||||
| Net income applicable to general partner | ||||||||||||||
| (Note 1) | (5,118 | ) | (4,041 | ) | (9,572 | ) | (8,240 | ) | ||||||
| Net income applicable to limited partners | $ | 34,579 | $ | 27,512 | $ | 61,248 | $ | 62,764 | ||||||
| Income per unit applicable to limited | ||||||||||||||
| partners (Note 1): | ||||||||||||||
| Continuing operations | $ | 0.74 | $ | 0.60 | $ | 1.31 | $ | 1.35 | ||||||
| Discontinued operations | — | (0.01 | ) | — | (0.01 | ) | ||||||||
| Net income | $ | 0.74 | $ | 0.59 | $ | 1.31 | $ | 1.34 | ||||||
| Weighted average number of limited | ||||||||||||||
| partnership units outstanding | 46,809,749 | 46,809,749 | 46,809,749 | 46,809,749 | ||||||||||
| EBITDA from continuing operations (Note 2) | $ | 88,792 | $ | 73,727 | $ | 169,803 | $ | 155,320 | ||||||
| Distributable cash flow from continuing operations (Note 2) | $ | 59,020 | $ | 45,772 | $ | 111,248 | $ | 103,577 | ||||||
June 30, | June 30, | December 31, | ||||||||||||
2007 | 2006 | 2006 | ||||||||||||
| Balance Sheet Data: | ||||||||||||||
| Debt, including current portion (a) | $ | 1,446,044 | $ | 1,159,482 | $ | 1,354,367 | ||||||||
| Partners' equity (b) | 1,862,473 | 1,891,092 | 1,875,681 | |||||||||||
| Debt-to-capitalization ratio (a) / ((a)+(b)) | 43.7 | % | 38.0 | % | 41.9 | % | ||||||||
NuStar Energy L.P.
Consolidated Financial Information - Continued
June 30, 2007 and 2006
(unaudited, thousands of dollars, except barrel information)
Three Months Ended | Six Months Ended | |||||||||||||
June 30, | June 30, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||
| Operating Data: | ||||||||||||||
| Refined product terminals: | ||||||||||||||
| Throughput (barrels/day) | 227,953 | 265,277 | 229,360 | 258,811 | ||||||||||
| Throughput revenues | $ | 11,852 | $ | 12,876 | $ | 23,300 | $ | 23,416 | ||||||
| Storage lease revenues | 71,908 | 60,493 | 141,156 | 120,026 | ||||||||||
| Product sales (bunkering) | 157,937 | 127,874 | 297,479 | 253,949 | ||||||||||
| Total revenues | 241,697 | 201,243 | 461,935 | 397,391 | ||||||||||
| Cost of product sales | 146,636 | 118,283 | 274,563 | 232,501 | ||||||||||
| Operating expenses | 52,529 | 50,092 | 103,522 | 94,071 | ||||||||||
| Depreciation and amortization | 13,398 | 11,041 | 26,586 | 21,947 | ||||||||||
| Segment operating income | $ | 29,134 | $ | 21,827 | $ | 57,264 | $ | 48,872 | ||||||
| Refined product pipelines: | ||||||||||||||
| Throughput (barrels/day) | 647,887 | 709,480 | 632,393 | 705,248 | ||||||||||
| Throughput revenues | $ | 55,139 | $ | 52,201 | $ | 108,563 | $ | 104,247 | ||||||
| Product sales | 1,963 | — | 1,963 | — | ||||||||||
| Total revenues | 57,102 | 52,201 | 110,526 | 104,247 | ||||||||||
| Cost of product sales | 1,062 | — | 1,062 | — | ||||||||||
| Operating expenses | 25,832 | 23,736 | 49,908 | 43,538 | ||||||||||
| Depreciation and amortization | 11,264 | 10,603 | 22,272 | 20,742 | ||||||||||
| Segment operating income | $ | 18,944 | $ | 17,862 | $ | 37,284 | $ | 39,967 | ||||||
| Crude oil pipelines: | ||||||||||||||
| Throughput (barrels/day) | 348,482 | 440,691 | 348,052 | 434,219 | ||||||||||
| Throughput revenues | $ | 10,116 | $ | 14,868 | $ | 22,465 | $ | 28,917 | ||||||
| Operating expenses | 3,651 | 4,290 | 7,024 | 7,987 | ||||||||||
| Depreciation and amortization | 1,261 | 1,283 | 2,494 | 2,532 | ||||||||||
| Segment operating income | $ | 5,204 | $ | 9,295 | $ | 12,947 | $ | 18,398 | ||||||
| Crude oil storage tanks: | ||||||||||||||
| Throughput (barrels/day) | 564,588 | 484,322 | 551,971 | 498,618 | ||||||||||
| Throughput revenues | $ | 11,589 | $ | 11,656 | $ | 22,402 | $ | 23,417 | ||||||
| Operating expenses | 2,951 | 1,037 | 5,721 | 4,629 | ||||||||||
| Depreciation and amortization | 1,937 | 1,912 | 3,850 | 3,807 | ||||||||||
| Segment operating income | $ | 6,701 | $ | 8,707 | $ | 12,831 | $ | 14,981 | ||||||
| Other: | ||||||||||||||
| Product sales | $ | 546 | $ | — | $ | 546 | $ | — | ||||||
| Cost of product sales | 370 | — | 370 | — | ||||||||||
| Operating expenses | 1,018 | — | 1,018 | — | ||||||||||
| Segment operating income | $ | (842 | ) | $ | — | $ | (842 | ) | $ | — | ||||
| Intersegment eliminations: | ||||||||||||||
| Revenues | $ | (544 | ) | $ | — | $ | (544 | ) | $ | — | ||||
| Cost of product sales | (7 | ) | — | (7 | ) | — | ||||||||
| Operating expenses | (537 | ) | — | (537 | ) | — | ||||||||
| Total | $ | — | $ | — | $ | — | $ | — | ||||||
| Consolidated Information: | ||||||||||||||
| Revenues | $ | 320,506 | $ | 279,968 | $ | 617,330 | $ | 553,972 | ||||||
| Cost of product sales | 148,061 | 118,283 | 275,988 | 232,501 | ||||||||||
| Operating expenses | 85,444 | 79,155 | 166,656 | 150,225 | ||||||||||
| Depreciation and amortization | 27,860 | 24,839 | 55,202 | 49,028 | ||||||||||
| �� Segment operating income | 59,141 | 57,691 | 119,484 | 122,218 | ||||||||||
| General and administrative expenses | 17,581 | 10,375 | 32,489 | 18,935 | ||||||||||
| Consolidated operating income | $ | 41,560 | $ | 47,316 | $ | 86,995 | $ | 103,283 | ||||||
NuStar Energy L.P.
Consolidated Financial Information - Continued
June 30, 2007 and 2006
(unaudited, thousands of dollars, except unit data and per unit data)
Notes:
| 1. | Income is allocated between limited partners and the general partner’s interests based on provisions in the partnership agreement. The income applicable to limited partners is divided by the weighted average number of limited partnership units outstanding in computing the income per unit applicable to limited partners. |
| The following table details the calculation of net income applicable to the general partner: |
| Three Months Ended | Six Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
June 30, | June 30, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||
| Net income applicable to general partner | ||||||||||||||
| and limited partners' interest | $ | 39,697 | $ | 31,553 | $ | 70,820 | $ | 71,004 | ||||||
| Less general partner incentive distribution | 4,413 | 3,480 | 8,323 | 6,960 | ||||||||||
| Net income after general partner incentive distribution | 35,284 | 28,073 | 62,497 | 64,044 | ||||||||||
| General partner interest | 2 | % | 2 | % | 2 | % | 2 | % | ||||||
| General partner allocation of net income | ||||||||||||||
| after general partner incentive distribution | 705 | 561 | 1,249 | 1,280 | ||||||||||
| General partner incentive distribution | 4,413 | 3,480 | 8,323 | 6,960 | ||||||||||
| Net income applicable to general partner | $ | 5,118 | $ | 4,041 | $ | 9,572 | $ | 8,240 | ||||||
| 2. | NuStar Energy L.P. utilizes two financial measures, EBITDA from continuing operations and distributable cash flow from continuing operations, which are not defined in United States generally accepted accounting principles. Management uses these financial measures because they are widely accepted financial indicators used by investors to compare partnership performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the partnership’s assets and the cash that the business is generating. Neither EBITDA from continuing operations nor distributable cash flow from continuing operations are intended to represent cash flows for the period, nor are they presented as an alternative to income from continuing operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles. |
| The following is a reconciliation of income from continuing operations to EBITDA from continuing operations and distributable cash flow from continuing operations: |
| Three Months Ended | Six Months Ended | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
June 30, | June 30, | |||||||||||||
2007 | 2006 | 2007 | 2006 | |||||||||||
| Income from continuing operations | $ | 39,697 | $ | 31,792 | $ | 70,820 | $ | 71,381 | ||||||
| Plus interest expense, net | 19,452 | 16,604 | 38,306 | 32,300 | ||||||||||
| Plus income tax expense | 1,783 | 492 | 5,475 | 2,611 | ||||||||||
| Plus depreciation and amortization | 27,860 | 24,839 | 55,202 | 49,028 | ||||||||||
| EBITDA from continuing operations | 88,792 | 73,727 | 169,803 | 155,320 | ||||||||||
| Less equity earnings from joint ventures | (1,746 | ) | (1,844 | ) | (3,357 | ) | (3,050 | ) | ||||||
| Less interest expense, net | (19,452 | ) | (16,604 | ) | (38,306 | ) | (32,300 | ) | ||||||
| Less reliability capital expenditures | (7,335 | ) | (10,052 | ) | (11,961 | ) | (16,216 | ) | ||||||
| Less income tax expense | (1,783 | ) | (492 | ) | (5,475 | ) | (2,611 | ) | ||||||
| Plus distributions from joint ventures | 544 | 1,037 | 544 | 2,434 | ||||||||||
| Distributable cash flow from continuing operations | 59,020 | 45,772 | 111,248 | 103,577 | ||||||||||
| General partner's interest in distributable cash flow | ||||||||||||||
| from continuing operations | (5,410 | ) | (4,396 | ) | (10,274 | ) | (8,792 | ) | ||||||
| Limited partners' interest in distributable cash flow | ||||||||||||||
| from continuing operations | $ | 53,610 | $ | 41,376 | $ | 100,974 | $ | 94,785 | ||||||
| Weighted average number of limited | ||||||||||||||
| partnership units outstanding | 46,809,749 | 46,809,749 | 46,809,749 | 46,809,749 | ||||||||||
| Distributable cash flow from continuing | ||||||||||||||
| operations per limited partner unit | $ | 1.145 | $ | 0.884 | $ | 2.157 | $ | 2.025 | ||||||