Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - NuStar GP Holdings, LLC | d8k.htm |
 9
th
Annual Wells Fargo Pipeline and MLP Symposium
Curt Anastasio, CEO and
President December 7, 2010
Exhibit 99.1 |
 Statements contained in this presentation that state management’s
expectations or predictions of the future are forward-looking statements as
defined
by
federal
securities
law.
The
words
“believe,”
“expect,”
“should,”
“targeting,”
“estimates,”
and other similar expressions identify forward-
looking
statements.
It
is
important
to
note
that
actual
results
could
differ
materially from those projected in such forward-looking statements. We
undertake no duty to update any forward-looking statement to conform the
statement to actual results or changes in the company’s expectations.
For more information concerning factors that could cause actual results to
differ from those expressed or forecasted, see NuStar
Energy L.P.’s and NuStar
GP
Holdings,
LLC’s
respective
annual
reports
on
Form
10-K
and
quarterly
reports on Form 10-Q, filed with the Securities and Exchange Commission
and
available
on
NuStar’s
websites
at
www.nustarenergy.com
and
www.nustargpholdings.com.
Forward Looking Statements
2 |
 NuStar Overview
3 |
 NuStar
Energy L.P. (NYSE: NS) is
a leading publicly traded
partnership with a market
capitalization of around $4.4 billion
and an enterprise value of
approximately $6.3 billion
NuStar
GP Holdings, LLC (NYSE:
NSH) holds the 2% general
partner interest, incentive
distribution rights and 15.6% of the
common units in NuStar
Energy
L.P. with a market capitalization of
around $1.5 billion
Two Publicly Traded Companies
NS
NSH
IPO Date:
4/16/2001
7/19/2006
Unit Price (11/29/10):
$67.43
$35.57
Annual Distribution/Unit:
$4.30
$1.92
Yield (11/29/10):
6.38%
5.40%
Debt Balance (9/30/10)
$1,991 million
$19.5 million
Market Capitalization:
$4,357 million
$1,513 million
Enterprise Value
$6,261 million
$1,526 million
Total Assets (9/30/10)
$5,191 million
$618 million
Debt/Cap. (9/30/10)
42.5%
n/a
Credit Ratings –
Moody’s
Baa3/Stable
n/a
S&P and Fitch
BBB-/Stable
n/a
83.1%
Membership Interest
82.4%
L.P. Interest
Public Unitholders
35.4 Million NSH Units
Public Unitholders
54.3 Million NS Units
16.9%
Membership
Interest
2.0% G.P. Interest
15.6% L.P. Interest
Incentive Distribution Rights
William E. Greehey
7.2 Million NSH Units
NYSE: NSH
NYSE: NS
4 |
 Large
and Diverse Geographic Footprint
with Assets in Key Locations
Asset Stats:
Operations in eight
different countries
including the U.S.,
Mexico, Netherlands,
Netherlands Antilles (i.e.
Caribbean), England,
Ireland, Scotland and
Canada
8,417 miles of crude oil
and refined product
pipelines
Own 88 terminal and
storage facilities
Over 93 million barrels of
storage capacity
2 asphalt refineries on
the U.S. East Coast
capable of processing
104,000 bpd of crude oil
5 |
 45%
35%
20%
Percentage of 2010 Projected
Segment Operating Income
Approximately 80% of NuStar Energy’s 2010 segment operating income is
projected to come from fee-based transportation and storage segments
Remainder of 2010 segment operating income is projected to relate to
margin- based asphalt and fuels marketing segment
Storage: 45%
Transportation: 35%
Refined Product Terminals
Crude Oil Storage
Refined Product Pipelines*
Crude Oil Pipelines
Asphalt & Fuels Marketing: 20%
Asphalt
Fuels Marketing
Product Supply, Bunkering and Fuel Oil
Marketing
Diversified Operations from Three
Business Segments
* Includes primarily distillates, gasoline, propane, jet fuel, ammonia and
other light products. Does not include natural gas. 6
|
 Increasing Distributable Cash Flows
7
NS Distributable Cash Flows ($ in Millions)
2001
2002
2003
2004
2005
2006
2007
2008
2009
$56
$68
$86
$102
$154
$214
$221
$319
$346 |
 Transportation Segment
Overview
8 |
 9
2010 Transportation Segment Results Should be Improved over 2009..
2011 EBITDA Expected to be slightly less than 2010
Transportation Segment EBITDA
(in Millions)
2010 Summary
EBITDA $5-$10 million higher than 2009.
Throughputs higher than 2009. Improving economy and customer turnaround
delayed into 2011.
July 1, 2010 tariff decrease 1.3%. Tariffs were 7.6% higher than 2009 for
the first half of 2010.
2011 Outlook
$1-$5 million of additional EBITDA from internal growth projects.
Recently announced Eagle Ford shale crude project to be completed in
mid-2011. Revised FERC Escalator in place July 1, 2011. Tariffs
projected to be up 4.5%. (Assumed 1.3% FERC Escalator)
Throughputs projected to be down 1.6%.
Segment EBITDA down slightly in 2011. |
 Transportation Segment Assets in close
proximity to key Shale Formations
Transportation Segment Assets in close
proximity to key Shale Formations
Shale Development Strategy
Our strategy is to optimize and grow the existing asset base, and maximize the
value of the assets located in or near shale developments
10
There are four key shale developments located in NuStar’s Mid-Continent and Gulf
Coast regions, including the Bakken, Niobrara, Barnett, and Eagle Ford
developments
|
 11
Recently announced agreement with Koch
Pipeline first NuStar project in Eagle Ford Shale
Companies agreed to a pipeline connection and capacity lease
agreement
Allows NuStar to reactivate a 60-mile pipeline that has been idle
since November 2005
Project connects our existing Pettus, Texas to Corpus Christi
pipeline segment to Koch’s existing pipeline
Initial capacity agreement for 30 thousand barrels per day, could
grow to 50 thousand barrels per day
Project cost $5 to $10 million
Expected in-service date mid-2011 |
 Storage Segment Overview
12 |
 2010
Storage Segment Results Should be Improved over 2009
..2011 EBITDA Expected to be Higher than
2010 due to Benefits from Internal Growth Program
13
Storage Segment EBITDA
(in Millions)
2010 Summary
EBITDA should be $14-$18 million higher than 2009.
Storage tank renewals and escalations increased revenues significantly during the
year. Two
acquisitions
should
be
closed
during
the
year.
(Mobile,
AL.
and
Mersin,
Turkey)
St. Eustatius terminal reconfiguration project and Texas City Strategic Ike
project should be completed in Dec. 2010.
2011 Outlook
Demand for storage should remain strong
Internal growth projects should increase EBITDA by $30 to $40 million
St. James storage expansion project to be completed in August 2011 through January
2012. Full year of EBITDA from two acquisitions, St. Eustatius and
Texas City 2010 projects. 2006
2007
2008
2009
$162
$177
$208
$242 |
 Plan
to expand our St. James, Louisiana terminal in two phases
Phase 1 –
Third-Party Crude Oil Storage
Construct 3.1 million barrels of crude oil storage
Projected
CAPEX
of
$110
to
$130
million,
with
projected
average
annual
EBITDA of $15 to $25 million
Expected in-service August 2011 through January 2012
Phase 2 –
Third-Party Crude Oil Storage
Project in early planning stages
Should be similar in size to Phase 1 project
Could grow in size based on customer demand
Expected in-service in 2013
14 |
 Plan
to convert existing tanks and construct new tanks for distillate service at
our St. Eustatius terminal
Conversion Project
Convert 600,000 barrels of storage from fuel oil to distillate service
to capture higher storage fees
Expansion Project
Construct 900,000 barrels of new storage for distillate service
Interested customers include several national oil companies
Combined conversion and expansion projected CAPEX of $40 to $50
million, with projected average annual EBITDA of $5 to $10 million
Expected in-service by February 2012 (Conversion Project) and
September 2012 (Expansion Project)
15 |
 Joint Venture (JV) Overview
NuStar entered into a $50-$60 million
JV agreement with S-Oil and Aves
Oil, two Turkish companies
The JV should own 100% of two
terminals in Mersin and land in
Giresun and Ceyhan
NuStar should own 75% of the JV
and operate the terminals
Both terminals connect via pipeline
to an offshore platform (SAVKA) 5
km off the Turkish coastline
The JV should own 67% of SAVKA
Upon Projected December Closing, Acquired Assets
in Turkey Provide Platform for Internal Growth
Growth Opportunities
Expansion project under development at Mersin
Expands existing storage by about 70 percent
Potential to tie into NATO Pipeline
Provides access to markets for military fuels
New terminal at Giresun
37-acre site with access to Black Sea ports
200,000 barrel fuel oil terminal under development
Second phase build-out to 1.9 million barrels under
evaluation
New terminal at Ceyhan
Ceyhan is the destination for pipelines delivering
crude from northern Iraq and the Caspian area to
the Mediterranean
173 acre property is well-suited for building up to
6.3 million barrels of storage and marine jetty
16 |
 Asphalt & Fuels Marketing
Segment Overview
17 |
 $3.78
$8.75
$6.37
Improved Earnings in Bunkering, Heavy Fuels, Product and Crude Trading
Operations
Should
cause
Segment
Results
to
be
higher
in
2010…
Segment Should See Slightly Improved Results in 2011
Asphalt & Fuels Marketing
U.S. East Coast Product Margin ($ per barrel)
18
2009
Actual
2008
Actual
2000-2007
Average
2010 Summary
Asphalt results expected to be comparable to 2009.
Due to weak demand in the residential and commercial real estate markets,
private sector industry asphalt demand was down substantially in 2010
Higher refinery margins increased refinery utilization rates higher than expected,
causing VTB and asphalt supply to increase during the year.
During the 3
quarter, pipeline disruptions of Canadian crude reduced heavy crude runs in
the Northeast reducing asphalt supply.
Fuels Marketing portion of segment will be $25 to $35 million higher than
2009. Increased
Bunker
Marketing
earnings
at
St.
Eustatius
as
well
as
higher
sales
volumes
and
increased
margins
at
our Texas City facility contributed to this increase in earnings.
Increased Fuel Oil Trading business at Texas City, also expected to contribute to
year over year increase. 2011 Outlook
Tighter
Asphalt
supply
in
the
last
half
of
2011,
due
to
Conoco
Wood
River coker
coming
on-line,
should
cause
asphalt
operations EBITDA to be improved.
Other operations in this segment should realize comparable results to 2010.
2006
2007
2008
2009
$27
$22
$37
$10
$90
$70
Asphalt
Fuels Marketing
$127
$80
EBITDA (in Millions)
rd |
 19
Working to Diversify our Crude Slate from Dependence on
Venezuelan crudes
Current PDV contract ends in the first quarter of 2015
Recently entered into a 10 thousand barrel per day contract to
purchase offshore Brazilian Peregrino crude oil from Statoil.
3-year contract becomes effective late 2011 or early 2012.
Mid-Continent and Gulf Coast Asphalt Marketing dependent on
purchases of finished asphalt and asphalt component blending
Strategy is to negotiate asphalt off-take agreement with regional
suppliers to reduce supply cost and assure availability
Supply Initiatives for Asphalt Operations:
Address Crude Availability/Price and Asphalt Supply Cost
|
 Financial Overview
20 |
 21
9/30/10 Revolver Availability
NuStar
Revolver Availability has increased due to
Equity Issuances and Senior Note Issuance –
Credit Ratings and Metrics have Improved as a Result
Total Bank Credit
$1,210
Less:
Borrowings
(138)
Letters of Credit
Go Zone Financing
(157)
Other
(10)
Revolver Availability
$905
Standard & Poor’s: BBB-
(Stable
Outlook)
Moody’s: Baa3 (Stable Outlook)
Fitch: BBB-
(Stable Outlook)
Debt/EBITDA (9/30/10): 4.6x
Debt/Capitalization (9/30/10): 42.5%
Credit Ratings/Metrics
(Dollars in Millions)
5.0x Revolver Debt/EBITDA covenant limits true Revolver availability to
~$200 million at 9/30/10
All
three
Rating
Agencies
upgraded
NuStar
to
Stable
Outlook
from
Negative Outlook during 2010 |
 $1.2 billion Credit
Facility $138
NuStar
Logistics Notes (4.80%)
452
NuStar
Logistics Notes (7.65%)
349
NuStar
Logistics Notes (6.875%)
104
NuStar
Logistics Notes (6.05%)
239
NuStar
Pipeline Notes(5.875%)
256
NuStar
Pipeline Notes (7.75%)
261
Other Debt
192
Total Debt
$1,991
(Dollars in Millions)
No Significant Debt Maturities Until 2012
2010
$0.8
2011
$0.8
2012
$536*
2013
$496
2014
$0
Thereafter
$957
* Primarily includes maturity of $138 million revolver
balance and $366 million of senior notes
9/30/10 Debt Structure
9/30/10 Debt Structure Maturities
22
No significant debt maturities until 2012 at which time the revolver and some
senior notes become due
New Credit Revolver terms and pricing seem to be improving as economy
improves
Current plan is to hold off closing on a new Revolver until 2012
Debt
structure
approximately
50%
fixed
rate
–
50%
variable
rate |
 $11
$20
$13
$8
$128
$107
$153
$218
$3
$14
$20
$19
$36
$80
2008 Actual
2009 Actual
2010 Forecast
2011 Forecast
Corporate
Asphalt & Fuels Marketing
Storage
Transportation
Majority of 2011 Internal Growth Capital
Will to be spent in the Storage Segment
23
(
Dollars in Millions)
Annual Internal Growth Spending By Business Segment
$146
$222
$325
$164
$23
$4 |
 24
All Three Segments see EBITDA growth in
2010…. Total NuStar
EBITDA should be higher in 2011
EBITDA Guidance Summary
Transportation
up
$5
to
$10
million
in
2010.
Down
slightly
in
2011.
Storage up $14 to $18 million in 2010. Internal growth projects should
add $30 to $40 million to 2011 EBITDA.
Asphalt & Fuels Marketing
Asphalt Refining & Marketing operations for 2010 comparable to
2009. 2011 results should be slightly higher than 2010.
Fuels Marketing 2010 results should be $25 to $35 million higher
than 2009. 2011 results comparable to 2010.
2010
NuStar
EBITDA
projected
to
be
in
the
$480
to
$500
million
range.
2011 EBITDA higher, mostly driven by storage internal growth
projects. |
 25
Large internal growth program continues …
NS distribution increase should be higher in 2011
Capital Spending Summary
Reliability capital spending should be $50 to $55 million in 2010 and 2011
Strategic capital spending should be $215 to $225 million in 2010 and
$320 to $330 million in 2011
NS Distribution Growth for 2011 should be higher than 2010
No plans to issue equity or additional debt in the remainder of 2010 and 2011
Plans could change if NuStar closes on a large acquisition
|
 |
 27
Appendix |
 28
Reconciliation of Non-GAAP Financial Information:
EBITDA and Distributable Cash Flow
The following is a reconciliation of net income to EBITDA and distributable cash flow:
2001
2002
2003
2004
2005
2006
2007
2008
2009
Net income
45,873
$
55,143
$
69,593
$
78,418
$
107,675
$
149,906
$
150,298
$
254,018
$
224,875
$
Plus interest expense, net
3,811
4,880
15,860
20,950
41,388
66,266
76,516
90,818
79,384
Plus income tax expense
-
395
-
-
4,713
5,861
11,448
11,006
10,531
Plus depreciation and amortization expense
13,390
16,440
26,267
33,149
64,895
100,266
114,293
135,709
145,743
EBITDA
63,074
76,858
111,720
132,517
218,671
322,299
352,555
491,551
460,533
Less equity earnings from joint ventures
3,179
3,188
2,416
1,344
2,319
5,882
6,833
8,030
9,615
Less interest expense, net
3,811
4,880
15,860
20,950
41,388
66,266
76,516
90,818
79,384
Less reliability capital expenditures
2,786
3,943
10,353
9,701
23,707
35,803
40,337
55,669
45,163
Less income tax expense
-
-
-
-
4,713
5,861
11,448
11,006
10,531
Plus mark-to-market impact on hedge transactions
-
-
-
-
-
-
3,131
(9,784)
19,970
Plus charges reimbursed by general partner
-
-
-
-
-
575
-
-
-
Plus distributions from joint ventures
2,874
3,590
2,803
1,373
4,657
5,141
544
2,835
9,700
Plus other non-cash items
-
-
-
-
2,672
-
-
-
-
Distributable cash flow
56,172
$
68,437
$
85,894
$
101,895
$
153,873
$
214,203
$
221,096
$
319,079
$
345,510
$
Note: 2005 and 2006 distributable cash flow and EBITDA are from continuing operations.
Year Ended December 31,
NuStar Energy L.P. utilizes two financial measures, EBITDA and distributable cash flow, which are not
defined in United States generally accepted accounting principles (GAAP). Management uses these
financial measures because they are a widely accepted financial indicators used by investors to compare
partnership performance. In addition, management believes that these measures provide investors an
enhanced perspective of the operating performance of the partnership's assets and the cash that
the business is generating. Neither EBITDA nor distributable cash flow are intended to represent cash flows for the
period, nor are they presented as an alternative to net income. They should not be considered in
isolation or as a substitute for a measure of performance prepared in accordance with
GAAP. (Unaudited, Dollars in Thousands) |
 29
Reconciliation of Non-GAAP Financial Information:
EBITDA
(Unaudited, Dollars in Thousands)
Projected net income range
Plus projected interest expense range
Plus projected income tax expense range
Plus projected depreciation and
amortization expense range
Projected EBITDA range
December 31, 2010
$ 236,000 -
253,000
77,000 -
78,000
14,000 -
15,000
153,000 -
154,000
$ 480,000 -
500,000
Year Ended
NuStar
Energy L.P. utilizes EBITDA, which is not defined in United States generally
accepted accounting principles. Management uses this financial
measure
because
it
is
a
widely
accepted
financial
indicator
used
by
investors
to
compare
partnership
performance.
In
addition,
management
believes
that this measure provides investors an enhanced perspective of the operating
performance of the partnership's assets and the cash that the business is
generating. EBITDA is not intended to represent cash flows for the period or as an
alternative to net income. EBITDA should not be considered in isolation or
as a substitute for a measure of performance prepared in accordance with United States generally accepted accounting principles. |
 Reconciliation of Non-GAAP Financial Information:
Transportation Segment
30
(Unaudited, Dollars in Thousands)
The following is a reconciliation of operating income to EBITDA for the
Transportation Segment: 2006
2007
2008
2009
Operating income
122,714
$
126,508
$
135,086
$
139,869
$
Plus depreciation and amortization expense
47,145
49,946
50,749
50,528
EBITDA
169,859
$
176,454
$
185,835
$
190,397
$
Projected incremental operating income range
$ 5,000 -
9,000
Plus projected incremental depreciation and
amortization expense range
0 -
1,000
Projected incremental adjusted EBITDA range
$ 5,000 -
10,000
Projected incremental operating income range
$ 1,000 -
4,000
Plus projected incremental depreciation and
amortization expense range
0 -
1,000
Projected incremental adjusted EBITDA range
$ 1,000 -
5,000
The
following
is
a
reconciliation
of
projected
incremental
operating
income
to
projected
incremental
adjusted
EBITDA
related
to
our
internal
growth
program for the year ended December 31, 2011 compared to the year ended December
31, 2010: Transportation
Segment
Year Ended December 31,
The following is a reconciliation of projected incremental operating income to
projected incremental adjusted EBITDA for the year ended December 31, 2010:
Transportation
Segment
EBITDA in the following reconciliations relate to our reportable segments or a portion of a
reportable segment. We do not allocate general and administrative expenses to our reportable
segments because those expenses relate primarily to the overall management at the entity level. Therefore,
EBITDA reflected in the following reconciliations excludes any allocation of general and
administrative expenses consistent with our policy for determining segmental operating income,
the most directly comparable GAAP measure. EBITDA should not be considered in isolation or as a substitute for a measure
of performance prepared in accordance with GAAP. |
 Reconciliation of Non-GAAP Financial Information:
Storage Segment
31
The following is a reconciliation of operating income to EBITDA for the Storage Segment:
2006
2007
2008
2009
Operating income
108,486
$
114,635
$
141,079
$
171,245
$
Plus depreciation and amortization expense
53,121
62,317
66,706
70,888
EBITDA
161,607
$
176,952
$
207,785
$
242,133
$
Projected incremental operating income range
$ 8,000 - 11,000
Plus projected incremental depreciation and
amortization expense range
6,000 - 7,000
Projected incremental adjusted EBITDA range
$ 14,000 - 18,000
Projected incremental operating income range
$ 26,000 - 33,000
Plus projected incremental depreciation and
amortization expense range
4,000 - 7,000
Projected incremental adjusted EBITDA range
$ 30,000 - 40,000
The
following
is
a
reconciliation
of
projected
incremental
operating
income
to
projected
incremental
adjusted
EBITDA
related
to
our
internal
growth
program for the year ended December 31, 2011 compared to the year ended December 31, 2010:
Storage
Segment
Year Ended December 31,
The following is a reconciliation of projected incremental operating income to projected incremental
adjusted EBITDA for the year ended December 31, 2010: Storage
Segment
(Unaudited, Dollars in Thousands)
EBITDA in the following reconciliations relate to our reportable segments or a portion of a
reportable segment. We do not allocate general and administrative expenses to our reportable
segments because those expenses relate primarily to the overall management at the entity level. Therefore,
EBITDA reflected in the following reconciliations excludes any allocation of general and
administrative expenses consistent with our policy for determining segmental operating income,
the most directly comparable GAAP measure. EBITDA should not be considered in isolation or as a
substitute for a measure of performance prepared in accordance with GAAP.
|
 Reconciliation of Non-GAAP Financial Information:
Internal Growth Program
St. James, LA
Terminal
Expansion Phase 1
St. Eustatius
Distillate Project
Projected annual operating income range
$ 11,000 - 20,000
$ 4,000 - 8,000
Plus projected annual depreciation and
amortization expense range
4,000 - 5,000
1,000 - 2,000
Projected annual adjusted EBITDA range
$ 15,000 - 25,000
$ 5,000 - 10,000
The
following
is
a
reconciliation
of
projected
annual
operating
income
to
projected
annual
adjusted
EBITDA
for
certain
projects
in
our
storage
segment
related to our internal growth program:
32
EBITDA in the following reconciliations relate to our reportable segments or a portion of a
reportable segment. We do not allocate general and administrative expenses to our reportable
segments because those expenses relate primarily to the overall management at the entity level. Therefore,
EBITDA reflected in the following reconciliations excludes any allocation of general and
administrative expenses consistent with our policy for determining segmental operating income,
the most directly comparable GAAP measure. EBITDA should not be considered in isolation or as a substitute for a
measure of performance prepared in accordance with GAAP.
(Unaudited, Dollars in Thousands) |
 Reconciliation of Non-GAAP Financial Information:
Asphalt & Fuels Marketing Segment
33
The following is a reconciliation of operating income to EBITDA for the asphalt and fuels marketing
segment: 2006
2007
2008
2009
Operating income
26,915
$
21,111
$
112,506
$
60,629
$
Plus depreciation and amortization expense
-
423
14,734
19,463
EBITDA
26,915
$
21,534
$
127,240
$
80,092
$
Fuels Marketing
Operations
Asphalt Operations
Asphalt and Fuels
Marketing Segment
Projected incremental operating income range
$ 25,000 - 35,000
-
$
$ 25,000 - 35,000
Plus projected incremental depreciation and
amortization expense range
-
-
-
Projected incremental adjusted EBITDA range
$ 25,000 - 35,000
-
$
$ 25,000 - 35,000
The
following
is
a
reconciliation
of
projected
incremental
operating
income
to
projected
incremental
adjusted
EBITDA
for
the
asphalt
and
fuels
marketing
segment:
Year Ended December 31,
EBITDA in the following reconciliations relate to our reportable segments or a portion of a
reportable segment. We do not allocate general and administrative expenses to our reportable
segments because those expenses relate primarily to the overall management at the entity level. Therefore, EBITDA reflected in
the following reconciliations excludes any allocation of general and administrative expenses
consistent with our policy for determining segmental operating income, the most directly
comparable GAAP measure. EBITDA should not be considered in isolation or as a substitute for a measure of performance
prepared in accordance with GAAP.
(Unaudited, Dollars in Thousands) |