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NuStar GP Holdings, LLC Increases Fourth Quarter 2011 Distribution

2011 Total Distributions 5.9% Higher than 2010

2012 Results Should Benefit from NuStar Energy Internal Growth Projects

SAN ANTONIO--(BUSINESS WIRE)--Jan. 27, 2012-- NuStar GP Holdings, LLC (NYSE: NSH) today announced that distributable cash flow available to unitholders for the fourth quarter of 2011 was $21.5 million, or $0.51 per unit, compared to $19.6 million, or $0.46 per unit, for the fourth quarter of 2010. For the year ended December 31, 2011, distributable cash flow available to unitholders was $84.3 million, or $1.98 per unit, compared to $79.6 million, or $1.87 per unit in 2010.

Fourth quarter 2011 net income was $19.0 million, or $0.45 per unit, compared to $15.3 million, or $0.35 per unit, for the fourth quarter of 2010. For the year ended December 31, 2011, net income was $69.6 million, or $1.64 per unit, compared to $72.5 million, or $1.70 per unit in 2010.

With respect to the quarterly distribution to unitholders for the fourth quarter of 2011, NuStar GP Holdings, LLC announced that its board of directors has declared a distribution of $0.51 per unit. This quarterly distribution represents an increase of $0.015 per unit, or 3%, over the $0.495 distribution for the third quarter of 2011. The fourth quarter 2011 distribution will be paid on February 14, 2012, to holders of record as of February 7, 2012.

“Due primarily to the approximate 2% increase in NuStar Energy L.P’s 2011 distribution and the cash flow benefits realized as a result of NuStar Energy L.P. issuing equity during the fourth quarter of 2011, NuStar GP Holdings, LLC was able to increase its 2011 total distributions by 5.9%. Total 2011 declared distributions of $1.98 per unit were $0.11 per unit higher than the $1.87 per unit distribution declared in 2010,” said Curt Anastasio, President and Chief Executive Officer of NuStar Energy L.P. and NuStar GP Holdings, LLC.

Anastasio added, “In 2012, NuStar GP Holdings, LLC should benefit from increased EBITDA at NuStar Energy L.P. Internal growth projects completed in 2011 and 2012 by NuStar Energy L.P. should be the major contributors to the increase in EBITDA.”

A conference call with management is scheduled for 10:00 a.m. ET (9:00 a.m. CT) today, January 27, 2012, to discuss the financial results for the fourth quarter of 2011. Investors interested in listening to the presentation may call 800/622-7620, passcode 39023181. International callers may access the presentation by dialing 706/645-0327, passcode 39023181. The company intends to have a playback available following the presentation, which may be accessed by calling 800/642-1687, passcode 39023181. 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 14.3 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 2009 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 Year Ended
December 31, December 31,
  2011     2010     2011     2010  
Statement of Income Data:
Equity in earnings of NuStar Energy L.P. $ 12,526 $ 15,416 $ 65,783 $ 66,859
 
General and administrative expenses (1,063 ) (1,063 ) (3,298 ) (3,184 )
Other income, net 7,877 1,440 7,320 9,475
Interest expense, net   (111 )   (204 )   (570 )   (1,106 )
 
Income before income tax (expense) benefit 19,229 15,589 69,235 72,044
Income tax (expense) benefit   (199 )   (282 )   401     419  
Net income $ 19,030   $ 15,307   $ 69,636   $ 72,463  
 
Basic and diluted net income per unit $ 0.45   $ 0.35   $ 1.64   $ 1.70  
 
Equity in Earnings of NuStar Energy L.P.:
General partner interest $ 409 $ 859 $ 3,703 $ 4,113
General partner incentive distribution   9,816     8,568     36,319     33,304  

General partner's interest in earnings and incentive distributions of NuStar Energy L.P.

10,225 9,427 40,022 37,417
Limited partner interest in earnings of NuStar Energy L.P. 3,022 6,710 28,645 32,326

Amortization of step-up in basis related to NuStar Energy L.P.'s assets and liabilities

  (721 )   (721 )   (2,884 )   (2,884 )
Equity in earnings of NuStar Energy L.P. $ 12,526   $ 15,416   $ 65,783   $ 66,859  
 
 
Distributable Cash Flow (Note 1):
Cash distributions from NuStar Energy L.P. associated with:
General partner interest $ 1,782 $ 1,592 $ 6,630 $ 6,227
General partner incentive distribution 9,816 8,568 36,326 33,304
Limited partner interest - common units   11,292     11,038     44,842     43,924  
Total distributions from NuStar Energy L.P. 22,890 21,198 87,798 83,455
Deduct expenses of NuStar GP Holdings, LLC:
General and administrative expenses (1,063 ) (1,063 ) (3,298 ) (3,184 )
Income tax (expense) benefit (199 ) (282 ) 401 419
Interest expense, net   (111 )   (204 )   (570 )   (1,106 )
Distributable cash flow $ 21,517   $ 19,649   $ 84,331   $ 79,584  
 
Weighted average number of common units outstanding 42,550,358 42,526,518 42,546,096 42,517,525
 
Distributable cash flow per unit $ 0.51   $ 0.46   $ 1.98   $ 1.87  
 
Cash distributions to be paid to the unitholders of
NuStar GP Holdings, LLC:
Distribution per unit $ 0.51   $ 0.48   $ 1.98   $ 1.87  
 
Total distribution $ 21,708   $ 20,422   $ 84,252   $ 79,517  
 
 
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 Year Ended
December 31, December 31,
  2011     2010     2011     2010  
Net Income $ 19,030 $ 15,307 $ 69,636 $ 72,463
Less equity in earnings of NuStar Energy L.P. (12,526 ) (15,416 ) (65,783 ) (66,859 )
Plus cash distributions from NuStar Energy L.P. 22,890 21,198 87,798 83,455
Other income, net   (7,877 )   (1,440 )   (7,320 )   (9,475 )
Distributable cash flow 21,517 19,649 84,331 79,584
Less cash distributions from NuStar Energy L.P. (22,890 ) (21,198 ) (87,798 ) (83,455 )
Plus distributions of equity in earnings of NuStar Energy L.P. 12,526 15,416 65,783 66,859
Net effect of changes in operating accounts   215     6     2,014     8,837  
Net cash provided by operating activities $ 11,368   $ 13,873   $ 64,330   $ 71,825  

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
http://www.nustarenergy.com

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