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FAIR VALUE MEASUREMENTS | 3 Months Ended
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Mar. 31, 2014
Fair Value Disclosures [Abstract] |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS We segregate the inputs used in measuring fair value into three levels: Level 1, defined as observable inputs such as quoted prices for identical assets or liabilities in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable, such as quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in markets that are not active; and Level 3, defined as unobservable inputs in which little or no market data exists. We consider counterparty credit risk and our own credit risk in the determination of all estimated fair values. Recurring Fair Value Measurements The following assets and liabilities are measured at fair value on a recurring basis:
| March 31, 2014
| Level 1 |  | Level 2 |  | Level 3 |  | Total
| (Thousands of Dollars)
Other current assets: |  |  |  |  |  |  |
Product imbalances | $ | 2,470 |  |  | $ | — |  |  | $ | — |  |  | $ | 2,470 |
Commodity derivatives | 579 |  |  | 4,695 |  |  | — |  |  | 5,274 |
Other long-term assets, net: |  |  |  |  |  |  |
Commodity derivatives | — |  |  | 794 |  |  | — |  |  | 794 |
Accrued liabilities: |  |  |  |  |  |  |
Product imbalances | (2,157 | ) |  | — |  |  | — |  |  | (2,157 | )
Commodity derivatives | — |  |  | (2,574 | ) |  | — |  |  | (2,574 | )
Contingent consideration | — |  |  | — |  |  | (1,318 | ) |  | (1,318 | )
Other long-term liabilities: |  |  |  |  |  |  |
Commodity derivatives | — |  |  | (411 | ) |  | — |  |  | (411 | )
Guarantee liability | — |  |  | — |  |  | (2,620 | ) |  | (2,620 | )
Total | $ | 892 |  |  | $ | 2,504 |  |  | $ | (3,938 | ) |  | $ | (542 | )
| December 31, 2013
| Level 1 |  | Level 2 |  | Level 3 |  | Total
| (Thousands of Dollars)
Other current assets: |  |  |  |  |  |  |
Product imbalances | $ | 1,980 |  |  | $ | — |  |  | $ | — |  |  | $ | 1,980 |
Commodity derivatives | — |  |  | 4,948 |  |  | — |  |  | 4,948 |
Other long-term assets, net: |  |  |  |  |  |  |
Commodity derivatives | — |  |  | 6,977 |  |  | — |  |  | 6,977 |
Accrued liabilities: |  |  |  |  |  |  |
Product imbalances | (2,190 | ) |  | — |  |  | — |  |  | (2,190 | )
Commodity derivatives | (1,433 | ) |  | (800 | ) |  | — |  |  | (2,233 | )
Contingent consideration | — |  |  | — |  |  | (1,318 | ) |  | (1,318 | )
Other long-term liabilities: |  |  |  |  |  |  |
Commodity derivatives | — |  |  | (1,575 | ) |  | — |  |  | (1,575 | )
Guarantee liability | — |  |  | — |  |  | (1,880 | ) |  | (1,880 | )
Total | $ | (1,643 | ) |  | $ | 9,550 |  |  | $ | (3,198 | ) |  | $ | 4,709 |
Product Imbalances. We value our assets and liabilities related to product imbalances using quoted market prices in active markets as of the reporting date. Commodity Derivatives. We base the fair value of certain of our commodity derivative instruments on quoted prices on an exchange; accordingly, we include these items in Level 1 of the fair value hierarchy. We also have derivative instruments for which we determine fair value using industry pricing services and other observable inputs, such as quoted prices on an exchange for similar derivative instruments. Therefore, we include these derivative instruments in Level 2 of the fair value hierarchy. See Note 7 for a discussion of our derivative instruments. Contingent Consideration. On December 13, 2012, NuStar Logistics acquired certain assets, including 100% of the partnership interest in TexStar Crude Oil Pipeline, LP, from TexStar Midstream Services, LP and certain of its affiliates (collectively, TexStar) for approximately $325.0 million (the TexStar Asset Acquisition), including contingent consideration. In connection with the TexStar Asset Acquisition, we could be obligated to pay additional consideration to TexStar. Such obligations are dependent upon the cost of work required to complete certain assets and obtain outstanding real estate rights (collectively, the Contingent Consideration). We estimated the fair value of the Contingent Consideration based on significant inputs not observable in the market and have therefore reported that amount within Level 3 of the fair value hierarchy. Based on our assessment of the costs necessary to complete the assets in accordance with our agreement with TexStar, and considering the probability of possible outcomes, we determined that it is unlikely we would be obligated to pay a portion of the Contingent Consideration. The undiscounted amount of potential future payments that we could be required to make under the applicable agreements is between $0 and $1.3 million. Guarantees. As of March 31, 2014, we recorded a liability of $2.6 million representing the fair value of guarantees we have issued on behalf of Asphalt JV. We estimated the fair value considering the probability of default by Asphalt JV and an estimate of the amount we would be obligated to pay under the guarantees at the time of default. We calculated the fair value based on the guarantees outstanding as of March 31, 2014, totaling $111.0 million, plus two guarantees that do not specify a maximum amount, but for which we believe any amounts due would be minimal. Our estimate of the fair value is based on significant inputs not observable in the market and thus falls within Level 3 of the fair value hierarchy. See Note 8 for a discussion of our agreements with Asphalt JV. In the event we are obligated to perform under any of these guarantees, the amount paid by us will be treated as additional borrowings under the NuStar JV Term Loan. As a result, we increased the carrying value of the note receivable from Asphalt JV by the same amount as the liability for the fair value of the guarantees outstanding as of March 31, 2014. The following table summarizes the activity in our Level 3 liabilities:
| Three Months Ended March 31, 2014
| (Thousands of Dollars)
Beginning balance | $ | 3,198 |
Adjustment to guarantee liability | 740 |
Ending balance | $ | 3,938 |
Non-recurring Fair Value Measurements We reclassified the property, plant and equipment associated with certain terminals as “Assets held for sale” on the consolidated balance sheet and recorded those assets at fair value, less costs to sell. We estimated the fair values of $19.9 million and $22.0 million as of March 31, 2014 and December 31, 2013, respectively, using a weighted-average of values calculated using an income approach and a market approach. The income approach calculates fair value by discounting the estimated net cash flows generated by the related terminal. The market approach involves estimating the fair value measurement on an earnings multiple based on public company transaction data. Our estimate of the fair value is based on significant inputs not observable in the market and thus falls within Level 3 of the fair value hierarchy. Fair Value of Financial Instruments We recognize cash equivalents, receivables, note receivables, payables and debt in our consolidated balance sheets at their carrying amounts. The fair values of these financial instruments, except for a note receivable from Asphalt JV and debt, approximate their carrying amounts. The estimated fair value and carrying amounts of the debt and note receivable were as follows:
| March 31, 2014 |  | December 31, 2013
| Fair Value |  | Carrying Amount |  | Fair Value |  | Carrying Amount
| (Thousands of Dollars)
Debt | $ | 2,764,360 |  |  | $ | 2,710,117 |  |  | $ | 2,636,734 |  |  | $ | 2,655,553 |
Note receivable from Asphalt JV | $ | 144,949 |  |  | $ | 171,275 |  |  | $ | 133,416 |  |  | $ | 165,440 |
We estimated the fair value of our publicly-traded senior notes based upon quoted prices in active markets; therefore, we determined that the fair value of our publicly traded senior notes falls in Level 1 of the fair value hierarchy. For our other debt, for which a quoted market price is not available, we 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 note receivable related to the NuStar JV Term Loan is recorded at: (i) the outstanding principal amount of $190.0 million; (ii) plus the fair value of guarantees of $2.6 million; and (iii) reduced by equity losses from our investment in Asphalt JV of $21.3 million incurred after the carrying value of our investment in Asphalt JV was reduced to zero. We review the financial information of Asphalt JV monthly for possible non-payment indicators. We estimated the fair value of the note receivable using discounted cash flows, which use observable inputs such as time to maturity and market interest rates, and determined the fair value falls in Level 2 of the fair value hierarchy. See Note 8 for additional information on the note receivable from Asphalt JV.

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- Definition The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13537-108611 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13433-108611 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 28 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14064-108612 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=25499696&loc=d3e19207-110258 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6957238&loc=d3e14172-108612 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 10 -Section 50 -Paragraph 16 -URI http://asc.fasb.org/extlink&oid=28364263&loc=d3e13504-108611 + Details
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