ns-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _______

Commission File Number 1-16417

_________________________________________

NuStar Energy L.P.

(Exact name of registrant as specified in its charter)

_________________________________________


Delaware						74-2956831
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

19003 IH-10 West

San Antonio, Texas

(Address of principal executive offices)

78257

(Zip Code)

Registrant’s telephone number, including area code (210) 918-2000

_______________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common units

New York Stock Exchange

Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units

NSprA

New York Stock Exchange

Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units

NSprB

New York Stock Exchange

Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units

NSprC

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

The number of common units outstanding as of April 30, 2021 was 109,526,320.

Table of Contents

NUSTAR ENERGY L.P.

FORM 10-Q

TABLE OF CONTENTS


PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements:

	Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020	3

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2021 and 2020	4

	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2021 and 2020	5

	Consolidated Statements of Partners’ Equity and Mezzanine Equity for the Three Months Ended March 31, 2021 and 2020	6

	Condensed Notes to Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30

Item 4.	Controls and Procedures	30

PART II – OTHER INFORMATION

Item 1A.	Risk Factors	31

Item 6.	Exhibits	32

SIGNATURES		33

Table of Contents

PART I – FINANCIAL INFORMATION

Item 1.Financial Statements

NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited, Thousands of Dollars, Except Unit Data)


	March 31, 2021		December 31, 2020
Assets
Current assets:
Cash and cash equivalents	$	28,246	$	153,625
Accounts receivable, net	121,253		133,473

Inventories	17,534		11,059

Prepaid and other current assets	15,719		25,400

Total current assets	182,752		323,557
Property, plant and equipment, at cost	6,205,276		6,164,742
Accumulated depreciation and amortization	(2,264,511)		(2,207,230)
Property, plant and equipment, net	3,940,765		3,957,512
Intangible assets, net	617,353		630,209
Goodwill	766,416		766,416




Other long-term assets, net	136,586		139,324
Total assets	$	5,643,872	$	5,817,018
Liabilities, Mezzanine Equity and Partners’ Equity
Current liabilities:
Accounts payable	$	71,623	$	71,731

Current portion of finance lease obligations	3,517		3,839

Accrued interest payable	77,996		50,847
Accrued liabilities	58,761		77,770

Taxes other than income tax	12,968		16,998


Total current liabilities	224,865		221,185
Long-term debt, less current portion	3,446,604		3,593,496

Deferred income tax liability	13,200		13,011
Other long-term liabilities	156,338		157,825
Total liabilities	3,841,007		3,985,517

Commitments and contingencies (Note 6)

Series D preferred limited partners (23,246,650 preferred units outstanding as of March 31, 2021 and December 31, 2020) (Note 8)	603,563		599,542

Partners’ equity (Note 9):
Preferred limited partners
Series A (9,060,000 units outstanding as of March 31, 2021 and December 31, 2020)	218,307		218,307
Series B (15,400,000 units outstanding as of March 31, 2021 and December 31, 2020)	371,476		371,476
Series C (6,900,000 units outstanding as of March 31, 2021 and December 31, 2020)	166,518		166,518
Common limited partners (109,526,248 and 109,468,127 common units outstanding as of March 31, 2021 and December 31, 2020, respectively)	537,537		572,314

Accumulated other comprehensive loss	(94,536)		(96,656)
Total partners’ equity	1,199,302		1,231,959


Total liabilities, mezzanine equity and partners’ equity	$	5,643,872	$	5,817,018

See Condensed Notes to Consolidated Financial Statements.

Table of Contents

NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

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


	Three Months Ended March 31,
	2021		2020
Revenues:
Service revenues	$	271,883	$	316,746
Product sales	89,763		76,045
Total revenues	361,646		392,791
Costs and expenses:
Costs associated with service revenues:
Operating expenses (excluding depreciation and amortization expense)	87,287		100,182
Depreciation and amortization expense	68,418		68,061
Total costs associated with service revenues	155,705		168,243
Cost associated with product sales	81,113		67,450

Goodwill impairment loss	—		225,000
General and administrative expenses (excluding depreciation and amortization expense)	24,492		22,971
Other depreciation and amortization expense	2,047		2,186

Total costs and expenses	263,357		485,850
Operating income (loss)	98,289		(93,059)

Interest expense, net	(54,918)		(47,494)


Other income (expense), net	398		(6,489)
Income (loss) before income tax expense	43,769		(147,042)
Income tax expense	1,512		599
Net income (loss)	$	42,257	$	(147,641)

Basic and diluted net income (loss) per common unit (Note 10)	$	0.05	$	(1.68)



Basic and diluted weighted-average common units outstanding	109,506,222		108,897,400


Comprehensive income (loss)	$	44,377	$	(183,954)

See Condensed Notes to Consolidated Financial Statements.

Table of Contents

NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, Thousands of Dollars)


	Three Months Ended March 31,
	2021		2020
Cash Flows from Operating Activities:
Net income (loss)	$	42,257	$	(147,641)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense	70,465		70,247
Amortization of unit-based compensation	3,871		2,585
Amortization of debt related items	3,042		1,462

Goodwill impairment loss	—		225,000



Changes in current assets and current liabilities (Note 11)	24,397		(9,785)
Decrease in other long-term assets	2,381		2,303
(Decrease) increase in other long-term liabilities	(1,678)		948
Other, net	922		6,309
Net cash provided by operating activities	145,657		151,428
Cash Flows from Investing Activities:
Capital expenditures	(40,463)		(56,283)
Change in accounts payable related to capital expenditures	(5,449)		(15,706)
Proceeds from sale or disposition of assets	130		565





Net cash used in investing activities	(45,782)		(71,424)
Cash Flows from Financing Activities:


Proceeds from long-term debt borrowings	270,400		135,200
Proceeds from short-term debt borrowings	—		52,000

Long-term debt repayments	(418,100)		(104,615)
Short-term debt repayments	—		(47,500)






Distributions to preferred unitholders	(31,887)		(30,423)
Distributions to common unitholders	(43,811)		(65,169)

SEC Form 10-Q filed by Nustar Energy L.P.