NuStar Energy L.P. Reports Earnings Results for the First Quarter of 2017

As previously announced on Tuesday, April 11, 2017, NuStar Energy L.P.
(NYSE: NS) signed a definitive agreement to acquire Navigator Energy
Services, LLC for approximately $1.475 billion (the Navigator
Acquisition), subject to purchase price adjustments, and expects to
close the acquisition in the second quarter, subject to customary
closing conditions, including the receipt of regulatory approvals.

Since announcing the Navigator Acquisition last week, NuStar has closed
an equity offering and priced an offering of Senior Notes. On Tuesday,
April 18, 2017, NuStar Energy closed on an upsized equity offering of
14,375,000 common units (the Equity Offering), which includes the
underwriter’s purchase of 1,875,000 additional common units, for gross
proceeds of approximately $665 million. On Thursday, April 20, 2017,
NuStar Logistics, a wholly owned operating subsidiary of NuStar Energy,
priced $550 million of 5.625% senior notes due April 28, 2027. The
proceeds from both of these capital market transactions will be used to
partially fund the purchase price for the Navigator Acquisition.

For the first quarter of 2017, net income applicable to limited partners
was $38.5 million, or $0.49 per unit, and earnings before interest,
taxes, depreciation and amortization (EBITDA) were $154.1 million.
Absent the impact of the Equity Offering, first quarter of 2017 net
income per unit applicable to limited partners would have been $40.4
million, or $0.51 per unit.

DCF available to common limited partners was $88.9 million for the first
quarter of 2017, which resulted in a distribution coverage ratio to the
common limited partners of 0.87 times. Without the Equity Offering
impact, DCF available to common limited partners would have been $91.3
million for the first quarter of 2017, which would have allowed NuStar
to cover its distribution to the common limited partners by 1.06 times.

The partnership also announced the Series A Preferred Unit distribution
for the first quarter 2017 of $0.53125 per Series A Preferred Unit,
which will be paid on June 15, 2017 to holders of record as of June 1,
2017. In addition, the partnership announced the first quarter 2017
common unit distribution of $1.095 per common unit, which will be paid
on May 12, 2017 to holders of record as of May 8, 2017.

“Our strong first quarter results were primarily driven by higher
renewal rates at several of our terminal facilities, incremental
throughput fees associated with our Martin terminal acquisition and an
increase in ammonia throughput volumes due to a warmer spring season. In
addition, we experienced improved results in our Fuels Marketing segment
and a decrease in overall operating expenses during the quarter,” said
Brad Barron, President and Chief Executive Officer of NuStar Energy L.P.
and NuStar GP Holdings, LLC.

“For the last three years, we have been focused on de-risking our base
business, strengthening our balance sheet and restoring our distribution
coverage. But for the timing of our equity offering, which closed before
the ex-dividend date for the first quarter common unit distribution,
this would have been our twelfth consecutive quarter of distribution
coverage, demonstrating, once again, the resiliency and strength of our
legacy pipeline and storage operations.”

“Our base business delivered solid results in first quarter, and in the
second quarter, we are poised to acquire Navigator’s Permian assets,
providing a new platform for future growth in one of the most prolific
basins in the United States. Given how the Navigator assets will
complement our existing portfolio and their location in the Core of the
Core of the Midland basin, these assets couldn’t be a better fit for
NuStar.”

Barron went on to say, “We are very pleased with the pending Navigator
acquisition and related financing transactions. We upsized the equity
offering and the underwriters exercised the entire greenshoe, increasing
the offering from 10.5 million common units to almost 14.4 million
common units, with gross proceeds of approximately $665 million. And our
$550 million bond offering was significantly oversubscribed, allowing us
to secure a great interest rate. Obviously, we expect an acquisition of
this size will cause our distribution coverage to drop below a one-times
coverage for the remainder of 2017, but with the anticipated ramp-up in
EBITDA over the next few years, our current forecast indicates that we
could return to distribution coverage as early as the second half of
2018. And, most importantly, we believe this is a transformative
transaction that will provide a substantial growth platform that better
positions us for distribution growth in the future.”

First Quarter 2017 Earnings Conference Call
Details

A conference call with management is scheduled for 10:00 a.m. CT today,
April 24, 2017, to discuss the financial and operational results for the
first quarter of 2017. Investors interested in listening to the
discussion may dial toll-free 844/889-7787, passcode 8863375.
International callers may access the discussion by dialing 661/378-9931,
passcode 8863375. The partnership intends to have a playback available
following the discussion, which may be accessed by dialing toll-free
855/859-2056, passcode 8863375. International callers may access the
playback by dialing 404/537-3406, passcode 8863375. The playback will be
available until 1:00 p.m. CT on May 24, 2017.

Investors interested in listening to the live discussion or a replay via
the internet may access the discussion directly at http://edge.media-server.com/m/p/8beg7bko
or by logging on to NuStar Energy L.P.’s website at www.nustarenergy.com.

The discussion 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 website 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 approximately
8,700 miles of pipeline and 79 terminal and storage facilities that
store and distribute crude oil, refined products and specialty liquids.
The partnership’s combined system has approximately 95 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 website 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, and the related conference call will
include, forward-looking statements regarding future events, such as the
partnership’s future performance and the consummation of the
acquisition. 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 2016 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 - Continued
(Unaudited, Thousands of
Dollars, Except Ratio Data)

Notes:

(1) NuStar Energy L.P. utilizes financial measures, such as
earnings before interest, taxes, depreciation and amortization (EBITDA),
distributable cash flow (DCF) and distribution coverage ratio, which are
not defined in U.S. generally accepted accounting principles (GAAP).
Management believes these financial measures provide useful information
to investors and other external users of our financial information
because (i) they provide additional information about the operating
performance of the partnership’s assets and the cash the business is
generating, (ii) investors and other external users of our financial
statements benefit from having access to the same financial measures
being utilized by management and our board of directors when making
financial, operational, compensation and planning decisions and (iii)
they highlight the impact of significant transactions.

Our board of directors and management use EBITDA and/or DCF when
assessing the following: (i) the performance of our assets, (ii) the
viability of potential projects, (iii) our ability to fund
distributions, (iv) our ability to fund capital expenditures and (v) our
ability to service debt. In addition, our board of directors uses a
distribution coverage ratio, which is calculated based on DCF, as the
metric for determining the company-wide bonus and the vesting of
performance units awarded to management. Our board of directors believes
DCF appropriately aligns management’s interest with our unitholders’
interest in increasing distributions in a prudent manner. DCF is a
widely accepted financial indicator used by the master limited
partnership (MLP) investment community to compare partnership
performance. DCF is used by the MLP investment community, in part,
because the value of a partnership unit is partially based on its yield,
and its yield is based on the cash distributions a partnership can pay
its unitholders.

None of these financial measures are presented as an alternative to net
income. They should not be considered in isolation or as substitutes for
a measure of performance prepared in accordance with GAAP. The following
is a reconciliation of EBITDA, DCF and distribution coverage ratio:

NuStar Energy L.P. and Subsidiaries
Consolidated
Financial Information - Continued
(Unaudited, Thousands of
Dollars, Except Ratio and Per Unit Data)

(2) The following is a reconciliation of DCF and distribution
coverage ratio, adjusted to exclude distributions that will be paid on
the 14,375,000 common units that were issued subsequent to the end of
the current reporting period ending March 31, 2017:

(a) Adjusted distribution coverage ratio is calculated by dividing
adjusted DCF available to common limited partners by distributions
applicable to common limited partners, as adjusted.

(3) The following is a reconciliation of net income applicable to
limited partners and net income per unit to adjusted net income
applicable to limited partners and adjusted net income per unit:

(a) GP interest and incentive distributions that will be paid on the
14,375,000 common units that were issued subsequent to the end of the
current reporting period ending March 31, 2017.

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