![]() 9 th Annual Wells Fargo Pipeline and MLP Symposium Curt Anastasio, CEO and President December 7, 2010 Exhibit 99.1 |
![]() Statements contained in this presentation that state management’s expectations or predictions of the future are forward-looking statements as defined by federal securities law. The words “believe,” “expect,” “should,” “targeting,” “estimates,” and other similar expressions identify forward- looking statements. It is important to note that actual results could differ materially from those projected in such forward-looking statements. We undertake no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations. For more information concerning factors that could cause actual results to differ from those expressed or forecasted, see NuStar Energy L.P.’s and NuStar GP Holdings, LLC’s respective annual reports on Form 10-K and quarterly reports on Form 10-Q, filed with the Securities and Exchange Commission and available on NuStar’s websites at www.nustarenergy.com and www.nustargpholdings.com. Forward Looking Statements 2 |
![]() NuStar Overview 3 |
![]() NuStar Energy L.P. (NYSE: NS) is a leading publicly traded partnership with a market capitalization of around $4.4 billion and an enterprise value of approximately $6.3 billion NuStar GP Holdings, LLC (NYSE: NSH) holds the 2% general partner interest, incentive distribution rights and 15.6% of the common units in NuStar Energy L.P. with a market capitalization of around $1.5 billion Two Publicly Traded Companies NS NSH IPO Date: 4/16/2001 7/19/2006 Unit Price (11/29/10): $67.43 $35.57 Annual Distribution/Unit: $4.30 $1.92 Yield (11/29/10): 6.38% 5.40% Debt Balance (9/30/10) $1,991 million $19.5 million Market Capitalization: $4,357 million $1,513 million Enterprise Value $6,261 million $1,526 million Total Assets (9/30/10) $5,191 million $618 million Debt/Cap. (9/30/10) 42.5% n/a Credit Ratings – Moody’s Baa3/Stable n/a S&P and Fitch BBB-/Stable n/a 83.1% Membership Interest 82.4% L.P. Interest Public Unitholders 35.4 Million NSH Units Public Unitholders 54.3 Million NS Units 16.9% Membership Interest 2.0% G.P. Interest 15.6% L.P. Interest Incentive Distribution Rights William E. Greehey 7.2 Million NSH Units NYSE: NSH NYSE: NS 4 |
![]() Large and Diverse Geographic Footprint with Assets in Key Locations Asset Stats: Operations in eight different countries including the U.S., Mexico, Netherlands, Netherlands Antilles (i.e. Caribbean), England, Ireland, Scotland and Canada 8,417 miles of crude oil and refined product pipelines Own 88 terminal and storage facilities Over 93 million barrels of storage capacity 2 asphalt refineries on the U.S. East Coast capable of processing 104,000 bpd of crude oil 5 |
![]() 45% 35% 20% Percentage of 2010 Projected Segment Operating Income Approximately 80% of NuStar Energy’s 2010 segment operating income is projected to come from fee-based transportation and storage segments Remainder of 2010 segment operating income is projected to relate to margin- based asphalt and fuels marketing segment Storage: 45% Transportation: 35% Refined Product Terminals Crude Oil Storage Refined Product Pipelines* Crude Oil Pipelines Asphalt & Fuels Marketing: 20% Asphalt Fuels Marketing Product Supply, Bunkering and Fuel Oil Marketing Diversified Operations from Three Business Segments * Includes primarily distillates, gasoline, propane, jet fuel, ammonia and other light products. Does not include natural gas. 6 |
![]() Increasing Distributable Cash Flows 7 NS Distributable Cash Flows ($ in Millions) 2001 2002 2003 2004 2005 2006 2007 2008 2009 $56 $68 $86 $102 $154 $214 $221 $319 $346 |
![]() Transportation Segment Overview 8 |
![]() 9 2010 Transportation Segment Results Should be Improved over 2009.. 2011 EBITDA Expected to be slightly less than 2010 Transportation Segment EBITDA (in Millions) 2010 Summary EBITDA $5-$10 million higher than 2009. Throughputs higher than 2009. Improving economy and customer turnaround delayed into 2011. July 1, 2010 tariff decrease 1.3%. Tariffs were 7.6% higher than 2009 for the first half of 2010. 2011 Outlook $1-$5 million of additional EBITDA from internal growth projects. Recently announced Eagle Ford shale crude project to be completed in mid-2011. Revised FERC Escalator in place July 1, 2011. Tariffs projected to be up 4.5%. (Assumed 1.3% FERC Escalator) Throughputs projected to be down 1.6%. Segment EBITDA down slightly in 2011. |
![]() Transportation Segment Assets in close proximity to key Shale Formations Transportation Segment Assets in close proximity to key Shale Formations Shale Development Strategy Our strategy is to optimize and grow the existing asset base, and maximize the value of the assets located in or near shale developments 10 There are four key shale developments located in NuStar’s Mid-Continent and Gulf Coast regions, including the Bakken, Niobrara, Barnett, and Eagle Ford developments |
![]() 11 Recently announced agreement with Koch Pipeline first NuStar project in Eagle Ford Shale Companies agreed to a pipeline connection and capacity lease agreement Allows NuStar to reactivate a 60-mile pipeline that has been idle since November 2005 Project connects our existing Pettus, Texas to Corpus Christi pipeline segment to Koch’s existing pipeline Initial capacity agreement for 30 thousand barrels per day, could grow to 50 thousand barrels per day Project cost $5 to $10 million Expected in-service date mid-2011 |
![]() Storage Segment Overview 12 |
![]() 2010 Storage Segment Results Should be Improved over 2009 ..2011 EBITDA Expected to be Higher than 2010 due to Benefits from Internal Growth Program 13 Storage Segment EBITDA (in Millions) 2010 Summary EBITDA should be $14-$18 million higher than 2009. Storage tank renewals and escalations increased revenues significantly during the year. Two acquisitions should be closed during the year. (Mobile, AL. and Mersin, Turkey) St. Eustatius terminal reconfiguration project and Texas City Strategic Ike project should be completed in Dec. 2010. 2011 Outlook Demand for storage should remain strong Internal growth projects should increase EBITDA by $30 to $40 million St. James storage expansion project to be completed in August 2011 through January 2012. Full year of EBITDA from two acquisitions, St. Eustatius and Texas City 2010 projects. 2006 2007 2008 2009 $162 $177 $208 $242 |
![]() Plan to expand our St. James, Louisiana terminal in two phases Phase 1 – Third-Party Crude Oil Storage Construct 3.1 million barrels of crude oil storage Projected CAPEX of $110 to $130 million, with projected average annual EBITDA of $15 to $25 million Expected in-service August 2011 through January 2012 Phase 2 – Third-Party Crude Oil Storage Project in early planning stages Should be similar in size to Phase 1 project Could grow in size based on customer demand Expected in-service in 2013 14 |
![]() Plan to convert existing tanks and construct new tanks for distillate service at our St. Eustatius terminal Conversion Project Convert 600,000 barrels of storage from fuel oil to distillate service to capture higher storage fees Expansion Project Construct 900,000 barrels of new storage for distillate service Interested customers include several national oil companies Combined conversion and expansion projected CAPEX of $40 to $50 million, with projected average annual EBITDA of $5 to $10 million Expected in-service by February 2012 (Conversion Project) and September 2012 (Expansion Project) 15 |
![]() Joint Venture (JV) Overview NuStar entered into a $50-$60 million JV agreement with S-Oil and Aves Oil, two Turkish companies The JV should own 100% of two terminals in Mersin and land in Giresun and Ceyhan NuStar should own 75% of the JV and operate the terminals Both terminals connect via pipeline to an offshore platform (SAVKA) 5 km off the Turkish coastline The JV should own 67% of SAVKA Upon Projected December Closing, Acquired Assets in Turkey Provide Platform for Internal Growth Growth Opportunities Expansion project under development at Mersin Expands existing storage by about 70 percent Potential to tie into NATO Pipeline Provides access to markets for military fuels New terminal at Giresun 37-acre site with access to Black Sea ports 200,000 barrel fuel oil terminal under development Second phase build-out to 1.9 million barrels under evaluation New terminal at Ceyhan Ceyhan is the destination for pipelines delivering crude from northern Iraq and the Caspian area to the Mediterranean 173 acre property is well-suited for building up to 6.3 million barrels of storage and marine jetty 16 |
![]() Asphalt & Fuels Marketing Segment Overview 17 |
![]() $3.78 $8.75 $6.37 Improved Earnings in Bunkering, Heavy Fuels, Product and Crude Trading Operations Should cause Segment Results to be higher in 2010… Segment Should See Slightly Improved Results in 2011 Asphalt & Fuels Marketing U.S. East Coast Product Margin ($ per barrel) 18 2009 Actual 2008 Actual 2000-2007 Average 2010 Summary Asphalt results expected to be comparable to 2009. Due to weak demand in the residential and commercial real estate markets, private sector industry asphalt demand was down substantially in 2010 Higher refinery margins increased refinery utilization rates higher than expected, causing VTB and asphalt supply to increase during the year. During the 3 quarter, pipeline disruptions of Canadian crude reduced heavy crude runs in the Northeast reducing asphalt supply. Fuels Marketing portion of segment will be $25 to $35 million higher than 2009. Increased Bunker Marketing earnings at St. Eustatius as well as higher sales volumes and increased margins at our Texas City facility contributed to this increase in earnings. Increased Fuel Oil Trading business at Texas City, also expected to contribute to year over year increase. 2011 Outlook Tighter Asphalt supply in the last half of 2011, due to Conoco Wood River coker coming on-line, should cause asphalt operations EBITDA to be improved. Other operations in this segment should realize comparable results to 2010. 2006 2007 2008 2009 $27 $22 $37 $10 $90 $70 Asphalt Fuels Marketing $127 $80 EBITDA (in Millions) rd |
![]() 19 Working to Diversify our Crude Slate from Dependence on Venezuelan crudes Current PDV contract ends in the first quarter of 2015 Recently entered into a 10 thousand barrel per day contract to purchase offshore Brazilian Peregrino crude oil from Statoil. 3-year contract becomes effective late 2011 or early 2012. Mid-Continent and Gulf Coast Asphalt Marketing dependent on purchases of finished asphalt and asphalt component blending Strategy is to negotiate asphalt off-take agreement with regional suppliers to reduce supply cost and assure availability Supply Initiatives for Asphalt Operations: Address Crude Availability/Price and Asphalt Supply Cost |
![]() Financial Overview 20 |
![]() 21 9/30/10 Revolver Availability NuStar Revolver Availability has increased due to Equity Issuances and Senior Note Issuance – Credit Ratings and Metrics have Improved as a Result Total Bank Credit $1,210 Less: Borrowings (138) Letters of Credit Go Zone Financing (157) Other (10) Revolver Availability $905 Standard & Poor’s: BBB- (Stable Outlook) Moody’s: Baa3 (Stable Outlook) Fitch: BBB- (Stable Outlook) Debt/EBITDA (9/30/10): 4.6x Debt/Capitalization (9/30/10): 42.5% Credit Ratings/Metrics (Dollars in Millions) 5.0x Revolver Debt/EBITDA covenant limits true Revolver availability to ~$200 million at 9/30/10 All three Rating Agencies upgraded NuStar to Stable Outlook from Negative Outlook during 2010 |
![]() $1.2 billion Credit Facility $138 NuStar Logistics Notes (4.80%) 452 NuStar Logistics Notes (7.65%) 349 NuStar Logistics Notes (6.875%) 104 NuStar Logistics Notes (6.05%) 239 NuStar Pipeline Notes(5.875%) 256 NuStar Pipeline Notes (7.75%) 261 Other Debt 192 Total Debt $1,991 (Dollars in Millions) No Significant Debt Maturities Until 2012 2010 $0.8 2011 $0.8 2012 $536* 2013 $496 2014 $0 Thereafter $957 * Primarily includes maturity of $138 million revolver balance and $366 million of senior notes 9/30/10 Debt Structure 9/30/10 Debt Structure Maturities 22 No significant debt maturities until 2012 at which time the revolver and some senior notes become due New Credit Revolver terms and pricing seem to be improving as economy improves Current plan is to hold off closing on a new Revolver until 2012 Debt structure approximately 50% fixed rate – 50% variable rate |
![]() $11 $20 $13 $8 $128 $107 $153 $218 $3 $14 $20 $19 $36 $80 2008 Actual 2009 Actual 2010 Forecast 2011 Forecast Corporate Asphalt & Fuels Marketing Storage Transportation Majority of 2011 Internal Growth Capital Will to be spent in the Storage Segment 23 ( Dollars in Millions) Annual Internal Growth Spending By Business Segment $146 $222 $325 $164 $23 $4 |
![]() 24 All Three Segments see EBITDA growth in 2010…. Total NuStar EBITDA should be higher in 2011 EBITDA Guidance Summary Transportation up $5 to $10 million in 2010. Down slightly in 2011. Storage up $14 to $18 million in 2010. Internal growth projects should add $30 to $40 million to 2011 EBITDA. Asphalt & Fuels Marketing Asphalt Refining & Marketing operations for 2010 comparable to 2009. 2011 results should be slightly higher than 2010. Fuels Marketing 2010 results should be $25 to $35 million higher than 2009. 2011 results comparable to 2010. 2010 NuStar EBITDA projected to be in the $480 to $500 million range. 2011 EBITDA higher, mostly driven by storage internal growth projects. |
![]() 25 Large internal growth program continues … NS distribution increase should be higher in 2011 Capital Spending Summary Reliability capital spending should be $50 to $55 million in 2010 and 2011 Strategic capital spending should be $215 to $225 million in 2010 and $320 to $330 million in 2011 NS Distribution Growth for 2011 should be higher than 2010 No plans to issue equity or additional debt in the remainder of 2010 and 2011 Plans could change if NuStar closes on a large acquisition |
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![]() 27 Appendix |
![]() 28 Reconciliation of Non-GAAP Financial Information: EBITDA and Distributable Cash Flow The following is a reconciliation of net income to EBITDA and distributable cash flow: 2001 2002 2003 2004 2005 2006 2007 2008 2009 Net income 45,873 $ 55,143 $ 69,593 $ 78,418 $ 107,675 $ 149,906 $ 150,298 $ 254,018 $ 224,875 $ Plus interest expense, net 3,811 4,880 15,860 20,950 41,388 66,266 76,516 90,818 79,384 Plus income tax expense - 395 - - 4,713 5,861 11,448 11,006 10,531 Plus depreciation and amortization expense 13,390 16,440 26,267 33,149 64,895 100,266 114,293 135,709 145,743 EBITDA 63,074 76,858 111,720 132,517 218,671 322,299 352,555 491,551 460,533 Less equity earnings from joint ventures 3,179 3,188 2,416 1,344 2,319 5,882 6,833 8,030 9,615 Less interest expense, net 3,811 4,880 15,860 20,950 41,388 66,266 76,516 90,818 79,384 Less reliability capital expenditures 2,786 3,943 10,353 9,701 23,707 35,803 40,337 55,669 45,163 Less income tax expense - - - - 4,713 5,861 11,448 11,006 10,531 Plus mark-to-market impact on hedge transactions - - - - - - 3,131 (9,784) 19,970 Plus charges reimbursed by general partner - - - - - 575 - - - Plus distributions from joint ventures 2,874 3,590 2,803 1,373 4,657 5,141 544 2,835 9,700 Plus other non-cash items - - - - 2,672 - - - - Distributable cash flow 56,172 $ 68,437 $ 85,894 $ 101,895 $ 153,873 $ 214,203 $ 221,096 $ 319,079 $ 345,510 $ Note: 2005 and 2006 distributable cash flow and EBITDA are from continuing operations. Year Ended December 31, NuStar Energy L.P. utilizes two financial measures, EBITDA and distributable cash flow, which are not defined in United States generally accepted accounting principles (GAAP). Management uses these financial measures because they are a widely accepted financial indicators used by investors to compare partnership performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the partnership's assets and the cash that the business is generating. Neither EBITDA nor distributable cash flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income. They should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with GAAP. (Unaudited, Dollars in Thousands) |
![]() 29 Reconciliation of Non-GAAP Financial Information: EBITDA (Unaudited, Dollars in Thousands) Projected net income range Plus projected interest expense range Plus projected income tax expense range Plus projected depreciation and amortization expense range Projected EBITDA range December 31, 2010 $ 236,000 - 253,000 77,000 - 78,000 14,000 - 15,000 153,000 - 154,000 $ 480,000 - 500,000 Year Ended NuStar Energy L.P. utilizes EBITDA, which is not defined in United States generally accepted accounting principles. Management uses this financial measure because it is a widely accepted financial indicator used by investors to compare partnership performance. In addition, management believes that this measure provides investors an enhanced perspective of the operating performance of the partnership's assets and the cash that the business is generating. EBITDA is not intended to represent cash flows for the period or as an alternative to net income. EBITDA should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with United States generally accepted accounting principles. |
![]() Reconciliation of Non-GAAP Financial Information: Transportation Segment 30 (Unaudited, Dollars in Thousands) The following is a reconciliation of operating income to EBITDA for the Transportation Segment: 2006 2007 2008 2009 Operating income 122,714 $ 126,508 $ 135,086 $ 139,869 $ Plus depreciation and amortization expense 47,145 49,946 50,749 50,528 EBITDA 169,859 $ 176,454 $ 185,835 $ 190,397 $ Projected incremental operating income range $ 5,000 - 9,000 Plus projected incremental depreciation and amortization expense range 0 - 1,000 Projected incremental adjusted EBITDA range $ 5,000 - 10,000 Projected incremental operating income range $ 1,000 - 4,000 Plus projected incremental depreciation and amortization expense range 0 - 1,000 Projected incremental adjusted EBITDA range $ 1,000 - 5,000 The following is a reconciliation of projected incremental operating income to projected incremental adjusted EBITDA related to our internal growth program for the year ended December 31, 2011 compared to the year ended December 31, 2010: Transportation Segment Year Ended December 31, The following is a reconciliation of projected incremental operating income to projected incremental adjusted EBITDA for the year ended December 31, 2010: Transportation Segment EBITDA in the following reconciliations relate to our reportable segments or a portion of a reportable segment. We do not allocate general and administrative expenses to our reportable segments because those expenses relate primarily to the overall management at the entity level. Therefore, EBITDA reflected in the following reconciliations excludes any allocation of general and administrative expenses consistent with our policy for determining segmental operating income, the most directly comparable GAAP measure. EBITDA should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with GAAP. |
![]() Reconciliation of Non-GAAP Financial Information: Storage Segment 31 The following is a reconciliation of operating income to EBITDA for the Storage Segment: 2006 2007 2008 2009 Operating income 108,486 $ 114,635 $ 141,079 $ 171,245 $ Plus depreciation and amortization expense 53,121 62,317 66,706 70,888 EBITDA 161,607 $ 176,952 $ 207,785 $ 242,133 $ Projected incremental operating income range $ 8,000 - 11,000 Plus projected incremental depreciation and amortization expense range 6,000 - 7,000 Projected incremental adjusted EBITDA range $ 14,000 - 18,000 Projected incremental operating income range $ 26,000 - 33,000 Plus projected incremental depreciation and amortization expense range 4,000 - 7,000 Projected incremental adjusted EBITDA range $ 30,000 - 40,000 The following is a reconciliation of projected incremental operating income to projected incremental adjusted EBITDA related to our internal growth program for the year ended December 31, 2011 compared to the year ended December 31, 2010: Storage Segment Year Ended December 31, The following is a reconciliation of projected incremental operating income to projected incremental adjusted EBITDA for the year ended December 31, 2010: Storage Segment (Unaudited, Dollars in Thousands) EBITDA in the following reconciliations relate to our reportable segments or a portion of a reportable segment. We do not allocate general and administrative expenses to our reportable segments because those expenses relate primarily to the overall management at the entity level. Therefore, EBITDA reflected in the following reconciliations excludes any allocation of general and administrative expenses consistent with our policy for determining segmental operating income, the most directly comparable GAAP measure. EBITDA should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with GAAP. |
![]() Reconciliation of Non-GAAP Financial Information: Internal Growth Program St. James, LA Terminal Expansion Phase 1 St. Eustatius Distillate Project Projected annual operating income range $ 11,000 - 20,000 $ 4,000 - 8,000 Plus projected annual depreciation and amortization expense range 4,000 - 5,000 1,000 - 2,000 Projected annual adjusted EBITDA range $ 15,000 - 25,000 $ 5,000 - 10,000 The following is a reconciliation of projected annual operating income to projected annual adjusted EBITDA for certain projects in our storage segment related to our internal growth program: 32 EBITDA in the following reconciliations relate to our reportable segments or a portion of a reportable segment. We do not allocate general and administrative expenses to our reportable segments because those expenses relate primarily to the overall management at the entity level. Therefore, EBITDA reflected in the following reconciliations excludes any allocation of general and administrative expenses consistent with our policy for determining segmental operating income, the most directly comparable GAAP measure. EBITDA should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with GAAP. (Unaudited, Dollars in Thousands) |
![]() Reconciliation of Non-GAAP Financial Information: Asphalt & Fuels Marketing Segment 33 The following is a reconciliation of operating income to EBITDA for the asphalt and fuels marketing segment: 2006 2007 2008 2009 Operating income 26,915 $ 21,111 $ 112,506 $ 60,629 $ Plus depreciation and amortization expense - 423 14,734 19,463 EBITDA 26,915 $ 21,534 $ 127,240 $ 80,092 $ Fuels Marketing Operations Asphalt Operations Asphalt and Fuels Marketing Segment Projected incremental operating income range $ 25,000 - 35,000 - $ $ 25,000 - 35,000 Plus projected incremental depreciation and amortization expense range - - - Projected incremental adjusted EBITDA range $ 25,000 - 35,000 - $ $ 25,000 - 35,000 The following is a reconciliation of projected incremental operating income to projected incremental adjusted EBITDA for the asphalt and fuels marketing segment: Year Ended December 31, EBITDA in the following reconciliations relate to our reportable segments or a portion of a reportable segment. We do not allocate general and administrative expenses to our reportable segments because those expenses relate primarily to the overall management at the entity level. Therefore, EBITDA reflected in the following reconciliations excludes any allocation of general and administrative expenses consistent with our policy for determining segmental operating income, the most directly comparable GAAP measure. EBITDA should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with GAAP. (Unaudited, Dollars in Thousands) |