NS NuStar Energy LP

2014 EBITDA and DCF Highest in Partnership’s History

Pipeline and Storage Segment Throughput Volumes Increase to Record Levels in the Fourth Quarter

Recently Closed on Immediately Accretive Transaction to Acquire Full Ownership in Linden, NJ Refined Products Terminal

NuStar Energy L.P. (NYSE: NS) today announced fourth quarter 2014 distributable cash flow from continuing operations available to limited partners was $95.4 million, or $1.23 per unit, compared to 2013 fourth quarter distributable cash flow from continuing operations available to limited partners of $75.3 million, or $0.97 per unit. For the year ended December 31, 2014, distributable cash flow from continuing operations available to limited partners was $354.8 million, or $4.56 per unit, significantly higher than the $257.8 million, or $3.31 per unit earned in 2013.

“2014 was a great year for NuStar,” said Brad Barron, President and Chief Executive Officer of NuStar Energy L.P. and NuStar GP Holdings, LLC. “We were able to achieve our primary goal of covering our full-year distribution for 2014 through a renewed focus on our core, fee-based pipeline and terminals businesses and by significantly reducing our exposure to margin-based operations.

“Record throughput volumes in both our pipeline and storage segments, the renewal of eight million barrels of storage at two key storage facilities, the completion of Phase 1 of our South Texas Crude Oil Pipeline Expansion and our new state-of-the-art dock in Corpus Christi, TX, all played a pivotal role in our return to distribution coverage. Distributable cash flow from continuing operations available to limited partners covers the distribution to the limited partners by 1.12 times for the fourth quarter of 2014 and by 1.04 times for the full-year 2014, our highest annual distribution coverage since 2011,” said Barron.

Barron went on to say, “Earlier this month, we announced that we acquired the remaining 50% interest in a refined products terminal in Linden, NJ, which is located in the New York Harbor. Owning this terminal outright provides synergies with our adjacent wholly owned terminal and may provide opportunities for future expansion. This transaction was immediately accretive.”

Fourth Quarter and Full Year Earnings Results

Fourth quarter earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations were $136.0 million, compared to fourth quarter 2013 negative EBITDA of $192.3 million. For the year ended December 31, 2014, the partnership reported $547.9 million of EBITDA from continuing operations, the highest we’ve reported in our history.

The partnership reported fourth quarter net income applicable to limited partners of $41.5 million, or $0.54 per unit, compared to a net loss applicable to limited partners of $368.3 million, or $4.73 per unit for the fourth quarter of 2013. Absent certain adjustments, fourth quarter 2013 adjusted net income applicable to limited partners would have been $16.6 million, or $0.21 per unit.

For the year ended December 31, 2014, the partnership reported net income applicable to limited partners of $163.3 million, or $2.10 per unit, compared to a net loss applicable to limited partners of $311.5 million, or $4.00 per unit, in 2013. Absent certain adjustments, 2013 adjusted net income applicable to limited partners would have been $58.8 million, or $0.75 per unit.

The partnership also announced that its board of directors has declared a fourth quarter 2014 distribution of $1.095 per unit. The fourth quarter 2014 distribution will be paid on February 13, 2015 to holders of record as of February 9, 2015.

2015 Earnings Guidance

“First quarter 2015 EBITDA results for our pipeline and storage segments should be higher than last year’s first quarter. Both segments should continue to benefit from increased throughput volumes from Phase 1 of our South Texas Crude Oil Pipeline System, which came online in the second quarter of 2014, while our storage segment will also benefit from incremental EBITDA associated with our recent acquisition of the Linden Terminal. First quarter 2015 EBITDA results for the fuels marketing segment should be comparable to last year’s first quarter,” said Barron.

Commenting on full-year 2015 guidance, Barron said, “Our pipeline segment EBITDA should be $25 to $45 million higher than 2014, and storage segment EBITDA should be $10 to $30 million higher than 2014, while EBITDA in our fuels marketing segment is expected to be in the range of $20 to $30 million. Based on these projections, we expect to once again cover our distribution for the full-year 2015.”

With regard to capital spending projections for 2015, Barron went on to say, “We plan to spend $400 to $420 million on internal growth projects and acquisitions during 2015, while reliability capital spending is expected to be in the range of $40 to $50 million.”

Fourth Quarter Earnings Conference Call Details

A conference call with management is scheduled for 9:00 a.m. CT today, January 30, 2015, to discuss the financial and operational results for the fourth quarter of 2014. Investors interested in listening to the presentation may call 800/622-7620, passcode 63734023. International callers may access the presentation by dialing 706/645-0327, passcode 63734023. The partnership intends to have a playback available following the presentation, which may be accessed by calling 800/585-8367, passcode 63734023. International callers may access the playback by calling 404/537-3406, passcode 63734023. The playback will be available until 10:59 p.m. CT on February 27, 2015.

Investors interested in listening to the live presentation or a replay via the internet may access the presentation directly by clicking here or by logging on to NuStar Energy L.P.’s Web site at www.nustarenergy.com.

The presentation will disclose certain non-GAAP financial measures. Reconciliations of certain of these non-GAAP financial measures to U.S. GAAP may be found in this press release, with additional reconciliations located on the Financials page of the Investors section of NuStar Energy L.P.’s Web site at www.nustarenergy.com.

NuStar Energy L.P., a publicly traded master limited partnership based in San Antonio, is one of the largest independent liquids terminal and pipeline operators in the nation. NuStar currently has 8,643 miles of pipeline and 81 terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids. The partnership’s combined system has approximately 93 million barrels of storage capacity, and NuStar has operations in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, and the United Kingdom. For more information, visit NuStar Energy L.P.'s Web site at www.nustarenergy.com.

This release serves as qualified notice to nominees under Treasury Regulation Sections 1.1446-4(b)(4) and (d). Please note that 100% of NuStar Energy L.P.’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of NuStar Energy L.P.’s distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate for individuals and corporations, as applicable. Nominees, and not NuStar Energy L.P., are treated as the withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.

Cautionary Statement Regarding Forward-Looking Statements

This press release includes forward-looking statements regarding future events, such as the partnership’s future performance. 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 and NuStar GP Holdings, LLC’s 2013 annual reports on Form 10-K and subsequent filings with the Securities and Exchange Commission. Actual results may differ materially from those described in the forward-looking statements.

      NuStar Energy L.P. and Subsidiaries Consolidated Financial Information (Unaudited, Thousands of Dollars, Except Unit and Per Unit Data)   Three Months Ended December 31, Year Ended December 31, 2014   2013 2014   2013 Statement of Income Data: Revenues: Service revenues $ 270,895 $ 237,216 $ 1,026,446 $ 938,138 Product sales 410,843   548,171   2,048,672   2,525,594   Total revenues 681,738   785,387   3,075,118   3,463,732   Costs and expenses: Cost of product sales 389,020 525,760 1,967,528 2,453,997 Operating expenses 135,359 112,463 472,925 454,396 General and administrative expenses 27,070 25,108 96,056 91,086 Depreciation and amortization expense 48,943 45,805 191,708 178,921 Goodwill impairment loss —   304,453   —   304,453   Total costs and expenses 600,392   1,013,589   2,728,217   3,482,853   Operating income (loss) 81,346 (228,202 ) 346,901 (19,121 ) Equity in earnings (loss) of joint ventures 3,059 (13,341 ) 4,796 (39,970 ) Interest expense, net (31,735 ) (34,270 ) (131,226 ) (127,119 ) Interest income from related party — 1,553 — 6,113 Other income, net 2,683   3,424   4,499   7,341   Income (loss) from continuing operations before

income tax expense

55,353 (270,836 ) 224,970 (172,756 ) Income tax expense 484   4,666   10,801   12,753   Income (loss) from continuing operations 54,869 (275,502 ) 214,169 (185,509 ) Loss from discontinued operations, net of tax (Note 1) (1,475 ) (99,778 ) (3,791 ) (99,162 ) Net income (loss) $ 53,394   $ (375,280 ) $ 210,378   $ (284,671 ) Net income (loss) applicable to limited partners $ 41,522   $ (368,327 ) $ 163,339   $ (311,516 ) Net income (loss) per unit applicable to limited partners Continuing operations $ 0.55 $ (3.60 ) $ 2.14 $ (2.89 ) Discontinued operations (Note 1) (0.01 ) (1.13 ) (0.04 ) (1.11 ) Total $ 0.54   $ (4.73 ) $ 2.10   $ (4.00 ) Weighted-average limited partner units outstanding 77,886,078   77,886,078   77,886,078   77,886,078     EBITDA from continuing operations (Note 2) $ 136,031 $ (192,314 ) $ 547,904 $ 127,171 DCF from continuing operations (Note 2) $ 108,173 $ 88,115 $ 405,890 $ 308,877   December 31, 2014 2013 Balance Sheet Data: Debt, including current portion (a) $ 2,826,452 $ 2,655,553 Partners’ equity (b) 1,716,210 1,903,794 Consolidated debt coverage ratio (Note 3) 4.0x 4.4x         NuStar Energy L.P. and Subsidiaries Consolidated Financial Information - Continued (Unaudited, Thousands of Dollars, Except Barrel Data)   Three Months Ended December 31, Year Ended December 31, 2014   2013 2014   2013 Pipeline: Refined products pipelines throughput (barrels/day) 533,521 514,975 510,737 487,021 Crude oil pipelines throughput (barrels/day) 490,969   377,937   437,757   365,749   Total throughput (barrels/day) 1,024,490 892,912 948,494 852,770 Throughput revenues $ 130,812 $ 109,768 $ 477,030 $ 411,529 Operating expenses 44,421 31,769 154,106 134,365 Depreciation and amortization expense 20,036   18,832   77,691   68,871   Segment operating income $ 66,355   $ 59,167   $ 245,233   $ 208,293   Storage: Throughput (barrels/day) 918,929 807,414 887,607 781,213 Throughput revenues $ 31,867 $ 27,629 $ 123,051 $ 104,553 Storage lease revenues 111,142   105,956   441,455   451,996   Total revenues 143,009 133,585 564,506 556,549 Operating expenses 74,952 71,596 277,554 279,712 Depreciation and amortization expense 26,368 24,439 103,848 99,868 Goodwill and asset impairment loss —   304,453   —   304,453   Segment operating income (loss) $ 41,689   $ (266,903 ) $ 183,104   $ (127,484 ) Fuels Marketing: Product sales $ 414,205 $ 549,167 $ 2,060,017 $ 2,527,698 Cost of product sales 392,734   530,197   1,983,339   2,474,612   Gross margin 21,471 18,970 76,678 53,086 Operating expenses 18,563 11,849 51,857 53,185 Depreciation and amortization expense —   7   16   27   Segment operating income (loss) $ 2,908   $ 7,114   $ 24,805   $ (126 ) Consolidation and Intersegment Eliminations: Revenues $ (6,288 ) $ (7,133 ) $ (26,435 ) $ (32,044 ) Cost of product sales (3,714 ) (4,437 ) (15,811 ) (20,615 ) Operating expenses (2,577 ) (2,751 ) (10,592 ) (12,866 ) Total $ 3   $ 55   $ (32 ) $ 1,437   Consolidated Information: Revenues $ 681,738 $ 785,387 $ 3,075,118 $ 3,463,732 Cost of product sales 389,020 525,760 1,967,528 2,453,997 Operating expenses 135,359 112,463 472,925 454,396 Depreciation and amortization expense 46,404 43,278 181,555 168,766 Goodwill and asset impairment loss —   304,453   —   304,453   Segment operating income (loss) 110,955 (200,567 ) 453,110 82,120 General and administrative expenses 27,070 25,108 96,056 91,086 Other depreciation and amortization expense 2,539   2,527   10,153   10,155   Consolidated operating income (loss) $ 81,346   $ (228,202 ) $ 346,901   $ (19,121 )  

NuStar Energy L.P. and Subsidiaries

Consolidated Financial Information - Continued

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

Notes:

(1)   The results of operations for the following have been reported as discontinued operations for all periods presented: (i) the San Antonio Refinery and related assets, which we sold on January 1, 2013, and (ii) certain storage assets that were classified as “Assets held for sale” on the consolidated balance sheet as of December 31, 2013.   (2) NuStar Energy L.P. utilizes financial measures, earnings before interest, taxes, depreciation and amortization (EBITDA) from continuing operations, distributable cash flow (DCF) from continuing operations, DCF from continuing operations per unit, adjusted net income and adjusted net income per unit (EPU), which are not defined in U.S. generally accepted accounting principles (GAAP). 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. None of EBITDA from continuing operations, DCF from continuing operations, DCF from continuing operations per unit, adjusted net income and adjusted EPU are intended to represent cash flows from operations for the period, nor are they presented as an alternative to net income or income from continuing operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with GAAP. For purposes of segment reporting, we do not allocate general and administrative expenses to our reported operating segments because those expenses relate primarily to the overall management at the entity level. Therefore, EBITDA reflected in the segment reconciliations exclude any allocation of general and administrative expenses consistent with our policy for determining segmental operating income, the most directly comparable GAAP measure.   The following is a reconciliation of income (loss) from continuing operations to EBITDA from continuing operations and DCF from continuing operations:       Three Months Ended December 31, Year Ended December 31, 2014   2013 2014   2013 Income (loss) from continuing operations $ 54,869 $ (275,502 ) $ 214,169 $ (185,509 )

Plus interest expense, net and interest income from related party

31,735 32,717 131,226 121,006 Plus income tax expense 484 4,666 10,801 12,753 Plus depreciation and amortization expense 48,943   45,805   191,708   178,921   EBITDA from continuing operations 136,031 (192,314 ) 547,904 127,171 Equity in (earnings) loss of joint ventures (3,059 ) 13,341 (4,796 ) 39,970 Interest expense, net and interest income from related party (31,735 ) (32,717 ) (131,226 ) (121,006 ) Reliability capital expenditures (10,373 ) (11,600 ) (28,635 ) (39,939 ) Income tax expense (484 ) (4,666 ) (10,801 ) (12,753 ) Distributions from joint ventures 1,708 2,169 7,587 7,956 Other items (a) 11,686 315,718 19,732 311,675 Mark-to-market impact on hedge transactions (b) 4,399   (1,816 ) 6,125   (4,197 ) DCF from continuing operations $ 108,173 $ 88,115 $ 405,890 $ 308,877  

Less DCF from continuing operations available to general partner

12,766   12,766   51,064   51,064  

DCF from continuing operations available to limited partners

$ 95,407   $ 75,349   $ 354,826   $ 257,813    

DCF from continuing operations per limited partner unit

$ 1.23 $ 0.97 $ 4.56 $ 3.31   (a)   Other items for the three months and year ended December 31, 2014 mainly consist of (i) a net increase in deferred revenue associated with throughput deficiency payments and construction reimbursements and (ii) a lower of cost or market adjustment of $3.8 million. Other items for the three months and year ended December 31, 2013 mainly consist of (i) a non-cash goodwill impairment charge totaling $304.5 million and (ii) an increase in deferred revenue associated with throughput deficiency payments and construction reimbursements received in the period.   (b) DCF from continuing operations excludes the impact of unrealized mark-to-market gains and losses that arise from valuing certain derivative contracts, as well as the associated hedged inventory. The gain or loss associated with these contracts is realized in DCF from continuing operations when the contracts are settled.    

NuStar Energy L.P. and Subsidiaries

Consolidated Financial Information - Continued (Unaudited, Thousands of Dollars, Except Per Unit Data) Notes (continued):  

The following is a reconciliation of net loss and EPU to adjusted net income and EPU:

      Three Months EndedDecember 31, 2013 Year EndedDecember 31, 2013 Net loss / EPU $ (375,280 )   $ (4.73 ) $ (284,671 )   $ (4.00 ) Certain adjustments: Goodwill and asset impairment loss 406,982 4.99 406,982 4.99 Gain on sale of certain assets — — (9,295 ) (0.12 ) Other adjustments (3,387 ) (0.05 ) (8,928 ) (0.12 ) Total certain adjustments 403,595 4.94 388,759 4.75 Adjusted net income 28,315 104,088 GP interest and incentive and noncontrolling interest (11,751 )   (45,251 )   Adjusted net income / EPU applicable to limited partners $ 16,564   $ 0.21   $ 58,837   $ 0.75    

The following is a reconciliation of projected incremental operating income to projected incremental EBITDA for the year ended December 31, 2015:

      Pipeline Segment Storage Segment Projected incremental operating income $ 15,000 - 30,000 $ 5,000 - 20,000 Plus projected incremental depreciation and amortization expense   10,000 - 15,000   5,000 - 10,000 Projected incremental EBITDA $ 25,000 - 45,000 $ 10,000 - 30,000  

The following is a reconciliation of projected operating income to projected EBITDA for our fuels marketing segment:

   

Year EndedDecember 31, 2015

Projected operating income $ 20,000 - 30,000 Plus projected depreciation and amortization expense   — Projected EBITDA $ 20,000 - 30,000   (3)   The consolidated debt coverage ratio is calculated as consolidated debt to consolidated EBITDA, as defined in our $1.5 billion five-year revolving credit agreement.

NuStar Energy, L.P., San AntonioInvestors, Chris Russell, Treasurer and Vice President Investor RelationsInvestor Relations: 210-918-3507orMedia, Mary Rose Brown, Executive Vice President,Corporate Communications: 210-918-2314Web site: http://www.nustarenergy.com