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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 September 30, 2023
OR
☐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
_________________________________________
nslogoa04.jpg
NuStar Energy L.P.
(Exact name of registrant as specified in its charter)
_________________________________________
Delaware74-2956831
(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 classTrading Symbol(s)Name of each exchange on which registered
Common UnitsNSNew York Stock Exchange
8.50% Series A Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred UnitsNSprANew York Stock Exchange
7.625% Series B Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred UnitsNSprBNew York Stock Exchange
9.00% Series C Fixed-to-Floating Rate Cumulative Redeemable Perpetual Preferred UnitsNSprCNew 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 filerþAccelerated 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 October 31, 2023 was 125,895,543.

NUSTAR ENERGY L.P.
FORM 10-Q
TABLE OF CONTENTS
Item 1.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
2
PART I – FINANCIAL INFORMATION

Item 1.Financial Statements
NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited, Thousands of Dollars, Except Unit Data)
September 30,
2023		December 31,
2022
Assets
Current assets:
Cash and cash equivalents$4,371 $14,489 
Accounts receivable, net156,651 149,971 
Inventories17,336 15,397 
Prepaid and other current assets21,236 24,067 
Total current assets199,594 203,924 
Property, plant and equipment, at cost5,739,619 5,733,685 
Accumulated depreciation and amortization(2,452,390)(2,330,602)
Property, plant and equipment, net3,287,229 3,403,083 
Intangible assets, net485,471 513,696 
Goodwill732,356 732,356 
Other long-term assets, net207,646 120,627 
Total assets$4,912,296 $4,973,686 
Liabilities, Mezzanine Equity and Partners’ Equity
Current liabilities:
Accounts payable$74,168 $67,765 
Current portion of finance leases4,725 4,416 
Accrued interest payable78,312 37,607 
Accrued liabilities84,433 76,072 
Taxes other than income tax14,527 10,607 
Total current liabilities256,165 196,467 
Long-term debt, less current portion of finance leases3,398,006 3,293,415 
Deferred income tax liability3,258 3,219 
Other long-term liabilities212,743 131,299 
Total liabilities3,870,172 3,624,400 
Commitments and contingencies (Note 5)
Series D preferred limited partners (0 and 16,346,650 units outstanding as of
September 30, 2023 and December 31, 2022, respectively) (Note 6)
— 446,970 
Partners’ equity (Note 7):
 Preferred limited partners
Series A (9,060,000 units outstanding as of September 30, 2023 and December 31, 2022)
218,307 218,307 
Series B (15,400,000 units outstanding as of September 30, 2023 and December 31, 2022)
371,476 371,476 
Series C (6,900,000 units outstanding as of September 30, 2023 and December 31, 2022)
166,518 166,518 
Common limited partners (125,895,543 and 110,818,718 units outstanding
as of September 30, 2023 and December 31, 2022, respectively)
317,279 177,620 
Accumulated other comprehensive loss(31,456)(31,605)
Total partners’ equity1,042,124 902,316 
Total liabilities, mezzanine equity and partners’ equity$4,912,296 $4,973,686 
See Condensed Notes to Consolidated Financial Statements.
3
NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited, Thousands of Dollars, Except Unit and Per Unit Data)
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
Revenues:
Service revenues$289,945 $277,380 $850,578 $820,752 
Product sales120,355 135,863 331,923 432,511 
Total revenues410,300 413,243 1,182,501 1,253,263 
Costs and expenses:
Costs associated with service revenues:
Operating expenses (excluding depreciation and amortization expense)
94,052 91,286 276,577 272,636 
Depreciation and amortization expense63,215 63,140 187,799 188,683 
Total costs associated with service revenues157,267 154,426 464,376 461,319 
Costs associated with product sales101,572 117,324 281,947 378,217 
Impairment loss — — — 46,122 
General and administrative expenses (excluding depreciation and amortization expense)
35,083 27,676 95,428 82,656 
Other depreciation and amortization expense1,080 1,935 3,672 5,582 
Total costs and expenses295,002 301,361 845,423 973,896 
Gain on sale of assets— — 41,075 — 
Operating income115,298 111,882 378,153 279,367 
Interest expense, net(63,125)(52,294)(178,666)(153,053)
Other income, net156 1,475 7,298 7,158 
Income before income tax expense52,329 61,063 206,785 133,472 
Income tax expense1,134 1,430 3,513 2,328 
Net income$51,195 $59,633 $203,272 $131,144 
Basic and diluted net (loss) income per common unit (Note 8)
$(0.07)$0.20 $0.34 $0.18 
Basic and diluted weighted-average common units outstanding119,218,622 110,310,921 113,698,898 110,265,359 
Comprehensive income$51,132 $59,746 $203,421 $173,063 
See Condensed Notes to Consolidated Financial Statements.

4
NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, Thousands of Dollars)
 Nine Months Ended September 30,
 20232022
Cash flows from operating activities:
Net income$203,272 $131,144 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense191,471 194,265 
Amortization of unit-based compensation11,652 9,861 
Amortization of debt related items8,060 7,663 
Gain on sale of assets(41,075)— 
Gain from insurance recoveries— (625)
Impairment loss— 46,122 
Changes in current assets and current liabilities (Note 9)
41,562 32,839 
Increase in other long-term assets, net(2,033)(2,332)
(Decrease) increase in other long-term liabilities(52)525 
Other, net(6,456)(5,684)
Net cash provided by operating activities406,401 413,778 
Cash flows from investing activities:
Capital expenditures(101,094)(111,437)
Change in accounts payable related to capital expenditures5,635 (9,716)
Proceeds from insurance recoveries12,395 5,805 
Proceeds from sale or disposition of assets, net of transaction costs102,781 59,643 
Net cash provided by (used in) investing activities19,717 (55,705)
Cash flows from financing activities:
Proceeds from long-term debt borrowings841,200 588,100 
Long-term debt repayments(739,500)(706,000)
Proceeds from issuance of common units, net of issuance costs221,899 — 
Redemption of Series D preferred units(518,680)— 
Distributions to preferred unitholders(93,050)(94,493)
Distributions to common unitholders(133,086)(132,288)
Other, net(14,785)(12,207)
Net cash used in financing activities(436,002)(356,888)
Effect of foreign exchange rate changes on cash30 750 
Net (decrease) increase in cash, cash equivalents and restricted cash(9,854)1,935 
Cash, cash equivalents and restricted cash as of the beginning of the period23,377 14,439 
Cash, cash equivalents and restricted cash as of the end of the period$13,523 $16,374 
See Condensed Notes to Consolidated Financial Statements.
5
NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY AND MEZZANINE EQUITY
Three Months Ended September 30, 2023 and 2022
(Unaudited, Thousands of Dollars, Except Per Unit Data)
Limited PartnersMezzanine Equity
 PreferredCommonAccumulated
Other
Comprehensive
Loss
Total Partners’ Equity
(Note 7)
Series D Preferred Limited Partners (Note 6)
Total
Balance as of July 1, 2023$756,301 $144,409 $(31,393)$869,317 $230,264 $1,099,581 
Net income23,083 24,660 — 47,743 3,452 51,195 
Other comprehensive loss— — (63)(63)— (63)
Distributions to partners:
Series A, B and C preferred
(23,083)— — (23,083)— (23,083)
Common ($0.40 per unit)
— (44,362)— (44,362)— (44,362)
Series D preferred
— — — — (3,452)(3,452)
Issuance of common units— 221,829 — 221,829 — 221,829 
Unit-based compensation— 3,426 — 3,426 — 3,426 
Series D preferred unit accretion— (197)— (197)197 — 
Series D preferred unit redemption— (32,475)— (32,475)(230,461)(262,936)
Other— (11)— (11)— (11)
Balance as of September 30, 2023$756,301 $317,279 $(31,456)$1,042,124 $— $1,042,124 

Balance as of July 1, 2022$756,301 $220,511 $(32,172)$944,640 $625,751 $1,570,391 
Net income16,608 27,170 — 43,778 15,855 59,633 
Other comprehensive income— — 113 113 — 113 
Distributions to partners:
Series A, B and C preferred
(16,608)— — (16,608)— (16,608)
Common ($0.40 per unit)
— (44,124)— (44,124)— (44,124)
Series D preferred
— — — — (15,855)(15,855)
Unit-based compensation
— 2,542 — 2,542 — 2,542 
Series D preferred unit accretion— (4,890)— (4,890)4,890 — 
Other— (9)— (9)— (9)
Balance as of September 30, 2022$756,301 $201,200 $(32,059)$925,442 $630,641 $1,556,083 
See Condensed Notes to Consolidated Financial Statements.











6
NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF PARTNERS’ EQUITY AND MEZZANINE EQUITY
Nine Months Ended September 30, 2023 and 2022
(Unaudited, Thousands of Dollars, Except Per Unit Data)
Limited PartnersMezzanine Equity
 PreferredCommonAccumulated
Other
Comprehensive
Loss
Total Partners’ Equity
(Note 7)
Series D Preferred Limited Partners (Note 6)
Total
Balance as of January 1, 2023$756,301 $177,620 $(31,605)$902,316 $446,970 $1,349,286 
Net income66,779 111,878 — 178,657 24,615 203,272 
Other comprehensive income— — 149 149 — 149 
Distributions to partners:
Series A, B and C preferred
(66,779)— — (66,779)— (66,779)
Common ($1.20 per unit)
— (133,086)— (133,086)— (133,086)
Series D preferred
— — — — (24,615)(24,615)
Issuance of common units— 221,829 — 221,829 — 221,829 
Unit-based compensation
— 10,816 — 10,816 — 10,816 
Series D preferred unit accretion— (7,171)— (7,171)7,171 — 
Series D preferred unit redemptions— (64,542)— (64,542)(454,138)(518,680)
Other— (65)— (65)(3)(68)
Balance as of September 30, 2023$756,301 $317,279 $(31,456)$1,042,124 $— $1,042,124 
Balance as of January 1, 2022$756,301 $299,502 $(73,978)$981,825 $616,439 $1,598,264 
Net income47,515 36,066 — 83,581 47,563 131,144 
Other comprehensive income— — 41,919 41,919 — 41,919 
Distributions to partners:
Series A, B and C preferred
(47,515)— — (47,515)— (47,515)
Common ($1.20 per unit)
— (132,288)— (132,288)— (132,288)
Series D preferred
— — — — (47,563)(47,563)
Unit-based compensation
— 12,133 — 12,133 — 12,133 
Series D preferred unit accretion— (14,205)— (14,205)14,205 — 
Other— (8)— (8)(3)(11)
Balance as of September 30, 2022$756,301 $201,200 $(32,059)$925,442 $630,641 $1,556,083 
See Condensed Notes to Consolidated Financial Statements.
7
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 three business segments: pipeline, storage and fuels marketing.

Recent Developments
Redemptions of Series D Preferred Units. In the second and third quarters of 2023, we redeemed the remaining 16,346,650 Series D Preferred Units, as defined in Note 6, for an aggregate net redemption price of $518.7 million. See Note 6 for additional information on these redemptions.

Issuance of Common Units. On August 11, 2023, we issued 14,950,000 common units representing limited partner interests at a price of $15.35 per unit for net proceeds of approximately $222.0 million. We used these proceeds to repay outstanding borrowings under our Revolving Credit Agreement, as defined in Note 4.

Debt Amendments. On June 30, 2023, we amended our Revolving Credit Agreement, primarily to extend the maturity date from April 27, 2025 to January 27, 2027. On June 29, 2023, we amended our Receivables Financing Agreement, as defined in Note 4, to extend the scheduled termination date from January 31, 2025 to July 1, 2026. See Note 4 for more information.

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 nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023. 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, 2022.

2. DISPOSITIONS

Sale-Leaseback Transaction
On March 21, 2023, we sold our corporate headquarters facility and approximately 24 acres of underlying land located in San Antonio, Texas (the Corporate Headquarters) for an aggregate cash sales price of $103.0 million and immediately entered into an operating lease agreement (the Lease Agreement) to lease back the Corporate Headquarters for an initial term of 20 years, with two renewal options of ten years each (the Sale-Leaseback Transaction). Upon closing of the sale in the first quarter of 2023, the Sale-Leaseback Transaction qualified as a completed sale, and we recognized a gain of $41.1 million, which is presented in “Gain on sale of assets” on the condensed consolidated statements of comprehensive income. We entered into the Sale-Leaseback Transaction in order to monetize the Corporate Headquarters and used the proceeds to repay outstanding borrowings on our Revolving Credit Agreement.

8
NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Pursuant to the Lease Agreement, rent for the initial term starts at $6.4 million per year and increases annually by 2.5%. At inception of the lease, right-of-use assets and lease liabilities associated with the Sale-Leaseback Transaction assumed a reasonably certain term of 20 years and were included in our consolidated balance sheet as follows (thousands of dollars):
Operating lease right-of-use assets:
Other long-term assets, net$82,230 
Operating lease liabilities:
Accrued liabilities$710 
Other long-term liabilities81,498 
Total operating lease liabilities$82,208 

Following our entrance into the Sale-Leaseback Transaction, the weighted-average discount rate for our operating leases was 6.1%.

Point Tupper Terminal Disposition
On April 29, 2022, we sold the equity interests in our wholly owned subsidiaries that owned our Point Tupper terminal facility in Nova Scotia, Canada (the Point Tupper Terminal Operations) to EverWind Fuels for $60.0 million. The terminal facility had a storage capacity of 7.8 million barrels and was included in the storage segment. We used the sales proceeds to reduce debt and improve our debt metrics.

During the first quarter of 2022, we determined that the Point Tupper Terminal Operations met the criteria to be classified as held for sale. We compared the carrying value of the Point Tupper Terminal Operations, which included $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 we recognized a pre-tax impairment loss of $46.1 million in the first quarter of 2022, which is presented in “Impairment loss” on the condensed consolidated statements of comprehensive income. We believe that the sales price of $60.0 million provided a reasonable indication of the fair value of the Point Tupper Terminal Operations as it represented an exit price in an orderly transaction between market participants. The sales price was a quoted price for identical assets and liabilities in a market that was not active and, thus, our fair value estimate fell within Level 2 of the fair value hierarchy. Upon closing in the second quarter of 2022, we released $39.6 million of foreign currency translation losses from accumulated other comprehensive loss and finalized our sales price, resulting in a gain of $1.6 million, which was presented in “Other income, net” on the condensed consolidated statement of comprehensive income for the period.

9
NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
3. 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:
20232022
Contract AssetsContract LiabilitiesContract AssetsContract Liabilities
(Thousands of Dollars)
Balances as of January 1:
Current portion$2,612 $(17,647)$2,336 $(15,443)
Noncurrent portion304 (41,405)504 (46,027)
Total 2,916 (59,052)2,840 (61,470)
Activity:
Additions3,878 (51,196)3,806 (32,895)
Transfer to accounts receivable(5,556)— (4,224)— 
Transfer to revenues— 36,564 (83)38,158 
Total (1,678)(14,632)(501)5,263 
Balances as of September 30:
Current portion466 (29,887)1,977 (14,327)
Noncurrent portion772 (43,797)362 (41,880)
Total $1,238 $(73,684)$2,339 $(56,207)

Current contract assets are included in “Prepaid and other current assets” and noncurrent contract assets are included in “Other long-term assets, net” on the consolidated balance sheets. The current portion of contract liabilities is included in “Accrued liabilities” and the noncurrent portion of contract liabilities is included in “Other long-term liabilities” on the consolidated balance sheets.

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 September 30, 2023:
Remaining Performance Obligations
(Thousands of Dollars)
2023 (remaining)$107,616 
2024360,981 
2025236,718 
2026169,712 
202781,920 
Thereafter125,903 
Total$1,082,850 

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

10
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 September 30,Nine Months Ended September 30,
2023202220232022
(Thousands of Dollars)
Pipeline segment:
Crude oil pipelines $100,525 $101,865 $290,314 $281,999 
Refined products and ammonia pipelines124,839 107,143 354,934 316,257 
Total pipeline segment revenues from contracts with customers225,364 209,008 645,248 598,256 
Storage segment:
Throughput terminals21,868 26,933 73,022 84,303 
Storage terminals (excluding lessor revenues)42,013 40,694 127,078 138,502 
Total storage segment revenues from contracts with customers
63,881 67,627 200,100 222,805 
Lessor revenues11,323 10,765 33,970 32,291 
Total storage segment revenues75,204 78,392 234,070 255,096 
Fuels marketing segment:
Revenues from contracts with customers
109,732 125,843 303,185 399,912 
Consolidation and intersegment eliminations— — (2)(1)
Total revenues$410,300 $413,243 $1,182,501 $1,253,263 

4. DEBT

Revolving Credit Agreement
On June 30, 2023, we amended our $1.0 billion unsecured revolving credit agreement (as amended, the Revolving Credit Agreement), primarily to extend the maturity date from April 27, 2025 to January 27, 2027. The amendment also includes a requirement that we certify that the sum of our Revolving Credit Agreement availability and unrestricted cash balance is no less than $150.0 million on a pro forma basis prior to using any borrowings under the Revolving Credit Agreement to redeem certain unsecured indebtedness or our Series D Preferred Units.

As of September 30, 2023, the Revolving Credit Agreement had $665.4 million available for borrowing and $330.0 million of borrowings outstanding. Letters of credit issued under the Revolving Credit Agreement totaled $4.6 million as of September 30, 2023, 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 SOFR-based rate. The Revolving Credit Agreement and certain fees under the Receivables Financing Agreement 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 September 30, 2023, our weighted-average interest rate related to borrowings under the Revolving Credit Agreement was 7.9%.

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 a rolling period of four quarters, the Consolidated Debt Coverage Ratio (as defined in the Revolving Credit Agreement) may not exceed 5.00-to-1.00, and the Consolidated Interest Coverage Ratio (as defined in the Revolving Credit Agreement) must not be less than 1.75-to-1.00. As of September 30, 2023, we believe that we are in compliance with these financial covenants.

11
NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
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 (as amended, the Receivables Financing Agreement) and agreements with certain of NuStar Energy’s wholly owned subsidiaries (collectively with the Receivables Financing Agreement, the Securitization Program). Under the Securitization Program, certain of NuStar Energy’s wholly owned subsidiaries sell their accounts receivable to NuStar Finance on an ongoing basis, and NuStar Finance provides the newly acquired accounts receivable as collateral for its revolving borrowings under the Receivables Financing Agreement. On June 29, 2023, we amended the Receivables Financing Agreement to extend the scheduled termination date from January 31, 2025 to July 1, 2026. As of September 30, 2023, the amount of borrowings outstanding under the Receivables Financing Agreement totaled $72.6 million, the interest rate related to outstanding borrowings was 7.0% and $137.5 million of our accounts receivable was included in the Securitization Program.

Fair Value of Long-Term Debt
The estimated fair values and carrying amounts of long-term debt, excluding finance leases, were as follows:
September 30, 2023December 31, 2022
 (Thousands of Dollars)
Fair value$3,320,299 $3,169,664 
Carrying amount$3,348,006 $3,242,289 

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 unamortized debt issuance costs.

5. COMMITMENTS AND CONTINGENCIES

We have contingent liabilities resulting from various litigation, claims and commitments. We record accruals for loss contingencies when losses are considered probable and can be reasonably estimated. Legal fees associated with defending the Partnership in legal matters are expensed as incurred. We accrued $1.2 million and $0.3 million for contingent losses as of September 30, 2023 and December 31, 2022, 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.

6. SERIES D CUMULATIVE CONVERTIBLE PREFERRED UNITS

Redemptions
In the second and third quarters of 2023, we redeemed all of our outstanding Series D Cumulative Convertible Preferred Units (the Series D Preferred Units), primarily with borrowings under our Revolving Credit Agreement, which had been partially paid down with proceeds from the Sale-Leaseback Transaction in the first quarter of 2023 and with proceeds from the issuance of common units in the third quarter of 2023. On the notification dates for each redemption, those Series D Preferred Units became mandatorily redeemable; therefore, we reclassified those Series D Preferred Units from mezzanine equity to liability-classified mandatorily redeemable Series D Preferred Units valued at the redemption price, excluding accrued distributions (Net Redemption Price). We recorded the difference between the carrying value of those Series D Preferred Units prior to reclassification and the Net Redemption Price as a deemed distribution, which reduced our common equity and was subtracted from net income to arrive at net (loss) income attributable to common units in the calculation of basic and diluted net (loss) income per common unit. At each closing, we accounted for the redemptions as extinguishments of debt.

Distributions accrued for redeemed units from the notification dates to the redemption dates for the three and nine months ended September 30, 2023 totaled $3.1 million and $4.8 million, respectively, and are reported in “Interest expense, net” on the condensed consolidated statements of comprehensive income.

12
NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Information related to the Series D Preferred Unit redemptions is shown below (thousands of dollars, except unit and per unit data):
September 12, 2023 RedemptionJuly 31, 2023 RedemptionJune 30, 2023 Redemption
Notification dateAugust 14, 2023June 29, 2023May 25, 2023
Units redeemed8,286,6502,560,0005,500,000 
Redemption price per unit, including accrued distributions$32.59 $32.18 $31.88 
Redemption price, including accrued distributions$270,062 $82,381 $175,340 
Accrued distributions7,126 1,152 825 
Net Redemption Price$262,936 $81,229 $174,515 
Carrying value of units at notification date$230,461 $71,210 $152,467 
Net Redemption Price262,936 81,229 174,515 
Loss to common limited partners attributable to redemption$(32,475)$(10,019)$(22,048)

For the three and nine months ended September 30, 2023, we recorded losses of $0.27 and $0.57 per common unit, respectively, attributable to the Series D Preferred Unit redemptions.

Units Outstanding
The following is a summary of our Series D Preferred Units outstanding:
Transaction DatePrice per UnitNumber of Units
Units outstanding as of January 1, 202223,246,650 
RepurchaseNovember 22, 2022$32.73 (6,900,000)
Units outstanding as of December 31, 2022
16,346,650 
RedemptionJune 30, 2023$31.88 (5,500,000)
RedemptionJuly 31, 2023$32.18 (2,560,000)
RedemptionSeptember 12, 2023$32.59 (8,286,650)
Units outstanding as of September 30, 2023
— 

Distributions
Prior to their redemption and/or repurchase, we allocated net income to our Series D Preferred Units equal to the amount of distributions earned during the period. Distributions on the Series D Preferred Units were payable out of any legally available funds, accrued and were cumulative from the original issuance dates and were payable on the 15th day (or next business day) of each of March, June, September and December, beginning September 17, 2018, to holders of record on the first business day of each payment month. The distribution rates on the Series D Preferred Units were as follows: (i) 9.75% per annum ($0.619 per unit per distribution period) for the first two years; (ii) 10.75% per annum ($0.682 per unit per distribution period) for years three through five; and (iii) the greater of 13.75% per annum ($0.872 per unit per distribution period) or the distribution per common unit thereafter.

13
NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
The distribution rate on our Series D Preferred Units increased on June 15, 2023, to the greater of 13.75% per annum ($0.872 per unit per distribution period) or the distribution per common unit. The total distribution for the applicable periods in the table below excludes amounts reported in “Interest expense, net” as described above under “Redemptions.” Distribution information on our Series D Preferred Units was as follows:
 Distribution PeriodDistribution Rate per UnitTotal Distribution
(Thousands of Dollars)
June 15, 2023 - September 12, 2023$0.872 $5,134 
March 15, 2023 - June 14, 2023$0.682 $10,315 
December 15, 2022 - March 14, 2023$0.682 $11,148 
September 15, 2022 - December 14, 2022$0.682 $14,337 
June 15, 2022 - September 14, 2022$0.682 $15,854 
March 15, 2022 - June 14, 2022$0.682 $15,854 
December 15, 2021 - March 14, 2022$0.682 $15,854 

7. 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.

Information on our Series A, B and C Preferred Units is shown below:
Units
Units Issued and Outstanding as of September 30, 2023
Optional Redemption Date/Date When Distribution Rate Became Floating
Floating Annual Rate (as a Percentage of the $25.00 Liquidation Preference per Unit)
Series A Preferred Units9,060,000December 15, 2021
Three-month LIBOR(a) plus 6.766%
Series B Preferred Units15,400,000June 15, 2022
Three-month LIBOR(a) plus 5.643%
Series C Preferred Units6,900,000December 15, 2022
Three-month LIBOR(a) plus 6.88%
(a)Beginning with the distribution period starting on September 15, 2023, LIBOR was replaced with the corresponding CME Term SOFR plus the applicable tenor spread adjustment of 0.26161%.

Distribution information on our Series A, B and C Preferred Units is as follows (thousands of dollars, except per unit data):
Series A Preferred UnitsSeries B Preferred UnitsSeries C Preferred Units
Distribution PeriodDistribution Rate per UnitTotal DistributionDistribution Rate per UnitTotal DistributionDistribution Rate per UnitTotal Distribution
September 15, 2023 - December 14, 2023$0.77736 $7,043 $0.70717 $10,890 $0.78448 $5,413 
June 15, 2023 - September 14, 2023$0.76715 $6,950 $0.69696 $10,733 $0.77428 $5,343 
March 15, 2023 - June 14, 2023$0.73169 $6,629 $0.66150 $10,187 $0.73881 $5,098 
December 15, 2022 - March 14, 2023$0.71889 $6,513 $0.64871 $9,990 $0.72602 $5,010 
September 15, 2022 - December 14, 2022$0.64059 $5,804 $0.57040 $8,784 $0.56250 $3,881 
June 15, 2022 - September 14, 2022$0.54808 $4,966 $0.47789 $7,360 $0.56250 $3,881 
March 15, 2022 - June 14, 2022$0.47817 $4,332 $0.47657 $7,339 $0.56250 $3,881 
December 15, 2021 - March 14, 2022$0.43606 $3,951 $0.47657 $7,339 $0.56250 $3,881 

On October 25, 2023, our Board of Directors declared distributions with respect to the Series A, B and C Preferred Units to be paid on December 15, 2023.

14
NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Common Limited Partners
Issuance of Common Units. On August 11, 2023, we issued 14,950,000 common units representing limited partner interests at a price of $15.35 per unit for proceeds of approximately $222.0 million, net of approximately $7.5 million of issuance costs. We used these proceeds to repay outstanding borrowings under our Revolving Credit Agreement.

Distributions. 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. On October 25, 2023, our Board of Directors declared distributions with respect to our common units for the quarter ended September 30, 2023.

The following table summarizes information about cash distributions to our common limited partners applicable to the period in which the distributions were earned:
Quarter EndedCash Distributions
Per Unit		Total Cash
Distributions		Record DatePayment Date
(Thousands of Dollars)
September 30, 2023$0.40 $50,358 November 7, 2023November 14, 2023
June 30, 2023$0.40 $44,363 August 8, 2023August 14, 2023
March 31, 2023$0.40 $44,396 May 8, 2023May 12, 2023
December 31, 2022$0.40 $44,328 February 8, 2023February 14, 2023

Accumulated Other Comprehensive Income (Loss) (AOCI)
The balance of and changes in the components included in AOCI were as follows:
Three Months Ended September 30,
20232022
Foreign Currency TranslationCash Flow HedgesPension and Other Postretirement BenefitsTotalForeign Currency TranslationCash Flow HedgesPension and Other Postretirement BenefitsTotal
(Thousands of Dollars)
Balance as of July 1$746 $(33,360)$1,221 $(31,393)$(153)$(35,436)$3,417 $(32,172)
Other comprehensive (loss) income before reclassification adjustments(42)— — (42)15 — — 15 
Net gain on pension costs reclassified into other income, net
— — (737)(737)— — (422)(422)
Net loss on cash flow hedges reclassified into interest expense, net
— 725 — 725 — 525 — 525 
Other
— — (9)(9)— — (5)(5)
Other comprehensive (loss) income(42)725 (746)(63)15 525 (427)113 
Balance as of September 30$704 $(32,635)$475 $(31,456)$(138)$(34,911)$2,990 $(32,059)

15
NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Nine Months Ended September 30,
20232022
Foreign
Currency
Translation		Cash Flow
Hedges		Pension and
Other
Postretirement
Benefits		TotalForeign
Currency
Translation		Cash Flow
Hedges		Pension and
Other
Postretirement
Benefits		Total
(Thousands of Dollars)
Balance as of January 1$62 $(34,380)$2,713 $(31,605)$(41,761)$(36,486)$4,269 $(73,978)
Other comprehensive income before reclassification adjustments642 — — 642 1,977 — — 1,977 
Sale of Point Tupper Terminal Operations reclassified into net income (Note 2)
— — — — 39,646 — — 39,646 
Net gain on pension costs reclassified into other income, net
— — (2,210)(2,210)— — (1,262)(1,262)
Net loss on cash flow hedges reclassified into interest expense, net
— 1,745 — 1,745 — 1,575 — 1,575 
Other
— — (28)(28)— — (17)(17)
Other comprehensive income (loss)642 1,745 (2,238)149 41,623 1,575 (1,279)41,919 
Balance as of September 30$704 $(32,635)$475 $(31,456)$(138)$(34,911)$2,990 $(32,059)

As of September 30, 2023, we expect to reclassify a loss of $3.5 million to “Interest expense, net” within the next 12 months associated with unwound forward-starting interest rate swaps.

8. NET INCOME (LOSS) PER COMMON UNIT

Basic and diluted 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 and, from June 15, 2023 to their redemption on September 12, 2023, the Series D Preferred Units. 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.

The Series D Preferred Units contained certain unitholder conversion and redemption features, and we used the if-converted method to calculate the dilutive effect of the conversion or redemption feature that would have been most advantageous to the Series D preferred unitholders. The effect of the assumed conversion or redemption of the Series D Preferred Units outstanding, prior to their redemption and/or repurchase, was antidilutive for all periods presented; therefore, we did not include such conversion in the computation of diluted net (loss) income per common unit.

16
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 September 30,Nine Months Ended September 30,
 2023202220232022
 (Thousands of Dollars, Except Unit and Per Unit Data)
Net income$51,195 $59,633 $203,272 $131,144 
Distributions to preferred limited partners
(26,535)(32,463)(91,394)(95,078)
Distributions to common limited partners(50,358)(44,125)(139,117)(132,418)
Distribution equivalent rights to restricted units(651)(614)(1,990)(1,864)
Distributions in excess of income$(26,349)$(17,569)$(29,229)$(98,216)
Distributions to common limited partners$50,358 $44,125 $139,117 $132,418 
Allocation of distributions in excess of income to common limited partners(26,349)(17,569)(29,229)(98,216)
Series D Preferred Unit accretion(197)(4,890)(7,171)(14,205)
Series D Preferred Unit redemptions(32,475)— (64,542)— 
Net (loss) income attributable to common units$(8,663)$21,666 $38,175 $19,997 
Basic and diluted weighted-average common units outstanding119,218,622 110,310,921 113,698,898 110,265,359 
Basic and diluted net (loss) income per common unit$(0.07)$0.20 $0.34 $0.18 

9. SUPPLEMENTAL CASH FLOW INFORMATION

Changes in current assets and current liabilities were as follows:
 Nine Months Ended September 30,
 20232022
 (Thousands of Dollars)
Decrease (increase) in current assets:
Accounts receivable$(18,953)$(8,093)
Inventories(1,939)984 
Other current assets2,853 (3,055)
Increase (decrease) in current liabilities:
Accounts payable4,354 8,336 
Accrued interest payable40,705 40,271 
Accrued liabilities9,940 (7,610)
Taxes other than income tax4,602 2,006 
Changes in current assets and current liabilities$41,562 $32,839 

The above changes in current assets and current liabilities may 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 accrued compensation expense paid with fully vested common unit awards; and
•current assets and current liabilities disposed of during the period.

17
NUSTAR ENERGY L.P. AND SUBSIDIARIES
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
Other supplemental cash flow information is as follows:
 Nine Months Ended September 30,
 20232022
 (Thousands of Dollars)
Cash paid for interest, net of amount capitalized$131,112 $105,238 
Cash paid for income taxes, net of tax refunds received$2,980 $4,063 
Right-of-use assets obtained in exchange for operating lease liabilities$82,372 $10,050 
Right-of-use assets obtained in exchange for finance lease liabilities$2,806 $2,254 

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.