PARTNERS’ EQUITY

Partners’ Equity Activity

The following table summarizes changes in the carrying amount of equity attributable to NuStar Energy L.P. partners and noncontrolling interest:



	Three Months Ended March 31, 2012									Three Months Ended March 31, 2011
	NuStar Energy L.P. Partners’ Equity			Noncontrolling Interest			Total Partners’ Equity			NuStar Energy L.P. Partners’ Equity			Noncontrolling Interest		Total Partners’ Equity
	(Thousands of Dollars)
Beginning balance	$	2,852,201		$	12,134		$	2,864,335		$	2,702,700		$	—	$	2,702,700
Acquisition	—			—			—			—			15,000		15,000
Net income	26,351			(97		)	26,254			28,502			14		28,516
Other comprehensive income (loss):
Foreign currency translation adjustment	7,911			1,119			9,030			8,553			552		9,105
Net unrealized (loss) gain on cash flow hedges	(53,823		)	—			(53,823		)	2,878			—		2,878
Net loss reclassified into income on cash flow hedges	7,767			—			7,767			—			—		—
Total other comprehensive (loss) income	(38,145		)	1,119			(37,026		)	11,431			552		11,983
Cash distributions to partners	(89,076		)	—			(89,076		)	(79,616		)	—		(79,616		)
Other	(269		)	—			(269		)	—			—		—
Ending balance	$	2,751,062		$	13,156		$	2,764,218		$	2,663,017		$	15,566	$	2,678,583

Allocations of Net Income

Our partnership agreement, as amended, sets forth the calculation to be used to determine the amount and priority of cash distributions that the common unitholders and the general partner will receive. The partnership agreement also contains provisions for the allocation of net income and loss to the unitholders and the general partner. For purposes of maintaining partner capital accounts, the partnership agreement specifies that items of income and loss shall be allocated among the partners in accordance with their respective percentage interests. Normal allocations according to percentage interests are made after giving effect to priority income allocations, if any, in an amount equal to incentive cash distributions allocated 100% to the general partner. The following table details the calculation of net income applicable to the general partner:



	Three Months Ended March 31,
	2012			2011
	(Thousands of Dollars)
Net income attributable to NuStar Energy L.P.	$	26,351		$	28,502
Less general partner incentive distribution	9,816			8,568
Net income after general partner incentive distribution	16,535			19,934
General partner interest	2		%	2		%
General partner allocation of net income after general partner incentive distribution	331			398
General partner incentive distribution	9,816			8,568
Net income applicable to general partner	$	10,147		$	8,966

Cash Distributions

On February 10, 2012, we paid a quarterly cash distribution totaling $89.1 million, or $1.095 per unit, related to the fourth quarter of 2011. On April 25, 2012, we announced a quarterly cash distribution of $1.095 per unit related to the first quarter of 2012. This distribution will be paid on May 11, 2012 to unitholders of record on May 8, 2012 and will total $89.1 million.

The following table reflects the allocation of total cash distributions to the general and limited partners applicable to the period in which the distributions were earned:



	Three Months Ended March 31,
	2012		2011
	(Thousands of Dollars, Except Per Unit Data)
General partner interest	$	1,782	$	1,592
General partner incentive distribution	9,816		8,568
Total general partner distribution	11,598		10,160
Limited partners’ distribution	77,478		69,456
Total cash distributions	$	89,076	$	79,616

Cash distributions per unit applicable to limited partners	$	1.095	$	1.075