NuStar Energy L.P. (NYSE:NS) today announced net income applicable to limited partners of $45.4 million, or $0.97 per unit, for the third quarter of 2007 compared to $36.9 million, or $0.79 per unit, earned in the third quarter of 2006. For the nine months ended September 30, 2007, net income applicable to limited partners was $106.6 million, or $2.28 per unit, compared to $99.6 million, or $2.13 per unit, for the nine months ended September 30, 2006.
Distributable cash flow available to limited partners from continuing operations for the third quarter of 2007 was $62.7 million, or $1.34 per unit, compared to $55.5 million, or $1.19 per unit, for the third quarter of 2006. For the nine months ended September 30, 2007, distributable cash flow available to limited partners from continuing operations was $163.7 million, or $3.50 per unit, compared to $150.3 million, or $3.21 per unit, for the nine months ended September 30, 2006. As of September 30, 2007, the partnership’s debt-to-capitalization ratio was 44.7 percent compared to 41.9 percent as of December 31, 2006.
NuStar Energy L.P. previously announced that its board of directors had declared an increase in the quarterly distribution rate to $0.985 per unit, or $3.94 per unit on an annual basis, which will be paid on November 14, 2007, to holders of record as of November 8, 2007. This quarterly distribution represents an increase of $0.07 per unit, or 7.7 percent, over the $0.915 distribution for the third quarter of 2006 and an increase of $0.035 per unit, or 3.7 percent, over the $0.95 distribution for the second quarter of 2007. Distributable cash flow available to limited partners covers the distribution to the limited partners by 1.36 times for the third quarter of 2007.
Included in the third quarter 2007 results in other income is a $7.3 million gain, or $0.15 per unit, related to the sale of NuStar’s interest in a coal property in Wyoming that was acquired through the Kaneb purchase in 2005. Further, the net impact of the fire at Valero Energy’s McKee refinery, taking into consideration insurance proceeds received in the third quarter, increased net income by $3.3 million, or $0.07 per unit. Excluding the impact of these and other special items, adjusted earnings were $38.0 million, or $0.81 per unit, for the third quarter of 2007.
NuStar Energy L.P. also announced this morning a proposed acquisition of CITGO Asphalt Refining Company’s asphalt operations and assets for $450 million plus working capital estimated to be $100 million at closing.
“We are excited about the significant opportunities we have by acquiring CITGO’s asphalt operations on the U.S. East Coast,” said Curt Anastasio, NuStar Energy L.P.’s Chief Executive Officer. “As refiners continue to add cokers to be able to process more of the bottom of the barrel, we expect this will reduce asphalt feedstocks resulting in higher margins. Since we are acquiring CITGO’s asphalt assets at significantly less than replacement value, we believe we are poised to benefit from these positive fundamentals. We anticipate closing around year-end and expect to quickly integrate these assets.
“I am also pleased to report yet another increase in the quarterly distribution, which is the second consecutive increase in the quarterly distribution this year.
“We continue to make substantial progress on our $400 million construction program, having completed over $80 million of terminal projects to date. With the exception of one of our Amsterdam projects, which has been pushed back slightly to the first quarter of 2008, we continue to expect the remaining projects will be completed on-time with the majority of them in-service by early to mid-2008. We have recently completed our strategic planning process and have identified many internal growth opportunities that will allow us to continue growing the partnership beyond 2008. We have already started developing several of these projects and hope to have more information on these in the near future.
“Looking ahead to the fourth quarter of 2007, we believe results will be in the range of $0.50 to $0.60 per unit and we continue to expect that earnings before interest, taxes, depreciation and amortization (“EBITDA”) will be higher in 2007 than in 2006,” said Anastasio.
A conference call with management is scheduled for 11:00 a.m. ET (10:00 a.m. CT) today, November 7, 2007, to discuss the proposed acquisition of CITGO Asphalt Refining Company and respond to questions regarding the financial and operational results for the third quarter of 2007. Investors interested in listening to the presentation may call 800/622-7620, passcode 20992515. International callers may access the presentation by dialing 706/645-0327, passcode 20992515. The company intends to have a playback available following the presentation, which may be accessed by calling 800/642-1687, passcode 20992515. A live broadcast of the conference call will also be available on the partnership’s Web site at www.nustarenergy.com. In addition, further information about the transaction is provided in a management presentation posted to the NuStar Energy L.P. and NuStar GP Holdings, LLC Web sites at www.nustarenergy.com and www.nustargp.com in the Investors portion of the Web sites.
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NuStar Energy L.P. is a publicly traded, limited partnership based in San Antonio, with 9,113 miles of pipeline, 85 terminal facilities and four crude oil storage tank facilities. The second largest independent liquids terminal operator in the world, NuStar has operations in the United States, the Netherlands Antilles, Canada, Mexico, the Netherlands and the United Kingdom. The partnership’s combined system has over 81 million barrels of storage capacity, and includes crude oil and refined product pipelines, refined product terminals, a petroleum and specialty liquids storage and terminaling business, as well as crude oil storage facilities. For more information, visit NuStar Energy L.P.'s Web site at www.nustarenergy.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995 regarding future events and the future financial performance of NuStar Energy L.P. 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 2006 annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission.