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 ~~June 30, 2021~~March 31, 2022


☐			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 ~~July 31, 2021~~April 30, 2022 was ~~109,532,470.~~110,303,252.

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 ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021	3

	Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	4

	Consolidated Statements of Cash Flows for the ~~Six~~Three Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	5

	Consolidated Statements of Partners’ Equity and Mezzanine Equity for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~	6

	Condensed Notes to Consolidated Financial Statements	87

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1918

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3331

Item 4.	Controls and Procedures	3332

PART II – OTHER INFORMATION

~~Item 1A.~~	~~Risk Factors~~	34

Item 6.	Exhibits	3633

SIGNATURES		3734

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)


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	23,500	$	153,625	Cash and cash equivalents	$	8,398	$	5,637
Accounts receivable, net	Accounts receivable, net	143,392		133,473		Accounts receivable, net	142,527		135,126

Inventories	Inventories	12,812		11,059		Inventories	19,310		16,644

Prepaid and other current assets	Prepaid and other current assets	30,177		25,400		Prepaid and other current assets	15,079		27,135

Assets held for sale						Assets held for sale	86,458		—
Total current assets	Total current assets	209,881		323,557		Total current assets	271,772		184,542
Property, plant and equipment, at cost	Property, plant and equipment, at cost	6,255,183		6,164,742		Property, plant and equipment, at cost	5,625,080		5,728,848
Accumulated depreciation and amortization	Accumulated depreciation and amortization	(2,323,020)		(2,207,230)		Accumulated depreciation and amortization	(2,171,692)		(2,187,206)
Property, plant and equipment, net	Property, plant and equipment, net	3,932,163		3,957,512		Property, plant and equipment, net	3,453,388		3,541,642
Intangible assets, net	Intangible assets, net	604,497		630,209		Intangible assets, net	546,679		557,785
Goodwill	Goodwill	766,416		766,416		Goodwill	732,356		732,356

Other long-term assets, net	Other long-term assets, net	133,023		139,324		Other long-term assets, net	125,730		140,007
Total assets	Total assets	$	5,645,980	$	5,817,018	Total assets	$	5,129,925	$	5,156,332
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	$	70,484	$	71,731	Accounts payable	$	70,360	$	82,446

Current portion of finance lease obligations	Current portion of finance lease obligations	3,522		3,839		Current portion of finance lease obligations	4,000		3,848

Accrued interest payable	Accrued interest payable	39,161		50,847		Accrued interest payable	72,107		34,139
Accrued liabilities	Accrued liabilities	60,711		77,770		Accrued liabilities	54,447		79,818

Taxes other than income tax	Taxes other than income tax	15,432		16,998		Taxes other than income tax	10,196		14,475

Liabilities held for sale						Liabilities held for sale	66,496		—
Total current liabilities	Total current liabilities	189,310		221,185		Total current liabilities	277,606		214,726
Long-term debt, less current portion	Long-term debt, less current portion	3,496,933		3,593,496		Long-term debt, less current portion	3,168,425		3,183,555

Deferred income tax liability	Deferred income tax liability	12,252		13,011		Deferred income tax liability	2,848		11,831
Other long-term liabilities	Other long-term liabilities	152,047		157,825		Other long-term liabilities	137,763		147,956
Total liabilities	Total liabilities	3,850,542		3,985,517		Total liabilities	3,586,642		3,558,068

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 June 30, 2021 and December 31, 2020) (Note 8)		607,718		599,542
Series D preferred limited partners (23,246,650 preferred units outstanding as of March 31, 2022 and December 31, 2021) (Note 8)						Series D preferred limited partners (23,246,650 preferred units outstanding as of March 31, 2022 and December 31, 2021) (Note 8)	621,018		616,439

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 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)		371,476		371,476
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)		523,711		572,314
Series A (9,060,000 units outstanding as of March 31, 2022 and December 31, 2021)						Series A (9,060,000 units outstanding as of March 31, 2022 and December 31, 2021)	218,307		218,307
Series B (15,400,000 units outstanding as of March 31, 2022 and December 31, 2021)						Series B (15,400,000 units outstanding as of March 31, 2022 and December 31, 2021)	371,476		371,476
Series C (6,900,000 units outstanding as of March 31, 2022 and December 31, 2021)						Series C (6,900,000 units outstanding as of March 31, 2022 and December 31, 2021)	166,518		166,518
Common limited partners (110,297,849 and 109,986,273 common units outstanding as of March 31, 2022 and December 31, 2021, respectively)						Common limited partners (110,297,849 and 109,986,273 common units outstanding as of March 31, 2022 and December 31, 2021, respectively)	239,010		299,502

Accumulated other comprehensive loss	Accumulated other comprehensive loss	(92,292)		(96,656)		Accumulated other comprehensive loss	(73,046)		(73,978)
Total partners’ equity	Total partners’ equity	1,187,720		1,231,959		Total partners’ equity	922,265		981,825

Total liabilities, mezzanine equity and partners’ equity	Total liabilities, mezzanine equity and partners’ equity	$	5,645,980	$	5,817,018	Total liabilities, mezzanine equity and partners’ equity	$	5,129,925	$	5,156,332

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 June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
Revenues:	Revenues:									Revenues:
Service revenues	Service revenues	$	300,788	$	284,151	$	572,671	$	600,897	Service revenues	$	265,305	$	271,883
Product sales	Product sales	126,305		55,389		216,068		131,434		Product sales	144,558		89,763
Total revenues	Total revenues	427,093		339,540		788,739		732,331		Total revenues	409,863		361,646
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)	100,493		101,078		187,780		201,260		Operating expenses (excluding depreciation and amortization expense)	86,402		87,287
Depreciation and amortization expense	Depreciation and amortization expense	68,964		69,214		137,382		137,275		Depreciation and amortization expense	63,303		68,418
Total costs associated with service revenues	Total costs associated with service revenues	169,457		170,292		325,162		338,535		Total costs associated with service revenues	149,705		155,705
Cost associated with product sales		112,641		50,676		193,754		118,126
Costs associated with product sales										Costs associated with product sales	126,715		81,113
Impairment loss										Impairment loss	46,122		—

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)	27,477		23,700		51,969		46,671		General and administrative expenses (excluding depreciation and amortization expense)	27,071		24,492
Other depreciation and amortization expense	Other depreciation and amortization expense	1,913		2,171		3,960		4,357		Other depreciation and amortization expense	1,824		2,047

Total costs and expenses	Total costs and expenses	311,488		246,839		574,845		732,689		Total costs and expenses	351,437		263,357
Operating income (loss)		115,605		92,701		213,894		(358)
Operating income										Operating income	58,426		98,289

Interest expense, net	Interest expense, net	(53,780)		(59,499)		(108,698)		(106,993)		Interest expense, net	(49,818)		(54,918)

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

Basic and diluted net income (loss) per common unit (Note 10)		$	0.25	$	(0.06)	$	0.30	$	(1.74)
Other income, net										Other income, net	3,671		398
Income before income tax (benefit) expense										Income before income tax (benefit) expense	12,279		43,769
Income tax (benefit) expense										Income tax (benefit) expense	(33)		1,512
Net income										Net income	$	12,312	$	42,257

Basic and diluted net (loss) income per common unit (Note 10)										Basic and diluted net (loss) income per common unit (Note 10)	$	(0.22)	$	0.05

Basic and diluted weighted-average common units outstanding	Basic and diluted weighted-average common units outstanding	109,529,658		109,194,722		109,518,004		109,046,061		Basic and diluted weighted-average common units outstanding	110,177,045		109,506,222

Comprehensive income (loss)		$	65,627	$	32,520	$	110,004	$	(151,434)
Comprehensive income										Comprehensive income	$	13,244	$	44,377

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)


		Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income (loss)		$	105,640	$	(117,875)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Net income						Net income	$	12,312	$	42,257
Adjustments to reconcile net income to net cash provided by operating activities:						Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	Depreciation and amortization expense	141,342		141,632		Depreciation and amortization expense	65,127		70,465
Amortization of unit-based compensation	Amortization of unit-based compensation	7,154		5,193		Amortization of unit-based compensation	3,412		3,871
Amortization of debt related items	Amortization of debt related items	6,025		3,976		Amortization of debt related items	2,532		3,042

Goodwill impairment loss		0		225,000

Impairment loss						Impairment loss	46,122		—

Changes in current assets and current liabilities (Note 11)	Changes in current assets and current liabilities (Note 11)	(43,333)		(6,174)		Changes in current assets and current liabilities (Note 11)	17,512		24,397
Decrease in other long-term assets	Decrease in other long-term assets	5,440		5,980		Decrease in other long-term assets	3,644		2,381
(Decrease) increase in other long-term liabilities		(6,162)		3,601
Decrease in other long-term liabilities						Decrease in other long-term liabilities	(662)		(1,678)
Other, net	Other, net	(1,869)		9,108		Other, net	(4,169)		922
Net cash provided by operating activities	Net cash provided by operating activities	214,237		270,441		Net cash provided by operating activities	145,830		145,657
Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Capital expenditures	Capital expenditures	(87,194)		(96,358)		Capital expenditures	(32,750)		(40,463)
Change in accounts payable related to capital expenditures	Change in accounts payable related to capital expenditures	(5,345)		(15,509)		Change in accounts payable related to capital expenditures	(14,498)		(5,449)
Proceeds from insurance recoveries						Proceeds from insurance recoveries	5,805		—
Proceeds from sale or disposition of assets	Proceeds from sale or disposition of assets	304		5,787		Proceeds from sale or disposition of assets	341		130

Net cash used in investing activities	Net cash used in investing activities	(92,235)		(106,080)		Net cash used in investing activities	(41,102)		(45,782)
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		0		463,051

Proceeds from long-term debt borrowings	Proceeds from long-term debt borrowings	490,500		326,984		Proceeds from long-term debt borrowings	253,000		270,400
Proceeds from short-term debt borrowings		0		52,000

Long-term debt repayments	Long-term debt repayments	(588,300)		(704,715)		Long-term debt repayments	(268,800)		(418,100)
Short-term debt repayments		0		(57,500)

Distributions to preferred unitholders	Distributions to preferred unitholders	(63,774)		(60,846)		Distributions to preferred unitholders	(31,025)		(31,887)
Distributions to common unitholders	Distributions to common unitholders	(87,623)		(108,846)		Distributions to common unitholders	(44,041)		(43,811)

Payments for termination of interest rate swaps		0		(49,225)
Payment of tax withholding for unit-based compensation		(632)		(8,820)
Increase (decrease) in cash book overdrafts		458		(1,359)

Other, net	Other, net	(3,482)		(13,043)		Other, net	(8,848)		(2,331)
Net cash used in financing activities	Net cash used in financing activities	(252,853)		(162,319)		Net cash used in financing activities	(99,714)		(225,729)
Effect of foreign exchange rate changes on cash	Effect of foreign exchange rate changes on cash	727		(945)		Effect of foreign exchange rate changes on cash	176		475
Net (decrease) increase in cash, cash equivalents and restricted cash		(130,124)		1,097
Net increase (decrease) in cash, cash equivalents and restricted cash						Net increase (decrease) in cash, cash equivalents and restricted cash	5,190		(125,379)
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	14,439		162,426
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	$	32,302	$	26,077	Cash, cash equivalents and restricted cash as of the end of the period	$	19,629	$	37,047

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,~~March 31, 2022 and 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 March 31, 2021		$	756,301	$	537,537	$	(94,536)	$	1,199,302	$	603,563	$	1,802,865
Net income		16,033		31,496		0		47,529		15,854		63,383
Balance as of January 1, 2022														Balance as of January 1, 2022	$	756,301	$	299,502	$	(73,978)	$	981,825	$	616,439	$	1,598,264
Net income (loss)														Net income (loss)	15,238		(18,780)		—		(3,542)		15,854		12,312
Other comprehensive income	Other comprehensive income	0		0		2,244		2,244		—		2,244		Other comprehensive income	—		—		932		932		—		932
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	(15,238)		—		—		(15,238)		—		(15,238)
Common ($0.40 per unit)	Common ($0.40 per unit)	—		(43,812)		—		(43,812)		—		(43,812)		Common ($0.40 per unit)	—		(44,041)		—		(44,041)		—		(44,041)
Series D preferred	Series D preferred	—		—		—		—		(15,854)		(15,854)		Series D preferred	—		—		—		—		(15,854)		(15,854)

Unit-based compensation	Unit-based compensation	0		2,652		0		2,652		—		2,652		Unit-based compensation	—		6,910		—		6,910		—		6,910
Series D preferred unit accretion	Series D preferred unit accretion	—		(4,155)		—		(4,155)		4,155		0		Series D preferred unit accretion	—		(4,581)		—		(4,581)		4,581		—
Other	Other	0		(7)		0		(7)		0		(7)		Other	—		—		—		—		(2)		(2)
Balance as of June 30, 2021		$	756,301	$	523,711	$	(92,292)	$	1,187,720	$	607,718	$	1,795,438
Balance as of March 31, 2022														Balance as of March 31, 2022	$	756,301	$	239,010	$	(73,046)	$	922,265	$	621,018	$	1,543,283


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
Balance as of January 1, 2021														Balance as of January 1, 2021	$	756,301	$	572,314	$	(96,656)	$	1,231,959	$	599,542	$	1,831,501
Net income														Net income	16,033		10,370		—		26,403		15,854		42,257
Other comprehensive income	Other comprehensive income	0		0		2,754		2,754		—		2,754		Other comprehensive income	—		—		2,120		2,120		—		2,120
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)	—		(43,677)		—		(43,677)		—		(43,677)		Common ($0.40 per unit)	—		(43,811)		—		(43,811)		—		(43,811)
Series D preferred	Series D preferred	—		—		—		—		(14,651)		(14,651)		Series D preferred	—		—		—		—		(15,854)		(15,854)

Unit-based compensation	Unit-based compensation	0		2,056		0		2,056		—		2,056		Unit-based compensation	—		2,678		—		2,678		—		2,678
Series D Preferred Unit accretion	Series D Preferred Unit accretion	—		(5,064)		—		(5,064)		5,064		0		Series D Preferred Unit accretion	—		(4,021)		—		(4,021)		4,021		—
Other	Other	0		(1)		0		(1)		(6)		(7)		Other	—		7		—		7		—		7
Balance as of June 30, 2020		$	756,301	$	808,118	$	(101,455)	$	1,462,964	$	591,895	$	2,054,859
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

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, terminalling and storage of petroleum products and renewable 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.~~Sale of Point Tupper Terminal. On April 29, 2022, we sold the equity interests in our wholly owned subsidiaries that own our Point Tupper terminal facility to EverWind Fuels for $60.0 million, plus working capital, which is subject to adjustment. The ~~coronavirus, or COVID-19, had~~terminal facility has a ~~severe negative impact on global economic activity during 2020, significantly reducing demand~~storage capacity of 7.8 million barrels and has been included in the storage segment. We recognized a pre-tax impairment loss of $46.1 million in the first quarter of 2022 and expect to utilize the sales proceeds to reduce debt and thereby improve our debt metrics. Please refer to Note 3 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.more information.

~~Senior Notes.~~Debt Amendments. On ~~February 1, 2021,~~January 28, 2022, we ~~repaid~~amended and restated our ~~$300.0 million of 6.75% senior notes at maturity with borrowings under our~~$1.0 billion unsecured revolving credit ~~agreement.~~

~~Term Loan Credit Agreement.~~ ~~On February 16, 2021,~~agreement to extend the maturity to April 27, 2025, replace the LIBOR-based interest rate and modify other terms. Also on January 28, 2022, we ~~terminated an unsecured term loan credit~~amended our $100.0 million receivables financing agreement ~~with certain lenders~~to extend the scheduled termination date to January 31, 2025, replace the LIBOR-based interest rate and ~~Oaktree Fund Administration, LLC, as administrative agent for the lenders (the Term Loan).~~modify other terms. Please refer to Note 5 for ~~further discussion about the Term Loan.~~more information.

Other Event

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 six months ended June 30, 2021, we~~We received insurance proceeds of ~~$20.5~~$5.8 million and ~~for the year ended December 31, 2020, we received insurance proceeds of $35.0 million, including $25.0~~$20.5 million for the ~~six~~three months ended ~~June 30, 2020. Gains~~March 31, 2022 and 2021, respectively. We recorded a gain from business interruption insurance of $4.0 million ~~and $3.1 million~~ for the ~~six~~three months ended ~~June 30,~~March 31, 2021, ~~and June 30, 2020, respectively, are~~which is included in “Operating expenses” in the condensed consolidated statements of comprehensive ~~income (loss).~~income. Insurance proceeds ~~relate to~~for cleanup costs and business interruption ~~and~~ are ~~therefore~~ included in “Cash flows from operating activities” in the consolidated ~~statement~~statements 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 ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, ~~2021.~~2022. 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.~~2021.

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, requiring the calculation of diluted ~~earnings-per-unit~~earnings per unit to include the effect of potential unit settlement for any convertible instruments that may be settled in either cash or units, and amending the disclosure requirements for convertible instruments. The guidance is effective for annual periods beginning after December 15, ~~2021, and early adoption is permitted for annual periods beginning after December 15, 2020.~~2021. Amendments may be applied using either a modified retrospective approach or a fully retrospective approach. We ~~plan to adopt~~adopted the amended guidance on January 1, 2022 using the modified retrospective approach. ~~We are currently assessing~~While the ~~impact of this~~ amended guidance did not have a material impact on our financial position, results of operations, ~~and~~or disclosures ~~and plan~~at adoption, changes to the earnings per unit guidance could result in changes to our diluted net income (loss) per common unit. Please refer to Note 10 for additional information.

Reference Rate Reform

In March 2020, the FASB issued guidance intended to provide ~~additional information about~~relief to companies impacted by reference rate reform. The amended guidance provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The publication of U.S. dollar LIBOR rates for the most common tenors is expected to cease after publication on June 30, 2023, and, pursuant to the Adjustable Interest Rate (LIBOR) Act signed into law in the U.S. on March 15, 2022, the Board of Governors of the Federal Reserve System has been directed to select a benchmark replacement rate to automatically replace LIBOR in LIBOR-based contracts that lack adequate fallback provisions upon cessation. As of March 31, 2022, $402.5 million of our variable-rate debt uses LIBOR as a benchmark for establishing the interest rate. In addition, the distribution rate on our 8.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units is a floating rate based on LIBOR, and the distribution rates on our 7.625% Series B and 9.00% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred Units convert from fixed rates to floating rates based on LIBOR in June 2022 and December 2022, respectively. The FASB’s guidance is effective as of March 12, 2020 through December 31, 2022. We adopted the guidance on a prospective basis. The guidance did not have an impact on our financial position, results of operations or disclosures at ~~a future date.~~transition, but we will continue to evaluate its impact on contracts modified on or before December 31, 2022.

3. ~~GOODWILL~~DISPOSITION AND IMPAIRMENT

~~In March 2020,~~Sale of Point Tupper Terminal. On February 11, 2022, we entered into an agreement to sell the ~~COVID-19 pandemic~~equity interests in our wholly owned subsidiaries that own our Point Tupper terminal facility in Nova Scotia, Canada (the Point Tupper Terminal Operations) to EverWind Fuels for $60.0 million, plus working capital, which is subject to adjustment. The terminal facility has a storage capacity of 7.8 million barrels and ~~actions taken by the Organization of Petroleum Exporting Countries and other oil-producing nations (OPEC+) resulted in severe disruptions~~has been included in the ~~capital~~storage segment. We completed the sale on April 29, 2022 and ~~commodities markets, which led~~expect to ~~significant decline in~~utilize the sales proceeds to reduce debt and thereby improve 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~~debt metrics as part of our ~~goodwill reporting units. These factors~~strategic plan to strengthen our balance sheet. We compared the carrying value of the Point Tupper Terminal Operations, which includes $42.2 million in cumulative foreign currency translation losses accumulated since our acquisition of the Point Tupper terminal facility in 2005, to its fair value less costs to sell, 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~~we recognized a ~~goodwill~~pre-tax impairment ~~charge~~loss of ~~$225.0~~$46.1 million in the first quarter of ~~2020,~~2022, which is ~~reported~~presented in "Impairment loss" on the ~~pipeline segment. Our assessment did not identify any other reporting units at risk~~consolidated statement of comprehensive income. We believe that the sales price of $60.0 million provides a ~~goodwill impairment.~~

~~We calculated the estimated fair value~~reasonable indication 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~~Point Tupper Terminal Operations as it represents an exit price in an orderly transaction between market participants. The sales price is ~~included~~a quoted price for identical assets and liabilities 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 June 30, 2021~~a market that is not active and, ~~October 1, 2020. Considering that the carrying value of the reporting unit was written down to its~~thus, our 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. 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 as of 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 determinationfalls within Level 2 of the fair value ~~of our assets.~~hierarchy.

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NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

During the first quarter of 2022, we determined the Point Tupper Terminal Operations met the criteria to be classified as held for sale. Accordingly, the consolidated balance sheet reflects the assets and liabilities of the Point Tupper Terminal Operations as held for sale as of March 31, 2022. The following table provides the carrying amounts of the major classes of assets and liabilities included in “Assets held for sale” and “Liabilities held for sale” on the consolidated balance sheet:


	March 31, 2022
	(Thousands of Dollars)
Cash	$	2,429
Accounts receivable	1,138
Inventories	399
Prepaid and other current assets	1,792
Property, plant and equipment, net of accumulated depreciation and impairment loss	65,716
Other long-term assets, net	14,984
Assets held for sale	$	86,458

Accounts payable	$	2,636
Deferred income tax liability	7,638
Accrued liabilities	4,355
Other long-term liabilities	9,640
Impairment reserve (cumulative translation losses)	42,227
Liabilities held for sale	$	66,496

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					2022				2021
		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	$	2,336	$	(15,443)	$	2,694	$	(22,019)
Noncurrent portion	Noncurrent portion	932		(47,537)		1,003		(40,289)		Noncurrent portion	504		(46,027)		932		(47,537)
Total	Total	3,626		(69,556)		3,143		(61,372)		Total	2,840		(61,470)		3,626		(69,556)

Activity:	Activity:									Activity:
Additions	Additions	1,898		(19,401)		2,670		(34,156)		Additions	71		(9,645)		92		(9,658)
Transfer to accounts receivable	Transfer to accounts receivable	(2,055)		—		(2,258)		—		Transfer to accounts receivable	(2,037)		—		(1,990)		—
Transfer to revenues	Transfer to revenues	(250)		25,987		(125)		29,848		Transfer to revenues	(83)		12,117		(125)		15,877

Total	Total	(407)		6,586		287		(4,308)		Total	(2,049)		2,472		(2,023)		6,219

Balances as of June 30:
Balances as of March 31:										Balances as of March 31:
Current portion	Current portion	2,590		(17,002)		2,218		(20,235)		Current portion	277		(13,454)		733		(16,524)
Noncurrent portion	Noncurrent portion	629		(45,968)		1,212		(45,445)		Noncurrent portion	448		(45,544)		870		(46,813)
Held for sale										Held for sale	66		—		—		—
Total	Total	$	3,219	$	(62,970)	$	3,430	$	(65,680)	Total	$	791	$	(58,998)	$	1,603	$	(63,337)

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NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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 ~~June 30, 2021~~March 31, 2022 (in thousands of dollars):


2021 (remaining)		$	245,634
2022		399,345
2022 (remaining)				2022 (remaining)	$	315,545
2023	2023	280,095		2023	283,526
2024	2024	189,149		2024	189,426
2025	2025	130,697		2025	132,497
2026				2026	90,396
Thereafter	Thereafter	176,403		Thereafter	93,490
Total	Total	$	1,421,323	Total	$	1,104,880

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~~conditions. The revenue shown above includes $19.2 million relating to our Point Tupper Terminal Operations that was held for sale as of March 31, 2022.

Disaggregation of Revenues

The following table disaggregates our revenues:


	Three Months Ended March 31,
	2022		2021
	(Thousands of Dollars)
Pipeline segment:
Crude oil pipelines	$	86,124	$	74,588
Refined products and ammonia pipelines	102,559		94,640
Total pipeline segment revenues from contracts with customers	188,683		169,228



Storage segment:
Throughput terminals	26,441		24,794
Storage terminals (excluding lessor revenues)	50,719		73,416
Total storage segment revenues from contracts with customers	77,160		98,210
Lessor revenues	10,761		10,364
Total storage segment revenues	87,921		108,574

Fuels marketing segment:
Revenues from contracts with customers	133,260		83,855

Consolidation and intersegment eliminations	(1)		(11)

Total revenues	$	409,863	$	361,646

5. DEBT

Revolving Credit Agreement

On January 28, 2022, NuStar Logistics amended and restated its $1.0 billion unsecured revolving credit agreement (the Revolving Credit Agreement) to, among other things: (i) extend the maturity date from October 27, 2023 to April 27, 2025; (ii) increase the maximum amount of letters of credit capable of being issued from $400.0 million to $500.0 million; (iii) replace LIBOR benchmark provisions with ~~payment obligations~~customary secured overnight financing rate, or SOFR, benchmark provisions; (iv) remove the 0.50x increase permitted in our consolidated debt coverage ratio for ~~take-or-pay minimum volume commitments.~~certain rolling periods in which an acquisition for aggregate net consideration of at least $50.0 million occurs; and (v) add baskets and exceptions to certain negative covenants.

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NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

~~Disaggregation of Revenues~~

~~The following table disaggregates our revenues:~~

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
(Thousands of Dollars)
Pipeline segment:
Crude oil pipelines $ 82,034 $ 79,110 $ 156,622 $ 170,832
Refined products and ammonia pipelines (excluding lessor revenues) 110,872 86,173 205,512 189,307
Total pipeline segment revenues from contracts with customers 192,906 165,283 362,134 360,139
Lessor revenues 0 825 0 1,650
Total pipeline segment revenues 192,906 166,108 362,134 361,789
Storage segment:
Throughput terminals 35,143 32,199 59,937 70,922
Storage terminals (excluding lessor revenues) 73,742 76,880 147,158 151,046
Total storage segment revenues from contracts with customers 108,885 109,079 207,095 221,968
Lessor revenues 10,363 10,328 20,727 20,656
Total storage segment revenues 119,248 119,407 227,822 242,624
Fuels marketing segment:
Revenues from contracts with customers 114,939 54,025 198,794 127,927
Consolidation and intersegment eliminations 0 0 (11) (9)
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 ~~June 30, 2021,~~March 31, 2022, we had ~~$185.0~~$106.5 million of borrowings outstanding and ~~$809.8~~$888.7 million available for borrowing under the Revolving Credit Agreement. Letters of credit issued under the Revolving Credit Agreement totaled ~~$5.2~~$4.8 million as of ~~June 30, 2021~~March 31, 2022 and 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~~SOFR-based rate. The ~~interest rate on the~~ Revolving Credit Agreement isand certain fees under the Receivables Financing Agreement, defined below, are the only debt arrangements with interest rates that are subject to adjustment if our debt rating is downgraded (or upgraded) by certain credit rating agencies. As of ~~June 30, 2021,~~March 31, 2022, our weighted-average interest rate related to borrowings under the Revolving Credit Agreement was ~~2.6%~~3.0%.

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 that is less than the total amount available for borrowing. For ~~the~~a rolling period of four quarters, ~~ended June 30, 2021,~~ the consolidated debt coverage ratio (as defined in the Revolving Credit Agreement) ~~could not~~cannot 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 ~~June 30, 2021,~~March 31, 2022, we believe that we are in compliance with the covenants in the Revolving Credit Agreement.

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

~~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, with a scheduled termination date of January 31, 2025, (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~~Under the Securitization Program, certain of NuStar Energy’s wholly owned subsidiaries sell their accounts receivable to NuStar Finance on an ongoing basis, and ~~providing these receivables~~NuStar Finance provides the newly acquired accounts receivable as collateral for ~~NuStar Finance’s~~its revolving borrowings under the ~~Securitization Program.~~Receivables Financing Agreement. 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. On January 28, 2022, the Receivables Financing Agreement was amended to, among other things: (i) extend the scheduled termination date from September 20, 2023 to January 31, 2025; (ii) reduce the floor rate in the calculation of our borrowing rates; and (iii) replace provisions related to the LIBOR rate of interest with references to SOFR rates of interest.

Borrowings ~~by NuStar Finance~~ under the Receivables Financing Agreement bear interest, at ~~the applicable bank~~NuStar Finance’s option, at a base rate or a SOFR rate, each as defined in the Receivables Financing Agreement. As of March 31, 2022, the amount of borrowings outstanding under the Receivables Financing ~~Agreement. The weighted average~~Agreement totaled $72.0 million, the weighted-average interest rate related to outstanding borrowings ~~under the Securitization Program as of June 30, 2021~~ was ~~2.3%. As of June 30, 2021, $125.4~~1.9% and $132.2 million of our accounts receivable was included in the Securitization Program. ~~The amount of borrowings outstanding under the Receivables Financing Agreement totaled $74.2 million as of 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:


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(Thousands of Dollars)					(Thousands of Dollars)
Fair value	Fair value	$	3,793,490	$	3,799,378	Fair value	$	3,222,517	$	3,459,153
Carrying amount	Carrying amount	$	3,443,530	$	3,539,258	Carrying amount	$	3,115,915	$	3,130,625

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.

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NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

6. COMMITMENTS, CONTINGENCIES AND ~~CONTINGENCIES~~UNCERTAINTIES

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 ~~$0.1~~$0.9 million and ~~$2.6~~$0.1 million for contingent losses as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, 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.

~~Table of Contents~~

~~NUSTAR ENERGY L.P. AND SUBSIDIARIES~~COVID-19. 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 2022 and beyond.

~~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~~included 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 swapsthat qualified as cash flow hedges ~~and we designated them as such.~~prior to their termination. We ~~recorded~~reclassify the mark-to-market adjustments ~~as a component of~~related to these cash flows hedges that were recorded in “Accumulated other comprehensive loss” (AOCI)~~, and the amount in AOCI is recognized in~~ into “Interest expense, net” as the underlying 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~~We reclassified losses on cash flow hedges to “Interest expense, net” asof $0.5 million and $1.3 million for the ~~related forecasted interest payments occur.~~

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

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

three months ended March 31, 2022 and 2021, respectively. As of ~~June 30, 2021,~~March 31, 2022, we expect to reclassify a loss of ~~$4.0~~$2.1 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 number of Series D Preferred Units issued and outstanding as of March 31, 2022 and December 31, 2021 totaled 23,246,650. 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 ~~July 2021,~~April 2022, our board of directors declared distributions of $0.682 per Series D Preferred Unit to be paid on ~~September~~June 15, ~~2021.~~2022.

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NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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~~month.

Distribution information for our Series B and C Preferred Units is as ~~follows (until the~~follows:


Units	Fixed Distribution Rate Per Unit Per Quarter		Fixed Distribution Per Quarter		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 B Preferred Units	$	0.47657	$	7,339	June 15, 2022	Three-month LIBOR plus 5.643%
Series C Preferred Units	$	0.56250	$	3,881	December 15, 2022	Three-month LIBOR plus 6.88%

The distribution rate ~~changes~~on our Series A Preferred Units converted from a fixed rate to a floating ~~rate):~~rate of the three-month LIBOR plus 6.766% on December 15, 2021. Distribution information for our Series A Preferred Units is as follows:

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


Period	Distribution Rate per Unit		Total Distribution
			(Thousands of Dollars)



March 15, 2022 - June 14, 2022	$	0.47817	$	4,332
December 15, 2021 - March 14, 2022	$	0.43606	$	3,951

In ~~July 2021,~~April 2022, our board of directors declared distributions with respect to the Series A, B and C Preferred Units to be paid on ~~September~~June 15, ~~2021.~~2022.

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. In April 2022, our board of directors declared distributions with respect to our common units for the quarter ended March 31, 2022.

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

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
December 31, 2020 $ 0.40 $ 43,787 February 8, 2021 February 12, 2021
partners applicable to the period in which the distributions were earned:


Quarter Ended	Cash Distributions Per Unit		Total Cash Distributions		Record Date	Payment Date
			(Thousands of Dollars)


March 31, 2022	$	0.40	$	44,165	May 9, 2022	May 13, 2022
December 31, 2021	$	0.40	$	44,008	February 8, 2022	February 14, 2022

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NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Accumulated Other Comprehensive Income (Loss)

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


		Three Months Ended June 30,																	Three Months Ended March 31,
		2021								2020									2022								2021
		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 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
Balance as of January 1																		Balance as of January 1	$	(41,761)	$	(36,486)	$	4,269	$	(73,978)	$	(42,362)	$	(42,150)	$	(12,144)	$	(96,656)
Other comprehensive income before reclassification adjustments																		Other comprehensive income before reclassification adjustments	829		—		—		829		957		—		—		957
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	—		—		(420)		(420)		—		—		(187)		(187)
Net loss on cash flow hedges reclassified into interest expense, net	Net loss on cash flow hedges reclassified into interest expense, net	0		1,335		0		1,335		0		878		0		878		Net loss on cash flow hedges reclassified into interest expense, net	—		529		—		529		—		1,348		—		1,348
Other	Other	0		0		2		2		0		0		4		4		Other	—		—		(6)		(6)		—		—		2		2
Other comprehensive income (loss)	Other comprehensive income (loss)	1,094		1,335		(185)		2,244		2,638		417		(301)		2,754		Other comprehensive income (loss)	829		529		(426)		932		957		1,348		(185)		2,120
Balance as of June 30		$	(40,311)	$	(39,467)	$	(12,514)	$	(92,292)	$	(47,962)	$	(44,890)	$	(8,603)	$	(101,455)
Balance as of March 31																		Balance as of March 31	$	(40,932)	$	(35,957)	$	3,843	$	(73,046)	$	(41,405)	$	(40,802)	$	(12,329)	$	(94,536)

Six 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 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) 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 0 0 (374) (374) 0 0 (610) (610)
Net loss on cash flow hedges reclassified into interest expense, net 0 2,683 0 2,683 0 1,525 0 1,525
Other 0 0 4 4 0 0 7 7
Other comprehensive income (loss) 2,051 2,683 (370) 4,364 (4,190) (28,766) (603) (33,559)
Balance as of June 30 $ (40,311) $ (39,467) $ (12,514) $ (92,292) $ (47,962) $ (44,890) $ (8,603) $ (101,455)

~~Table of Contents~~

~~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 the Series D Preferred Units and contingently issuable performance unit ~~awards and the Series D Preferred Units.~~awards.

The Series D Preferred Units ~~are convertible into common units at~~contain certain unitholder conversion and redemption features, and we use the ~~option of the holder at any time on or after June 29, 2020. As such, we calculated~~if-converted method to calculate the dilutive effect of the conversion or redemption feature that is most advantageous to our Series D ~~Preferred Units using the if-converted method.~~preferred unitholders. The effect of the assumed conversion or redemption of the Series D Preferred Units outstanding aswas antidilutive for each of the ~~end of each period presented was antidilutive;~~three months ended March 31, 2022 and 2021; therefore, we did not include such conversion in the computation of diluted net (loss) 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 basic and diluted net (loss) income per common unit:


	Three Months Ended March 31,
	2022		2021
	(Thousands of Dollars, Except Unit and Per Unit Data)
Net income	$	12,312	$	42,257
Distributions to preferred limited partners	(31,092)		(31,887)
Distributions to common limited partners	(44,165)		(43,834)
Distribution equivalent rights to restricted units	(633)		(598)
Distributions in excess of income	$	(63,578)	$	(34,062)

Distributions to common limited partners	$	44,165	$	43,834
Allocation of distributions in excess of income	(63,578)		(34,062)
Series D Preferred Unit accretion	(4,581)		(4,021)
Net (loss) income attributable to common units	$	(23,994)	$	5,751


Basic and diluted weighted-average common units outstanding	110,177,045		109,506,222



Basic and diluted net (loss) income per common unit	$	(0.22)	$	0.05

11. SUPPLEMENTAL CASH FLOW INFORMATION

Changes in current assets and current liabilities were as follows:


		Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020			2022		2021
		(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	$	(9,942)	$	25,386	Accounts receivable	$	(13,704)	$	12,232

Inventories	Inventories	(1,744)		4,176		Inventories	(3,062)		(6,471)

Other current assets	Other current assets	(4,752)		(8,781)		Other current assets	10,289		9,689
Increase (decrease) in current liabilities:	Increase (decrease) in current liabilities:					Increase (decrease) in current liabilities:
Accounts payable	Accounts payable	3,588		(15,197)		Accounts payable	4,284		5,067

Accrued interest payable	Accrued interest payable	(11,686)		(177)		Accrued interest payable	37,968		27,149
Accrued liabilities	Accrued liabilities	(17,222)		(11,625)		Accrued liabilities	(14,178)		(19,082)
Taxes other than income tax	Taxes other than income tax	(1,575)		44		Taxes other than income tax	(4,085)		(4,187)

Changes in current assets and current liabilities	Changes in current assets and current liabilities	$	(43,333)	$	(6,174)	Changes in current assets and current liabilities	$	17,512	$	24,397

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;

•~~payments~~the reclassification of certain assets and liabilities to “Assets held for sale” and “Liabilities held for sale” on the ~~termination of interest rate swaps included in cash flows from financing activities;~~consolidated balance sheet (please refer to Note 3 for additional discussion); and

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

Table of Contents

NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

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


		Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020			2022		2021
		(Thousands of Dollars)					(Thousands of Dollars)
Cash paid for interest, net of amount capitalized	Cash paid for interest, net of amount capitalized	$	114,339	$	103,034	Cash paid for interest, net of amount capitalized	$	9,320	$	24,737
Cash paid for income taxes, net of tax refunds received	Cash paid for income taxes, net of tax refunds received	$	5,882	$	4,661	Cash paid for income taxes, net of tax refunds received	$	185	$	554

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, 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~~is included in the consolidated balance sheets as follows:


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(Thousands of Dollars)					(Thousands of Dollars)
Cash and cash equivalents	Cash and cash equivalents	$	23,500	$	153,625	Cash and cash equivalents	$	8,398	$	5,637
Assets held for sale						Assets held for sale	2,429		—
Other long-term assets, net	Other long-term assets, net	8,802		8,801		Other long-term assets, net	8,802		8,802
Cash, cash equivalents and restricted cash	Cash, cash equivalents and restricted cash	$	32,302	$	162,426	Cash, cash equivalents and restricted cash	$	19,629	$	14,439

~~Table of Contents~~

~~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.

Results of operations for the reportable segments were as follows:


		Three Months Ended June 30,				Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020		2021		2020			2022		2021
		(Thousands of Dollars)									(Thousands of Dollars)
Revenues:	Revenues:									Revenues:

Pipeline	Pipeline	$	192,906	$	166,108	$	362,134	$	361,789	Pipeline	$	188,683	$	169,228

Storage	Storage	119,248		119,407		227,822		242,624		Storage	87,921		108,574

Fuels marketing	Fuels marketing	114,939		54,025		198,794		127,927		Fuels marketing	133,260		83,855

Consolidation and intersegment eliminations	Consolidation and intersegment eliminations	0		0		(11)		(9)		Consolidation and intersegment eliminations	(1)		(11)
Total revenues	Total revenues	$	427,093	$	339,540	$	788,739	$	732,331	Total revenues	$	409,863	$	361,646

Operating income (loss):	Operating income (loss):									Operating income (loss):
Pipeline	Pipeline	$	96,512	$	71,981	$	175,891	$	(50,943)	Pipeline	$	95,752	$	79,379
Storage	Storage	46,185		43,242		88,903		91,821		Storage	(14,975)		42,718
Fuels marketing	Fuels marketing	2,298		3,349		5,029		9,792		Fuels marketing	6,544		2,731

Total segment operating income	Total segment operating income	144,995		118,572		269,823		50,670		Total segment operating income	87,321		124,828
General and administrative expenses	General and administrative expenses	27,477		23,700		51,969		46,671		General and administrative expenses	27,071		24,492
Other depreciation and amortization expense	Other depreciation and amortization expense	1,913		2,171		3,960		4,357		Other depreciation and amortization expense	1,824		2,047
Total operating income (loss)		$	115,605	$	92,701	$	213,894	$	(358)
Total operating income										Total operating income	$	58,426	$	98,289

Table of Contents

NUSTAR ENERGY L.P. AND SUBSIDIARIES

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Total assets by reportable segment were as follows:


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(Thousands of Dollars)					(Thousands of Dollars)
Pipeline	Pipeline	$	3,540,298	$	3,609,508	Pipeline	$	3,405,703	$	3,441,272
Storage	Storage	1,918,515		1,897,167		Storage	1,518,082		1,537,037
Fuels marketing	Fuels marketing	43,537		31,967		Fuels marketing	66,006		41,562
Total segment assets	Total segment assets	5,502,350		5,538,642		Total segment assets	4,989,791		5,019,871

Other partnership assets	Other partnership assets	143,630		278,376		Other partnership assets	140,134		136,461
Total consolidated assets	Total consolidated assets	$	5,645,980	$	5,817,018	Total consolidated assets	$	5,129,925	$	5,156,332

~~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 Russia-Ukraine conflict, economic activity and the actions by oil producing nations on our ~~business, as well as the timing of, expected use of proceeds from and the other anticipated benefits from the announced sale of terminals.~~business. 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, terminalling and storage of petroleum products and renewable 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 ~~June 30, 2021,~~March 31, 2022, our assets included ~~9,920~~9,940 miles of pipeline and 7364 terminal and storage facilities, which ~~provide~~provided approximately 7257 million barrels of storage capacity. As described below, on April 29, 2022 we sold our Point Tupper terminal facility with a storage capacity of 7.8 million barrels. 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 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 production, 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

~~Agreement~~Sale of Point Tupper Terminal. On April 29, 2022, we sold the equity interests in our wholly owned subsidiaries that own our Point Tupper terminal facility (the Point Tupper Terminal Operations) 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~~EverWind Fuels for ~~$250.0~~$60.0 million, plus working capital, which is subject to adjustment. The ~~terminals have an aggregate~~terminal facility has a storage capacity of ~~14.8~~7.8 million barrels and ~~are~~has been included in the storage segment. We recognized a non-cash pre-tax impairment loss of $46.1 million in the first quarter of 2022 and expect to ~~complete the sale by the beginning of the fourth quarter and will~~ utilize the sales proceeds to reduce debt and thereby 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.

~~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 a sufficient proportion of people are not vaccinated to reach herd immunity, or 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. 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.~~

~~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 3of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for ~~further discussion.~~additional information.

Debt Amendments. On January 28, 2022, we amended and restated our $1.0 billion unsecured revolving credit agreement to extend the maturity to April 27, 2025, replace the LIBOR-based interest rate and modify other terms. Also on January 28, 2022, we amended our $100.0 million receivables financing agreement to extend the scheduled termination date to January 31, 2025, replace the LIBOR-based interest rate and modify other terms.

Other Events

Eastern U.S. Terminals Disposition. On October 8, 2021, we completed the sale of nine U.S. terminal and storage facilities, including all our North East Terminals and one terminal in Florida (the Eastern U.S. Terminal Operations) to Sunoco LP for $250.0 million in cash (the Eastern U.S. Terminals Disposition). The terminals had an aggregate storage capacity of 14.8 million barrels and were included in the storage segment. We utilized the proceeds from the sale to reduce debt and improve our debt metrics.

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Trends and Outlook

~~As America begins~~While 2022 marks the third year of the COVID-19 pandemic in the U.S., we continue to ~~recover from the impact of COVID-19 and returns to normal activity and growth, we are seeing~~see signs of stabilization and improvement, across the U.S. and in NuStar’s footprint. U.S. refined product demand outlook has ~~improved~~seen some sustained improvement, as COVID-19 vaccinations have continued to allow more ~~and more Americans to return to~~people go about normal day-to-day activities and ~~to begin~~ traveling. However, ~~the “Delta” variant has increased~~variants may emerge that could significantly increase COVID-19 case counts, ~~significantly in many parts of the United States,~~ which may further impact the overall demand recovery in ~~2021.~~2022.

Since Russia’s military invasion of Ukraine in late February 2022, prices for a number of the commodities produced in those countries, including oil and gas, rose sharply and have been volatile, on market concerns about worldwide supply constraints. The long-term impact of the ongoing Russia-Ukraine conflict, along with the lingering impact of COVID-19, on the global and U.S. economy remains uncertain; however, at this time, we do not expect a significant impact to our operations or financial position.

Although U.S. oil production has been slow to respond to the recent increase in crude oil prices due to a variety of factors, including supply chain challenges, we expect sustained healthy U.S. shale production growth in 2022 from improving global demand as well as supply constraints from the Russia-Ukraine conflict. We expect our Permian system volumes to see healthy growth in 2022. Refined product demand on NuStar’s pipeline systems ~~averaged 100% of~~rebounded in 2021 to pre-pandemic ~~demand for the first half of the year after reaching 105% for the second quarter. We continue to~~levels or higher, and we expect our refined products pipeline systems to perform at or above 100% of our pre-pandemic levels through 2022; however, if prices for motor fuels continue to rise and remain at those levels for a sustained period, consumer demand could fall, which would reduce demand for the ~~remainder of~~transportation and storage services we provide. So far this ~~year. Strengthening~~year, the sustained recovery in refined product demand has increased U.S. refiners’ utilization and demand for crude oil, ~~and rebounding crude demand, along with tempered global supply,~~which has contributed to ~~higher~~increased throughputs on certain of our crude prices 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 willoil pipelines, which we expect to 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 over time, which should be positive for crude volumes on our Corpus Christi Crude System, as well as for our St. James terminal.through 2022. In addition, we continue to expect to benefit from the growth of our renewable fuels distribution system on the West ~~Coast. We~~Coast, where we expect to provide an increasing share of California’s renewable fuels as we complete our planned tank conversion projects.

The lingering impact of the COVID-19 pandemic continues to ripple through the U.S. economy, notably in the form of rising inflation and supply chain issues, which affected certain industries and geographic areas to varying degrees during 2021; the Russia-Ukraine conflict seems to have only amplified inflation and supply chain constraints so far in 2022. The U.S. Federal Reserve has raised interest rates and is expected to implement several more increases in 2022, which will increase the cost of our variable-rate debt. In addition, the distribution rates of our Series A, B and C Preferred Units have converted, or will convert in 2022, from fixed rates to floating rates that increase or decrease with prevailing interest rates. On the other hand, our ability to pass along rate increases reflecting changes in producer and/or consumer price indices to our customers, under our tariffs and contracts, should counterbalance the impact of inflation on our costs. We plan to continue to manage our operations with fiscal discipline ~~in this turbulent environment. Upon closing of the announced sale of terminals,~~and to evaluate our capital expenditures as we remain committed to improving our debt metrics and strengthening our balance sheet. We expect to ~~use the proceeds to further lower our leverage. For the full-year 2021, we expect reliability and strategic capital expenditures to be comparable to 2020. We expect~~continue to fund all of our expenses, distribution requirements and capital expenditures for the full-year ~~2021~~2022 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;~~Russia-Ukraine conflict; 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 unplanned refinery downtime; crude oil prices; the supply of and demand for petroleum products, renewable fuels and anhydrous ammonia; demand for our transportation and storage services; the availability and costs of personnel, equipment, supplies 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 our Quarterly Reports on Form 10-Q for additional discussion on how these factors could affect our operations.

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RESULTS OF OPERATIONS

Consolidated Results of Operations

Three Months Ended ~~June 30, 2021~~March 31, 2022 Compared to Three Months Ended ~~June 30, 2020~~March 31, 2021


		Three Months Ended June 30,				Change			Three Months Ended March 31,				Change
		2021		2020					2022		2021
		(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	$	300,788	$	284,151	$	16,637	Service revenues	$	265,305	$	271,883	$	(6,578)
Product sales	Product sales	126,305		55,389		70,916		Product sales	144,558		89,763		54,795
Total revenues	Total revenues	427,093		339,540		87,553		Total revenues	409,863		361,646		48,217

Costs and expenses:	Costs and expenses:							Costs and expenses:
Costs associated with service revenues	Costs associated with service revenues	169,457		170,292		(835)		Costs associated with service revenues	149,705		155,705		(6,000)
Cost associated with product sales		112,641		50,676		61,965

Costs associated with product sales								Costs associated with product sales	126,715		81,113		45,602
Impairment loss								Impairment loss	46,122		—		46,122

General and administrative expenses	General and administrative expenses	27,477		23,700		3,777		General and administrative expenses	27,071		24,492		2,579
Other depreciation and amortization expense	Other depreciation and amortization expense	1,913		2,171		(258)		Other depreciation and amortization expense	1,824		2,047		(223)

Total costs and expenses	Total costs and expenses	311,488		246,839		64,649		Total costs and expenses	351,437		263,357		88,080

Operating income	Operating income	115,605		92,701		22,904		Operating income	58,426		98,289		(39,863)

Interest expense, net	Interest expense, net	(53,780)		(59,499)		5,719		Interest expense, net	(49,818)		(54,918)		5,100

Loss on extinguishment of debt		—		(3,842)		3,842

Other income, net	Other income, net	2,896		2,216		680		Other income, net	3,671		398		3,273
Income before income tax expense		64,721		31,576		33,145
Income tax expense		1,338		1,810		(472)
Income before income tax (benefit) expense								Income before income tax (benefit) expense	12,279		43,769		(31,490)
Income tax (benefit) expense								Income tax (benefit) expense	(33)		1,512		(1,545)

Net income	Net income	$	63,383	$	29,766	$	33,617	Net income	$	12,312	$	42,257	$	(29,945)

Basic and diluted net income (loss) per common unit		$	0.25	$	(0.06)	$	0.31
Basic and diluted net (loss) income per common unit								Basic and diluted net (loss) income per common unit	$	(0.22)	$	0.05	$	(0.27)

Consolidated Overview. Net income ~~increased $33.6~~decreased $29.9 million for the three months ended ~~June 30, 2021,~~March 31, 2022, compared to the three months ended ~~June 30, 2020,~~March 31, 2021, mainly due to a non-cash pre-tax impairment loss of $46.1 million recorded in the first quarter of 2022 related to our Point Tupper Terminal Operations and lower operating income from our storage segment, excluding the impairment loss. These decreases were partially offset by higher operating income from our pipeline ~~segment in the second quarter of 2021 as pandemic recovery resulted in higher demand.~~segment.

Corporate Items. General and administrative expenses increased ~~$3.8~~$2.6 million for the three months ended ~~June 30, 2021,~~March 31, 2022, compared to the three months ended ~~June 30, 2020,~~March 31, 2021, mainly due to higher compensation costs.

Interest expense, net, decreased ~~$5.7~~$5.1 million for the three months ended ~~June 30, 2021,~~March 31, 2022, compared to the three months ended ~~June 30, 2020, mainly~~March 31, 2021, primarily due to ~~interest expense recorded in~~lower overall debt balances following the ~~second quarter~~repayment of outstanding debt, partially with the proceeds from October 2021 and December 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~~

Six Months Ended June 30, Change
2021 2020
(Unaudited, Thousands of Dollars, Except Per Unit Data)
Statement of Income Data:
Revenues:
Service revenues $ 572,671 $ 600,897 $ (28,226)
Product sales 216,068 131,434 84,634
Total revenues 788,739 732,331 56,408
Costs and expenses:
Costs associated with service revenues 325,162 338,535 (13,373)
Cost associated with product sales 193,754 118,126 75,628
Goodwill impairment loss — 225,000 (225,000)
General and administrative expenses 51,969 46,671 5,298
Other depreciation and amortization expense 3,960 4,357 (397)
Total costs and expenses 574,845 732,689 (157,844)
Operating income (loss) 213,894 (358) 214,252
Interest expense, net (108,698) (106,993) (1,705)
Loss on extinguishment of debt — (3,842) 3,842
Other income (expense), net 3,294 (4,273) 7,567
Income (loss) from before income tax expense 108,490 (115,466) 223,956
Income tax expense 2,850 2,409 441
Net income (loss) $ 105,640 $ (117,875) $ 223,515
Basic and diluted net income (loss) per common unit: $ 0.30 $ (1.74) $ 2.04
asset sales.

~~Consolidated Overview.~~ We recorded net income of $105.6 million for the six months ended June 30, 2021, compared to a net loss of $117.9 million for the six months ended 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 storage and fuels marketing segments.

We saw a rebound in demand across most of our pipelines in the 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, 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 reduced operating income by $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 $5.3 million for the six months ended June 30, 2021, compared to the six months ended June 30, 2020, mainly due to higher compensation costs.~~

Interest expense, net, increased $1.7 million for the six months ended June 30, 2021, compared to the six months ended June 30, 2020, primarily due to the interest on the September 2020 issuance of $1.2 billion of senior notes, which was partially offset by lower expenses due to the repayment of the Term Loan on September 16, 2020.

~~We recorded other~~Other income, net ofincreased $3.3 million for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, compared to ~~other expense, net of $4.3 million for~~ the ~~six~~three months ended ~~June 30, 2020, mainly~~March 31, 2021, primarily due to foreign exchange rate ~~fluctuations associated with our Mexican subsidiary.~~fluctuations.

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Pipeline Segment

As of ~~June 30, 2021, we own~~March 31, 2022, our pipeline assets consist of 9,940 miles of pipeline with 33 terminals and 13.0 million barrels of storage capacity. Our Central West System includes 3,205 miles of refined product pipelines and ~~2,215~~2,235 miles of crude oil ~~pipelines, as well as 5.6 million barrels of storage capacity, which comprise~~pipelines. In addition, our Central ~~West System. In addition, we own~~East System includes 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 transportation in our refined product and crude oil pipelines and on a per ton basis for transportation in the Ammonia Pipeline. Other revenues include product sales of surplus pipeline loss allowance (PLA) volumes.

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

Three Months Ended June 30, Change
2021 2020
(Thousands of Dollars, Except Barrels/Day Information)
Crude oil pipelines throughput (barrels/day) 1,244,215 1,063,739 180,476
Refined products and ammonia pipelines throughput (barrels/day) 606,973 452,678 154,295
Total throughput (barrels/day) 1,851,188 1,516,417 334,771
Throughput and other revenues $ 192,906 $ 166,108 $ 26,798
Operating expenses 51,404 50,099 1,305
Depreciation and amortization expense 44,990 44,028 962
Segment operating income $ 96,512 $ 71,981 $ 24,531

Total revenues increased $26.8 million and throughputs increased 334,771 barrels per day for the three months ended June 30, 2021, compared to the three months ended 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 $4.2 million, despite an increase in throughputs of 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 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~~Three Months Ended ~~June 30, 2021~~March 31, 2022 Compared to ~~Six~~Three Months Ended ~~June 30, 2020~~March 31, 2021


		Six Months Ended June 30,				Change			Three Months Ended March 31,				Change
		2021		2020					2022		2021
		(Thousands of Dollars, Except Barrels/Day Information)
Pipeline Segment:								Pipeline Segment:	(Thousands of Dollars, Except Barrels/Day Information)
Crude oil pipelines throughput (barrels/day)	Crude oil pipelines throughput (barrels/day)	1,173,166		1,297,892		(124,726)		Crude oil pipelines throughput (barrels/day)	1,309,085		1,101,327		207,758
Refined products and ammonia pipelines throughput (barrels/day)	Refined products and ammonia pipelines throughput (barrels/day)	558,121		523,555		34,566		Refined products and ammonia pipelines throughput (barrels/day)	563,248		508,726		54,522
Total throughput (barrels/day)	Total throughput (barrels/day)	1,731,287		1,821,447		(90,160)		Total throughput (barrels/day)	1,872,333		1,610,053		262,280

Throughput and other revenues	Throughput and other revenues	$	362,134	$	361,789	$	345	Throughput and other revenues	$	188,683	$	169,228	$	19,455
Operating expenses	Operating expenses	96,459		100,345		(3,886)		Operating expenses	48,103		45,055		3,048
Depreciation and amortization expense	Depreciation and amortization expense	89,784		87,387		2,397		Depreciation and amortization expense	44,828		44,794		34
Goodwill impairment loss		—		225,000		(225,000)
Segment operating income (loss)		$	175,891	$	(50,943)	$	226,834

Segment operating income								Segment operating income	$	95,752	$	79,379	$	16,373

Pipeline segment revenues increased $19.5 million and throughputs increased 262,280 barrels per day for the ~~six~~three months ended ~~June 30, 2021 were comparable~~March 31, 2022, compared to the ~~six~~three months ended ~~June 30, 2020, despite a decrease in throughputs of 90,160 barrels per day.~~March 31, 2021. 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, which brought snow and damaging ice and caused widespread power outages in Texas and surrounding states in February 2021, as well as the lingering effects offrom the COVID-19 ~~restrictions. However, by~~pandemic, as demand did not recover to pre-pandemic levels until the second quarter of ~~2021, demand had largely recovered to pre-pandemic levels.~~

2021. Revenues and throughputs increased primarily due to the ~~2021 rebound in demand, resulting in:~~following:

•an increase in revenues of ~~$11.4~~$13.2 million and an increase in throughputs of ~~7,825~~118,660 barrels per day on our Permian Crude System, mainly due to the negative impacts on the first quarter of 2021 described above, as well as an increase of $4.9 million in sales of PLA volumes in the first quarter of 2022 compared to the first quarter of 2021;

•an increase in revenues of $2.9 million and an increase in throughputs of 12,516 barrels per day on our North and East pipelines combined, due to supply disruptions from the conversion of a Wyoming refinery, resulting in higher volumes on our East Pipeline and a rebound in demand in 2022, compared to lower demand in 2021 due to the ~~second quarter of 2021;~~lingering impacts from COVID-19;

•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~~$1.5 million and an increase in throughputs of ~~33,137~~14,183 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~~negative impacts in the first quarter of ~~2021; and~~2021 described above;

•an increase in revenues of ~~$2.1~~$1.4 million and an increase in throughputs of ~~2,983~~15,090 barrels per day on our ~~Valley~~Three Rivers System, primarily due to an increase in demand on our Nuevo Laredo and San Antonio pipelines;

•an increase in revenues of $1.1 million and an increase in throughputs of 13,899 barrels per day on our Houston Pipeline ~~System, mainly~~ due to a ~~rebound in demand in~~new contract with a customer that began at the ~~second quarter~~end of ~~2021~~March 2021; and ~~higher~~

•although revenues remained comparable as a result of 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~~increased 65,421 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~~a rebound in ~~2021, compared to the first quarter of 2020;~~demand.

•

These increases were partially offset by a decrease in revenues of ~~$3.6~~$1.3 million ~~and a decrease in throughputs of 2,676 barrels per day~~ on our Ardmore System, ~~as a result~~despite an increase in throughputs of ~~Winter Storm Uri in the first quarter of 2021,~~22,227 barrels per day. Revenues decreased mainly due 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 $3.1 million and a decrease in~~while throughputs ~~of 3,645 barrels per day on our Ammonia Pipeline, mainly~~increased primarily due to ~~unfavorable weather conditions for agricultural application and outages at customers’ facilities~~the negative impacts in the ~~six months ended June 30, 2021.~~first quarter of 2021 described above.

Operating expenses ~~decreased $3.9~~increased $3.0 million for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, compared to the ~~six~~three months ended ~~June 30, 2020, primarily~~March 31, 2021, mainly due to ~~a decrease of $4.2 million in maintenance and regulatory expenses, mainly on our Ammonia Pipeline, and a decrease~~an increase in power costs of ~~$2.8~~$2.5 million, ~~across multiple pipelines,~~ primarily ~~resulting from lower throughputs 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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In the first quarter of 2020, the negative impact of the COVID-19 pandemic, combined with actions by OPEC+, led to a decline in our unit price and 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 goodwill impairment.higher throughputs.

Storage Segment

Our storage segment is comprised of our facilities that provide storage, handling and other services for ~~petroleum~~refined products, crude oil, specialty chemicals, renewable fuels and other liquids. As of ~~June 30, 2021,~~March 31, 2022, we ~~own~~owned and ~~operate 38 terminals~~operated 29 terminal 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~~44.2 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.~~Point Tupper Terminal. ~~On December 7, 2020,~~In the first quarter of 2022, we recorded a non-cash pre-tax impairment loss of $46.1 million related to our Point Tupper terminal facility, which was sold ~~the equity interests in our wholly owned subsidiaries that owned two terminals in Texas City, Texas~~on April 29, 2022 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.~~$60.0 million.

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

Three Months Ended ~~June 30, 2021~~March 31, 2022 Compared to Three Months Ended ~~June 30, 2020~~March 31, 2021


		Three Months Ended June 30,				Change			Three Months Ended March 31,				Change
		2021		2020					2022		2021
		(Thousands of Dollars, Except Barrels/Day Information)
Storage Segment:								Storage Segment:	(Thousands of Dollars, Except Barrels/Day Information)
Throughput (barrels/day)	Throughput (barrels/day)	385,790		348,189		37,601		Throughput (barrels/day)	395,803		400,302		(4,499)

Throughput terminal revenues	Throughput terminal revenues	$	35,143	$	32,199	$	2,944	Throughput terminal revenues	$	26,441	$	24,794	$	1,647
Storage terminal revenues	Storage terminal revenues	84,105		87,208		(3,103)		Storage terminal revenues	61,480		83,780		(22,300)
Total revenues	Total revenues	119,248		119,407		(159)		Total revenues	87,921		108,574		(20,653)
Operating expenses	Operating expenses	49,089		50,979		(1,890)		Operating expenses	38,299		42,232		(3,933)
Depreciation and amortization expense	Depreciation and amortization expense	23,974		25,186		(1,212)		Depreciation and amortization expense	18,475		23,624		(5,149)
Impairment loss								Impairment loss	46,122		—		46,122

Segment operating income		$	46,185	$	43,242	$	2,943
Segment operating (loss) income								Segment operating (loss) income	$	(14,975)	$	42,718	$	(57,693)

Throughput terminal revenues increased ~~$2.9~~$1.6 million ~~and throughputs increased 37,601 barrels per day~~ for the three months ended ~~June 30, 2021,~~March 31, 2022, compared to the three months ended ~~June 30, 2020, mainly~~March 31, 2021, primarily due to an increase in revenues of ~~$2.9~~$1.4 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 13,776 barrels per day at our Corpus Christi North Beach terminal due to weak export markets and volumes delivered to our customers’ refineries instead of over our docks in the second quarter of 2021; revenues remained flat at the terminal due to minimum volume commitments.beach terminal.

Storage terminal revenues decreased ~~$3.1~~$22.3 million for the three months ended ~~June 30, 2021,~~March 31, 2022, compared to the three months ended ~~June 30, 2020,~~March 31, 2021, primarily due to the following:

•a decrease in revenues of ~~$8.5~~$16.3 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 $2.4 million at our West Coast Terminals, mainly~~ due to ~~completed projects, resulting~~the Eastern U.S. Terminals Disposition in ~~higher throughputs and associated handling fees;~~October 2021; and

•~~an increase~~a decrease in revenues of ~~$2.2~~$5.5 million and $1.1 million at our ~~North East Terminals,~~St. James and Point Tupper terminals, respectively, mainly due to ~~contango market conditions at our Linden and Piney Point terminals that led to new contracts in~~ the ~~second quarter~~expiration of ~~2020 and an increase in throughput and ancillary fees.~~customer contracts.

Operating expenses decreased ~~$1.9~~$3.9 million for the three months ended ~~June 30, 2021,~~March 31, 2022, compared to the three months ended ~~June 30, 2020,~~March 31, 2021, primarily due to a decrease in operating expenses of ~~$5.8~~$9.3 million due to the ~~Texas City Sale~~Eastern U.S. Terminals Disposition in ~~December 2020 and a~~October 2021. This decrease ~~in maintenance and regulatory expenses of $1.0 million. These decreases were~~was partially offset by an increase in

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~~compensation~~ maintenance and regulatory expense of ~~$1.5~~$1.0 million ~~an increase~~ in 2022 and a $4.0 million recovery in the first quarter of 2021 for business interruption insurance ~~expense of $1.3 million due~~related to ~~higher premiums and an increase in reimbursable expenses of $1.2 million across various terminals.~~the Selby terminal.

Depreciation and amortization expense decreased ~~$1.2~~$5.1 million for the three months ended ~~June 30, 2021,~~March 31, 2022, compared to the three months ended ~~June 30, 2020, primarily due to the Texas City Sale.~~

~~Six Months Ended June 30,~~March 31, 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 $2.7 million at our Gulf Coast Terminals, excluding the Texas City Sale, mainly at our St. James and Jacksonville terminals. The increase at our St. James terminal was mainly due to an increase in reimbursable revenues, higher throughput and ancillary 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.

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

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

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

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

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

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~~Depreciation and amortization expense decreased $2.3 million for the six months ended June 30, 2021, compared to the six months ended June 30, 2020,~~ mainly due to the ~~Texas City Sale~~Eastern U.S. Terminals Disposition in ~~December 2020.~~October 2021.

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.

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Three Months Ended ~~June 30, 2021~~March 31, 2022 Compared to Three Months Ended ~~June 30, 2020~~March 31, 2021


		Three Months Ended June 30,				Change			Three Months Ended March 31,				Change
		2021		2020					2022		2021
		(Thousands of Dollars)
Fuels Marketing Segment:								Fuels Marketing Segment:	(Thousands of Dollars)
Product sales	Product sales	$	114,939	$	54,025	$	60,914	Product sales	$	133,260	$	83,855	$	49,405
Cost of goods	Cost of goods	112,063		50,115		61,948		Cost of goods	126,123		82,403		43,720
Gross margin	Gross margin	2,876		3,910		(1,034)		Gross margin	7,137		1,452		5,685
Operating expenses	Operating expenses	578		561		17		Operating expenses	593		(1,279)		1,872

Segment operating income	Segment operating income	$	2,298	$	3,349	$	(1,051)	Segment operating income	$	6,544	$	2,731	$	3,813

Segment operating income ~~decreased $1.1~~increased $3.8 million for the three months ended ~~June 30, 2021,~~March 31, 2022, compared to the three months ended ~~June 30, 2020,~~March 31, 2021, mainly due to ~~lower~~higher 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 $4.0 million~~ from our bunkering ~~operations and $2.0 million from our blending~~ operations. ~~The overall decrease in segment operating income was partially offset by~~We received 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~~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+.~~control. Our risk factors in Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 describe the risks inherent to these sources of funding and the availability thereof.

~~Due~~In the first quarter of 2022, we continued to prioritize liquidity by extending 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~~maturity on our ~~liquidity. We expect that amounts available under our~~$1.0 billion revolving credit agreement ~~will be sufficient~~ to ~~address senior note maturities in~~April 27, 2025, extending the scheduled termination date on our $100.0 million receivables financing agreement to January 31, 2025 and entering an agreement to sell our Point Tupper Terminal. For the full-year 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 ongoing lack of access to equity markets and the COVID-19 environment, we expect to fund all of our expenses, distribution requirements and capital expenditures using internally generated cash flows as we did for ~~the full-year~~ 2021.

~~Cash Flows for~~Beyond 2022, absent a return of access to the ~~Six Months Ended June 30,~~equity capital markets, we plan to continue to fund our expenses, distribution requirements and capital expenditures with internally generated cash flows, which could include proceeds from asset dispositions. We have no long-term debt maturities until 2025, and we have been and expect to continue to be able to access debt capital markets to refinance those maturities. Our Series D Cumulative Convertible Preferred Units (Series D Preferred Units) become redeemable, at our option, beginning in 2023, which coincides with an increase in the distribution rate of those units. Beginning in 2028, the holders of the Series D Preferred Units have the option to require us to redeem their units, and we have begun taking steps to position ourselves to redeem the Series D Preferred Units gradually over the next several years in advance of the possible mandatory redemption. By reducing our leverage, primarily through the disposition of non-strategic assets in recent years, and continuing to increase the amount by which our internally generated cash flows exceed our expenses, distribution requirements and capital expenditures, we are increasing our financial flexibility. Beyond those items, we will also continue to evaluate other sources of liquidity to manage the optional or mandatory redemption of the Series D Preferred Units.

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CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND 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”):


		Six Months Ended June 30,					Three Months Ended March 31,
		2021		2020			2022		2021
		(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	$	214,237	$	270,441	Operating activities	$	145,830	$	145,657
Investing activities	Investing activities	(92,235)		(106,080)		Investing activities	(41,102)		(45,782)
Financing activities	Financing activities	(252,853)		(162,319)		Financing activities	(99,714)		(225,729)
Effect of foreign exchange rate changes on cash	Effect of foreign exchange rate changes on cash	727		(945)		Effect of foreign exchange rate changes on cash	176		475
Net (decrease) increase in cash, cash equivalents and restricted cash		$	(130,124)	$	1,097
Net increase (decrease) in cash, cash equivalents and restricted cash						Net increase (decrease) in cash, cash equivalents and restricted cash	$	5,190	$	(125,379)

Net cash provided by operating activities ~~decreased $56.2 million~~was comparable for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, compared to the ~~six~~three months ended ~~June 30, 2020, primarily due to~~March 31, 2021, as lower net income in the first quarter of 2022 was driven by a non-cash impairment loss and offset by changes in working capital. Cash flows from operating activities includes insurance proceeds of $20.5 million and $25.0 million for the six months ended 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 ~~increased by $43.3~~decreased $17.5 million for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, compared to ~~$6.2~~a decrease of $24.4 million for the ~~six~~three months ended ~~June 30, 2020.~~March 31, 2021. Working capital requirements are mainly affected by our accounts receivable and accounts payables balances, which vary depending on the timing of payments. ~~Increased activity~~Cash flows from operating activities for the ~~continuing economic recovery also contributed~~three months ended March 31, 2021 include $20.5 million related to cleanup costs and business interruption for the ~~increase in working capital. In addition,~~2019 Selby terminal fire. Additionally, the timing of payments related to accrued interest payable changed due to the $250.0 million of 4.75% senior ~~note issuances in 2020. Please refer to Note 11~~notes repaid on November 1, 2021 and the $300.0 million of ~~the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for additional discussion.~~6.75% senior notes repaid February 1, 2021.

For the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, 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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Net cash used in investing activities decreased by ~~$13.8~~$4.7 million for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, compared to the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, primarily due to ~~reductions to our capital expenditures.~~proceeds from insurance recoveries of $5.8 million received in the first quarter of 2022.

Net cash used in financing activities ~~increased $90.5~~decreased $126.0 million for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022, compared to the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, mainly due to a ~~$177.6 million increase~~decrease in net debt repayments. ~~This increase was partially offset by~~For the ~~$49.2~~three months ended March 31, 2022, we had net debt repayments of $15.8 million, ~~payment~~compared to ~~terminate interest rate swaps in the second quarter of 2020 and a decrease of $21.2~~$147.7 million in ~~distributions paid to our common unitholders~~net debt repayments for the ~~six~~three months ended ~~June 30, 2021, compared to the six months ended June 30, 2020.~~March 31, 2021.

~~Sources of Liquidity~~SOURCES OF LIQUIDITY

Revolving Credit ~~Agreement.~~Agreement

On ~~February 16, 2021, NuStar Logistics~~January 28, 2022, we amended ~~its~~and restated our unsecured $1.0 billion revolving credit agreement (the Revolving Credit Agreement) to, among other ~~things, expand certain adjustments related~~things: (i) extend the maturity date from October 27, 2023 to April 27, 2025; (ii) increase the maximum amount of letters of credit capable of being issued from $400.0 million to $500.0 million; (iii) replace LIBOR benchmark provisions with customary secured overnight financing rate, or SOFR, benchmark provisions; (iv) remove the 0.50x increase permitted in our ~~maximum~~ consolidated debt coverage ratio for certain rolling periods in which an acquisition for aggregate net consideration of at least $50.0 million occurs; and ~~minimum consolidated interest coverage ratio.~~(v) add baskets and exceptions to certain negative covenants.

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 that is less than the total amount available for borrowing. For ~~the~~a rolling period of four quarters, ~~ended June 30, 2021,~~ the consolidated debt coverage ratio (as defined in the Revolving Credit Agreement) ~~could not~~cannot 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 ~~June 30, 2021,~~March 31, 2022, our consolidated debt coverage ratio was ~~4.27x~~3.92x and our consolidated interest coverage ratio was ~~2.05x.~~2.16x. As of ~~June 30, 2021,~~March 31, 2022, we had ~~$809.8~~$888.7 million available for borrowing. ~~We expect that amounts available~~Letters of credit issued under the Revolving Credit Agreement ~~will be sufficient to address senior note maturities in 2022.~~

~~The~~totaled $4.8 million as of March 31, 2022 and limit the amount we can borrow under 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:Agreement.

~~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 commitmentTable 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.Contents

Receivables Financing ~~Agreement.~~ 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 ~~lenders~~lender (the Receivables Financing Agreement) and agreements with certain of NuStar Energy’s wholly owned subsidiaries. As of ~~June 30, 2021, $125.4~~March 31, 2022, $132.2 million of our accounts receivable was included in the Securitization Program and the amount of borrowings outstanding under the Receivables Financing Agreement totaled ~~$74.2~~$72.0 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.

On January 28, 2022, the Receivables Financing Agreement was amended to, among other things: (i) extend the scheduled termination date from September 20, 2023 to January 31, 2025; (ii) reduce the floor rate in the calculation of our borrowing rates; and (iii) replace provisions related to the LIBOR rate of interest with references to SOFR rates of interest. Following the amendment, borrowings under the Receivables Financing Agreement bear interest, at NuStar Finance’s option, at a base rate or a SOFR rate, each as defined in the Receivables Financing Agreement.

The interest rate on the Revolving Credit Agreement and certain fees under the Receivables Financing Agreement are the only debt arrangements that are subject to adjustment if our debt rating is downgraded (or upgraded) by certain credit rating agencies. Please refer to Note 5 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for afurther discussion of certain of our debt agreements.

Asset Sale

We expect to utilize the proceeds from the sale of our Point Tupper terminal to reduce debt and thereby improve our debt metrics. We closed the sale on April 29, 2022.

MATERIAL CASH REQUIREMENTS

Capital ~~Requirements~~Expenditures

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
(Thousands of Dollars)
For the six months ended June 30:
2021 $ 69,762 $ 17,432 $ 87,194
2020 $ 85,307 $ 11,051 $ 96,358
Expected for the year ended December 31, 2021 $140,000 - 170,000 $40,000 - 50,000


	Strategic Capital Expenditures		Reliability Capital Expenditures		Total
	(Thousands of Dollars)
For the three months ended March 31:
2022	$	26,041	$	6,709	$	32,750
2021	$	31,974	$	8,489	$	40,463

Expected for the year ended December 31, 2022	$115,000 - 145,000		$35,000 - 45,000

Strategic capital expenditures for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ mainly consisted of expansion projects on our Permian Crude System and Central West Refined Products Pipelines, 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.~~projects. Reliability capital expenditures for the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 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 for 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. Therefore, our actual capital expenditures for 2022 may increase or decrease from the expected amounts noted above. We expect to self-fund all of our capital expenditures in 2022.

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:

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	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)	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)								(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	Series B Preferred Units	7.625%	$	1.90625	$	29,357	June 15, 2022	Three-month LIBOR plus 5.643%	Series B Preferred Units	7.625%	$	1.90625	$	29,357	June 15, 2022	Three-month LIBOR plus 5.643%
Series C Preferred Units	Series C Preferred Units	9.00%	$	2.25	$	15,525	December 15, 2022	Three-month LIBOR plus 6.88%	Series C Preferred Units	9.00%	$	2.25	$	15,525	December 15, 2022	Three-month LIBOR plus 6.88%

The distribution rate on our Series A Preferred Units converted from a fixed rate to a floating rate of the three-month LIBOR plus 6.766% on December 15, 2021. Distribution information for our Series A Preferred Units is as follows:


Period	Distribution Rate per Unit		Total Distribution
			(Thousands of Dollars)



March 15, 2022 - June 14, 2022	$	0.47817	$	4,332
December 15, 2021 - March 14, 2022	$	0.43606	$	3,951

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. The number of Series D Preferred Units issued and outstanding as of March 31, 2022 and December 31, 2021 totaled 23,246,650. 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 ~~July 2021,~~April 2022, 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 ~~September~~June 15, ~~2021.~~2022.

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. In April 2022, our board of directors declared distributions with respect to our common units for the quarter ended March 31, 2022. The following table summarizes information about quarterly cash distributions to our common limited partners applicable to the period in which the distributions were earned:


Quarter Ended	Cash Distributions Per Unit		Total Cash Distributions		Record Date	Payment Date
			(Thousands of Dollars)


March 31, 2022	$	0.40	$	44,165	May 9, 2022	May 13, 2022
December 31, 2021	$	0.40	$	44,008	February 8, 2022	February 14, 2022

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Debt Obligations

~~Our~~The following table summarizes our debt ~~obligations as of June 30, 2021 are listed below:~~obligations:
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.


	Maturity			Outstanding Obligations as of March 31, 2022
				(Thousands of Dollars)
Receivables Financing Agreement, 1.9% as of March 31, 2022	January 31, 2025			$	72,000
Revolving Credit Agreement, 3.0% as of March 31, 2022	April 27, 2025			$	106,500
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
GoZone Bonds 5.85% - 6.35%	2038	thru	2041	$	322,140
Subordinated Notes, 7.0% as of March 31, 2022	January 15, 2043			$	402,500

We believe that, as of ~~June 30, 2021,~~March 31, 2022, 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.

Guarantor Summarized Financial ~~Information~~

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 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. 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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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.


		June 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
		(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	$	52,004	$	154,752	Current assets	$	27,791	$	33,645
Long-term assets	Long-term assets	$	2,895,016	$	2,950,217	Long-term assets	$	2,770,973	$	2,791,481
Current liabilities (a)	Current liabilities (a)	$	109,676	$	140,385	Current liabilities (a)	$	147,145	$	119,841
Long-term liabilities, including long-term debt	Long-term liabilities, including long-term debt	$	3,488,064	$	3,609,306	Long-term liabilities, including long-term debt	$	3,158,526	$	3,162,351
Series D preferred limited partners interests	Series D preferred limited partners interests	$	607,718	$	599,542	Series D preferred limited partners interests	$	621,018	$	616,439

				Six Months Ended June 30, 2021					Three Months Ended March 31, 2022
				(Thousands of Dollars)					(Thousands of Dollars)
Summarized Combined Income Statement Information:	Summarized Combined Income Statement Information:					Summarized Combined Income Statement Information:
Revenues	Revenues			$	404,402	Revenues			$	195,218
Operating income	Operating income			$	152,745	Operating income			$	67,575
Interest expense, net	Interest expense, net			$	(109,027)	Interest expense, net			$	(49,877)

Net income	Net income			$	45,618	Net income			$	18,825

(a)Excludes ~~$0.7~~$1,003.5 million and ~~$0.6~~$1,004.5 million of net intercompany payables as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, due to the non-guarantor subsidiaries from the Guarantor Issuer Group.

Long-term assets for the non-guarantor subsidiaries totaled ~~$2,541.1~~$2,087.2 million and ~~$2,543.2~~$2,180.3 million as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively. Revenue and net ~~income~~loss for the non-guarantor subsidiaries totaled ~~$384.3~~$214.6 million and ~~$60.0~~$6.5 million, respectively, for the ~~six~~three months ended ~~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.~~March 31, 2022.

~~Interest Rate Swaps~~Series D Preferred Units Redemption Features

~~Please refer to Note 7~~We may redeem all or any portion of the ~~Condensed Notes~~23,246,650 Series D Preferred Units issued and outstanding in an amount not less than $50.0 million for cash at a redemption price equal to, ~~Consolidated Financial Statements~~as applicable: (i) $31.73 per Series D Preferred Unit, or up to $737.6 million, at any time on or after June 29, 2023 but prior to June 29, 2024; (ii) $30.46 per Series D Preferred Unit, or up to $708.1 million, at any time on or after June 29, 2024 but prior to June 29, 2025; (iii) $29.19 per Series D Preferred Unit, or up to $678.6 million, at any time on or after June 29, 2025; plus, in ~~Item 1. “Financial Statements”~~each case, the sum of any unpaid distributions on the applicable Series D Preferred Unit plus the distributions prorated for the number of days elapsed (not to exceed 90) in the period of redemption (Series D Partial Period Distributions). The holders have the option to convert the units prior to such redemption.

Additionally, at any time on or after June 29, 2028, each holder of Series D Preferred Units will have the right to require us to redeem all of the Series D Preferred Units held by such holder at a ~~discussion~~redemption price equal to $29.19 per Series D Preferred Unit, or approximately $678.6 million if all Series D Preferred Units are tendered, plus any unpaid Series D distributions plus the Series D Partial Period Distributions. If a holder of ~~our interest rate swaps.~~Series D Preferred Units exercises its redemption right, we may elect to pay up to 50% of such amount in common units (which shall be valued at 93% of a volume-weighted average trading price of the common units); provided, that the common units to be issued do not, in the aggregate, exceed 15% of NuStar Energy’s common equity market capitalization at the time.

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 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.

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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 related thereto 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.~~2021.

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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.

On January 28, 2022, we amended and restated our $1.0 billion unsecured revolving credit agreement to extend the maturity to April 27, 2025, replace the LIBOR-based interest rate and modify other terms. Also on January 28, 2022, we amended our $100.0 million receivables financing agreement to extend the scheduled termination date to January 31, 2025, replace the LIBOR-based interest rate and modify other terms. 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.~~more information.

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:


		June 30, 2021																							March 31, 2022
		Expected Maturity Dates																							Expected Maturity Dates
		2021			2022			2023			2024		2025			Thereafter			Total			Fair Value			2022		2023		2024		2025			2026			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		$	3,121,695	Fixed-rate debt	$	—	$	—	$	—	$	600,000		$	500,000		$	1,472,140		$	2,572,140		$	2,641,192
Weighted-average rate	Weighted-average rate	—		%	4.8		%	—			—		5.8		%	6.0		%	5.9		%	—		Weighted-average rate	—		—		—		5.8		%	6.0		%	6.0		%	6.0		%	—
Variable-rate debt	Variable-rate debt	$	—		$	—		$	259,200		$	—	$	—		$	402,500		$	661,700		$	671,795	Variable-rate debt	$	—	$	—	$	—	$	178,500		$	—		$	402,500		$	581,000		$	581,325
Weighted-average rate	Weighted-average rate	—			—			2.5		%	—		—			6.9		%	5.2		%	—		Weighted-average rate	—		—		—		2.6		%	—			7.0		%	5.6		%	—


		December 31, 2020																							December 31, 2021
		Expected Maturity Dates																							Expected Maturity Dates
		2021			2022			2023			2024		2025			Thereafter			Total			Fair Value			2022		2023			2024		2025			2026			Thereafter			Total			Fair Value
		(Thousands of Dollars, Except Interest Rates)																							(Thousands of Dollars, Except Interest Rates)
Fixed-rate debt	Fixed-rate debt	$	300,000		$	250,000		$	—		$	—	$	600,000		$	1,972,140		$	3,122,140		$	3,396,542	Fixed-rate debt	$	—	$	—		$	—	$	600,000		$	500,000		$	1,472,140		$	2,572,140		$	2,858,794
Weighted-average rate	Weighted-average rate	6.8		%	4.8		%	—			—		5.8		%	6.0		%	5.9		%	—		Weighted-average rate	—		—			—		5.8		%	6.0		%	6.0		%	6.0		%	—
Variable-rate debt	Variable-rate debt	$	—		$	—		$	57,000		$	—	$	—		$	402,500		$	459,500		$	402,836	Variable-rate debt	$	—	$	194,300		$	—	$	—		$	—		$	402,500		$	596,800		$	600,359
Weighted-average rate	Weighted-average rate	—			—			2.3		%	—		—			7.0		%	6.4		%	—		Weighted-average rate	—		2.5		%	—		—			—			6.9		%	5.4		%	—

Distributions on 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) 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 the 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. The Series A, B and C Preferred Units expose us to changes in interest rates as the distribution rate on our Series A Preferred Units converted to a floating rate of the applicable LIBOR plus a spread on December 15, 2021, and the distribution rates on our Series B and C Preferred Units convert from fixed rates to floating rates of the applicable LIBOR plus a spread on June 15, 2022 and December 15, 2022, respectively. Based upon the 9,060,000 Series A Preferred Units outstanding at March 31, 2022 and the $25.00 liquidation preference per unit, an increase of 100 basis points, or 1.0%, in interest rates would increase the annual distributions on our Series A Preferred Units by $2.3 million. Please see Note 9 of the Condensed Notes to Consolidated Financial Statements in Item 1. “Financial Statements” for additional information on our Series A, B and C Preferred Units.

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.

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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 ~~June 30, 2021.~~March 31, 2022.

(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 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 a sufficient proportion of people are not vaccinated to reach herd immunity, or 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		Second Amended and Restated 5-Year Revolving Credit Agreement, dated as of January 28, 2022, among NuStar Logistics, L.P., NuStar Energy L.P. ~~2019 Long-Term Incentive Plan~~, NuStar Pipeline Operating Partnership L.P., Wells Fargo Bank, National Association, as Administrative Agent, and the lenders party thereto (incorporated by reference to Exhibit ~~10.1~~10.1 to NuStar Energy L.P.’s Current Report on Form 8-K filed ~~April 30, 2021~~January 31 , 2022 (File No. 001-16417))

10.02		Sixth Amendment to Receivables Financing Agreement, dated as of January 28, 2022, by and among NuStar Finance, LLC, as Borrower, NuStar Energy L.P., as initial Servicer, and PNC Bank, National Association (incorporated by reference to Exhibit 10.2 to NuStar Energy L.P.’s Current Report on Form 8-K filed January 31 , 2022 (File No. 001-16417))

*~~10.02~~10.03		Form of ~~2021~~2022 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~~(incorporated by reference to Exhibit 22.01 to NuStar Energy L.P.’s ’s Annual Report on Form 10-K for ~~year~~yea r ended December 31, ~~2020~~2021 (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
						~~August~~May 6, ~~2021~~2022

By:						/s/ Thomas R. Shoaf
						Thomas R. Shoaf
						Executive Vice President and Chief Financial Officer
						~~August~~May 6, ~~2021~~2022

By:						/s/ Jorge A. del Alamo
						Jorge A. del Alamo
						Senior Vice President and Controller
						~~August~~May 6, ~~2021~~2022

3734





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