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,~~June 30, 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,~~July 31, 2021 was ~~109,526,320.~~109,532,470.

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,~~June 30, 2021 and December 31, 2020	3

	Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended ~~March 31,~~June 30, 2021 and 2020	4

	Consolidated Statements of Cash Flows for the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2021 and 2020	5

	Consolidated Statements of Partners’ Equity and Mezzanine Equity for the Three and Six Months Ended ~~March 31,~~June 30, 2021 and 2020	6

	Condensed Notes to Consolidated Financial Statements	78

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1819

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3033

Item 4.	Controls and Procedures	3033

PART II – OTHER INFORMATION

Item 1A.	Risk Factors	3134

Item 6.	Exhibits	3236

SIGNATURES		3337

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			June 30, 2021		December 31, 2020
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	28,246	$	153,625	Cash and cash equivalents	$	23,500	$	153,625
Accounts receivable, net	Accounts receivable, net	121,253		133,473		Accounts receivable, net	143,392		133,473

Inventories	Inventories	17,534		11,059		Inventories	12,812		11,059

Prepaid and other current assets	Prepaid and other current assets	15,719		25,400		Prepaid and other current assets	30,177		25,400

Total current assets	Total current assets	182,752		323,557		Total current assets	209,881		323,557
Property, plant and equipment, at cost	Property, plant and equipment, at cost	6,205,276		6,164,742		Property, plant and equipment, at cost	6,255,183		6,164,742
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(2,264,511)		(2,207,230)		Accumulated depreciation and amortization	(2,323,020)		(2,207,230)
Property, plant and equipment, net	Property, plant and equipment, net	3,940,765		3,957,512		Property, plant and equipment, net	3,932,163		3,957,512
Intangible assets, net	Intangible assets, net	617,353		630,209		Intangible assets, net	604,497		630,209
Goodwill	Goodwill	766,416		766,416		Goodwill	766,416		766,416

Other long-term assets, net	Other long-term assets, net	136,586		139,324		Other long-term assets, net	133,023		139,324
Total assets	Total assets	$	5,643,872	$	5,817,018	Total assets	$	5,645,980	$	5,817,018
Liabilities, Mezzanine Equity and Partners’ Equity	Liabilities, Mezzanine Equity and Partners’ Equity					Liabilities, Mezzanine Equity and Partners’ Equity
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	71,623	$	71,731	Accounts payable	$	70,484	$	71,731

Current portion of finance lease obligations	Current portion of finance lease obligations	3,517		3,839		Current portion of finance lease obligations	3,522		3,839

Accrued interest payable	Accrued interest payable	77,996		50,847		Accrued interest payable	39,161		50,847
Accrued liabilities	Accrued liabilities	58,761		77,770		Accrued liabilities	60,711		77,770

Taxes other than income tax	Taxes other than income tax	12,968		16,998		Taxes other than income tax	15,432		16,998

Total current liabilities	Total current liabilities	224,865		221,185		Total current liabilities	189,310		221,185
Long-term debt, less current portion	Long-term debt, less current portion	3,446,604		3,593,496		Long-term debt, less current portion	3,496,933		3,593,496

Deferred income tax liability	Deferred income tax liability	13,200		13,011		Deferred income tax liability	12,252		13,011
Other long-term liabilities	Other long-term liabilities	156,338		157,825		Other long-term liabilities	152,047		157,825
Total liabilities	Total liabilities	3,841,007		3,985,517		Total liabilities	3,850,542		3,985,517

Commitments and contingencies (Note 6)	Commitments and contingencies (Note 6)	0		0		Commitments and contingencies (Note 6)	0		0

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
Series D preferred limited partners (23,246,650 preferred units outstanding as of June 30, 2021 and December 31, 2020) (Note 8)						Series D preferred limited partners (23,246,650 preferred units outstanding as of June 30, 2021 and December 31, 2020) (Note 8)	607,718		599,542

Partners’ equity (Note 9):	Partners’ equity (Note 9):					Partners’ equity (Note 9):
Preferred limited partners	Preferred limited partners					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
Series A (9,060,000 units outstanding as of June 30, 2021 and December 31, 2020)						Series A (9,060,000 units outstanding as of June 30, 2021 and December 31, 2020)	218,307		218,307
Series B (15,400,000 units outstanding as of June 30, 2021 and December 31, 2020)						Series B (15,400,000 units outstanding as of June 30, 2021 and December 31, 2020)	371,476		371,476
Series C (6,900,000 units outstanding as of June 30, 2021 and December 31, 2020)						Series C (6,900,000 units outstanding as of June 30, 2021 and December 31, 2020)	166,518		166,518
Common limited partners (109,532,026 and 109,468,127 common units outstanding as of June 30, 2021 and December 31, 2020, respectively)						Common limited partners (109,532,026 and 109,468,127 common units outstanding as of June 30, 2021 and December 31, 2020, respectively)	523,711		572,314

Accumulated other comprehensive loss	Accumulated other comprehensive loss	(94,536)		(96,656)		Accumulated other comprehensive loss	(92,292)		(96,656)
Total partners’ equity	Total partners’ equity	1,199,302		1,231,959		Total partners’ equity	1,187,720		1,231,959

Total liabilities, mezzanine equity and partners’ equity	Total liabilities, mezzanine equity and partners’ equity	$	5,643,872	$	5,817,018	Total liabilities, mezzanine equity and partners’ equity	$	5,645,980	$	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,				Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020				2021		2020		2021		2020
Revenues:	Revenues:						Revenues:
Service revenues	Service revenues	$	271,883	$	316,746		Service revenues	$	300,788	$	284,151	$	572,671	$	600,897
Product sales	Product sales	89,763		76,045			Product sales	126,305		55,389		216,068		131,434
Total revenues	Total revenues	361,646		392,791			Total revenues	427,093		339,540		788,739		732,331
Costs and expenses:	Costs and expenses:						Costs and expenses:
Costs associated with service revenues:	Costs associated with service revenues:						Costs associated with service revenues:
Operating expenses (excluding depreciation and amortization expense)	Operating expenses (excluding depreciation and amortization expense)	87,287		100,182			Operating expenses (excluding depreciation and amortization expense)	100,493		101,078		187,780		201,260
Depreciation and amortization expense	Depreciation and amortization expense	68,418		68,061			Depreciation and amortization expense	68,964		69,214		137,382		137,275
Total costs associated with service revenues	Total costs associated with service revenues	155,705		168,243			Total costs associated with service revenues	169,457		170,292		325,162		338,535
Cost associated with product sales	Cost associated with product sales	81,113		67,450			Cost associated with product sales	112,641		50,676		193,754		118,126

Goodwill impairment loss	Goodwill impairment loss	0		225,000			Goodwill impairment loss	0		0		0		225,000
General and administrative expenses (excluding depreciation and amortization expense)	General and administrative expenses (excluding depreciation and amortization expense)	24,492		22,971			General and administrative expenses (excluding depreciation and amortization expense)	27,477		23,700		51,969		46,671
Other depreciation and amortization expense	Other depreciation and amortization expense	2,047		2,186			Other depreciation and amortization expense	1,913		2,171		3,960		4,357

Total costs and expenses	Total costs and expenses	263,357		485,850			Total costs and expenses	311,488		246,839		574,845		732,689
Operating income (loss)	Operating income (loss)	98,289		(93,059)			Operating income (loss)	115,605		92,701		213,894		(358)

Interest expense, net	Interest expense, net	(54,918)		(47,494)			Interest expense, net	(53,780)		(59,499)		(108,698)		(106,993)

Loss on extinguishment of debt							Loss on extinguishment of debt	0		(3,842)		0		(3,842)
Other income (expense), net	Other income (expense), net	398		(6,489)			Other income (expense), net	2,896		2,216		3,294		(4,273)
Income (loss) before income tax expense	Income (loss) before income tax expense	43,769		(147,042)			Income (loss) before income tax expense	64,721		31,576		108,490		(115,466)
Income tax expense	Income tax expense	1,512		599			Income tax expense	1,338		1,810		2,850		2,409
Net income (loss)	Net income (loss)	$	42,257	$	(147,641)		Net income (loss)	$	63,383	$	29,766	$	105,640	$	(117,875)

Basic and diluted net income (loss) per common unit (Note 10)	Basic and diluted net income (loss) per common unit (Note 10)	$	0.05	$	(1.68)		Basic and diluted net income (loss) per common unit (Note 10)	$	0.25	$	(0.06)	$	0.30	$	(1.74)

Basic and diluted weighted-average common units outstanding	Basic and diluted weighted-average common units outstanding	109,506,222		108,897,400			Basic and diluted weighted-average common units outstanding	109,529,658		109,194,722		109,518,004		109,046,061

Comprehensive income (loss)	Comprehensive income (loss)	$	44,377	$	(183,954)		Comprehensive income (loss)	$	65,627	$	32,520	$	110,004	$	(151,434)

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,					Six Months Ended June 30,
		2021		2020			2021		2020
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income (loss)	Net income (loss)	$	42,257	$	(147,641)	Net income (loss)	$	105,640	$	(117,875)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:	Adjustments to reconcile net income (loss) to net cash provided by operating activities:					Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization expense	Depreciation and amortization expense	70,465		70,247		Depreciation and amortization expense	141,342		141,632
Amortization of unit-based compensation	Amortization of unit-based compensation	3,871		2,585		Amortization of unit-based compensation	7,154		5,193
Amortization of debt related items	Amortization of debt related items	3,042		1,462		Amortization of debt related items	6,025		3,976

Goodwill impairment loss	Goodwill impairment loss	0		225,000		Goodwill impairment loss	0		225,000

Changes in current assets and current liabilities (Note 11)	Changes in current assets and current liabilities (Note 11)	24,397		(9,785)		Changes in current assets and current liabilities (Note 11)	(43,333)		(6,174)
Decrease in other long-term assets	Decrease in other long-term assets	2,381		2,303		Decrease in other long-term assets	5,440		5,980
(Decrease) increase in other long-term liabilities	(Decrease) increase in other long-term liabilities	(1,678)		948		(Decrease) increase in other long-term liabilities	(6,162)		3,601
Other, net	Other, net	922		6,309		Other, net	(1,869)		9,108
Net cash provided by operating activities	Net cash provided by operating activities	145,657		151,428		Net cash provided by operating activities	214,237		270,441
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Capital expenditures	Capital expenditures	(40,463)		(56,283)		Capital expenditures	(87,194)		(96,358)
Change in accounts payable related to capital expenditures	Change in accounts payable related to capital expenditures	(5,449)		(15,706)		Change in accounts payable related to capital expenditures	(5,345)		(15,509)
Proceeds from sale or disposition of assets	Proceeds from sale or disposition of assets	130		565		Proceeds from sale or disposition of assets	304		5,787

Net cash used in investing activities	Net cash used in investing activities	(45,782)		(71,424)		Net cash used in investing activities	(92,235)		(106,080)
Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:

Proceeds from Term Loan, net of discount and issuance costs						Proceeds from Term Loan, net of discount and issuance costs	0		463,051

Proceeds from long-term debt borrowings	Proceeds from long-term debt borrowings	270,400		135,200		Proceeds from long-term debt borrowings	490,500		326,984
Proceeds from short-term debt borrowings	Proceeds from short-term debt borrowings	0		52,000		Proceeds from short-term debt borrowings	0		52,000

Long-term debt repayments	Long-term debt repayments	(418,100)		(104,615)		Long-term debt repayments	(588,300)		(704,715)
Short-term debt repayments	Short-term debt repayments	0		(47,500)		Short-term debt repayments	0		(57,500)

Distributions to preferred unitholders	Distributions to preferred unitholders	(31,887)		(30,423)		Distributions to preferred unitholders	(63,774)		(60,846)
Distributions to common unitholders	Distributions to common unitholders	(43,811)		(65,169)		Distributions to common unitholders	(87,623)		(108,846)

Payments for termination of interest rate swaps						Payments for termination of interest rate swaps	0		(49,225)
Payment of tax withholding for unit-based compensation	Payment of tax withholding for unit-based compensation	(601)		(8,820)		Payment of tax withholding for unit-based compensation	(632)		(8,820)
Increase (decrease) in cash book overdrafts	Increase (decrease) in cash book overdrafts	267		(1,194)		Increase (decrease) in cash book overdrafts	458		(1,359)
Other, net	Other, net	(1,997)		(6,568)		Other, net	(3,482)		(13,043)
Net cash used in financing activities	Net cash used in financing activities	(225,729)		(77,089)		Net cash used in financing activities	(252,853)		(162,319)
Effect of foreign exchange rate changes on cash	Effect of foreign exchange rate changes on cash	475		(1,403)		Effect of foreign exchange rate changes on cash	727		(945)
Net (decrease) increase in cash, cash equivalents and restricted cash	Net (decrease) increase in cash, cash equivalents and restricted cash	(125,379)		1,512		Net (decrease) increase in cash, cash equivalents and restricted cash	(130,124)		1,097
Cash, cash equivalents and restricted cash as of the beginning of the period	Cash, cash equivalents and restricted cash as of the beginning of the period	162,426		24,980		Cash, cash equivalents and restricted cash as of the beginning of the period	162,426		24,980
Cash, cash equivalents and restricted cash as of the end of the period	Cash, cash equivalents and restricted cash as of the end of the period	$	37,047	$	26,492	Cash, cash equivalents and restricted cash as of the end of the period	$	32,302	$	26,077

See Condensed Notes to Consolidated Financial Statements.

Table of Contents

NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY AND MEZZANINE EQUITY

Three Months Ended June 30, 2021 and 2020

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


		Limited Partners								Mezzanine Equity					Limited Partners								Mezzanine Equity
		Preferred		Common		Accumulated Other Comprehensive Loss		Total Partners’ Equity (Note 9)		Series D Preferred Limited Partners (Note 8)		Total			Preferred		Common		Accumulated Other Comprehensive Loss		Total Partners’ Equity (Note 9)		Series D Preferred Limited Partners (Note 8)		Total
Balance as of January 1, 2021		$	756,301	$	572,314	$	(96,656)	$	1,231,959	$	599,542	$	1,831,501
Balance as of March 31, 2021														Balance as of March 31, 2021	$	756,301	$	537,537	$	(94,536)	$	1,199,302	$	603,563	$	1,802,865
Net income	Net income	16,033		10,370		0		26,403		15,854		42,257		Net income	16,033		31,496		0		47,529		15,854		63,383
Other comprehensive income	Other comprehensive income	0		0		2,120		2,120		—		2,120		Other comprehensive income	0		0		2,244		2,244		—		2,244
Distributions to partners:	Distributions to partners:													Distributions to partners:
Series A, B and C preferred	Series A, B and C preferred	(16,033)		—		—		(16,033)		—		(16,033)		Series A, B and C preferred	(16,033)		—		—		(16,033)		—		(16,033)
Common ($0.40 per unit)	Common ($0.40 per unit)	—		(43,811)		—		(43,811)		—		(43,811)		Common ($0.40 per unit)	—		(43,812)		—		(43,812)		—		(43,812)
Series D preferred	Series D preferred	—		—		—		—		(15,854)		(15,854)		Series D preferred	—		—		—		—		(15,854)		(15,854)

Unit-based compensation	Unit-based compensation	0		2,678		0		2,678		—		2,678		Unit-based compensation	0		2,652		0		2,652		—		2,652
Series D preferred unit accretion	Series D preferred unit accretion	—		(4,021)		—		(4,021)		4,021		0		Series D preferred unit accretion	—		(4,155)		—		(4,155)		4,155		0
Other	Other	0		7		0		7		0		7		Other	0		(7)		0		(7)		0		(7)
Balance as of March 31, 2021		$	756,301	$	537,537	$	(94,536)	$	1,199,302	$	603,563	$	1,802,865
Balance as of June 30, 2021														Balance as of June 30, 2021	$	756,301	$	523,711	$	(92,292)	$	1,187,720	$	607,718	$	1,795,438

Balance as of January 1, 2020 $ 756,301 $ 1,087,805 $ (67,896) $ 1,776,210 $ 581,935 $ 2,358,145
Net income (loss) 16,033 (178,064) 0 (162,031) 14,390 (147,641)
Other comprehensive loss 0 0 (36,313) (36,313) — (36,313)
Distributions to partners:
Series A, B and C preferred (16,033) — — (16,033) — (16,033)
Common ($0.60 per unit) — (65,169) — (65,169) — (65,169)
Series D preferred — — — — (14,390) (14,390)
Unit-based compensation 0 16,051 0 16,051 — 16,051
Series D Preferred Unit accretion 0 (4,902) 0 (4,902) 4,902 0
Other 0 1 0 1 0 1
Balance as of March 31, 2020 $ 756,301 $ 855,722 $ (104,209) $ 1,507,814 $ 586,837 $ 2,094,651




Balance as of March 31, 2020	$	756,301	$	855,722	$	(104,209)	$	1,507,814	$	586,837	$	2,094,651
Net income (loss)	16,033		(918)		0		15,115		14,651		29,766
Other comprehensive income	0		0		2,754		2,754		—		2,754
Distributions to partners:
Series A, B and C preferred	(16,033)		—		—		(16,033)		—		(16,033)
Common ($0.40 per unit)	—		(43,677)		—		(43,677)		—		(43,677)
Series D preferred	—		—		—		—		(14,651)		(14,651)


Unit-based compensation	0		2,056		0		2,056		—		2,056
Series D Preferred Unit accretion	—		(5,064)		—		(5,064)		5,064		0
Other	0		(1)		0		(1)		(6)		(7)
Balance as of June 30, 2020	$	756,301	$	808,118	$	(101,455)	$	1,462,964	$	591,895	$	2,054,859

See Condensed Notes to Consolidated Financial Statements.

Table of Contents

NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY AND MEZZANINE EQUITY

Six Months Ended June 30, 2021 and 2020

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


	Limited Partners								Mezzanine Equity
	Preferred		Common		Accumulated Other Comprehensive Loss		Total Partners’ Equity (Note 9)		Series D Preferred Limited Partners (Note 8)		Total
Balance as of January 1, 2021	$	756,301	$	572,314	$	(96,656)	$	1,231,959	$	599,542	$	1,831,501
Net income	32,066		41,866		0		73,932		31,708		105,640
Other comprehensive income	0		0		4,364		4,364		—		4,364
Distributions to partners:
Series A, B and C preferred	(32,066)		—		—		(32,066)		—		(32,066)
Common ($0.80 per unit)	—		(87,623)		—		(87,623)		—		(87,623)
Series D preferred	—		—		—		—		(31,708)		(31,708)



Unit-based compensation	0		5,330		0		5,330		—		5,330
Series D preferred unit accretion	—		(8,176)		—		(8,176)		8,176		0

Balance as of June 30, 2021	$	756,301	$	523,711	$	(92,292)	$	1,187,720	$	607,718	$	1,795,438





Balance as of January 1, 2020	$	756,301	$	1,087,805	$	(67,896)	$	1,776,210	$	581,935	$	2,358,145
Net income (loss)	32,066		(178,982)		0		(146,916)		29,041		(117,875)
Other comprehensive loss	0		0		(33,559)		(33,559)		—		(33,559)
Distributions to partners:
Series A, B and C preferred	(32,066)		—		—		(32,066)		—		(32,066)
Common ($1.00 per unit)	—		(108,846)		—		(108,846)		—		(108,846)
Series D preferred	—		—		—		—		(29,041)		(29,041)



Unit-based compensation	0		18,107		0		18,107		—		18,107
Series D Preferred Unit accretion	—		(9,966)		—		(9,966)		9,966		0
Other	0		0		0		0		(6)		(6)
Balance as of June 30, 2020	$	756,301	$	808,118	$	(101,455)	$	1,462,964	$	591,895	$	2,054,859

See Condensed Notes to Consolidated Financial Statements.

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NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND BASIS OF PRESENTATION

Organization and Operations

NuStar Energy L.P. (NYSE: NS) is a Delaware limited partnership primarily engaged in the transportation, ~~of petroleum products and anhydrous ammonia, and the~~ terminalling and storage of petroleum products and renewable ~~fuels.~~fuels and the transportation of anhydrous ammonia. Unless otherwise indicated, the terms “NuStar Energy,” “NS,” “the Partnership,” “we,” “our” and “us” are used in this report to refer to NuStar Energy L.P., to one or more of our consolidated subsidiaries or to all of them taken as a whole. Our business is managed under the direction of the board of directors of NuStar GP, LLC, the general partner of our general partner, Riverwalk Logistics, L.P., both of which are indirectly wholly owned subsidiaries of ours.

We conduct our operations through our subsidiaries, primarily NuStar Logistics, L.P. (NuStar Logistics) and NuStar Pipeline Operating Partnership L.P. (NuPOP). We have 3 business segments: pipeline, storage and fuels marketing.

Recent Developments

COVID-19. The coronavirus, or COVID-19, had a severe negative impact on global economic activity during 2020, significantly reducing demand for petroleum products and increasing the volatility of crude oil prices, beginning in March 2020. Amid signs of stabilization and improvement across the U.S. economy in 2021, ongoing uncertainty surrounding the COVID-19 pandemic has caused and may continue to cause volatility and could have a significant impact on management’s estimates and assumptions in 2021 and beyond.

Senior Notes. On February 1, 2021, we repaid our $300.0 million of 6.75% senior notes at maturity with borrowings under our revolving credit agreement.

Term Loan Credit Agreement. On February 16, 2021, we terminated an unsecured term loan credit agreement with certain lenders and Oaktree Fund Administration, LLC, as administrative agent for the lenders (the Term Loan). Please refer to Note 5 for further discussion about the Term Loan.

Selby Terminal Fire. On October 15, 2019, our terminal facility in Selby, California experienced a fire that destroyed two storage tanks and temporarily shut down the terminal. For the ~~three~~six months ended ~~March 31,~~June 30, 2021, we received insurance proceeds of $20.5 million and for the year ended December 31, 2020, we received insurance proceeds of $35.0 million, including ~~$11.9~~$25.0 million infor the ~~first quarter of~~six months ended June 30, 2020. Gains from business interruption insurance of $4.0 million and $3.1 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021 and ~~March 31,~~June 30, 2020, respectively, are included in “Operating expenses” in the condensed consolidated statements of comprehensive income (loss). Insurance proceeds relate to cleanup costs and business interruption and are therefore included in “Cash flows from operating activities” in the consolidated statement of cash flows. We believe we have adequate insurance to offset additional costs.

Basis of Presentation

These unaudited condensed consolidated financial statements include the accounts of the Partnership and subsidiaries in which the Partnership has a controlling interest. Inter-partnership balances and transactions have been eliminated in consolidation.

These unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (GAAP) for interim financial information and with the instructions to the Quarterly Report on Form 10-Q and Article 10 of Regulation S-X of the Securities Exchange Act of 1934. Accordingly, they do not include all of the information and notes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included, and all disclosures are adequate. All such adjustments are of a normal recurring nature unless disclosed otherwise. Operating results for the ~~three~~six months ended ~~March 31,~~June 30, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2020.

We have reclassified certain previously reported amounts in the consolidated financial statements and notes to conform to current-period presentation.

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NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

2. NEW ACCOUNTING PRONOUNCEMENT

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

In August 2020, the Financial Accounting Standards Board (FASB) issued guidance intended to simplify the accounting for convertible instruments by eliminating certain accounting models for convertible debt instruments and convertible preferred ~~stock. In addition,~~stock, requiring the ~~guidance amends~~calculation of diluted earnings-per-unit to include the ~~derivatives scope exception~~effect of potential unit settlement for ~~contracts~~any convertible instruments that may be settled in ~~an entity’s own equity,~~either cash or units, and amending the disclosure requirements for convertible ~~instruments, and certain earnings-per-unit guidance.~~instruments. The guidance is effective for annual periods

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~~NUSTAR ENERGY L.P. AND SUBSIDIARIES~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

beginning after December 15, 2021, and early adoption is permitted for annual periods beginning after December 15, 2020. Amendments may be applied using either a modified retrospective approach or a fully retrospective approach. We plan to adopt the amended guidance on January 1, 2022 ~~and~~using the modified retrospective approach. We are currently assessing the impact of this amended guidance on our financial position, results of operations and ~~disclosures. We~~disclosures and plan to provide additional information about the expected impact at a future date.

3. GOODWILL IMPAIRMENT

In March 2020, the COVID-19 pandemic and actions taken by the Organization of Petroleum Exporting Countries and other oil-producing nations (OPEC+) resulted in severe disruptions in the capital and commodities markets, which led to significant decline in our unit price. As a result, our equity market capitalization fell significantly. The decline in crude oil prices and demand for petroleum products also led to a decline in expected earnings from some of our goodwill reporting units. These factors and others related to COVID-19 and OPEC+ caused us to conclude there were triggering events that occurred in March 2020 that required us to perform a goodwill impairment test as of March 31, 2020. We recognized a goodwill impairment charge of $225.0 million in the first quarter of 2020, which is reported in the pipeline segment. Our assessment did not identify any other reporting units at risk of a goodwill impairment.

We calculated the estimated fair value of each of our reporting units using a weighted-average of values determined from an income approach and a market approach. The income approach involves estimating the fair value of each reporting unit by discounting its estimated future cash flows using a discount rate that would be consistent with a market participant’s assumption. The market approach bases the fair value measurement on information obtained from observed stock prices of public companies and recent merger and acquisition transaction data of comparable entities. In order to estimate the fair value of goodwill, management must make certain estimates and assumptions that affect the total fair value of the reporting unit including, among other things, an assessment of market conditions, projected cash flows, discount rates and growth rates. Management’s estimates of projected cash flows related to the reporting unit include, but are not limited to, future earnings of the reporting unit, assumptions about the use or disposition of assets included in the reporting unit, estimated remaining lives of those assets, and future expenditures necessary to maintain the asset’s existing service potential. The assumptions in the fair value measurement reflect the current market environment, industry-specific factors and company-specific factors.

We assess goodwill for impairment annually on October 1, or more frequently if events or changes in circumstances indicate it might be impaired, and completed our most recent quantitative assessment on October 1, 2020. Although we determined that 0 impairment charges resulted from our October 1, 2020 impairment assessment, the fair value of the crude oil pipelines reporting unit, which is included in the pipeline reporting segment, exceeded its carrying value by approximately 4.0%. The goodwill associated with the crude oil pipelines reporting unit totaled $308.6 million as of ~~March 31,~~June 30, 2021 and October 1, 2020. Considering that the carrying value of the reporting unit was written down to its fair value with the first quarter of 2020 impairment charge discussed above, changes to certain assumptions used in our estimate could cause the fair value to be less than the carrying value of the crude oil pipelines reporting unit, resulting in an impairment. ~~Through the filing date of this report, we~~We did not identify any factors that warrant an interim goodwill impairment test or an evaluation of the recoverability of the carrying value of our long-lived assets ~~or goodwill~~ as of ~~March 31,~~June 30, 2021.

Management’s estimates are based on numerous assumptions about future operations and market conditions, which we believe to be reasonable but are inherently uncertain. The uncertainties underlying our assumptions and estimates, including uncertainty surrounding the COVID-19 pandemic, could differ significantly from actual results and lead to a different determination of the fair value of our assets.

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NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

4. REVENUE FROM CONTRACTS WITH CUSTOMERS

Contract Assets and Contract Liabilities

The following table provides information about contract assets and contract liabilities from contracts with customers:


		2021				2020					2021				2020
		Contract Assets		Contract Liabilities		Contract Assets		Contract Liabilities			Contract Assets		Contract Liabilities		Contract Assets		Contract Liabilities
		(Thousands of Dollars)									(Thousands of Dollars)
Balances as of January 1:	Balances as of January 1:									Balances as of January 1:
Current portion	Current portion	$	2,694	$	(22,019)	$	2,140	$	(21,083)	Current portion	$	2,694	$	(22,019)	$	2,140	$	(21,083)
Noncurrent portion	Noncurrent portion	932		(47,537)		1,003		(40,289)		Noncurrent portion	932		(47,537)		1,003		(40,289)
Total	Total	3,626		(69,556)		3,143		(61,372)		Total	3,626		(69,556)		3,143		(61,372)

Activity:	Activity:									Activity:
Additions	Additions	92		(9,658)		1,357		(11,883)		Additions	1,898		(19,401)		2,670		(34,156)
Transfer to accounts receivable	Transfer to accounts receivable	(1,990)		—		(1,289)		—		Transfer to accounts receivable	(2,055)		—		(2,258)		—
Transfer to revenues	Transfer to revenues	(125)		15,877		0		10,765		Transfer to revenues	(250)		25,987		(125)		29,848

Total	Total	(2,023)		6,219		68		(1,118)		Total	(407)		6,586		287		(4,308)

Balances as of March 31:
Balances as of June 30:										Balances as of June 30:
Current portion	Current portion	733		(16,524)		1,812		(20,421)		Current portion	2,590		(17,002)		2,218		(20,235)
Noncurrent portion	Noncurrent portion	870		(46,813)		1,399		(42,069)		Noncurrent portion	629		(45,968)		1,212		(45,445)
Total	Total	$	1,603	$	(63,337)	$	3,211	$	(62,490)	Total	$	3,219	$	(62,970)	$	3,430	$	(65,680)

Remaining Performance Obligations

The following table presents our estimated revenue from contracts with customers for remaining performance obligations that has not yet been recognized, representing our contractually committed revenue as of ~~March 31,~~June 30, 2021 (in thousands of dollars):


2021 (remaining)	2021 (remaining)	$	374,191	2021 (remaining)	$	245,634
2022	2022	377,763		2022	399,345
2023	2023	266,357		2023	280,095
2024	2024	185,483		2024	189,149
2025	2025	128,561		2025	130,697
Thereafter	Thereafter	176,465		Thereafter	176,403
Total	Total	$	1,508,820	Total	$	1,421,323

Our contractually committed revenue, for purposes of the tabular presentation above, is generally limited to customer service contracts that have fixed pricing and fixed volume terms and conditions, generally including contracts with payment obligations for take-or-pay minimum volume commitments.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Disaggregation of Revenues

The following table disaggregates our revenues:


		Three Months Ended March 31,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020					2021		2020		2021		2020
		(Thousands of Dollars)				(Thousands of Dollars)
Pipeline segment:	Pipeline segment:							Pipeline segment:
Crude oil pipelines	Crude oil pipelines	$	74,588	$	91,722			Crude oil pipelines	$	82,034	$	79,110	$	156,622	$	170,832
Refined products and ammonia pipelines (excluding lessor revenues)	Refined products and ammonia pipelines (excluding lessor revenues)	94,640		103,134				Refined products and ammonia pipelines (excluding lessor revenues)	110,872		86,173		205,512		189,307
Total pipeline segment revenues from contracts with customers	Total pipeline segment revenues from contracts with customers	169,228		194,856				Total pipeline segment revenues from contracts with customers	192,906		165,283		362,134		360,139
Lessor revenues	Lessor revenues	0		825				Lessor revenues	0		825		0		1,650
Total pipeline segment revenues	Total pipeline segment revenues	169,228		195,681				Total pipeline segment revenues	192,906		166,108		362,134		361,789

Storage segment:	Storage segment:							Storage segment:
Throughput terminals	Throughput terminals	24,794		38,723				Throughput terminals	35,143		32,199		59,937		70,922
Storage terminals (excluding lessor revenues)	Storage terminals (excluding lessor revenues)	73,416		74,166				Storage terminals (excluding lessor revenues)	73,742		76,880		147,158		151,046
Total storage segment revenues from contracts with customers	Total storage segment revenues from contracts with customers	98,210		112,889				Total storage segment revenues from contracts with customers	108,885		109,079		207,095		221,968
Lessor revenues	Lessor revenues	10,364		10,328				Lessor revenues	10,363		10,328		20,727		20,656
Total storage segment revenues	Total storage segment revenues	108,574		123,217				Total storage segment revenues	119,248		119,407		227,822		242,624

Fuels marketing segment:	Fuels marketing segment:							Fuels marketing segment:
Revenues from contracts with customers	Revenues from contracts with customers	83,855		73,902				Revenues from contracts with customers	114,939		54,025		198,794		127,927

Consolidation and intersegment eliminations	Consolidation and intersegment eliminations	(11)		(9)				Consolidation and intersegment eliminations	0		0		(11)		(9)

Total revenues	Total revenues	$	361,646	$	392,791			Total revenues	$	427,093	$	339,540	$	788,739	$	732,331

5. DEBT

Revolving Credit Agreement

On February 16, 2021, NuStar Logistics amended its $1.0 billion revolving credit agreement due October 27, 2023 (the Revolving Credit Agreement) to, among other things, expand certain adjustments related to our maximum consolidated debt coverage ratio and minimum consolidated interest coverage ratio.

As of ~~March 31,~~June 30, 2021, we had ~~$157.0~~$185.0 million of borrowings outstanding and ~~$837.8~~$809.8 million available for borrowing under the Revolving Credit Agreement. Letters of credit issued under the Revolving Credit Agreement totaled $5.2 million as of ~~March 31,~~June 30, 2021 and ~~restrict~~limit the amount we can borrow under the Revolving Credit Agreement. Obligations under the Revolving Credit Agreement are guaranteed by NuStar Energy and NuPOP. The Revolving Credit Agreement provides for U.S. dollar borrowings, which bear interest, at our option, based on an alternative base rate or a LIBOR-based rate. The interest rate on the Revolving Credit Agreement is subject to adjustment if our debt rating is downgraded (or upgraded) by certain credit rating agencies. As of ~~March 31,~~June 30, 2021, our weighted-average interest rate related to borrowings under the Revolving Credit Agreement was ~~2.7%~~2.6%.

The Revolving Credit Agreement is subject to maximum consolidated debt coverage ratio and minimum consolidated interest coverage ratio requirements, which may limit the amount we can borrow under the Revolving Credit Agreement to an amount less than the total amount available for borrowing. For the rolling period of four quarters ~~ending March 31,~~ended June 30, 2021, the consolidated debt coverage ratio (as defined in the Revolving Credit Agreement) could not exceed 5.00-to-1.00 and the consolidated interest coverage ratio (as defined in the Revolving Credit Agreement) must not be less than 1.75-to-1.00. As of ~~March 31,~~June 30, 2021, we believe that we are in compliance with the covenants in the Revolving Credit Agreement.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NuStar Logistics Senior Notes

Senior Note Repayment. We repaid our $300.0 million of 6.75% senior notes due February 1, 2021 with borrowings under our Revolving Credit Agreement.

Current Maturities. We expect to fund senior note maturities in February 2022 by utilizing borrowings under our Revolving Credit Agreement. Therefore, these senior note maturities are classified as long-term debt.

Term Loan Credit Agreement

On April 19, 2020, NuStar Energy and NuStar Logistics entered into an unsecured term loan credit agreement with certain lenders and Oaktree Fund Administration, LLC, as administrative agent for the lenders. The Term Loan provided for an aggregate commitment of up to $750.0 million pursuant to a three-year unsecured term loan credit facility. NuStar Logistics drew $500.0 million on April 21, 2020, which we repaid on September 16, 2020. On February 16, 2021, we terminated the Term Loan.

Receivables Financing Agreement

NuStar Energy and NuStar Finance LLC (NuStar Finance), a special purpose entity and wholly owned subsidiary of NuStar Energy, are parties to a $100.0 million receivables financing agreement with a third-party lender (the Receivables Financing Agreement) and agreements with certain of NuStar Energy’s wholly owned subsidiaries (collectively with the Receivables Financing Agreement, the Securitization Program). NuStar Energy provides a performance guarantee in connection with the Securitization Program. NuStar Finance’s sole activity consists of purchasing receivables from NuStar Energy’s subsidiaries that participate in the Securitization Program and providing these receivables as collateral for NuStar Finance’s revolving borrowings under the Securitization Program. NuStar Finance is a separate legal entity and the assets of NuStar Finance, including these accounts receivable, are not available to satisfy the claims of creditors of NuStar Energy, its subsidiaries selling receivables under the Securitization Program or their affiliates. The amount available for borrowing is based on the availability of eligible receivables and other customary factors and conditions.

Borrowings by NuStar Finance under the Receivables Financing Agreement bear interest at the applicable bank rate, as defined under the Receivables Financing Agreement. The weighted average interest rate related to outstanding borrowings under the Securitization Program as of ~~March 31,~~June 30, 2021 was 2.3%. As of ~~March 31,~~June 30, 2021, ~~$111.2~~$125.4 million of our accounts receivable was included in the Securitization Program. The amount of borrowings outstanding under the Receivables Financing Agreement totaled ~~$52.3~~$74.2 million as of ~~March 31,~~June 30, 2021.

Fair Value of Long-Term Debt

The estimated fair values and carrying amounts of long-term debt, excluding finance leases, were as follows:


		March 31, 2021		December 31, 2020			June 30, 2021		December 31, 2020
		(Thousands of Dollars)					(Thousands of Dollars)
Fair value	Fair value	$	3,666,778	$	3,799,378	Fair value	$	3,793,490	$	3,799,378
Carrying amount	Carrying amount	$	3,392,617	$	3,539,258	Carrying amount	$	3,443,530	$	3,539,258

We have estimated the fair value of our publicly traded notes based upon quoted prices in active markets; therefore, we determined that the fair value of our publicly traded notes falls in Level 1 of the fair value hierarchy. With regard to our other debt, for which a quoted market price is not available, we have estimated the fair value using a discounted cash flow analysis using current incremental borrowing rates for similar types of borrowing arrangements and determined that the fair value falls in Level 2 of the fair value hierarchy. The carrying amount includes net fair value adjustments, unamortized discounts and unamortized debt issuance costs.

6. COMMITMENTS AND CONTINGENCIES

We have contingent liabilities resulting from various litigation, claims and commitments. We record accruals for loss contingencies when losses are considered probable and can be reasonably estimated. Legal fees associated with defending the Partnership in legal matters are expensed as incurred. We accrued ~~$2.5~~$0.1 million and $2.6 million for contingent losses as of ~~March 31,~~June 30, 2021 and December 31, 2020, respectively. The amount that will ultimately be paid related to such matters may differ from the recorded accruals, and the timing of such payments is uncertain. We evaluate each contingent loss at least quarterly, and more frequently as each matter progresses and develops over time, and we do not believe that the resolution of any particular claim or proceeding, or all matters in the aggregate, would have a material adverse effect on our results of operations, financial position or liquidity.

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CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

7. DERIVATIVES

We utilize various derivative instruments to manage our exposure to interest rate risk and commodity price risk. Our risk management policies and procedures are designed to monitor interest rates, futures and swap positions and over-the-counter positions, as well as physical commodity volumes, grades, locations and delivery schedules, to help ensure that our hedging activities address our market risks. Derivative financial instruments associated with commodity price risk with respect to our petroleum product inventories and related firm commitments to purchase and/or sell such inventories were not material for any periods presented.

We were a party to certain interest rate swap agreements to manage our exposure to changes in interest rates, which consisted of forward-starting interest rate swap agreements related to a forecasted debt issuance in 2020. We entered into these swaps in order to hedge the risk of fluctuations in the required interest payments attributable to changes in the benchmark interest rate during the period from the effective date of the swap to the issuance of the forecasted debt. Under the terms of the swaps, we paid a weighted-average fixed rate and received a rate based on the three-month USD LIBOR. These swaps qualified as cash flow hedges, and we designated them as such. We recorded mark-to-market adjustments as a component of “Accumulated other comprehensive loss” (AOCI), and the amount in AOCI is recognized in “Interest expense, net” as the forecasted interest payments occur or if the interest payments are probable not to occur. In June 2020, we terminated forward-starting interest rate swaps with an aggregate notional amount of $250.0 million and paid $49.2 million, which is amortized into “Interest expense, net” as the related forecasted interest payments occur.

Our forward-starting interest rate swaps had the following impact on earnings:


		Three Months Ended March 31,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020					2021		2020		2021		2020
		(Thousands of Dollars)				(Thousands of Dollars)
Loss recognized in other comprehensive loss on derivative	Loss recognized in other comprehensive loss on derivative	$	0	$	(29,830)			Loss recognized in other comprehensive loss on derivative	$	0	$	(461)	$	0	$	(30,291)
Loss reclassified from AOCI into interest expense, net	Loss reclassified from AOCI into interest expense, net	$	(1,348)	$	(647)			Loss reclassified from AOCI into interest expense, net	$	(1,335)	$	(878)	$	(2,683)	$	(1,525)

As of ~~March 31,~~June 30, 2021, we expect to reclassify a loss of ~~$4.8~~$4.0 million to “Interest expense, net” within the next twelve months associated with unwound forward-starting interest rate swaps.

8. SERIES D CUMULATIVE CONVERTIBLE PREFERRED UNITS

Distributions on the Series D Cumulative Convertible Preferred Units (Series D Preferred Units) are payable out of any legally available funds, accrue and are cumulative from the original issuance dates, and are payable on the 15th day (or next business day) of each of March, June, September and December, to holders of record on the first business day of each payment month. The distribution rates on the Series D Preferred Units are as follows: (i) 9.75%, or $57.6 million, per annum ($0.619 per unit per distribution period) for the first two years (beginning with the September 17, 2018 distribution); (ii) 10.75%, or $63.4 million, per annum ($0.682 per unit per distribution period) for years three through five; and (iii) the greater of 13.75%, or $81.1 million, per annum ($0.872 per unit per distribution period) or the distribution per common unit thereafter. While the Series D Preferred Units are outstanding, the Partnership will be prohibited from paying distributions on any junior securities, including the common units, unless full cumulative distributions on the Series D Preferred Units (and any parity securities) have been, or contemporaneously are being, paid or set aside for payment through the most recent Series D Preferred Unit distribution payment date. Any Series D Preferred Unit distributions in excess of $0.635 per unit may be paid, in the Partnership’s sole discretion, in additional Series D Preferred Units, with the remainder paid in cash.

In ~~April~~July 2021, our board of directors declared distributions of $0.682 per Series D Preferred Unit to be paid on ~~June~~September 15, 2021.

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9. PARTNERS' EQUITY

Series A, B and C Preferred Units

We allocate net income to our 8.50% Series A, 7.625% Series B and 9.00% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (collectively, the Series A, B and C Preferred Units) equal to the amount of distributions earned during the period. Distributions on our Series A, B and C Preferred Units are payable out of any legally available funds, accrue and are cumulative from the original issuance dates, and are payable on the 15th day (or next business day) of each of March, June, September and December of each year to holders of record on the first business day of each payment month as follows (until the distribution rate changes to a floating rate):


Units	Fixed Distribution Rate Per Unit Per Quarter		Fixed Distribution Per Quarter		Date at Which Distribution Rate Becomes Floating
			(Thousands of Dollars)
Series A Preferred Units	$	0.53125	$	4,813	December 15, 2021
Series B Preferred Units	$	0.47657	$	7,339	June 15, 2022
Series C Preferred Units	$	0.56250	$	3,881	December 15, 2022

In ~~April~~July 2021, our board of directors declared distributions with respect to the Series A, B and C Preferred Units to be paid on ~~June~~September 15, 2021.

Common Limited Partners

We make quarterly distributions to common unitholders of 100% of our “Available Cash,” generally defined as cash receipts less cash disbursements, including distributions to our preferred units, and cash reserves established by the general partner, in its sole discretion. These quarterly distributions are declared and paid within 45 days subsequent to each quarter-end. The common unitholders receive a distribution each quarter as determined by the board of directors, subject to limitation by the distributions in arrears, if any, on our preferred units.

The following table summarizes information about quarterly cash distributions declared for our common limited partners:

Quarter Ended

Cash Distributions
Per Unit

Total Cash
Distributions

Record Date

Payment Date

Quarter Ended

Cash Distributions
Per Unit

Total Cash
Distributions

Record Date

Payment Date

(Thousands of Dollars)

June 30, 2021

0.40

43,814

August 6, 2021

August 12, 2021

March 31, 2021

0.40

43,834

May 10, 2021

May 14, 2021

March 31, 2021

0.40

43,834

May 10, 2021

May 14, 2021

December 31, 2020

0.40

43,787

February 8, 2021

February 12, 2021

December 31, 2020

0.40

43,787

February 8, 2021

February 12, 2021

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Accumulated Other Comprehensive Income (Loss)

The balance of and changes in the components included in AOCI were as follows:


	Three Months Ended June 30,
	2021								2020
	Foreign Currency Translation		Cash Flow Hedges		Pension and Other Postretirement Benefits		Total		Foreign Currency Translation		Cash Flow Hedges		Pension and Other Postretirement Benefits		Total
	(Thousands of Dollars)
Balance as of March 31	$	(41,405)	$	(40,802)	$	(12,329)	$	(94,536)	$	(50,600)	$	(45,307)	$	(8,302)	$	(104,209)
Other comprehensive income (loss):
Other comprehensive income (loss) before reclassification adjustments	1,094		0		0		1,094		2,638		(461)		0		2,177
Net gain on pension costs reclassified into other income, net	0		0		(187)		(187)		0		0		(305)		(305)
Net loss on cash flow hedges reclassified into interest expense, net	0		1,335		0		1,335		0		878		0		878
Other	0		0		2		2		0		0		4		4
Other comprehensive income (loss)	1,094		1,335		(185)		2,244		2,638		417		(301)		2,754
Balance as of June 30	$	(40,311)	$	(39,467)	$	(12,514)	$	(92,292)	$	(47,962)	$	(44,890)	$	(8,603)	$	(101,455)


		Three Months Ended March 31,																	Six Months Ended June 30,
		2021								2020									2021								2020
		Foreign Currency Translation		Cash Flow Hedges		Pension and Other Postretirement Benefits		Total		Foreign Currency Translation		Cash Flow Hedges		Pension and Other Postretirement Benefits		Total			Foreign Currency Translation		Cash Flow Hedges		Pension and Other Postretirement Benefits		Total		Foreign Currency Translation		Cash Flow Hedges		Pension and Other Postretirement Benefits		Total
		(Thousands of Dollars)																	(Thousands of Dollars)
Balance as of January 1	Balance as of January 1	$	(42,362)	$	(42,150)	$	(12,144)	$	(96,656)	$	(43,772)	$	(16,124)	$	(8,000)	$	(67,896)	Balance as of January 1	$	(42,362)	$	(42,150)	$	(12,144)	$	(96,656)	$	(43,772)	$	(16,124)	$	(8,000)	$	(67,896)
Other comprehensive income (loss):	Other comprehensive income (loss):																	Other comprehensive income (loss):
Other comprehensive income (loss) before reclassification adjustments	Other comprehensive income (loss) before reclassification adjustments	957		0		0		957		(6,828)		(29,830)		0		(36,658)		Other comprehensive income (loss) before reclassification adjustments	2,051		0		0		2,051		(4,190)		(30,291)		0		(34,481)
Net gain on pension costs reclassified into other income, net	Net gain on pension costs reclassified into other income, net	0		0		(187)		(187)		0		0		(305)		(305)		Net gain on pension costs reclassified into other income, net	0		0		(374)		(374)		0		0		(610)		(610)
Net loss on cash flow hedges reclassified into interest expense, net	Net loss on cash flow hedges reclassified into interest expense, net	0		1,348		0		1,348		0		647		0		647		Net loss on cash flow hedges reclassified into interest expense, net	0		2,683		0		2,683		0		1,525		0		1,525
Other	Other	0		0		2		2		0		0		3		3		Other	0		0		4		4		0		0		7		7
Other comprehensive income (loss)	Other comprehensive income (loss)	957		1,348		(185)		2,120		(6,828)		(29,183)		(302)		(36,313)		Other comprehensive income (loss)	2,051		2,683		(370)		4,364		(4,190)		(28,766)		(603)		(33,559)
Balance as of March 31		$	(41,405)	$	(40,802)	$	(12,329)	$	(94,536)	$	(50,600)	$	(45,307)	$	(8,302)	$	(104,209)
Balance as of June 30																		Balance as of June 30	$	(40,311)	$	(39,467)	$	(12,514)	$	(92,292)	$	(47,962)	$	(44,890)	$	(8,603)	$	(101,455)

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NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

10. NET INCOME (LOSS) PER COMMON UNIT

Basic net income (loss) per common unit is determined pursuant to the two-class method. Under this method, all earnings are allocated to our limited partners and participating securities based on their respective rights to receive distributions earned during the period. Participating securities include restricted units awarded under our long-term incentive plans. We compute basic net income (loss) per common unit by dividing net income (loss) attributable to common units by the weighted-average number of common units outstanding during the period.

We compute diluted net income (loss) per common unit by dividing net income (loss) attributable to common units by the sum of (i) the weighted average number of common units outstanding during the period and (ii) the effect of dilutive potential common units outstanding during the period. Dilutive potential common units may include contingently issuable performance unit awards and the Series D Preferred Units.

The Series D Preferred Units are convertible into common units at the option of the holder at any time on or after June 29, 2020. As such, we calculated the dilutive effect of the Series D Preferred Units using the if-converted method. The effect of the assumed conversion of the Series D Preferred Units outstanding as of the end of each period presented was antidilutive; therefore, we did not include such conversion in the computation of diluted net income (loss) per common unit.

Contingently issuable performance units are included as dilutive potential common units if it is probable that that performance measures will be achieved, unless to do so would be antidilutive. There were 0 dilutive potential common units outstanding related to the performance units for all periods presented.

The following table details the calculation of net income (loss) per common unit:


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	(Thousands of Dollars, Except Unit and Per Unit Data)
Net income (loss)	$	63,383	$	29,766	$	105,640	$	(117,875)
Distributions to preferred limited partners	(31,887)		(30,684)		(63,774)		(61,107)
Distributions to common limited partners	(43,814)		(43,678)		(87,648)		(87,408)
Distribution equivalent rights to restricted units	(586)		(502)		(1,184)		(1,008)
Distributions in excess of income (loss)	$	(12,904)	$	(45,098)	$	(46,966)	$	(267,398)

Distributions to common limited partners	$	43,814	$	43,678	$	87,648	$	87,408
Allocation of distributions in excess of income (loss)	(12,904)		(45,098)		(46,966)		(267,398)
Series D Preferred Unit accretion	(4,155)		(5,064)		(8,176)		(9,966)
Net income (loss) attributable to common units	$	26,755	$	(6,484)	$	32,506	$	(189,956)

Basic and diluted weighted-average common units outstanding	109,529,658		109,194,722		109,518,004		109,046,061

Basic and diluted net income (loss) per common unit	$	0.25	$	(0.06)	$	0.30	$	(1.74)

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NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

~~The following table details the calculation of net income (loss) per common unit:~~

Three Months Ended March 31,
2021 2020
(Thousands of Dollars, Except Unit and Per Unit Data)
Net income (loss) $ 42,257 $ (147,641)
Distributions to preferred limited partners (31,887) (30,423)
Distributions to common limited partners (43,834) (43,730)
Distribution equivalent rights to restricted units (598) (506)
Distributions in excess of income (loss) $ (34,062) $ (222,300)
Distributions to common limited partners $ 43,834 $ 43,730
Allocation of distributions in excess of income (loss) (34,062) (222,300)
Series D Preferred Unit accretion (4,021) (4,902)
Net income (loss) attributable to common units $ 5,751 $ (183,472)
Basic and diluted weighted-average common units outstanding 109,506,222 108,897,400
Basic and diluted net income (loss) per common unit $ 0.05 $ (1.68)

11. SUPPLEMENTAL CASH FLOW INFORMATION

Changes in current assets and current liabilities were as follows:


		Three Months Ended March 31,					Six Months Ended June 30,
		2021		2020			2021		2020
		(Thousands of Dollars)					(Thousands of Dollars)
Decrease (increase) in current assets:	Decrease (increase) in current assets:					Decrease (increase) in current assets:
Accounts receivable	Accounts receivable	$	12,232	$	7,778	Accounts receivable	$	(9,942)	$	25,386

Inventories	Inventories	(6,471)		1,648		Inventories	(1,744)		4,176

Other current assets	Other current assets	9,689		7,007		Other current assets	(4,752)		(8,781)
Increase (decrease) in current liabilities:	Increase (decrease) in current liabilities:					Increase (decrease) in current liabilities:
Accounts payable	Accounts payable	5,067		(18,082)		Accounts payable	3,588		(15,197)

Accrued interest payable	Accrued interest payable	27,149		2,680		Accrued interest payable	(11,686)		(177)
Accrued liabilities	Accrued liabilities	(19,082)		(5,679)		Accrued liabilities	(17,222)		(11,625)
Taxes other than income tax	Taxes other than income tax	(4,187)		(5,137)		Taxes other than income tax	(1,575)		44

Changes in current assets and current liabilities	Changes in current assets and current liabilities	$	24,397	$	(9,785)	Changes in current assets and current liabilities	$	(43,333)	$	(6,174)

The above changes in current assets and current liabilities differ from changes between amounts reflected in the applicable consolidated balance sheets due to:

•the change in the amount accrued for capital expenditures;

•the effect of foreign currency translation;

•~~changes in~~payments for the ~~fair values~~termination of ~~our~~ interest rate ~~swap agreements prior to termination;~~swaps included in cash flows from financing activities; and

•the effect of accrued compensation expense paid with fully vested common unit awards.

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~~NUSTAR ENERGY L.P. AND SUBSIDIARIES~~

~~CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

Cash flows related to interest and income taxes were as follows:


		Three Months Ended March 31,					Six Months Ended June 30,
		2021		2020			2021		2020
		(Thousands of Dollars)					(Thousands of Dollars)
Cash paid for interest, net of amount capitalized	Cash paid for interest, net of amount capitalized	$	24,737	$	43,172	Cash paid for interest, net of amount capitalized	$	114,339	$	103,034
Cash paid for income taxes, net of tax refunds received	Cash paid for income taxes, net of tax refunds received	$	554	$	90	Cash paid for income taxes, net of tax refunds received	$	5,882	$	4,661

As of ~~March 31,~~June 30, 2021 and December 31, 2020, restricted cash, representing legally restricted funds that are unavailable for general use, is included in "Other long-term assets, net" on the consolidated balance sheets. “Cash, cash equivalents and restricted cash” on the consolidated statements of cash flows was included in the consolidated balance sheets as follows:


		March 31, 2021		December 31, 2020			June 30, 2021		December 31, 2020
		(Thousands of Dollars)					(Thousands of Dollars)
Cash and cash equivalents	Cash and cash equivalents	$	28,246	$	153,625	Cash and cash equivalents	$	23,500	$	153,625
Other long-term assets, net	Other long-term assets, net	8,801		8,801		Other long-term assets, net	8,802		8,801
Cash, cash equivalents and restricted cash	Cash, cash equivalents and restricted cash	$	37,047	$	162,426	Cash, cash equivalents and restricted cash	$	32,302	$	162,426

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NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

12. SEGMENT INFORMATION

Our reportable business segments consist of the pipeline, storage and fuels marketing segments. Our segments represent strategic business units that offer different services and products. We evaluate the performance of each segment based on its respective operating income (loss), before general and administrative expenses and certain non-segmental depreciation and amortization expense. General and administrative expenses are not allocated to the operating segments since those expenses relate primarily to the overall management at the entity level. ~~Our principal operations include the transportation of petroleum products and anhydrous ammonia, and the terminalling, storage and marketing of petroleum products.~~

Results of operations for the reportable segments were as follows:


		Three Months Ended March 31,					Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020					2021		2020		2021		2020
		(Thousands of Dollars)				(Thousands of Dollars)
Revenues:	Revenues:							Revenues:

Pipeline	Pipeline	$	169,228	$	195,681			Pipeline	$	192,906	$	166,108	$	362,134	$	361,789

Storage	Storage	108,574		123,217				Storage	119,248		119,407		227,822		242,624

Fuels marketing	Fuels marketing	83,855		73,902				Fuels marketing	114,939		54,025		198,794		127,927

Consolidation and intersegment eliminations	Consolidation and intersegment eliminations	(11)		(9)				Consolidation and intersegment eliminations	0		0		(11)		(9)
Total revenues	Total revenues	$	361,646	$	392,791			Total revenues	$	427,093	$	339,540	$	788,739	$	732,331

Operating income (loss):	Operating income (loss):							Operating income (loss):
Pipeline	Pipeline	$	79,379	$	(122,924)			Pipeline	$	96,512	$	71,981	$	175,891	$	(50,943)
Storage	Storage	42,718		48,579				Storage	46,185		43,242		88,903		91,821
Fuels marketing	Fuels marketing	2,731		6,443				Fuels marketing	2,298		3,349		5,029		9,792

Total segment operating income (loss)		124,828		(67,902)
Total segment operating income								Total segment operating income	144,995		118,572		269,823		50,670
General and administrative expenses	General and administrative expenses	24,492		22,971				General and administrative expenses	27,477		23,700		51,969		46,671
Other depreciation and amortization expense	Other depreciation and amortization expense	2,047		2,186				Other depreciation and amortization expense	1,913		2,171		3,960		4,357
Total operating income (loss)	Total operating income (loss)	$	98,289	$	(93,059)			Total operating income (loss)	$	115,605	$	92,701	$	213,894	$	(358)

Total assets by reportable segment were as follows:


		March 31, 2021		December 31, 2020			June 30, 2021		December 31, 2020
		(Thousands of Dollars)					(Thousands of Dollars)
Pipeline	Pipeline	$	3,568,565	$	3,609,508	Pipeline	$	3,540,298	$	3,609,508
Storage	Storage	1,881,051		1,897,167		Storage	1,918,515		1,897,167
Fuels marketing	Fuels marketing	45,052		31,967		Fuels marketing	43,537		31,967
Total segment assets	Total segment assets	5,494,668		5,538,642		Total segment assets	5,502,350		5,538,642

Other partnership assets	Other partnership assets	149,204		278,376		Other partnership assets	143,630		278,376
Total consolidated assets	Total consolidated assets	$	5,643,872	$	5,817,018	Total consolidated assets	$	5,645,980	$	5,817,018

13. SUBSEQUENT EVENT

On August 1, 2021, we entered into an agreement to sell our storage facilities at eight locations, including all our North East Terminals and our one terminal in Florida to Sunoco LP for $250.0 million, subject to adjustment. During July 2021, sale negotiations with the potential buyer progressed significantly and management with appropriate authority agreed to the sale. The terminals have an aggregate storage capacity of 14.8 million barrels and are included in the storage segment. We expect to complete the sale by the beginning of the fourth quarter and will utilize the sales proceeds to improve our debt metrics. The book value at closing, including an allocation of goodwill for the terminal reporting unit, is expected to exceed the agreed purchase price and result in an estimated non-cash loss in the range of $130.0 million to $140.0 million in the third quarter of 2021.

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

Unless otherwise indicated, the terms “NuStar Energy,” “NS,” “the Partnership,” “we,” “our” and “us” are used in this report to refer to NuStar Energy L.P., to one or more of our consolidated subsidiaries or to all of them taken as a whole.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

In this Form 10-Q, we make certain forward-looking statements, such as statements regarding our plans, strategies, objectives, expectations, estimates, predictions, projections, assumptions, intentions, resources and the future impact of the coronavirus, or COVID-19, the responses thereto, ~~the decline in~~ economic activity and the actions by oil producing nations on our ~~business.~~business, as well as the timing of, expected use of proceeds from and the other anticipated benefits from the announced sale of terminals. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested in this report. These forward-looking statements can generally be identified by the words “anticipates,” “believes,” “expects,” “plans,” “intends,” “estimates,” “forecasts,” “budgets,” “projects,” “will,” “could,” “should,” “may” and similar expressions. These statements reflect our current views with regard to future events and are subject to various risks, uncertainties and assumptions, which may cause actual results to differ materially. Please read Item 1A. “Risk Factors” contained in our Annual Report on Form 10-K for the year ended December 31, 2020, our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 and this Quarterly Report on Form 10-Q, as well as additional information provided from time to time in our subsequent filings with the Securities and Exchange Commission, for a discussion of certain of those risks, uncertainties and assumptions.

If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those described in any forward-looking statement. Other unknown or unpredictable factors could also have material adverse effects on our future results. Readers are cautioned not to place undue reliance on this forward-looking information, which is as of the date of this Form 10-Q. We do not intend to update these statements unless we are required by the securities laws to do so, and we undertake no obligation to publicly release the result of any revisions to any such forward-looking statements that may be made to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations is presented in five sections:

•Overview, including Trends and Outlook

•Results of Operations

•Liquidity and Capital Resources

•Critical Accounting Policies

•New Accounting Pronouncements

OVERVIEW

NuStar Energy L.P. (NYSE: NS) is primarily engaged in the transportation, ~~of petroleum products and anhydrous ammonia, and the~~ terminalling and storage of petroleum products and renewable ~~fuels.~~fuels and the transportation of anhydrous ammonia. Our business is managed under the direction of the board of directors of NuStar GP, LLC, the general partner of our general partner, Riverwalk Logistics, L.P., both of which are indirectly wholly owned subsidiaries of ours.

Our operations consist of three reportable business segments: pipeline, storage and fuels marketing. As of ~~March 31,~~June 30, 2021, our assets included ~~9,915~~9,920 miles of pipeline and 73 terminal and storage facilities, which provide approximately 72 million barrels of storage capacity. We conduct our operations through our subsidiaries, primarily NuStar Logistics, L.P. (NuStar Logistics) and NuStar Pipeline Operating Partnership L.P. (NuPOP). We generate revenue primarily from:

•tariffs for ~~transporting crude oil, refined products and anhydrous ammonia~~transportation through our pipelines;

•fees for the use of our terminal and storage facilities and related ancillary services; and

•sales of petroleum products.

The following factors affect the results of our operations:

•economic factors and price volatility;

•industry factors, such as changes in the prices of petroleum products that affect demand, or regulatory changes that could increase costs or impose restrictions on operations;

•factors that affect our customers and the markets they serve, such as utilization rates and maintenance turnaround schedules of our refining company customers and drilling activity by our crude oil production customers;

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•company-specific factors, such as facility integrity issues, maintenance requirements and outages that impact the throughput rates of our assets; and

•seasonal factors that affect the demand for products transported by and/or stored in our assets and the demand for products we sell.

Recent Developments

~~Table~~Agreement to Sell Terminals. On August 1, 2021, we entered into an agreement to sell our storage facilities at eight locations, including all our North East Terminals and our one terminal in Florida to Sunoco LP for $250.0 million, subject to adjustment. The terminals have an aggregate storage capacity of ~~Contents~~14.8 million barrels and are included in the storage segment. We expect to complete the sale by the beginning of the fourth quarter and will utilize the sales proceeds to improve our debt metrics. The book value at closing, including an allocation of goodwill for the terminal reporting unit, is expected to exceed the agreed purchase price and result in an estimated non-cash loss in the range of $130.0 million to $140.0 million in the third quarter of 2021.

~~Recent Developments~~

COVID-19. The coronavirus, or COVID-19, had a severe negative impact on global economic activity during 2020, significantly reducing demand for petroleum products and increasing the volatility of crude oil prices, beginning in March 2020. While a number of countries, including the United States, have made significant progress in 2021 in deploying COVID-19 vaccines, which has improved economic conditions and outlook in those nations, many more continue to struggle to obtain and/or disseminate vaccinations to their populace, which is frustrating widespread global economic recovery. Even in the United States, if ~~we are unable to vaccinate~~ a sufficient proportion of people are not vaccinated to reach herd immunity, or ~~if vaccine-resistant strains~~as variants emerge, we may face additional resurgence in COVID-19 case count in some regions, as we have recently seen, which could slow the pace of domestic economic improvement and undermine rebounding demand in the markets our assets serve.

NuStar continues to take measures to ensure we operate safely and reliably and maintain a safe working environment for our employees at our locations across North America. In 2020, we implemented social distancing through revised shift schedules, work-from-home policies and designated remote work locations where appropriate, restricted non-essential business travel, required testing and self-screening for employees and contractors and other measures. Although the number of cases of COVID-19 has fallen across North America, we are continuing We continue to closely monitor each of our locations across North America to ensure the safety of our employees as well as the operational functionality of each location.

Senior Notes. On February 1, 2021, we repaid our $300.0 million of 6.75% senior notes at maturity with borrowings under our revolving credit agreement.

Trends and Outlook

As America begins to recover from the impact of COVID-19 and ~~begins returning~~returns to normal activity and growth, we are seeing signs of stabilization and improvement, across the U.S. and in NuStar’s footprint. U.S. refined product demand outlook has improved as COVID-19 vaccinations have continued to allow more and more Americans to return to normal day-to-day ~~activities.~~activities and to begin traveling. However, the “Delta” variant has increased COVID-19 case counts significantly in many parts of the United States, which may impact the overall demand recovery in 2021.

~~Within our pipeline segment, refined~~Refined product demand on NuStar’s pipeline systems averaged ~~near~~ 100% of pre-pandemic demand ~~in January and averaged 95%~~ for the first half of the year after reaching 105% for the second quarter. We continue to expect our refined products pipeline systems to perform at ~~around~~ 100% of our pre-pandemic levels for the remainder of this year. ~~Stronger~~Strengthening refined product demand ~~is contributing~~has increased U.S. refiners’ demand for crude oil and rebounding crude demand, along with tempered global supply, has contributed to higher crude prices ~~which are improving~~and improved expectations for U.S. shale production, particularly in the Permian Basin. We believe the Permian Basin, and our system in particular, has geological advantages over other shale plays, including lower production costs and higher product quality, that have benefited and will continue to benefit our assets in 2021 as crude demand, price and production continue to recover. Sustained healthy U.S. shale production growth, combined with improving global demand, should drive U.S. export growth ~~in the future,~~over time, which should be positive for ~~increased~~crude volumes on our Corpus Christi Crude ~~System. We~~System, as well as for our St. James terminal. In addition, we continue to expect ~~our storage segment~~ to benefit from the growth of our renewable fuels distribution system on the West ~~Coast, particularly as California replaces conventional fuels with renewable diesel and other~~Coast. We expect to provide an increasing share of California’s renewable fuels ~~and other states, in the Northwest and beyond, adopt similar low-carbon fuel standards that prioritize the renewable fuels our assets are positioned to facilitate.~~

We expect our second quarter 2021 operational results and throughputs for our pipeline segment to be higher than the comparable period due to the precipitous decline in overall demand for refined petroleum products in the second quarter of 2020 following stay-home orders, business closures and other measures to reduce the spread of the virus. For our storage segment, we expect our second quarter 2021 results to be comparable to the prior year’s quarter as we ~~continue to benefit from the contango market from last spring and renewable fuels-related projects at~~complete our ~~West Coast terminals. We expect our full-year 2021 results to be comparable to 2020.~~planned tank conversion projects.

We plan to continue to manage our operations with fiscal discipline in this turbulent ~~environment and~~environment. Upon closing of the announced sale of terminals, we expect to ~~evaluate divestitures of non-core assets~~use the proceeds to ~~reduce~~further lower our leverage. For the full-year 2021, we expect reliability and strategic capital expenditures to be comparable to 2020. We expect to fund all of our expenses, distribution requirements and capital expenditures for the full-year 2021 using internally generated cash flows.

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Our outlook for the partnership, both overall and for any of our segments, may change, as we base our expectations on our continuing evaluation of several factors, many of which are outside our control. These factors include, but are not limited to, uncertainty surrounding the COVID-19 pandemic, including its duration and lingering impacts to the economy; uncertainty surrounding future production decisions by the Organization of Petroleum Exporting Countries and other oil-producing nations (OPEC+); the state of the economy and the capital markets; changes to our customers’ refinery maintenance schedules and

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unplanned refinery downtime; crude oil prices; the supply of and demand for ~~crude oil, refined~~petroleum products, renewable fuels and anhydrous ammonia; demand for our transportation and storage services; the availability of personnel, equipment and services essential to our operations; the ability to obtain timely permitting approvals; and changes in laws and regulations affecting our operations. Please read Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 and ~~this~~our Quarterly ~~Report~~Reports on Form 10-Q for additional discussion on how these factors could affect our operations.

RESULTS OF OPERATIONS

Consolidated Results of Operations

Three Months Ended ~~March 31,~~June 30, 2021 Compared to Three Months Ended ~~March 31,~~June 30, 2020


	Three Months Ended June 30,				Change
	2021		2020
	(Unaudited, Thousands of Dollars, Except Per Unit Data)
Statement of Income Data:
Revenues:
Service revenues	$	300,788	$	284,151	$	16,637
Product sales	126,305		55,389		70,916
Total revenues	427,093		339,540		87,553

Costs and expenses:
Costs associated with service revenues	169,457		170,292		(835)
Cost associated with product sales	112,641		50,676		61,965


General and administrative expenses	27,477		23,700		3,777
Other depreciation and amortization expense	1,913		2,171		(258)

Total costs and expenses	311,488		246,839		64,649

Operating income	115,605		92,701		22,904

Interest expense, net	(53,780)		(59,499)		5,719

Loss on extinguishment of debt	—		(3,842)		3,842
Other income, net	2,896		2,216		680
Income before income tax expense	64,721		31,576		33,145
Income tax expense	1,338		1,810		(472)


Net income	$	63,383	$	29,766	$	33,617

Basic and diluted net income (loss) per common unit	$	0.25	$	(0.06)	$	0.31

Consolidated Overview. Net income increased $33.6 million for the three months ended June 30, 2021, compared to the three months ended June 30, 2020, mainly due to higher operating income from our pipeline segment in the second quarter of 2021 as pandemic recovery resulted in higher demand.

Corporate Items.General and administrative expenses increased $3.8 million for the three months ended June 30, 2021, compared to the three months ended June 30, 2020, mainly due to higher compensation costs.

Interest expense, net, decreased $5.7 million for the three months ended June 30, 2021, compared to the three months ended June 30, 2020, mainly due to interest expense recorded in the second quarter of 2020 related to the Term Loan, which was repaid on September 16, 2020. This decrease was partially offset by increased interest expense on the September 2020 issuance of $1.2 billion of senior notes.

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Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020

~~Consolidated Results of Operations~~

~~The following table presents our consolidated financial results:~~


		Three Months Ended March 31,				Change			Six Months Ended June 30,				Change
		2021		2020					2021		2020
		(Unaudited, Thousands of Dollars, Except Per Unit Data)							(Unaudited, Thousands of Dollars, Except Per Unit Data)
Statement of Income Data:	Statement of Income Data:							Statement of Income Data:
Revenues:	Revenues:							Revenues:
Service revenues	Service revenues	$	271,883	$	316,746	$	(44,863)	Service revenues	$	572,671	$	600,897	$	(28,226)
Product sales	Product sales	89,763		76,045		13,718		Product sales	216,068		131,434		84,634
Total revenues	Total revenues	361,646		392,791		(31,145)		Total revenues	788,739		732,331		56,408

Costs and expenses:	Costs and expenses:							Costs and expenses:
Costs associated with service revenues	Costs associated with service revenues	155,705		168,243		(12,538)		Costs associated with service revenues	325,162		338,535		(13,373)
Cost associated with product sales	Cost associated with product sales	81,113		67,450		13,663		Cost associated with product sales	193,754		118,126		75,628

Goodwill impairment loss	Goodwill impairment loss	—		225,000		(225,000)		Goodwill impairment loss	—		225,000		(225,000)
General and administrative expenses	General and administrative expenses	24,492		22,971		1,521		General and administrative expenses	51,969		46,671		5,298
Other depreciation and amortization expense	Other depreciation and amortization expense	2,047		2,186		(139)		Other depreciation and amortization expense	3,960		4,357		(397)

Total costs and expenses	Total costs and expenses	263,357		485,850		(222,493)		Total costs and expenses	574,845		732,689		(157,844)

Operating income (loss)	Operating income (loss)	98,289		(93,059)		191,348		Operating income (loss)	213,894		(358)		214,252

Interest expense, net	Interest expense, net	(54,918)		(47,494)		(7,424)		Interest expense, net	(108,698)		(106,993)		(1,705)

Loss on extinguishment of debt								Loss on extinguishment of debt	—		(3,842)		3,842
Other income (expense), net	Other income (expense), net	398		(6,489)		6,887		Other income (expense), net	3,294		(4,273)		7,567
Income (loss) before income tax expense		43,769		(147,042)		190,811
Income (loss) from before income tax expense								Income (loss) from before income tax expense	108,490		(115,466)		223,956
Income tax expense	Income tax expense	1,512		599		913		Income tax expense	2,850		2,409		441

Net income (loss)	Net income (loss)	$	42,257	$	(147,641)	$	189,898	Net income (loss)	$	105,640	$	(117,875)	$	223,515

Basic and diluted net income (loss) per common unit		$	0.05	$	(1.68)	$	1.73

Basic and diluted net income (loss) per common unit:								Basic and diluted net income (loss) per common unit:	$	0.30	$	(1.74)	$	2.04

Consolidated Overview. We recorded net income of ~~$42.3~~$105.6 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021, compared to a net loss of ~~$147.6~~$117.9 million for the ~~three~~six months ended ~~March 31,~~June 30, 2020, mainly due to a non-cash goodwill impairment charge of $225.0 million related to our crude oil pipelines reporting unit in the first quarter of 2020. Please refer to Note 3 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for additional information on the goodwill impairment. Excluding the impact of the $225.0 million goodwill impairment, operating income decreased due to higher general and administrative expenses and decreases in operating income for the ~~pipeline~~storage and ~~storage~~fuels marketing segments. In

We saw a rebound in demand across most of our pipelines in the ~~first~~second quarter of 2021, while we experienced lower throughput and lower revenue during the first quarter of 2021 due to the continuing effects of the COVID-19 global pandemic that began in March 2020, ~~mainly on our Corpus Christi Crude Pipeline System,~~ compared to the strong first quarter of 2020. Additionally, Winter Storm Uri brought snow and damaging ice and caused widespread power outages in Texas and surrounding states in February 2021, which ~~had a negative effect on~~reduced operating income ofby $10.7 million in the first quarter of 2021, including $9.5 million in the pipeline segment and $1.2 million in the storage segment.

Corporate Items. General and administrative expenses increased ~~$1.5~~$5.3 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021, compared to the ~~three~~six months ended ~~March 31,~~June 30, 2020, mainly due to higher compensation costs.

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Interest expense, net, increased ~~$7.4~~$1.7 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021, compared to the ~~three~~six months ended ~~March 31,~~June 30, 2020, primarily due to the interest on the September 2020 issuance of $1.2 billion of senior notes, ~~and $322.1 million in revenue bonds issued pursuant~~which was partially offset by lower expenses due to the ~~Gulf Opportunity Zone Act~~repayment of ~~2005 (GoZone Bonds) that were converted to a long-term interest rate in June~~the Term Loan on September 16, 2020.

~~Other~~We recorded other income, net of $3.3 million for the six months ended June 30, 2021, compared to other expense, net of ~~$6.5~~$4.3 million for the ~~three~~six months ended ~~March 31,~~June 30, 2020, ~~consisted~~ mainly ofdue to foreign ~~currency~~ exchange ~~losses~~rate fluctuations associated with our ~~Mexico~~Mexican subsidiary.

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Pipeline Segment

As of ~~March 31,~~June 30, 2021, we own 3,205 miles of refined product pipelines and ~~2,210~~2,215 miles of crude oil pipelines, as well as 5.6 million barrels of storage capacity, which comprise our Central West System. In addition, we own 2,500 miles of refined product pipelines, consisting of the East and North Pipelines, and a 2,000-mile ammonia pipeline (the Ammonia Pipeline), which comprise our Central East System. The East and North Pipelines have storage capacity of 7.4 million barrels. We charge tariffs on a per barrel basis for ~~transporting refined products, crude oil and other feedstocks~~transportation in our refined product and crude oil pipelines and on a per ton basis for ~~transporting anhydrous ammonia~~transportation in the Ammonia Pipeline.

~~The following table presents operating highlights for the pipeline segment:~~Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020


		Three Months Ended March 31,				Change			Three Months Ended June 30,				Change
		2021		2020					2021		2020
		(Thousands of Dollars, Except Barrels/Day Information)							(Thousands of Dollars, Except Barrels/Day Information)
Crude oil pipelines throughput (barrels/day)	Crude oil pipelines throughput (barrels/day)	1,101,327		1,532,046		(430,719)		Crude oil pipelines throughput (barrels/day)	1,244,215		1,063,739		180,476
Refined products and ammonia pipelines throughput (barrels/day)	Refined products and ammonia pipelines throughput (barrels/day)	508,726		594,432		(85,706)		Refined products and ammonia pipelines throughput (barrels/day)	606,973		452,678		154,295
Total throughput (barrels/day)	Total throughput (barrels/day)	1,610,053		2,126,478		(516,425)		Total throughput (barrels/day)	1,851,188		1,516,417		334,771

Throughput and other revenues	Throughput and other revenues	$	169,228	$	195,681	$	(26,453)	Throughput and other revenues	$	192,906	$	166,108	$	26,798
Operating expenses	Operating expenses	45,055		50,246		(5,191)		Operating expenses	51,404		50,099		1,305
Depreciation and amortization expense	Depreciation and amortization expense	44,794		43,359		1,435		Depreciation and amortization expense	44,990		44,028		962
Goodwill impairment loss		—		225,000		(225,000)
Segment operating income (loss)		$	79,379	$	(122,924)	$	202,303

Segment operating income								Segment operating income	$	96,512	$	71,981	$	24,531

Total revenues ~~decreased $26.5~~increased $26.8 million and throughputs ~~decreased 516,425~~increased 334,771 barrels per day for the three months ended ~~March 31,~~June 30, 2021, compared to the three months ended ~~March 31,~~June 30, 2020, primarily due to the 2021 rebound in demand as the economy continues to recover from the pandemic resulting in:

•an increase in revenues of $12.4 million and an increase in throughputs of 33,598 barrels per day on our East and North pipelines combined;

•an increase in revenues of $9.6 million and an increase in throughputs of 105,004 barrels per day on our McKee System pipelines;

•an increase in revenues of $8.3 million and an increase in throughputs of 57,017 barrels per day on our Permian Crude System, as well as higher sales of crude oil from pipeline loss allowance volumes in the second quarter of 2021;

•an increase in revenues of $3.3 million and an increase in throughputs of 13,238 barrels per day on our Valley Pipeline, as well as higher revenue from higher minimum volume commitments in the second quarter of 2021; and

•an increase in revenues of $2.7 million and an increase in throughputs of 39,127 barrels per day on our Three Rivers System, despite operational issues at a customer’s refinery in the second quarter of 2021.

These increases in revenue were partially offset by the following:

•a decrease in revenues of ~~$13.2~~$4.2 million, ~~and a decrease~~despite an increase in throughputs of ~~338,916~~63,067 barrels per day on our Corpus Christi Crude Pipeline System, mainly due to lower minimum volume commitments, while the increase in throughputs was primarily due to the rebound in demand in the second quarter of 2021;

•a decrease in revenues of $3.5 million, despite an increase in throughputs of 12,721 barrels per day on our Ardmore System, primarily due to the expiration of a customer contract and fewer barrels moved at higher average tariffs in the second quarter of 2021, which more than offset the revenue from increased throughputs resulting from the rebound in demand; and

•a decrease in revenues of $2.3 million and a decrease in throughputs of 5,424 barrels per day on our Ammonia Pipeline, mainly due to unfavorable weather conditions for ~~exports~~agricultural application and outages at customers’ facilities in the second quarter of 2021.

Operating expenses increased $1.3 million for the three months ended June 30, 2021, compared to the three months ended June 30, 2020, mainly due to an increase in compensation expense of $1.4 million, an increase in insurance expense of $0.7 million due to higher premiums and an increase in power costs of $0.6 million due to higher throughput. These increases were partially offset by lower maintenance and regulatory expense of $1.0 million.

Depreciation and amortization expense increased $1.0 million for the three months ended June 30, 2021, compared to the three months ended June 30, 2020, due to projects associated with our Permian Crude System and other completed projects.

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Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020


	Six Months Ended June 30,				Change
	2021		2020
	(Thousands of Dollars, Except Barrels/Day Information)
Crude oil pipelines throughput (barrels/day)	1,173,166		1,297,892		(124,726)
Refined products and ammonia pipelines throughput (barrels/day)	558,121		523,555		34,566
Total throughput (barrels/day)	1,731,287		1,821,447		(90,160)

Throughput and other revenues	$	362,134	$	361,789	$	345
Operating expenses	96,459		100,345		(3,886)
Depreciation and amortization expense	89,784		87,387		2,397
Goodwill impairment loss	—		225,000		(225,000)
Segment operating income (loss)	$	175,891	$	(50,943)	$	226,834

Pipeline segment revenues for the six months ended June 30, 2021 were comparable to the six months ended June 30, 2020, despite a decrease in throughputs of 90,160 barrels per day. The first six months of 2020 included strong demand in the first quarter, prior to the pandemic, which was followed by severely reduced demand in the second quarter, resulting from COVID-19 restrictions, including stay-at-home orders and business closures. In comparison, results for the first quarter of 2021 were negatively affected by Winter Storm Uri, as well as the lingering effects of COVID-19 restrictions. However, by the second quarter of 2021, demand had largely recovered to pre-pandemic levels.

Revenues increased primarily due to the 2021 rebound in demand, resulting in:

•an increase in revenues of $11.4 million and an increase in throughputs of 7,825 barrels per day on our North and East pipelines combined due to a rebound in demand in the second quarter of 2021;

•an increase in revenues of $5.7 million, despite a slight decrease in throughputs of 1,125 barrels per day on our Permian Crude System, mainly due to higher sales of crude oil from pipeline loss allowance volumes for the six months ended June 30, 2021;

•an increase in revenues of $5.4 million and an increase in throughputs of 33,137 barrels per day on our McKee System pipelines, mainly due to a rebound in demand in the second quarter of 2021, partially offset by the effects of Winter Storm Uri in the first quarter of 2021; and

•an increase in revenues of $2.1 million and an increase in throughputs of 2,983 barrels per day on our Valley Pipeline System, mainly due to a rebound in demand in the second quarter of 2021 and higher minimum volume commitments for the six months ended June 30, 2021.

These increases in revenue were partially offset by:

•a decrease in revenues of $17.4 million and a decrease in throughputs of 137,814 barrels per day on our Corpus Christi Crude Pipeline System, mainly due to lower minimum volume commitments for the six months ended June 30, 2021, as well as lower demand for exports in 2021, compared to the first quarter of 2020;

•a decrease in revenues of ~~$8.8~~$3.6 million and a decrease in throughputs of ~~128,773 barrels per day across a majority of our pipeline systems in Texas, mainly due to Winter Storm Uri;~~

•~~a decrease in revenues of $1.2 million and a decrease in throughputs of 7,295~~2,676 barrels per day on our ~~Valley Pipeline due to lower demand~~Ardmore System as a result of Winter Storm Uri in the first quarter of 2021, ~~compared to~~the expiration of a customer contract at the end of the first quarter of 2021 and fewer barrels moved at higher average tariffs in 2021, compared to 2020; and

•a decrease in revenues of ~~$1.0~~$3.1 million and a decrease in throughputs of ~~3,457~~3,645 barrels per day on our ~~North~~Ammonia Pipeline, mainly due to unfavorable weather conditions ~~that delayed~~for agricultural ~~activity for several weeks~~application and outages at customers’ facilities in the ~~first quarter of~~six months ended June 30, 2021.

Operating expenses decreased ~~$5.2~~$3.9 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021, compared to the ~~three~~six months ended ~~March 31,~~June 30, 2020, primarily due to ~~the following:~~

•a decrease of $4.2 million in maintenance and regulatory expenses, ~~of $3.6 million during 2021~~ mainly ~~as a result of maintenance and regulatory expenses~~ on ~~the~~our Ammonia Pipeline, and ~~regulatory cleaning and repairs on certain tanks along our McKee System pipelines in the first quarter of 2020; and~~

•a decrease in power ~~and rental~~ costs of ~~$3.7~~$2.8 million ~~mainly as a result of the~~across multiple pipelines, primarily resulting from lower throughputs ~~in the first quarter of 2021 described above,~~ and the addition of permanent power on our Permian Crude System. These decreases were partially offset by an increase of $4.4 million in compensation expense.

Depreciation and amortization expense increased $2.4 million for the six months ended June 30, 2021, compared to the six months ended June 30, 2020, mainly due to the completion of projects on our Permian Crude System and other completed projects.

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~~These decreases were partially offset by an increase in compensation costs of $3.1 million in~~In the first quarter of ~~2021.~~

~~Depreciation~~2020, the negative impact of the COVID-19 pandemic, combined with actions by OPEC+, led to a decline in our unit price and ~~amortization expense increased $1.4~~market capitalization in March 2020, and as a result, we recorded a non-cash goodwill impairment charge of $225.0 million related to our crude oil pipelines reporting unit. Please refer to Note 3 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for additional information on the ~~three months ended March 31, 2021, compared to the three months ended March 31, 2020, mainly due to projects associated with our Permian Crude System and other completed projects.~~goodwill impairment.

Storage Segment

Our storage segment is comprised of our facilities that provide storage, handling and other services for petroleum products, crude oil, specialty chemicals, renewable fuels and other liquids. As of ~~March 31,~~June 30, 2021, we own and operate 38 terminals and storage facilities in the U.S., one terminal in Nuevo Laredo, Mexico and one terminal located in Point Tupper, Canada, with an aggregate storage capacity of 59.0 million barrels. Revenues for the storage segment include fees for tank storage agreements, under which a customer agrees to pay for a certain amount of storage in a tank over a period of time (storage terminal revenues), and throughput agreements, under which a customer pays a fee per barrel for volumes moved through our terminals (throughput terminal revenues).

Sale of Texas City Terminals. On December 7, 2020, we sold the equity interests in our wholly owned subsidiaries that owned two terminals in Texas City, Texas for $106.0 million (the Texas City Sale). The two terminals have an aggregate storage capacity of 3.0 million barrels and were previously included in our storage segment.

Selby Terminal Fire. We recognized gains from business interruption insurance of $4.0 million and $3.1 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021 and ~~March 31,~~June 30, 2020, respectively, included in “Operating expenses,” which relate to a fire in October 2019 at our terminal facility in Selby, California.

~~The following table presents operating highlights for the storage segment:~~Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020


		Three Months Ended March 31,				Change			Three Months Ended June 30,				Change
		2021		2020					2021		2020
		(Thousands of Dollars, Except Barrels/Day Information)							(Thousands of Dollars, Except Barrels/Day Information)
Throughput (barrels/day)	Throughput (barrels/day)	400,302		678,830		(278,528)		Throughput (barrels/day)	385,790		348,189		37,601

Throughput terminal revenues	Throughput terminal revenues	$	24,794	$	38,723	$	(13,929)	Throughput terminal revenues	$	35,143	$	32,199	$	2,944
Storage terminal revenues	Storage terminal revenues	83,780		84,494		(714)		Storage terminal revenues	84,105		87,208		(3,103)
Total revenues	Total revenues	108,574		123,217		(14,643)		Total revenues	119,248		119,407		(159)
Operating expenses	Operating expenses	42,232		49,936		(7,704)		Operating expenses	49,089		50,979		(1,890)
Depreciation and amortization expense	Depreciation and amortization expense	23,624		24,702		(1,078)		Depreciation and amortization expense	23,974		25,186		(1,212)

Segment operating income	Segment operating income	$	42,718	$	48,579	$	(5,861)	Segment operating income	$	46,185	$	43,242	$	2,943

Throughput terminal revenues ~~decreased $13.9~~increased $2.9 million and throughputs ~~decreased 278,528~~increased 37,601 barrels per day for the three months ended ~~March 31,~~June 30, 2021, compared to the three months ended ~~March 31,~~June 30, 2020, mainly due to ~~a decrease~~an increase in ~~throughput terminal~~ revenues of ~~$13.3~~$2.9 million and an increase in throughputs of 51,406 barrels per day on our Central West Terminals, due to a rebound in demand in the second quarter of 2021. The increase in throughputs was partially offset by a decrease in throughputs of ~~264,999~~13,776 barrels per day at our Corpus Christi North Beach ~~terminal. Consistent with lower volumes on our Corpus Christi Crude Pipeline System, the decreases were mainly~~terminal due to ~~lower demand~~weak export markets and volumes delivered to our customers’ refineries instead of over our docks in the ~~first~~second quarter of ~~2021, compared~~2021; revenues remained flat at the terminal due to ~~the first quarter of 2020.~~minimum volume commitments.

Storage terminal revenues decreased ~~$0.7~~$3.1 million for the three months ended ~~March 31,~~June 30, 2021, compared to the three months ended ~~March 31,~~June 30, 2020, primarily due to a decrease in revenues of ~~$8.6~~$8.5 million as a result of the Texas City Sale in December 2020. This decrease was partially offset by the following:

•an increase in revenues of ~~$2.8~~$2.4 million at our West Coast Terminals, mainly due to completed projects, ~~new contracts~~resulting in higher throughputs and ~~rate escalations;~~associated handling fees; and

•an increase in revenues of ~~$1.9~~$2.2 million at our ~~St. James and Jacksonville terminals,~~North East Terminals, mainly due to contango market conditions at our Linden and Piney Point terminals that led to new contracts in the second quarter of 2020 and an increase in throughput and ancillary fees.

Operating expenses decreased $1.9 million for the three months ended June 30, 2021, compared to the three months ended June 30, 2020, primarily due to a decrease in operating expenses of $5.8 million due to the Texas City Sale in December 2020 and a decrease in maintenance and regulatory expenses of $1.0 million. These decreases were partially offset by an increase in

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compensation expense of $1.5 million, an increase in insurance expense of $1.3 million due to higher premiums and an increase in reimbursable expenses of $1.2 million across various terminals.

Depreciation and amortization expense decreased $1.2 million for the three months ended June 30, 2021, compared to the three months ended June 30, 2020, primarily due to the Texas City Sale.

Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020


	Six Months Ended June 30,				Change
	2021		2020
	(Thousands of Dollars, Except Barrels/Day Information)
Throughput (barrels/day)	393,006		513,510		(120,504)

Throughput terminal revenues	$	59,937	$	70,922	$	(10,985)
Storage terminal revenues	167,885		171,702		(3,817)
Total revenues	227,822		242,624		(14,802)
Operating expenses	91,321		100,915		(9,594)
Depreciation and amortization expense	47,598		49,888		(2,290)

Segment operating income	$	88,903	$	91,821	$	(2,918)

Throughput terminal revenues decreased $11.0 million and throughputs decreased 120,504 barrels per day for the six months ended June 30, 2021, compared to the six months ended June 30, 2020, mainly due to a decrease in revenues of $13.3 million and a decrease in throughputs of 139,482 barrels per day at our Corpus Christi North Beach terminal. Consistent with lower volumes on our Corpus Christi Crude Pipeline System, these decreases at our Corpus Christi North Beach terminal were due to lower minimum volume commitments for the six months ended June 30, 2021, Winter Storm Uri, weak export markets and volumes delivered to our customers’ refineries instead of over our docks in the second quarter of 2021. These decreases were partially offset by an increase in revenues of $2.3 million and an increase in throughputs of 19,446 barrels per day at our Central West Terminals, due to a rebound in demand in the second quarter of 2021.

Storage terminal revenues decreased $3.8 million for the six months ended June 30, 2021, compared to the six months ended June 30, 2020, primarily due to a decrease in revenues of $17.1 million due to the Texas City Sale in December 2020.

This decrease was partially offset by the following:

•an increase in revenues of $5.2 million at our West Coast Terminals, mainly due to completed projects, resulting in new contracts and rate escalations as well as higher throughputs and handling fees;

•an increase in revenues of $3.4 million at our North East Terminals, primarily due to contango market conditions that led to new contracts in the second quarter of 2020 and an increase in throughput and ancillary fees;

•an increase in revenues of ~~$2.3~~$2.7 million at our ~~North East~~Gulf Coast Terminals, excluding the Texas City Sale, mainly at our St. James and ~~Point Tupper terminals, primarily~~Jacksonville terminals. The increase at our St. James terminal was mainly due to ~~contango market conditions that led to new contracts and~~ an increase in reimbursable revenues, higher throughput and ancillary ~~fees;~~fees and unit train activity, partially offset by a decrease in customer base, while the increase at out Jacksonville terminal was mainly due to an increase in customer base; and

•an increase in revenues of $1.0 million at our Central West Terminals, primarily at our Nuevo Laredo terminal, due to the reactivation of our refined products pipeline to transport diesel to our Nuevo Laredo terminal in Mexico, which began full service at the end of the first quarter of 2020.

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Operating expenses decreased ~~$7.7~~$9.6 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021, compared to the ~~three~~six months ended ~~March 31,~~June 30, 2020, primarily due to the ~~following:~~following;

•a decrease in operating expenses of ~~$6.3~~$12.0 million due to the Texas City ~~Sale;~~Sale in December 2020;

•a decrease in maintenance expense of 2.5 million across various terminals; and

•a decrease in reimbursable expenses of ~~$2.3~~$1.1 million, mainly due to a decrease in wharfage activity of ~~$2.6~~$2.5 million at our Corpus Christi North Beach terminal ~~which was~~and a decrease of $0.9 million in tank cleaning expenses at Pt. Tupper, partially offset by an increase of ~~$1.0~~$1.7 million ~~due to higher~~in tank cleaning expenses at our St. James ~~terminal; and~~

•~~a decrease in maintenance expense of $1.5 million across various terminals.~~terminal.

These decreases were partially offset by an increase in compensation expense of ~~$2.1~~$3.6 million and an increase in insurance expense of ~~$2.1~~$3.4 million due to higher premiums.

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Depreciation and amortization expense decreased ~~$1.1~~$2.3 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021, compared to the ~~three~~six months ended ~~March 31,~~June 30, 2020, ~~primarily~~mainly due to the Texas City ~~Sale.~~Sale in December 2020.

Fuels Marketing Segment

The fuels marketing segment includes our bunkering operations in the Gulf Coast, as well as certain of our blending operations associated with our Central East System. The results of operations for the fuels marketing segment depend largely on the margin between our costs and the sales prices of the products we market. Therefore, the results of operations for this segment are more sensitive to changes in commodity prices compared to the operations of the pipeline and storage segments. We enter into derivative contracts to attempt to mitigate the effects of commodity price fluctuations. The financial impacts of the derivative financial instruments associated with commodity price risk were not material for any periods presented.

~~The following table presents operating highlights for the fuels marketing segment:~~Three Months Ended June 30, 2021 Compared to Three Months Ended June 30, 2020


		Three Months Ended March 31,				Change			Three Months Ended June 30,				Change
		2021		2020					2021		2020
		(Thousands of Dollars)							(Thousands of Dollars)
Product sales	Product sales	$	83,855	$	73,902	$	9,953	Product sales	$	114,939	$	54,025	$	60,914
Cost of goods	Cost of goods	82,403		66,954		15,449		Cost of goods	112,063		50,115		61,948
Gross margin	Gross margin	1,452		6,948		(5,496)		Gross margin	2,876		3,910		(1,034)
Operating expenses	Operating expenses	(1,279)		505		(1,784)		Operating expenses	578		561		17

Segment operating income	Segment operating income	$	2,731	$	6,443	$	(3,712)	Segment operating income	$	2,298	$	3,349	$	(1,051)

Segment operating income decreased ~~$3.7~~$1.1 million for the three months ended ~~March 31,~~June 30, 2021, compared to the three months ended ~~March 31,~~June 30, 2020, mainly due to lower gross margins across the segment.

Six Months Ended June 30, 2021 Compared to Six Months Ended June 30, 2020


	Six Months Ended June 30,				Change
	2021		2020
	(Thousands of Dollars)
Product sales	$	198,794	$	127,927	$	70,867
Cost of goods	194,466		117,069		77,397
Gross margin	4,328		10,858		(6,530)
Operating expenses	(701)		1,066		(1,767)


Segment operating income	$	5,029	$	9,792	$	(4,763)

Segment operating income decreased $4.8 million for the six months ended June 30, 2021, compared to the six months ended June 30, 2020, mainly due to lower gross margins of ~~$3.3~~$4.0 million from our bunkering operations and ~~$2.2~~$2.0 million from our blending ~~operations and other product sales.~~operations. The overall decrease in segment operating income was partially offset by a credit loss recovery of $1.7 million that we received in the first quarter of 2021, which is included in “Operating expenses.”

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LIQUIDITY AND CAPITAL RESOURCES

Overview

Our primary cash requirements are for distributions to our partners, debt service, capital expenditures and operating expenses. Our partnership agreement requires that we distribute all “Available Cash” to our common limited partners each quarter. “Available Cash” is defined in the partnership agreement generally as cash on hand at the end of the quarter, plus certain permitted borrowings made subsequent to the end of the quarter, less cash reserves determined by our board of directors, subject to requirements for distributions for our preferred units. We may maintain our distribution level with other sources of Available Cash, as provided in our partnership agreement, including borrowings under our revolving credit agreement and proceeds from the sales of assets.

In prior years, our objective was to fund our reliability capital expenditures and distribution requirements with net cash provided by operating activities during that year. If we did not generate sufficient cash from operations to meet that objective, we used cash on hand or other sources of cash flow, which primarily included borrowings under our revolving credit agreement, sales of non-strategic assets and, to the extent necessary, funds raised through debt or equity offerings. Prior to 2021, we funded our strategic capital expenditures primarily from borrowings under our revolving credit agreement, funds raised through debt or equity offerings and/or sales of non-strategic assets. However, our ability to raise funds by issuing debt or equity depends on many factors beyond our control, including our ability to access such markets with the continued uncertainty surrounding the duration and severity of the impact from the COVID-19 pandemic and actions by OPEC+. Our risk factors in Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020 describe the risks inherent to these sources of funding and the availability thereof.

Due to the negative impacts of, and the continued uncertainty related to, the COVID-19 pandemic and actions taken by OPEC+, we have taken steps to preserve and enhance our liquidity. We expect that amounts available under our revolving credit agreement will be sufficient to address senior note maturities in 2022, and we have no other senior note maturities until 2025. In addition, in response to the shifting expectations of our industry, including continuing to reduce leverage, combined with the ~~recent~~ongoing lack of access to equity markets and the ~~current~~ COVID-19 environment, we expect to fund all of our expenses, distribution requirements and capital expenditures using internally generated cash flows for the full-year 2021.

Cash Flows for the ~~Three~~Six Months Ended ~~March 31,~~June 30, 2021 and 2020

The following table summarizes our cash flows from operating, investing and financing activities (please refer to our Consolidated Statements of Cash Flows in Item 1. “Financial Statements”):


		Three Months Ended March 31,					Six Months Ended June 30,
		2021		2020			2021		2020
		(Thousands of Dollars)					(Thousands of Dollars)
Net cash provided by (used in):	Net cash provided by (used in):					Net cash provided by (used in):
Operating activities	Operating activities	$	145,657	$	151,428	Operating activities	$	214,237	$	270,441
Investing activities	Investing activities	(45,782)		(71,424)		Investing activities	(92,235)		(106,080)
Financing activities	Financing activities	(225,729)		(77,089)		Financing activities	(252,853)		(162,319)
Effect of foreign exchange rate changes on cash	Effect of foreign exchange rate changes on cash	475		(1,403)		Effect of foreign exchange rate changes on cash	727		(945)
Net (decrease) increase in cash, cash equivalents and restricted cash	Net (decrease) increase in cash, cash equivalents and restricted cash	$	(125,379)	$	1,512	Net (decrease) increase in cash, cash equivalents and restricted cash	$	(130,124)	$	1,097

Net cash provided by operating activities decreased ~~$5.8~~$56.2 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021, compared to the ~~three~~six months ended ~~March 31, 2020.~~June 30, 2020, primarily due to changes in working capital. Cash flows from operating activities includes insurance proceeds of $20.5 million and ~~$11.9~~$25.0 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021 and 2020, respectively, which are related to cleanup costs and business interruption at our terminal facility in Selby, California that experienced a fire in October 2019.

Our working capital ~~decreased~~increased by ~~$24.4~~$43.3 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021, compared to ~~an increase of $9.8~~$6.2 million for the ~~three~~six months ended ~~March 31,~~June 30, 2020. Working capital requirements are mainly affected by our accounts receivable and accounts payables balances, which vary depending on the timing of payments. ~~For~~Increased activity from the ~~three months ended March 31, 2021,~~continuing economic recovery also contributed to the ~~$12.2 million decrease~~increase in ~~accounts receivable was also due to insurance proceeds received during the period.~~working capital. In addition, the timing of payments related to accrued interest payable ~~increased $27.1 million for~~changed due to the ~~three months ended March 31, 2021, compared to $2.7 million for the three months ended March 31, 2020, mainly resulting from accrued interest expense for~~ senior note issuances in ~~2020, as well as changes in the timing of interest payments. Accrued liabilities decreased $19.1 million for the three months ended March 31, 2021, compared~~2020. Please refer to ~~$5.7 million for the three months ended March 31, 2020, mainly due to changes in the timing of revenue recognized that was included in contract liabilities at the beginning~~Note 11 of the ~~periods.~~Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for additional discussion.

For the six months ended June 30, 2021, net cash provided by operating activities combined with cash on hand exceeded our distributions to unitholders, reliability capital expenditures and strategic capital expenditures.

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~~For the three months ended March 31, 2021, net cash provided by operating activities exceeded our distributions to unitholders and capital expenditures.~~

Net cash used in investing activities decreased by ~~$25.6~~$13.8 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021, compared to the ~~three~~six months ended ~~March 31,~~June 30, 2020, primarily due to reductions to our capital expenditures.

Net cash used in financing activities increased ~~$148.6~~$90.5 million for the ~~three~~six months ended ~~March 31,~~June 30, 2021, compared to the ~~three~~six months ended ~~March 31,~~June 30, 2020, mainly due to a ~~$182.8~~$177.6 million increase in net debt repayments. This increase was partially offset by the $49.2 million payment to terminate interest rate swaps in the second quarter of 2020 and a decrease of $21.2 million in distributions paid to our common unitholders ~~of $21.4 million in~~for the ~~first quarter of~~six months ended June 30, 2021, compared to the ~~first quarter of~~six months ended June 30, 2020.

Sources of Liquidity

Revolving Credit Agreement. On February 16, 2021, NuStar Logistics amended its $1.0 billion revolving credit agreement (the Revolving Credit Agreement) to, among other things, expand certain adjustments related to our maximum consolidated debt coverage ratio and minimum consolidated interest coverage ratio.

The Revolving Credit Agreement is subject to maximum consolidated debt coverage ratio and minimum consolidated interest coverage ratio requirements, which may limit the amount we can borrow to an amount less than the total amount available for borrowing. For the rolling period of four quarters ~~ending March 31,~~ended June 30, 2021, the consolidated debt coverage ratio (as defined in the Revolving Credit Agreement) could not exceed 5.00-to-1.00 and the consolidated interest coverage ratio (as defined in the Revolving Credit Agreement) must not be less than 1.75-to-1.00. As of ~~March 31,~~June 30, 2021, our consolidated debt coverage ratio was ~~4.39x~~4.27x and our consolidated interest coverage ratio was ~~1.95x.~~2.05x. As of ~~March 31,~~June 30, 2021, we had ~~$837.8~~$809.8 million available for borrowing. We expect that amounts available under the Revolving Credit Agreement will be sufficient to address senior note maturities in 2022.

The Revolving Credit Agreement is the only debt arrangement with an interest rate that is subject to adjustment if our debt rating is downgraded (or upgraded) by certain credit rating agencies. In April of 2021, Moody’s Investor Service Inc. affirmed our credit rating and changed our rating outlook from negative to stable. The following table reflects the current ratings and outlook that have been assigned to our debt:

Fitch Ratings

Moody’s Investor
Service Inc.

S&P
Global Ratings

Ratings

BB-

Ba3

BB-

Outlook

Stable

Term Loan. On April 19, 2020, NuStar Energy and NuStar Logistics entered into an unsecured term loan credit agreement with certain lenders and Oaktree Fund Administration, LLC, as administrative agent for the lenders. The Term Loan provided for an aggregate commitment of up to $750.0 million pursuant to a three-year unsecured term loan credit facility. NuStar Logistics drew $500.0 million on April 21, 2020, which we repaid on September 16, 2020. We terminated the Term Loan on February 16, 2021.

Receivables Financing Agreement. NuStar Energy and NuStar Finance LLC (NuStar Finance), a special purpose entity and wholly owned subsidiary of NuStar Energy, are parties to a $100.0 million receivables financing agreement with third-party lenders (the Receivables Financing Agreement) and agreements with certain of NuStar Energy’s wholly owned subsidiaries. As of ~~March 31,~~June 30, 2021, ~~$111.2~~$125.4 million of our accounts receivable was included in the Securitization Program and the amount of borrowings outstanding under the Receivables Financing Agreement totaled ~~$52.3~~$74.2 million. The amount available for borrowing under the Receivables Financing Agreement is based on the availability of eligible receivables and other customary factors and conditions.

~~LOC Agreement.~~ NuStar Logistics also is a party to a $100.0 million uncommitted letter of credit agreement, which provides for standby letters of credit or guarantees with a term of up to one year (LOC Agreement). As of March 31, 2021, we had no letters of credit issued under the LOC Agreement.

Please refer to Note 5 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for a discussion of certain of our debt agreements.

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Capital Requirements

Our operations require significant investments to maintain, upgrade or enhance the operating capacity of our existing assets. Our capital expenditures consist of:

•strategic capital expenditures, such as those to expand or upgrade the operating capacity, increase efficiency or increase the earnings potential of existing assets, whether through construction or acquisition, as well as certain capital expenditures related to support functions; and

•reliability capital expenditures, such as those required to maintain the current operating capacity of existing assets or extend their useful lives, as well as those required to maintain equipment reliability and safety.

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The following table summarizes our capital expenditures:


		Strategic Capital Expenditures		Reliability Capital Expenditures		Total			Strategic Capital Expenditures		Reliability Capital Expenditures		Total
		(Thousands of Dollars)							(Thousands of Dollars)
For the three months ended March 31:
For the six months ended June 30:								For the six months ended June 30:
2021	2021	$	31,974	$	8,489	$	40,463	2021	$	69,762	$	17,432	$	87,194
2020	2020	$	52,654	$	3,629	$	56,283	2020	$	85,307	$	11,051	$	96,358

Expected for the year ended December 31, 2021	Expected for the year ended December 31, 2021	$ 140,000 - 170,000		$ 40,000 - 50,000				Expected for the year ended December 31, 2021	$140,000 - 170,000		$40,000 - 50,000

Strategic capital expenditures for the ~~three~~six months ended ~~March 31,~~June 30, 2021 and 2020 mainly consisted of expansion projects on our Permian Crude System, as well as our West Coast bio-fuels terminal projects in 2021 and our Northern Mexico refined products supply projects and expansion projects on our Corpus Christi Crude System in 2020. Reliability capital expenditures for the ~~three~~six months ended ~~March 31,~~June 30, 2021 and 2020 primarily related to maintenance upgrade projects at our terminals.

For the year ended December 31, 2021, we expect a significant portion of our strategic capital spending to relate to our expansion projects to accommodate production growth in the Permian Basin and projects to handle biofuels demand on the West Coast. We continue to evaluate our capital budget and make changes as economic conditions warrant, and our actual capital expenditures for 2021 may increase or decrease from the expected amounts noted above. We expect to fund our capital expenditures infor the full-year 2021 with internally generated cash flows, and our internal growth projects can be accelerated or scaled back depending on market conditions or customer demand.

Distributions

Common Units. Distribution payments are made to our common limited partners within 45 days after the end of each quarter as of a record date that is set after the end of each quarter. The following table summarizes information about quarterly cash distributions to our common limited partners:

Quarter Ended

Cash Distributions
Per Unit

Total Cash
Distributions

Record Date

Payment Date

Quarter Ended

Cash Distributions
Per Unit

Total Cash
Distributions

Record Date

Payment Date

(Thousands of Dollars)

June 30, 2021

0.40

43,814

August 6, 2021

August 12, 2021

March 31, 2021

0.40

43,834

May 10, 2021

May 14, 2021

March 31, 2021

0.40

43,834

May 10, 2021

May 14, 2021

December 31, 2020

0.40

43,787

February 8, 2021

February 12, 2021

December 31, 2020

0.40

43,787

February 8, 2021

February 12, 2021

Preferred Units. Distributions on our preferred units are payable out of any legally available funds, accrue and are cumulative from the original issuance dates, and are payable on the 15th day (or next business day) of each of March, June, September and December of each year to holders of record on the first business day of each payment month.

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The following table provides the terms related to distributions for our Series A, Series B and Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units (collectively, the Series A, B and C Preferred Units):


Units	Fixed Distribution Rate Per Annum (as a Percentage of the $25.00 Liquidation Preference Per Unit)	Fixed Distribution Rate Per Unit Per Annum		Fixed Distribution Per Annum		Optional Redemption Date/Date at Which Distribution Rate Becomes Floating	Floating Annual Rate (as a Percentage of the $25.00 Liquidation Preference Per Unit)
				(Thousands of Dollars)
Series A Preferred Units	8.50%	$	2.125	$	19,252	December 15, 2021	Three-month LIBOR plus 6.766%
Series B Preferred Units	7.625%	$	1.90625	$	29,357	June 15, 2022	Three-month LIBOR plus 5.643%
Series C Preferred Units	9.00%	$	2.25	$	15,525	December 15, 2022	Three-month LIBOR plus 6.88%

The distribution rates on the Series D Cumulative Convertible Preferred Units (Series D Preferred Units) are as follows: (i) 9.75%, or $57.6 million, per annum ($0.619 per unit per distribution period) for the first two years (beginning with the September 17, 2018 distribution); (ii) 10.75%, or $63.4 million, per annum ($0.682 per unit per distribution period) for years

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three through five; and (iii) the greater of 13.75%, or $81.1 million, per annum ($0.872 per unit per distribution period) or the distribution per common unit thereafter. While the Series D Preferred Units are outstanding, the Partnership will be prohibited from paying distributions on any junior securities, including the common units, unless full cumulative distributions on the Series D Preferred Units (and any parity securities) have been, or contemporaneously are being, paid or set aside for payment through the most recent Series D Preferred Unit distribution payment date. Any Series D Preferred Unit distributions in excess of $0.635 may be paid, in the Partnership’s sole discretion, in additional Series D Preferred Units, with the remainder paid in cash.

In ~~April~~July 2021, our board of directors declared distributions with respect to the Series A, B and C Preferred Units and the Series D Preferred Units to be paid on ~~June~~September 15, 2021.

Debt Obligations

Our debt obligations as of ~~March 31,~~June 30, 2021 are listed below:

•$250.0 million of 4.75% senior notes due February 1, 2022; $600.0 million of 5.75 % senior notes due October 1, 2025; $500.0 million of 6.0% senior notes due June 1, 2026; $550.0 million of 5.625% senior notes due April 28, 2027; $600.0 million of 6.375% senior notes due October 1, 2030; and $402.5 million subordinated notes due January 15, 2043 with a floating interest rate, which was 7.0% as of March 31, 2021;

•~~$322.1 million in GoZone Bonds due from 2038 to 2041; and~~

•~~Receivables Financing Agreement due September 20, 2023, with $52.3 million of borrowings outstanding as of March 31, 2021.~~


	Maturity			June 30, 2021
				(Thousands of Dollars)
Revolving Credit Agreement	October 27, 2023			$	185,000
4.75% senior notes	February 1, 2022			$	250,000
5.75% senior notes	October 1, 2025			$	600,000
6.00% senior notes	June 1, 2026			$	500,000
5.625% senior notes	April 28, 2027			$	550,000
6.375% senior notes	October 1, 2030			$	600,000
Subordinated Notes, with a floating interest rate of 6.9% as of June 30, 2021	January 15, 2043			$	402,500
GoZone Bonds	2038	thru	2041	$	322,140
Receivables Financing Agreement	September 20, 2023			$	74,200

We repaid our $300.0 million of 6.75% senior notes due February 1, 2021 at maturity, and we expect to pay our $250.0 million of 4.75% senior notes due February 1, 2022, with borrowings under our Revolving Credit Agreement.

We believe that, as of ~~March 31,~~June 30, 2021, we are in compliance with the ratios and covenants applicable to our debt obligations. A default under certain of our debt obligations would be considered an event of default under other of our debt obligations. Please refer to Note 5 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for a discussion of certain of our debt obligations.

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Guarantor Summarized Financial Information

NuStar Energy has no operations, and its assets consist mainly of its 100% ownership interest in its indirectly owned subsidiaries, NuStar Logistics and NuPOP. The senior and subordinated notes issued by NuStar Logistics are fully and unconditionally guaranteed by NuStar Energy and NuPOP. Each guarantee of the senior notes by NuStar Energy and NuPOP ranks equally in right of payment with all other existing and future unsecured senior indebtedness of that guarantor, is structurally subordinated to all existing and any future indebtedness and obligations of any subsidiaries of that guarantor that do not guarantee the notes and ~~rank~~ranks senior to its guarantee of our subordinated indebtedness. Each guarantee of the subordinated notes by NuStar Energy and NuPOP ranks equal in right of payment with all other existing and future subordinated indebtedness of that guarantor and subordinated in right of payment and upon liquidation to the prior payment in full of all other existing and future senior indebtedness of that guarantor. NuPOP will be released from its guarantee when it no longer guarantees any obligations of NuStar Energy or any of its subsidiaries, including NuStar Logistics, under any bank credit facility or public debt instrument. The rights of holders of our senior and subordinated notes may be limited under the U.S. Bankruptcy Code or state fraudulent transfer or conveyance law.

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The following table presents summarized combined income statement and balance sheet information for NuStar Energy, NuStar Logistics and NuPOP (collectively, the Guarantor Issuer Group). Intercompany items among the Guarantor Issuer Group have been eliminated in the summarized combined financial information below, as well as intercompany balances and activity for the Guarantor Issuer Group with non-guarantor subsidiaries, including the Guarantor Issuer Group’s investment balances in non-guarantor subsidiaries.


		March 31, 2021		December 31, 2020			June 30, 2021		December 31, 2020
		(Thousands of Dollars)					(Thousands of Dollars)
Summarized Combined Balance Sheet Information:	Summarized Combined Balance Sheet Information:					Summarized Combined Balance Sheet Information:
Current assets	Current assets	$	24,885	$	154,752	Current assets	$	52,004	$	154,752
Long-term assets	Long-term assets	$	2,920,804	$	2,950,217	Long-term assets	$	2,895,016	$	2,950,217
Current liabilities (a)	Current liabilities (a)	$	147,373	$	140,385	Current liabilities (a)	$	109,676	$	140,385
Long-term liabilities, including long-term debt	Long-term liabilities, including long-term debt	$	3,464,691	$	3,609,306	Long-term liabilities, including long-term debt	$	3,488,064	$	3,609,306
Series D preferred limited partners interests	Series D preferred limited partners interests	$	603,563	$	599,542	Series D preferred limited partners interests	$	607,718	$	599,542

				Three Months Ended March 31, 2021					Six Months Ended June 30, 2021
				(Thousands of Dollars)					(Thousands of Dollars)
Summarized Combined Income Statement Information:	Summarized Combined Income Statement Information:					Summarized Combined Income Statement Information:
Revenues	Revenues			$	186,703	Revenues			$	404,402
Operating income	Operating income			$	67,582	Operating income			$	152,745
Interest expense, net	Interest expense, net			$	(55,018)	Interest expense, net			$	(109,027)

Net income	Net income			$	13,412	Net income			$	45,618

(a)Excludes $0.7 million and $0.6 million of net intercompany payables as of ~~March 31,~~June 30, 2021 and December 31, 2020, respectively, due to the non-guarantor subsidiaries from the Guarantor Issuer Group.

Long-term assets for the non-guarantor subsidiaries totaled ~~$2,540.3~~$2,541.1 million and $2,543.2 million as of ~~March 31,~~June 30, 2021 and December 31, 2020, respectively. Revenue and net income for the non-guarantor subsidiaries totaled ~~$174.9~~$384.3 million and ~~$28.8~~$60.0 million, respectively, for the ~~three~~six months ended ~~March 31,~~June 30, 2021. Please refer to Note 5 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for a discussion of certain of our debt obligations.

Interest Rate Swaps

Please refer to Note 7 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for a discussion of our interest rate swaps.

Environmental, Health and Safety

Our operations are subject to extensive international, federal, state and local environmental laws and regulations, in the U.S. and in the other countries in which we operate, including those relating to the discharge of materials into the environment, waste management, remediation, the characteristics and composition of fuels, climate change and greenhouse gases. Our operations are also subject to extensive health, safety and security laws and regulations, including those relating to worker and pipeline safety, pipeline and storage tank integrity and operations security. Because more stringent environmental and safety laws and

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regulations are continuously being enacted or proposed, the level of expenditures required for environmental, health and safety matters is expected to increase in the future.

Contingencies

We are subject to certain loss contingencies, and we believe that the resolution of any particular claim or proceeding, or all matters in the aggregate, would not have a material adverse effect on our results of operations, financial position or liquidity, as further disclosed in Note 6 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements.”

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates. Ongoing uncertainty surrounding the COVID-19 pandemic, including its duration and lingering impacts, and uncertainty surrounding future production decisions by oil producing nations continue to cause volatility and could significantly impact management’s estimates and assumptions. Our critical accounting policies are disclosed in our Annual Report on Form 10-K for the year ended December 31, 2020.

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NEW ACCOUNTING PRONOUNCEMENTS

Please refer to Note 2 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for a discussion of new accounting pronouncements.

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Item 3.Quantitative and Qualitative Disclosures About Market Risk

We manage our exposure to changing interest rates principally through the use of a combination of fixed-rate debt and variable-rate debt. Borrowings under our variable-rate debt expose us to increases in interest rates. Please refer to Note 5 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for additional information about certain of our debt instruments.

The following tables present principal cash flows and related weighted-average interest rates by expected maturity dates for our long-term debt, excluding finance leases:


		March 31, 2021																							June 30, 2021
		Expected Maturity Dates																							Expected Maturity Dates
		2021			2022			2023			2024		2025			Thereafter			Total			Fair Value			2021			2022			2023			2024		2025			Thereafter			Total			Fair Value
		(Thousands of Dollars, Except Interest Rates)																							(Thousands of Dollars, Except Interest Rates)
Fixed-rate debt	Fixed-rate debt	$	—		$	250,000		$	—		$	—	$	600,000		$	1,972,140		$	2,822,140		$	3,060,505	Fixed-rate debt	$	—		$	250,000		$	—		$	—	$	600,000		$	1,972,140		$	2,822,140		$	3,121,695
Weighted-average rate	Weighted-average rate	—		%	4.8		%	—			—		5.8		%	6.0		%	5.9		%	—		Weighted-average rate	—		%	4.8		%	—			—		5.8		%	6.0		%	5.9		%	—
Variable-rate debt	Variable-rate debt	$	—		$	—		$	209,300		$	—	$	—		$	402,500		$	611,800		$	606,273	Variable-rate debt	$	—		$	—		$	259,200		$	—	$	—		$	402,500		$	661,700		$	671,795
Weighted-average rate	Weighted-average rate	—			—			2.5		%	—		—			7.0		%	5.5		%	—		Weighted-average rate	—			—			2.5		%	—		—			6.9		%	5.2		%	—


	December 31, 2020
	Expected Maturity Dates
	2021			2022			2023			2024		2025			Thereafter			Total			Fair Value
	(Thousands of Dollars, Except Interest Rates)
Fixed-rate debt	$	300,000		$	250,000		$	—		$	—	$	600,000		$	1,972,140		$	3,122,140		$	3,396,542
Weighted-average rate	6.8		%	4.8		%	—			—		5.8		%	6.0		%	5.9		%	—
Variable-rate debt	$	—		$	—		$	57,000		$	—	$	—		$	402,500		$	459,500		$	402,836
Weighted-average rate	—			—			2.3		%	—		—			7.0		%	6.4		%	—

Since the operations of our fuels marketing segment expose us to commodity price risk, we also use derivative instruments to attempt to mitigate the effects of commodity price fluctuations. Derivative financial instruments associated with commodity price risk were not material for any periods presented.

Item 4.Controls and Procedures

(a)Evaluation of disclosure controls and procedures.

Our management has evaluated, with the participation of the principal executive officer and principal financial officer of NuStar GP, LLC, the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report, and has concluded that our disclosure controls and procedures were effective as of ~~March 31,~~June 30, 2021.

(b)Changes in internal control over financial reporting.

There has been no change in our internal control over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1A. Risk Factors

Except as set forth below, there have been no material developments with respect to the risk factors previously disclosed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2020 and in Part II, Item 1A. “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021. The information contained in this Item 1A. updates, and should be read in conjunction with, the related information set forth in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020 and in Part II, Item 1A. “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, in addition to the other information contained in this Quarterly Report on Form 10-Q.

The ongoing effects of the COVID-19 pandemic, the actions taken in response thereto and developments in the global oil markets may continue to adversely affect our business, financial condition, results of operations or cash flows.

The coronavirus, or COVID-19, had a severe negative impact on global economic activity during 2020, significantly reducing demand for petroleum products and increasing the volatility of crude oil prices, beginning in March 2020. While a number of countries, including the United States, have made significant progress in 2021 in deploying COVID-19 vaccines, which has improved economic conditions and outlook in those nations, many more continue to struggle to obtain and/or disseminate vaccinations to their populace, which is frustrating widespread global economic recovery. Even in the United States, if ~~we are unable to vaccinate~~ a sufficient proportion of people are not vaccinated to reach herd immunity, or ~~if vaccine-resistant strains~~as variants emerge, we may face additional resurgence in COVID-19 case count in some regions, as we have recently seen, which could slow the pace of domestic economic improvement and undermine rebounding demand in the markets our assets serve.

Ongoing uncertainty surrounding the COVID-19 pandemic, including its duration and lingering impacts to the economy, as well as uncertainty surrounding future production decisions by the Organization of Petroleum Exporting Countries and other oil-producing nations (OPEC+), have caused and may continue to cause volatility and could have a significant impact on management’s estimates and assumptions in 2021 and beyond. The extent of the impacts on our business, financial condition, results of operations and cash flows will depend on future developments that are highly uncertain and cannot be accurately predicted, such as: the duration and severity of the COVID-19 pandemic or other public health crises and the lingering impacts to the economy; uncertainty surrounding future production decisions by OPEC+; the state of the economy and the capital markets; changes to our customers’ refinery maintenance schedules and unplanned refinery downtime; crude oil prices; the supply of and demand for crude oil, refined products and anhydrous ammonia; demand for our transportation and storage services; the availability of personnel, equipment and services essential to our operations; the ability to obtain timely permitting approvals; and changes in laws and regulations affecting our operations.

We rely on our information technology and operational technology systems to conduct our business.Any significant cybersecurity breach or other significant disruption to those systems would cause our business, financial results and reputation to suffer, increase our costs and expose us to liability, and could adversely affect our ability to make distributions to our unitholders.

We rely on our information technology systems and our operational technology systems to process, transmit and store information, such as employee, customer and vendor data, and to conduct almost all aspects of our business, including safely operating our pipelines and storage facilities, recording and reporting commercial and financial transactions and receiving and making payments. We also rely on systems hosted by third parties, with respect to which we have limited visibility and control, and that have access to or store certain of our employee, customer and vendor data. The security of these networks and systems is critical to our operations and business strategy.

Although we take proactive steps to protect our company, systems and data from cyberattacks, such as implementing multiple layers of security, segregated systems and user access, antivirus tools, vulnerability scanning, monitoring and patch management, regular employee training, phishing tests, penetration tests, internal risk assessments, independent third-party assessments, tabletop exercises to test our incident response plan, enhanced cyber diligence of vendors and physical security measures, all companies are at risk of a cyberattack.The number and sophistication of reported cyberattacks by both state-sponsored and criminal organizations continue to increase, across industries and around the world, including recent attacks on operators of critical infrastructure assets, such as pipelines, as well as the third parties that provide technology services for critical infrastructure, in some cases with considerable negative impact on targeted companies’ ability to conduct business.

Like other companies, we recognize that, despite our security measures, we remain subject to cybersecurity incidents due to attacks from a variety of external threat actors, internal employee error or malfeasance and cybersecurity incidents suffered by our service providers, vendors or customers. In addition, in connection with COVID-19 precautions, many of our employees and those of our service providers, vendors and customers have been working, and some may continue to work, from home or other remote-work locations, where cybersecurity protections may be less robust and cybersecurity procedures and safeguards may be less effective. Moreover, certain attacker techniques and goals, such as surveillance, intelligence gathering or extended reconnaissance, may remain undetected for an extended period of time, which can increase the breadth and negative impact of

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an incident. A significant failure, compromise, breach or interruption in our systems or those of third parties critical to our operations could result in a disruption of our operations; physical damage to our assets or the environment; physical, financial, or other harm to employees or others; safety incidents; damage to our reputation; loss of customers or revenues; increased costs for remedial actions; and potential litigation or regulatory fines. Failures, interruptions and similar events that result in the loss or improper disclosure of information maintained in our systems and networks or those of our vendors, including personnel, customer and vendor information, have in the past and may in the future require reporting under relevant contractual obligations and laws and regulations protecting personal data and privacy and could also subject us to litigation or other liability under relevant contractual obligations, laws and regulations. Our financial results could also be adversely affected if our systems are breached or an employee, vendor or customer causes our systems to fail, either as a result of inadvertent error or deliberate tampering with or manipulation of our systems.

Due to the continued acceleration of cyberattacks, generally and against our industry, regulatory actions by federal, state and local governmental agencies in the U.S. and in other countries in which we operate have increased. Evolving laws and regulations governing cybersecurity and data privacy and protection pose increasingly complex compliance challenges. Although we believe that we have robust cybersecurity procedures and other safeguards in place, we cannot guarantee their effectiveness, and a significant failure, compromise, breach or interruption in our systems or those of our customers or vendors could have a material effect on our operations and the operations of our customers and vendors. As threats continue to evolve and cybersecurity and data privacy and protection laws and regulations continue to develop, we spend and expect to continue spending additional resources to continue to enhance our cybersecurity, data protection, business continuity and incident response measures, to investigate and remediate any vulnerabilities to, or consequences of, cyber incidents, as well as to ensure continued regulatory compliance.

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Item 6.Exhibits


Exhibit Number		Description



10.01		Ninth Amendment to Amended and Restated 5-Year Revolving Credit Agreement, dated as of February 16, 2021, among NuStar Logistics, L.P., NuStar Energy L.P., JPMorgan Chase Bank, N.A., as Administrative Agent, and the Lenders party thereto (incorporated by reference to Exhibit 10.01 to NuStar Energy L.P.’s Current Report on Form 8-K filed February 18, 2021 (File No. 001-16417))

~~10.02~~		Amended and Restated NuStar Energy L.P. 2019 Long-Term Incentive Plan (incorporated by reference to Exhibit 10.1 to NuStar Energy L.P.’s Current Report on Form 8-K filed April 30, 2021 (File No. 001-16417))

*10.02		Form of 2021 Performance Cash Award Agreement under the Amended and Restated NuStar Energy L.P. 2019 Long-Term Incentive Plan
22.01		Subsidiary Guarantors and Issuers of Guaranteed Securities (incorporated by reference to Exhibit 22.01 to NuStar Energy L.P.’s Annual Report on Form 10-K for year ended December 31, 2020 (File No. 001-16417))

*31.01		Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal executive officer

*31.02		Rule 13a-14(a) Certification (under Section 302 of the Sarbanes-Oxley Act of 2002) of principal financial officer

**32.01		Section 1350 Certification (under Section 906 of the Sarbanes-Oxley Act of 2002) of principal executive officer

**32.02		Section 1350 Certification (under Section 906 of the Sarbanes-Oxley Act of 2002) of principal financial officer

*101.INS		Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

*101.SCH		Inline XBRL Taxonomy Extension Schema Document

*101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

*101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

*101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document

*101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

*104		Cover Page Interactive Data File - Formatted in Inline XBRL and contained in Exhibit 101
*	Filed herewith.
**	Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NUSTAR ENERGY L.P.

(Registrant)

By: Riverwalk Logistics, L.P., its general partner

By: NuStar GP, LLC, its general partner


By:						/s/ Bradley C. Barron
						Bradley C. Barron
						President and Chief Executive Officer
						~~May 7,~~August 6, 2021

By:						/s/ Thomas R. Shoaf
						Thomas R. Shoaf
						Executive Vice President and Chief Financial Officer
						~~May 7,~~August 6, 2021

By:						/s/ Jorge A. del Alamo
						Jorge A. del Alamo
						Senior Vice President and Controller
						~~May 7,~~August 6, 2021

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