NuStar Energy (NS) 8-K Unaudited Pro Forma Condensed Consolidated Financial Statements

Exhibit 99.1

NUSTAR ENERGY L.P.

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Introduction

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.

The following unaudited pro forma condensed consolidated financial statements give effect to the sale on July 29, 2019 of our equity interests in our wholly owned subsidiaries that own the St. Eustatius terminal operations, for approximately $250.0 million, subject to adjustment (the St. Eustatius Operations, and the sale thereof, the St. Eustatius Disposition), as well as the sale, on November 30, 2018, of our European terminals and operations, for approximately $270.0 million (the European Operations, and the sale thereof, the European Disposition). We received net proceeds of $234.0 million for the St. Eustatius Disposition, after certain adjustments and subject to further adjustments following closing. The St. Eustatius Operations consist of a 14.3 million barrel storage and terminalling facility on the island of St. Eustatius in the Caribbean Netherlands and related assets and bunkering operations. The European Operations include six storage terminals in the United Kingdom and one facility in Amsterdam, with total storage capacity of approximately 9.5 million barrels, and related assets.

In the second quarter of 2019, we determined that the St. Eustatius Operations and the European Operations met the requirements to be reported as discontinued operations. We first adjusted the unaudited pro forma condensed consolidated statements of income for the St. Eustatius Disposition, since this disposition meets the requirements of a significant disposition of a business pursuant to Article 11 of Regulation S-X. We further adjusted the unaudited pro forma condensed consolidated statements of income for the years ended December 31, 2018, 2017 and 2016 to reflect the European Disposition, even though it did not meet the requirements of a significant disposition of a business pursuant to Article 11 of Regulation S-X, because the European Operations will be reported as discontinued operations together with the St. Eustatius Operations. Accordingly, unaudited pro forma condensed consolidated statements of income are presented as if the St. Eustatius Disposition and the European Disposition occurred on January 1, 2016.

The unaudited pro forma condensed consolidated balance sheet as of March 31, 2019 is presented as if the St. Eustatius Disposition occurred on that date. The unaudited pro forma condensed consolidated statement of income for the three months ended March 31, 2019 and balance sheet as of March 31, 2019 were not adjusted for the European Disposition since the sale occurred prior to the beginning of the quarterly period.

The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the audited historical consolidated financial statements of NuStar Energy L.P. included in its Annual Report on Form 10-K for the year ended December 31, 2018. The pro forma adjustments, as described in the notes to the unaudited pro forma condensed consolidated financial statements, are based upon available information and certain assumptions that we believe to be reasonable. The unaudited pro forma condensed consolidated financial statements are not necessarily indicative of the financial position that would have been obtained or the financial results that would have occurred if the St. Eustatius Disposition and European Disposition had been completed on the dates indicated, or in the future. In addition, the unaudited pro forma condensed consolidated financial statements do not give effect to the cost savings or other financial benefits we expect to result from the St. Eustatius Disposition and the European Disposition.

1

NUSTAR ENERGY L.P. AND SUBSIDIARIES

UNADUITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

March 31, 2019

(Thousands of Dollars)

	NuStar Energy L.P. Historical			St. Eustatius Adjustments				Total NuStar Energy L.P. Pro Forma
Assets
Current assets:
Cash and cash equivalents	$	15,822		$	(1,581	)	(a)	$	248,241
				234,000			(b)
Current assets, excluding cash and cash equivalents	210,123			(56,112		)	(a)	154,011
Total current assets	225,945			176,307				402,252
Property, plant and equipment, net	4,144,265			(217,982		)	(a)	3,926,283
Intangible assets, net	720,200			—				720,200
Goodwill	1,005,853			—				1,005,853
Other long-term assets, net	220,636			(36,034		)	(a)	184,602
Total assets	$	6,316,899		$	(77,709	)		$	6,239,190
Liabilities, Mezzanine Equity and Partners’ Equity
Current liabilities	$	321,386		$	(59,204	)	(a)	$	262,182
Long-term debt	3,333,220			—				3,333,220
Deferred income tax liability	11,787			—				11,787
Other long-term liabilities	193,536			(24,774		)	(a)	168,762
Total liabilities	3,859,929			(83,978		)		3,775,951
Commitments and contingencies
Series D preferred limited partners	568,293			—				568,293
Partners’ equity:
Preferred limited partners	756,301			—				756,301
Common limited partners	1,192,080			6,269			(c)	1,198,349
Accumulated other comprehensive loss	(59,704		)	—				(59,704		)
Total partners’ equity	1,888,677			6,269				1,894,946
Total liabilities, mezzanine equity and partners’ equity	$	6,316,899		$	(77,709	)		$	6,239,190

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

2

NUSTAR ENERGY L.P. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2019

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

	NuStar Energy L.P. Historical			Less: St. Eustatius Operations Historical (d)			Total NuStar Energy L.P. Pro Forma
Revenues	$	486,469		$	138,643		$	347,826
Costs and expenses:
Cost of revenues	363,013			116,602			246,411
Asset impairment loss	297,317			297,317			—
Goodwill impairment loss	31,123			31,123			—
General and administrative expenses (excluding depreciation and amortization expense)	25,996			305			25,691
Other depreciation and amortization expense	2,119			—			2,119
Total costs and expenses	719,568			445,347			274,221
Operating (loss) income	(233,099		)	(306,704		)	73,605
Interest (expense) income, net	(44,268		)	23			(44,291		)
Other income (expense), net	787			(4		)	791
(Loss) income before income tax expense	(276,580		)	(306,685		)	30,105
Income tax expense	1,283			101			1,182
Net (loss) income	(277,863		)	(306,786		)	28,923
Basic net loss per common unit:	$	(2.91	)	$	(2.85	)	$	(0.06	)
Basic weighted-average common units outstanding	107,531,619						107,531,619

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

3

NUSTAR ENERGY L.P. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2018

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

	NuStar Energy L.P. Historical				Less: St. Eustatius Operations Historical (d)			NuStar Energy L.P. Pro Forma excluding St. Eustatius Operations Historical			Less: European Operations Historical (d)				Total NuStar Energy L.P. Pro Forma
Revenues	$	1,961,757			$	374,716		$	1,587,041		$	66,779			$	1,520,262
Costs and expenses:
Cost of revenues	1,483,119				352,435			1,130,684			54,821				1,075,863
General and administrative expenses (excluding depreciation and amortization expense)	106,200				1,221			104,979			4,912				100,067
Other depreciation and amortization expense	8,875				—			8,875			271				8,604
Total costs and expenses	1,598,194				353,656			1,244,538			60,004				1,184,534
Operating income	363,563				21,060			342,503			6,775				335,728
Interest (expense) income, net	(186,237		)		29			(186,266		)	(1,868		)		(184,398		)
Other income (expense), net	39,876			(e)	78,515		(e)	(38,639		)	(43,841		)	(e)	5,202
Income before income tax expense	217,202				99,604			117,598			(38,934		)		156,532
Income tax expense	11,408				—			11,408			1,251				10,157
Net income (loss)	205,794				99,604			106,190			(40,185		)		146,375
Basic and diluted net (loss) income per common unit:	$	(2.77	)	(f)	$	0.97		$	(3.74	)	$	(0.40	)		$	(3.34	)
Basic weighted-average common units outstanding	99,490,495							99,490,495							99,490,495
Diluted weighted-average common units outstanding	99,531,172							99,531,172							99,531,172

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

4

NUSTAR ENERGY L.P. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2017

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

	NuStar Energy L.P. Historical			Less: St. Eustatius Operations Historical (d)			NuStar Energy L.P. Pro Forma excluding St. Eustatius Operations Historical			Less: European Operations Historical (d)			Total NuStar Energy L.P. Pro Forma
Revenues	$	1,814,019		$	298,041		$	1,515,978		$	71,206		$	1,444,772
Costs and expenses:
Cost of revenues	1,356,803			262,921			1,093,882			55,611			1,038,271
General and administrative expenses (excluding depreciation and amortization expense)	112,240			1,264			110,976			3,420			107,556
Other depreciation and amortization expense	8,698			—			8,698			263			8,435
Total costs and expenses	1,477,741			264,185			1,213,556			59,294			1,154,262
Operating income	336,278			33,856			302,422			11,912			290,510
Interest (expense) income, net	(173,083		)	7			(173,090		)	(1,316		)	(171,774		)
Other expense, net	(5,294		)	(5,120		)	(174		)	(106		)	(68		)
Income before income tax expense	157,901			28,743			129,158			10,490			118,668
Income tax expense	9,937			—			9,937			2,164			7,773
Net income	$	147,964		$	28,743		$	119,221		$	8,326		$	110,895
Basic net income per common unit:	$	0.64		$	0.32		$	0.32		$	0.09		$	0.23
Basic weighted-average common units outstanding	88,825,964						88,825,964						88,825,964

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

5

NUSTAR ENERGY L.P. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME

FOR THE YEAR ENDED DECEMBER 31, 2016

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

	NuStar Energy L.P. Historical			Less: St. Eustatius Operations Historical (d)			NuStar Energy L.P. Pro Forma excluding St. Eustatius Operations Historical			Less: European Operations Historical (d)			Total NuStar Energy L.P. Pro Forma
Revenues	$	1,756,682		$	289,114		$	1,467,568		$	71,722		$	1,395,846
Costs and expenses:
Cost of revenues	1,290,237			258,043			1,032,194			57,395			974,799
General and administrative expenses (excluding depreciation and amortization expense)	98,817			1,230			97,587			4,605			92,982
Other depreciation and amortization expense	8,519			—			8,519			151			8,368
Total costs and expenses	1,397,573			259,273			1,138,300			62,151			1,076,149
Operating income	359,109			29,841			329,268			9,571			319,697
Interest (expense) income, net	(138,350		)	72			(138,422		)	(1,612		)	(136,810		)
Other (expense) income, net	(58,783		)	24			(58,807		)	(20		)	(58,787		)
Income before income tax expense	161,976			29,937			132,039			7,939			124,100
Income tax expense (benefit)	11,973			(1,850		)	13,823			936			12,887
Net income	$	150,003		$	31,787		$	118,216		$	7,003		$	111,213
Basic and diluted net income per common unit:	$	1.27		$	0.40		$	0.87		$	0.09		$	0.78
Basic weighted-average common units outstanding	78,080,484						78,080,484						78,080,484
Diluted weighted-average common units outstanding	78,113,002						78,113,002						78,113,002

See accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.

6

NUSTAR ENERGY L.P. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(a) To reflect the elimination of assets and liabilities included in the St. Eustatius Disposition.

(b) To reflect the receipt of $234.0 million of cash proceeds for the St. Eustatius Disposition, which is equal to the total purchase price of $250.0 million less the aggregate amount of certain adjustments.

(c) To reflect the difference between the carrying value of the assets and liabilities included in the St. Eustatius Disposition as of March 31, 2019 and the proceeds received.

(d) To reflect the elimination of the historical results of the St. Eustatius Operations and European Operations, which do not include anticipated savings from costs that we expect to be reduced or eliminated as a result of the sale of one or both of these operations.

(e) For the year ended December 31, 2018, "Other income (expense), net" included: (i) a $78.8 million gain recorded in the first quarter of 2018 to reflect insurance proceeds received related to hurricane damage at the St. Eustatius terminal facility and (ii) a loss of $43.4 million from the European Disposition in the fourth quarter of 2018.

(f) Basic and diluted net income per common unit includes a $3.79 loss attributable to the merger on July 20, 2018 of NuStar GP Holdings, LLC, which indirectly owns our general partner, with a subsidiary of NuStar Energy L.P. We accounted for the merger as an equity transaction, similar to a redemption or induced conversion of preferred stock, which resulted in the loss of $3.79 per common unit.

7