2011 Credit Suisse Energy Summit Steve Blank, Senior Vice President, CFO and Treasurer February 11, 2011 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 $6.4 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 $1.6 billion Two Publicly Traded Companies NS NSH IPO Date: 4/16/2001 7/19/2006 Unit Price (02/04/11): $68.26 $36.42 Annual Distribution/Unit: $4.30 $1.92 Yield (02/04/11): 6.30% 5.27% Market Capitalization: $4,410 million $1,550 million Enterprise Value $6,366 million $1,561 million Credit Ratings – Moody’s Baa3/Stable n/a S&P and Fitch BBB-/Stable n/a 83.1% Membership Interest 82.4% L.P. Interest Public Unitholders 35.4 Million NSH Units Public Unitholders 54.3 Million NS Units 16.9% Membership Interest 2.0% G.P. Interest 15.6% L.P. Interest Incentive Distribution Rights William E. Greehey 7.2 Million NSH Units NYSE: NSH NYSE: NS 4 |
Large and Diverse Geographic Footprint with Assets in Key Locations Asset Stats: Operations in seven different countries including the U.S., Mexico, Netherlands, England, Ireland, Scotland and Canada 8,417 miles of crude oil and refined product pipelines Own 88 terminal and storage facilities Over 93 million barrels of storage capacity 2 asphalt refineries on the U.S. East Coast capable of processing 104,000 bpd of crude oil 5 |
43% 35% 22% Percentage of 2010 Segment Operating Income Approximately 78% of NuStar Energy’s 2010 segment operating income came from fee-based transportation and storage segments Remainder of 2010 segment operating income was related to margin-based asphalt and fuels marketing segment Storage: 43% Transportation: 35% Refined Product Terminals Crude Oil Storage Refined Product Pipelines* Crude Oil Pipelines Asphalt & Fuels Marketing: 22% Asphalt Fuels Marketing Product Supply, Bunkering and Fuel Oil Marketing Diversified Operations from Three Business Segments * Includes primarily distillates, gasoline, propane, jet fuel, ammonia and other light products. Does not include natural gas. 6 |
Historical Distributable Cash Flows 7 NS Distributable Cash Flows ($ in Millions) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 $56 $68 $86 $102 $154 $214 $221 $319 $346 $320 • 2011 distributable cash flows projected to be higher than 2009 levels |
NuStar Energy L.P.’s Distribution has been Covered by the Non-Asphalt Operations Distributable Cash Flows Since Asphalt Acquisition in March 2008 Jan 1, 2008 – December 31, 2010 Non-Asphalt Operations Distributable Cash Flows $896.3* Total Distribution 835.7 Excess Distributable Cash Flows $60.6 % of Distribution Covered by Non-Asphalt Operations Distributable Cash Flows 107% Asphalt Operations Distributable Cash Flows $88.5 * Includes transportation, storage and fuels marketing operations 8 (Dollars in Millions) |
Transportation Segment Overview 9 |
2006 2007 2008 2009 2010 $170 $176 $186 $190 $199 10 2010 Transportation Segment Results Improved over 2009.. 2011 EBITDA Expected to be lower than 2010 Transportation Segment EBITDA (in Millions) 2010 Summary Record EBITDA for transportation segment Throughputs ~1% higher than 2009. Improving economy and customer turnaround delayed into 2011. Higher tariff revenue due to increased tariff rates and increased throughput volumes on higher tariff long haul pipelines. 2011 Outlook $1-$5 million of additional EBITDA from internal growth projects. Eagle Ford shale crude project with Koch Pipeline Company should be completed in mid-2011. Revised FERC Indexation adjustment of 2.65% takes effect July 1, 2011. Tariffs projected to increase ~7% on July 1, 2011. Throughputs projected to be down ~4%. Heavy customer turnaround schedule and changing market conditions could negatively impact throughputs. Segment EBITDA expected to be $5-$10 million lower 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 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 Our strategy is to optimize and grow the existing asset base, and maximize the value of the assets located in or near shale developments 11 |
Storage Segment Overview 12 |
2010 Storage Segment Results Improved over 2009 ..2011 EBITDA Expected to be Higher than 2010 13 Storage Segment EBITDA (in Millions) 2010 Summary Record EBITDA for Storage Segment Storage tank renewals and escalations increased revenues during the year. Acquired three storage terminal facilities in Mobile, AL in May, 2010. St. Eustatius terminal reconfiguration project completed in 4 th quarter. 2011 Outlook Demand for storage should remain strong Expect to close on Joint Venture agreement related to two Turkey storage terminal facilities in 1 st quarter 2011. Benefits from St. James Phase 1 storage expansion project should begin in 3 rd quarter 2011. Full year of EBITDA from Mobile, AL acquisition and St. Eustatius terminal project. Segment EBITDA should be $30 to $40 million higher. 2006 2007 2008 2009 2010 $162 $177 $208 $242 $256 |
Plan to expand our St. James, Louisiana terminal in two phases Phase 1 – Third-Party Crude Oil Storage Construct 3.2 million barrels of crude oil storage Projected CAPEX of $125 to $145 million, with projected average annual EBITDA of $15 to $25 million Expected in-service 3 rd quarter 2011 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 last half of 2012 14 |
Plan to construct new tanks for distillate service at our St. Eustatius terminal Construct one million barrels of new storage for distillate service Interested customers include several large oil companies Projected CAPEX of $40 to $50 million, with projected average annual EBITDA of $5 to $10 million Expected in-service 3 rd quarter 2012 15 |
Joint Venture (JV) Overview NuStar entered into a JV agreement with S-Oil and Aves Oil, two Turkish companies. Cost of buying stock in JV entity ~$54 million. The JV should own 100% of two terminals in Mersin and land in Giresun and Ceyhan. Estimated terminal capacity 1.3 million barrels. 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 Upon Projected 1 st Quarter 2011 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 |
$27 $22 $37 $10 $37 $90 $70 $74 Asphalt Fuels Marketing $3.78 $8.75 $6.37 $7.73 Improved Earnings in Bunkering, Heavy Fuels and Asphalt Operations caused Segment Results to be higher in 2010… Segment Should See Slightly Improved Results in 2011 Asphalt & Fuels Marketing U.S. East Coast Product Margin ($ per barrel) 18 2009 Actual 2008 Actual 2000-2007 Average 2010 Summary Asphalt results slightly higher than 2009. Total U.S. asphalt demand up ~1% through November. During the 3 quarter, pipeline disruptions of Canadian crude supply reduced heavy crude runs in the Northeast reducing asphalt supply. NuStar higher margin rack asphalt sales volumes were ~ 6% higher than 2009. Fuels Marketing portion of segment $27 million higher than 2009. Improved bunker marketing earnings at St. Eustatius and our Texas City facility contributed to increased earnings. Increased Fuel Oil Trading business at Texas City, also contributed to year-over-year increase. • Increase primarily attributable to internal growth project coming online at Texas City in the 4 quarter 2011 Outlook Continued increase in asphalt demand and tighter Asphalt supply in late 2011, due to Conoco Wood River coker coming on-line, should cause asphalt operations EBITDA to be slightly improved. EBITDA in Fuels Marketing should be slightly higher than 2010. • Should benefit from full-year of EBITDA from Fuel Oil trading at Texas City. EBITDA (MM$) 2010 Actual 2006 2007 2008 2009 2010 $80 $111 $127 th th |
Financial Overview 19 |
20 12/31/10 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 $1,212 Less: Borrowings (188) Letters of Credit Go Zone Financing (294) Other (5) Revolver Availability $725 Standard & Poor’s: BBB- (Stable Outlook) Moody’s: Baa3 (Stable Outlook) Fitch: BBB- (Stable Outlook) Debt/EBITDA (12/31/10): 4.6x Debt/Capitalization (12/31/10): 44.2% Credit Ratings/Metrics (Dollars in Millions) 5.0x Revolver Debt/EBITDA covenant limits true Revolver availability to ~$200 million at 12/31/10 All three Rating Agencies upgraded NuStar to Stable Outlook from Negative Outlook during 2010 |
$1.2 billion Credit Facility $188 GO Zone Bonds 290 NuStar Logistics Notes (4.80%) 420 NuStar Logistics Notes (7.65%) 349 NuStar Logistics Notes (6.875%) 103 NuStar Logistics Notes (6.05%) 237 NuStar Pipeline Notes(5.875%) 255 NuStar Pipeline Notes (7.75%) 259 Other Debt 36 Total Debt $2,137 (Dollars in Millions) No Significant Debt Maturities Until 2012 2011 $0.8 2012 $583* 2013 $493 2014 $0 2015 $0 Thereafter $1,060 * Primarily includes maturity of $188 million revolver balance and $362 million of senior notes 12/31/10 Debt Structure 12/31/10 Debt Structure Maturities 21 No significant debt maturities until 2012 at which time the revolver and some senior notes become due Forward interest rate swaps in place for $500 million of $830 million 2012 and 2013 senior note maturities New Credit Revolver terms & 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 No plans to issue additional debt or equity in 2011 |
Majority of 2011 Internal Growth Capital Will to be spent in the Storage Segment 22 ( Dollars in Millions) Annual Internal Growth Spending By Business Segment $11 $20 $13 $21 $128 $107 $159 $224 $3 $14 $20 $11 $4 $23 $27 $80 2008 Actual 2009 Actual 2010 Actual 2011 Forecast Corporate Asphalt & Fuels Marketing Storage Transportation $164 $146 $219 $336 |
High quality, large and diverse asset footprint supporting energy infrastructure both in the U.S. and internationally Contracted fee-based storage and transportation assets provide stable cash flows, delivering 78% of 2010 operating income Fourth largest independent liquids terminal operator in the world Diverse and high quality customer base composed of large integrated oil companies, national oil companies and refiners Strong balance sheet, credit metrics and commitment to maintain investment grade credit ratings Lower cost of capital than majority of peers Experienced and proven management team with substantial equity ownership and industry experience Recognized nationally for safety and environmental record as well as one of the best places to work Investment Highlights 23 |
25 Appendix |
26 Reconciliation of Non-GAAP Financial Information: EBITDA and Distributable Cash Flow (Unaudited, Dollars in Thousands) The following is a reconciliation of net income to EBITDA and distributable cash flow: 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Net income 45,873 $ 55,143 $ 69,593 $ 78,418 $ 107,675 $ 149,906 $ 150,298 $ 254,018 $ 224,875 $ 238,970 $ Plus interest expense, net 3,811 4,880 15,860 20,950 41,388 66,266 76,516 90,818 79,384 78,280 Plus income tax expense - 395 - - 4,713 5,861 11,448 11,006 10,531 11,741 Plus depreciation and amortization expense 13,390 16,440 26,267 33,149 64,895 100,266 114,293 135,709 145,743 153,802 EBITDA 63,074 76,858 111,720 132,517 218,671 322,299 352,555 491,551 460,533 482,793 Less equity earnings from joint ventures 3,179 3,188 2,416 1,344 2,319 5,882 6,833 8,030 9,615 10,500 Less interest expense, net 3,811 4,880 15,860 20,950 41,388 66,266 76,516 90,818 79,384 78,280 Less reliability capital expenditures 2,786 3,943 10,353 9,701 23,707 35,803 40,337 55,669 45,163 54,031 Less income tax expense - - - - 4,713 5,861 11,448 11,006 10,531 11,741 Plus mark-to-market impact on hedge transactions - - - - - - 3,131 (9,784) 19,970 (17,640) 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 9,625 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 $ 320,226 $ 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. |
Reconciliation of Non-GAAP Financial Information: Transportation Segment 27 (Unaudited, Dollars in Thousands) The following is a reconciliation of operating income to EBITDA for the Transportation Segment: 2006 2007 2008 2009 2010 Operating income 122,714 $ 126,508 $ 135,086 $ 139,869 $ 148,571 $ Plus depreciation and amortization expense 47,145 49,946 50,749 50,528 50,617 EBITDA 169,859 $ 176,454 $ 185,835 $ 190,397 $ 199,188 $ Projected incremental operating income range $ 1,000 - 4,000 Plus projected incremental depreciation and amortization expense range 0 - 1,000 Projected incremental EBITDA range $ 1,000 - 5,000 Projected decrease in operating income range ($ 5,500 - 11,000) Plus projected incremental depreciation and amortization expense range 500 - 1,000 Projected decrease in EBITDA range ($ 5,000 - 10,000) 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. Transportation Segment Year Ended December 31, The following is a reconciliation of projected decrease in operating income to projected decrease in EBITDA for the year ended December 31, 2011 compared to the year ended December 31, 2010: The following is a reconciliation of projected incremental operating income to projected incremental EBITDA related to our internal growth program for the year ended December 31, 2011 compared to the year ended December 31, 2010: Transportation Segment |
Reconciliation of Non-GAAP Financial Information: Storage Segment 28 (Unaudited, Dollars in Thousands) The following is a reconciliation of operating income to EBITDA for the Storage Segment: 2006 2007 2008 2009 2010 Operating income 108,486 $ 114,635 $ 141,079 $ 171,245 $ 178,947 $ Plus depreciation and amortization expense 53,121 62,317 66,706 70,888 77,071 EBITDA 161,607 $ 176,952 $ 207,785 $ 242,133 $ 256,018 $ Projected incremental operating income range $ 25,000 - 34,000 Plus projected incremental depreciation and amortization expense range 5,000 - 6,000 Projected incremental EBITDA range $ 30,000 - 40,000 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 EBITDA range $ 15,000 - 25,000 $ 5,000 - 10,000 The following is a reconciliation of projected annual operating income to projected annual EBITDA for certain projects in our storage segment related to our internal growth program: The following is a reconciliation of projected incremental operating income to projected incremental EBITDA related to our internal growth program for the year ended December 31, 2011 compared to the year ended December 31, 2010: Storage 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. Year Ended December 31, |
Reconciliation of Non-GAAP Financial Information: Asphalt & Fuels Marketing Segment 29 (Unaudited, Dollars in Thousands) Asphalt Operations Fuels Marketing Operations Asphalt and Fuels Marketing Segment Operating income 53,977 $ 36,884 $ 90,861 $ Plus depreciation and amortization expense 20,164 93 20,257 EBITDA 74,141 $ 36,977 $ 111,118 $ Asphalt Operations Fuels Marketing Operations Asphalt and Fuels Marketing Segment Operating income 50,710 $ 9,919 $ 60,629 $ Plus depreciation and amortization expense 19,463 - 19,463 EBITDA 70,173 $ 9,919 $ 80,092 $ Year Ended December 31, 2007 Year Ended December 31, 2006 Asphalt Operations Fuels Marketing Operations Asphalt and Fuels Marketing Segment Asphalt and Fuels Marketing Segment Asphalt and Fuels Marketing Segment Operating income 76,267 $ 36,239 $ 112,506 $ 21,111 $ 26,815 $ Plus depreciation and amortization expense 14,182 552 14,734 423 - EBITDA 90,449 $ 36,791 $ 127,240 $ 21,534 $ 26,815 $ Year Ended December 31, 2010 Year Ended December 31, 2009 Year Ended December 31, 2008 The following tables reconcile operating income to EBITDA for asphalt operations and fuels marketing operations in our asphalt and fuels marketing 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: Asphalt Operations Distributable Cash Flow 30 (Unaudited, Dollars in Thousands) 2010 2009 2008 Total Asphalt operations operating income 53,977 $ 50,710 $ 76,267 $ 180,954 $ Plus depreciation and amortization 20,164 19,463 14,182 53,809 Asphalt operations EBITDA 74,141 70,173 90,449 234,763 Less general & administrative expense 19,954 16,105 18,640 54,699 Less interest expense 27,851 26,056 20,150 74,057 Less income tax expense 120 489 0 609 Less reliability capital expenditures 5,790 6,962 4,126 16,878 Asphalt operations distributable cash flow 20,426 $ 20,561 $ 47,533 $ 88,520 $ 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. The following is a reconciliation of operating income to projected annual adjusted EBITDA for certain projects in our storage segment related to our internal growth program: Allocated to asphalt operations for distributable cash flow purposes: Year Ended December 31, |