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NuStar GP Holdings, LLC Reports Increased Third Quarter 2011 Net Income and Distributable Cash Flow

SAN ANTONIO, Oct 28, 2011 (BUSINESS WIRE) -- NuStar GP Holdings, LLC (NYSE: NSH) today announced that distributable cash flow available to unitholders for the third quarter of 2011 was $21.1 million, or $0.50 per unit, compared to $20.7 million, or $0.49 per unit, for the third quarter of 2010. Third quarter 2011 net income was $18.4 million, or $0.43 per unit, compared to $17.8 million, or $0.42 per unit, for the third quarter of 2010.

In addition, the company announced that its board of directors has declared a third quarter 2011 distribution of $0.495 per unit. The third quarter 2011 distribution will be paid on November 16, 2011, to holders of record as of November 8, 2011.

"NuStar GP Holdings, LLC should benefit from a couple of internal growth projects completed by NuStar Energy L.P. during the third quarter," said Curt Anastasio, Chief Executive Officer and President of NuStar Energy L.P. and NuStar GP Holdings, LLC. "These projects should increase NuStar GP Holdings, LLC's future distributable cash flows and net income."

A conference call with management is scheduled for 11:00 a.m. ET (10:00 a.m. CT) today, October 28, 2011, to discuss the financial results for the third quarter of 2011. Investors interested in listening to the presentation may call 800/622-7620, passcode 13712546. International callers may access the presentation by dialing 706/645-0327, passcode 13712546. The company intends to have a playback available following the presentation, which may be accessed by calling 800/585-8367, passcode 13712546. A live broadcast of the conference call will also be available on the company's Web site at http://www.nustargpholdings.com.

NuStar GP Holdings, LLC is a publicly traded limited liability company that owns the two percent general partner interest, a 15.6 percent limited partner interest and the incentive distribution rights in NuStar Energy L.P., one of the largest asphalt refiners and marketers in the U.S. and the second largest independent liquids terminal operator in the nation with operations in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, the United Kingdom and Turkey. For more information, visit NuStar GP Holdings, LLC's Web site at http://www.nustargpholdings.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's distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of NuStar'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, 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.All forward-looking statements are based on the company's beliefs as well as assumptions made by and information currently available to the company.These statements reflect the company'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. and NuStar GP Holdings, LLC's 2010 annual reports on Form 10-K and subsequent filings with the Securities and Exchange Commission.

NuStar GP Holdings, LLC
Consolidated Financial Information
(Unaudited, Thousands of Dollars, Except Unit and Per Unit Data)
Three Months Ended Nine Months Ended
September 30, September 30,
2011 2010 2011 2010
Statement of Income Data:
Equity in earnings of NuStar Energy L.P. $ 18,996 $ 18,332 $ 53,257 $ 51,443
General and administrative expenses (749 ) (671 ) (2,235 ) (2,121 )
Other income (expense), net 108 15 (557 ) 8,035
Interest expense, net (116 ) (245 ) (459 ) (902 )
Income before income tax benefit 18,239 17,431 50,006 56,455
Income tax benefit 123 346 600 701
Net income $ 18,362 $ 17,777 $ 50,606 $ 57,156
Basic and diluted net income per unit $ 0.43 $ 0.42 $ 1.19 $ 1.35
Equity in Earnings of NuStar Energy L.P.:
General partner interest $ 1,223 $ 1,195 $ 3,294 $ 3,254
General partner incentive distribution 8,972 8,568 26,503 24,736
General partner's interest in earnings and incentive
distributions of NuStar Energy L.P. 10,195 9,763 29,797 27,990
Limited partner interest in earnings of NuStar Energy L.P. 9,522 9,290 25,623 25,616
Amortization of step-up in basis related to NuStar
Energy L.P.'s assets and liabilities (721 ) (721 ) (2,163 ) (2,163 )
Equity in earnings of NuStar Energy L.P. $ 18,996 $ 18,332 $ 53,257 $ 51,443
Distributable Cash Flow (Note 1):
Cash distributions from NuStar Energy L.P. associated with:
General partner interest $ 1,628 $ 1,592 $ 4,847 $ 4,635
General partner incentive distribution 8,972 8,568 26,503 24,736
Limited partner interest - common units 11,271 11,114 33,506 32,886
Total distributions from NuStar Energy L.P. 21,871 21,274 64,856 62,257
Deduct expenses of NuStar GP Holdings, LLC:
General and administrative expenses (749 ) (671 ) (2,235 ) (2,121 )
Income tax benefit 123 346 600 701
Interest expense, net (116 ) (245 ) (459 ) (902 )
Distributable cash flow $ 21,129 $ 20,704 $ 62,762 $ 59,935
Weighted average number of common units outstanding 42,544,659 42,514,494 42,544,659 42,514,494
Distributable cash flow per unit $ 0.50 $ 0.49 $ 1.48 $ 1.41
Cash distributions to be paid to the unitholders of
NuStar GP Holdings, LLC:
Distribution per unit $ 0.495 $ 0.480 $ 1.470 $ 1.390
Total distribution $ 21,059 $ 20,407 $ 62,540 $ 59,095
NuStar GP Holdings, LLC
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars)
Notes:
1. NuStar GP Holdings, LLC utilizes distributable cash flow as a financial measure, 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 general partner performance. In addition, management believes that this measure provides investors an enhanced perspective of the ability to make a minimum quarterly distribution. Distributable cash flow is not intended to represent cash flows for the period, nor is it presented as an alternative to net income. It 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.
The following is a reconciliation of net income to distributable cash flow and net cash provided by operating activities:
Three Months Ended Nine Months Ended
September 30, September 30,
2011 2010 2011 2010
Net Income $ 18,362 $ 17,777 $ 50,606 $ 57,156
Less equity in earnings of NuStar Energy L.P. (18,996 ) (18,332 ) (53,257 ) (51,443 )
Plus cash distributions from NuStar Energy L.P. 21,871 21,274 64,856 62,257
Other (income) expense, net (108 ) (15 ) 557 (8,035 )
Distributable cash flow 21,129 20,704 62,762 59,935
Less cash distributions from NuStar Energy L.P. (21,871 ) (21,274 ) (64,856 ) (62,257 )
Plus distributions of equity in earnings of NuStar Energy L.P. 18,996 18,332 53,257 51,443
Net effect of changes in operating accounts 1,465 10,782 1,772 8,831
Net cash provided by operating activities $ 19,719 $ 28,544 $ 52,935 $ 57,952

SOURCE: NuStar GP Holdings, LLC

NuStar Energy, L.P., San Antonio
Investors, Chris Russell, Vice President
Investor Relations: 210-918-3507
or
Media, Mary Rose Brown, Senior Vice President,
Corporate Communications: 210-918-2314
Web site: http://www.nustarenergy.com

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