| CONDENSED CONSOLIDATING FINANCIAL STATEMENTS |
CONDENSED CONSOLIDATING FINANCIAL STATEMENTS
NuStar Energy has no operations, and its assets consist mainly of its 100% 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. As a result, the following condensed consolidating financial statements are presented as an alternative to providing separate financial statements for NuStar Logistics and NuPOP. Condensed Consolidating Balance Sheets September 30, 2018 (Thousands of Dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | NuStar Energy | | NuStar Logistics | | NuPOP | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated | Assets | | | | | | | | | | | | Cash and cash equivalents | $ | 1,164 |
| | $ | 4,238 |
| | $ | — |
| | $ | 19,177 |
| | $ | — |
| | $ | 24,579 |
| Receivables, net | — |
| | 82 |
| | — |
| | 164,686 |
| | — |
| | 164,768 |
| Inventories | — |
| | 1,875 |
| | 6,822 |
| | 16,064 |
| | — |
| | 24,761 |
| Other current assets | 122 |
| | 16,961 |
| | 1,284 |
| | 44,399 |
| | — |
| | 62,766 |
| Intercompany receivable | 187,967 |
| | 2,726,465 |
| | — |
| | — |
| | (2,914,432 | ) | | — |
| Total current assets | 189,253 |
| | 2,749,621 |
| | 8,106 |
| | 244,326 |
| | (2,914,432 | ) | | 276,874 |
| Property, plant and equipment, net | — |
| | 1,846,330 |
| | 619,284 |
| | 2,019,234 |
| | — |
| | 4,484,848 |
| Intangible assets, net | — |
| | 51,463 |
| | — |
| | 694,449 |
| | — |
| | 745,912 |
| Goodwill | — |
| | 149,453 |
| | 170,652 |
| | 774,556 |
| | — |
| | 1,094,661 |
| Investment in wholly owned subsidiaries | 2,793,521 |
| | 29,961 |
| | 1,450,865 |
| | 849,825 |
| | (5,124,172 | ) | | — |
| Other long-term assets, net | 303 |
| | 77,144 |
| | 26,861 |
| | 14,355 |
| | — |
| | 118,663 |
| Total assets | $ | 2,983,077 |
| | $ | 4,903,972 |
| | $ | 2,275,768 |
| | $ | 4,596,745 |
| | $ | (8,038,604 | ) | | $ | 6,720,958 |
| Liabilities, Mezzanine Equity and Partners’ Equity | | | | | | | | | | | | Accounts payable | $ | 13,636 |
| | $ | 26,423 |
| | $ | 5,935 |
| | $ | 108,218 |
| | $ | — |
| | $ | 154,212 |
| Short-term debt | — |
| | 10,500 |
| | — |
| | — |
| | — |
| | 10,500 |
| Accrued interest payable | — |
| | 30,785 |
| | — |
| | 60 |
| | — |
| | 30,845 |
| Accrued liabilities | 929 |
| | 16,608 |
| | 7,971 |
| | 71,790 |
| | — |
| | 97,298 |
| Taxes other than income tax | 63 |
| | 7,152 |
| | 5,893 |
| | 6,587 |
| | — |
| | 19,695 |
| Income tax payable | — |
| | 364 |
| | — |
| | 4,212 |
| | — |
| | 4,576 |
| Intercompany payable | — |
| | — |
| | 1,393,208 |
| | 1,521,224 |
| | (2,914,432 | ) | | — |
| Total current liabilities | 14,628 |
| | 91,832 |
| | 1,413,007 |
| | 1,712,091 |
| | (2,914,432 | ) | | 317,126 |
| Long-term debt, less current portion | — |
| | 3,313,528 |
| | — |
| | 63,324 |
| | — |
| | 3,376,852 |
| Deferred income tax liability | — |
| | 1,262 |
| | 12 |
| | 22,069 |
| | — |
| | 23,343 |
| Other long-term liabilities | — |
| | 45,099 |
| | 13,124 |
| | 38,688 |
| | — |
| | 96,911 |
| Series D preferred units | 559,844 |
| | — |
| | — |
| | — |
| | — |
| | 559,844 |
| Total partners’ equity | 2,408,605 |
| | 1,452,251 |
| | 849,625 |
| | 2,760,573 |
| | (5,124,172 | ) | | 2,346,882 |
| Total liabilities, mezzanine equity and partners’ equity | $ | 2,983,077 |
| | $ | 4,903,972 |
| | $ | 2,275,768 |
| | $ | 4,596,745 |
| | $ | (8,038,604 | ) | | $ | 6,720,958 |
|
Condensed Consolidating Balance Sheets December 31, 2017 (Thousands of Dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | NuStar Energy | | NuStar Logistics | | NuPOP | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated | Assets | | | | | | | | | | | | Cash and cash equivalents | $ | 885 |
| | $ | 29 |
| | $ | — |
| | $ | 23,378 |
| | $ | — |
| | $ | 24,292 |
| Receivables, net | — |
| | 280 |
| | — |
| | 176,495 |
| | — |
| | 176,775 |
| Inventories | — |
| | 1,686 |
| | 8,611 |
| | 16,560 |
| | — |
| | 26,857 |
| Other current assets | 61 |
| | 11,412 |
| | 4,191 |
| | 6,844 |
| | — |
| | 22,508 |
| Intercompany receivable | — |
| | 3,112,164 |
| | — |
| | — |
| | (3,112,164 | ) | | — |
| Total current assets | 946 |
| | 3,125,571 |
| | 12,802 |
| | 223,277 |
| | (3,112,164 | ) | | 250,432 |
| Property, plant and equipment, net | — |
| | 1,893,720 |
| | 591,070 |
| | 1,816,143 |
| | — |
| | 4,300,933 |
| Intangible assets, net | — |
| | 58,530 |
| | — |
| | 725,949 |
| | — |
| | 784,479 |
| Goodwill | — |
| | 149,453 |
| | 170,652 |
| | 777,370 |
| | — |
| | 1,097,475 |
| Investment in wholly owned subsidiaries | 2,891,371 |
| | 24,162 |
| | 1,301,717 |
| | 790,882 |
| | (5,008,132 | ) | | — |
| Deferred income tax asset | — |
| | — |
| | — |
| | 233 |
| | — |
| | 233 |
| Other long-term assets, net | 303 |
| | 65,684 |
| | 27,493 |
| | 8,201 |
| | — |
| | 101,681 |
| Total assets | $ | 2,892,620 |
| | $ | 5,317,120 |
| | $ | 2,103,734 |
| | $ | 4,342,055 |
| | $ | (8,120,296 | ) | | $ | 6,535,233 |
| Liabilities and Partners’ Equity | | | | | | | | | | | | Accounts payable | $ | 4,078 |
| | $ | 27,642 |
| | $ | 13,160 |
| | $ | 101,052 |
| | $ | — |
| | $ | 145,932 |
| Short-term debt | — |
| | 35,000 |
| | — |
| | — |
| | — |
| | 35,000 |
| Current portion of long-term debt | — |
| | 349,990 |
| | — |
| | — |
| | — |
| | 349,990 |
| Accrued interest payable | — |
| | 40,402 |
| | — |
| | 47 |
| | — |
| | 40,449 |
| Accrued liabilities | 1,105 |
| | 17,628 |
| | 9,450 |
| | 33,395 |
| | — |
| | 61,578 |
| Taxes other than income tax | 125 |
| | 7,110 |
| | 3,794 |
| | 3,356 |
| | — |
| | 14,385 |
| Income tax payable | — |
| | 732 |
| | 4 |
| | 3,436 |
| | — |
| | 4,172 |
| Intercompany payable | 322,296 |
| | — |
| | 1,277,691 |
| | 1,512,177 |
| | (3,112,164 | ) | | — |
| Total current liabilities | 327,604 |
| | 478,504 |
| | 1,304,099 |
| | 1,653,463 |
| | (3,112,164 | ) | | 651,506 |
| Long-term debt, less current portion | — |
| | 3,201,220 |
| | — |
| | 61,849 |
| | — |
| | 3,263,069 |
| Deferred income tax liability | — |
| | 1,262 |
| | 12 |
| | 20,998 |
| | — |
| | 22,272 |
| Other long-term liabilities | — |
| | 58,806 |
| | 8,861 |
| | 50,630 |
| | — |
| | 118,297 |
| Total partners’ equity | 2,565,016 |
| | 1,577,328 |
| | 790,762 |
| | 2,555,115 |
| | (5,008,132 | ) | | 2,480,089 |
| Total liabilities and partners’ equity | $ | 2,892,620 |
| | $ | 5,317,120 |
| | $ | 2,103,734 |
| | $ | 4,342,055 |
| | $ | (8,120,296 | ) | | $ | 6,535,233 |
|
Condensed Consolidating Statements of Comprehensive Income For the Three Months Ended September 30, 2018 (Thousands of Dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | NuStar Energy | | NuStar Logistics | | NuPOP | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated | Revenues | $ | — |
| | $ | 127,165 |
| | $ | 62,981 |
| | $ | 300,323 |
| | $ | (106 | ) | | $ | 490,363 |
| Costs and expenses | 600 |
| | 76,932 |
| | 40,497 |
| | 277,163 |
| | (106 | ) | | 395,086 |
| Operating (loss) income | (600 | ) | | 50,233 |
| | 22,484 |
| | 23,160 |
| | — |
| | 95,277 |
| Equity in earnings of subsidiaries | 48,668 |
| | 9,405 |
| | 13,884 |
| | 34,607 |
| | (106,564 | ) | | — |
| Interest income (expense), net | 68 |
| | (45,532 | ) | | (1,882 | ) | | 2,521 |
| | — |
| | (44,825 | ) | Other income, net | — |
| | 468 |
| | 119 |
| | 333 |
| | — |
| | 920 |
| Income before income tax expense | 48,136 |
| | 14,574 |
| | 34,605 |
| | 60,621 |
| | (106,564 | ) | | 51,372 |
| Income tax expense | — |
| | 82 |
| | — |
| | 3,154 |
| | — |
| | 3,236 |
| Net income | $ | 48,136 |
| | $ | 14,492 |
| | $ | 34,605 |
| | $ | 57,467 |
| | $ | (106,564 | ) | | $ | 48,136 |
| | | | | | | | | | | | | Comprehensive income | $ | 48,136 |
| | $ | 19,751 |
| | $ | 34,605 |
| | $ | 57,109 |
| | $ | (106,564 | ) | | $ | 53,037 |
|
Condensed Consolidating Statements of Comprehensive Income (Loss) For the Three Months Ended September 30, 2017 (Thousands of Dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | NuStar Energy | | NuStar Logistics | | NuPOP | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated | Revenues | $ | — |
| | $ | 127,980 |
| | $ | 58,871 |
| | $ | 253,854 |
| | $ | (139 | ) | | $ | 440,566 |
| Costs and expenses | 332 |
| | 77,668 |
| | 38,709 |
| | 232,279 |
| | (139 | ) | | 348,849 |
| Operating (loss) income | (332 | ) | | 50,312 |
| | 20,162 |
| | 21,575 |
| | — |
| | 91,717 |
| Equity in earnings (loss) of subsidiaries | 38,896 |
| | (4,558 | ) | | 20,809 |
| | 39,508 |
| | (94,655 | ) | | — |
| Interest income (expense), net | 28 |
| | (46,247 | ) | | (1,455 | ) | | 2,418 |
| | — |
| | (45,256 | ) | Other income (expense), net | — |
| | 57 |
| | (8 | ) | | (5,175 | ) | | — |
| | (5,126 | ) | Income (loss) before income tax expense | 38,592 |
| | (436 | ) | | 39,508 |
| | 58,326 |
| | (94,655 | ) | | 41,335 |
| Income tax expense | — |
| | 115 |
| | 1 |
| | 2,627 |
| | — |
| | 2,743 |
| Net income (loss) | $ | 38,592 |
| | $ | (551 | ) | | $ | 39,507 |
| | $ | 55,699 |
| | $ | (94,655 | ) | | $ | 38,592 |
| | | | | | | | | | | | | Comprehensive income (loss) | $ | 38,592 |
| | $ | (1,031 | ) | | $ | 39,507 |
| | $ | 62,069 |
| | $ | (94,655 | ) | | $ | 44,482 |
|
Condensed Consolidating Statements of Comprehensive Income For the Nine Months Ended September 30, 2018 (Thousands of Dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | NuStar Energy | | NuStar Logistics | | NuPOP | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated | Revenues | $ | — |
| | $ | 364,721 |
| | $ | 185,760 |
| | $ | 902,422 |
| | $ | (455 | ) | | $ | 1,452,448 |
| Costs and expenses | 1,750 |
| | 235,936 |
| | 118,002 |
| | 823,620 |
| | (455 | ) | | 1,178,853 |
| Operating (loss) income | (1,750 | ) | | 128,785 |
| | 67,758 |
| | 78,802 |
| | — |
| | 273,595 |
| Equity in earnings of subsidiaries | 205,281 |
| | 8,848 |
| | 149,032 |
| | 211,919 |
| | (575,080 | ) | | — |
| Interest income (expense), net | 137 |
| | (145,915 | ) | | (5,177 | ) | | 9,422 |
| | — |
| | (141,533 | ) | Other income, net | — |
| | 2,792 |
| | 307 |
| | 78,985 |
| | — |
| | 82,084 |
| Income (loss) before income tax expense | 203,668 |
| | (5,490 | ) | | 211,920 |
| | 379,128 |
| | (575,080 | ) | | 214,146 |
| Income tax expense | — |
| | 313 |
| | 1 |
| | 10,164 |
| | — |
| | 10,478 |
| Net income (loss) | $ | 203,668 |
| | $ | (5,803 | ) | | $ | 211,919 |
| | $ | 368,964 |
| | $ | (575,080 | ) | | $ | 203,668 |
| | | | | | | | | | | | | Comprehensive income | $ | 203,668 |
| | $ | 24,535 |
| | $ | 211,919 |
| | $ | 361,830 |
| | $ | (575,080 | ) | | $ | 226,872 |
|
Condensed Consolidating Statements of Comprehensive Income (Loss) For the Nine Months Ended September 30, 2017 (Thousands of Dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | NuStar Energy | | NuStar Logistics | | NuPOP | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated | Revenues | $ | — |
| | $ | 380,504 |
| | $ | 161,689 |
| | $ | 822,064 |
| | $ | (773 | ) | | $ | 1,363,484 |
| Costs and expenses | 1,327 |
| | 237,086 |
| | 106,296 |
| | 757,288 |
| | (773 | ) | | 1,101,224 |
| Operating (loss) income | (1,327 | ) | | 143,418 |
| | 55,393 |
| | 64,776 |
| | — |
| | 262,260 |
| Equity in earnings (loss) of
subsidiaries | 124,073 |
| | (10,625 | ) | | 69,770 |
| | 121,002 |
| | (304,220 | ) | | — |
| Interest income (expense), net | 36 |
| | (129,551 | ) | | (4,160 | ) | | 6,393 |
| | — |
| | (127,282 | ) | Other income (expense), net | — |
| | 140 |
| | 1 |
| | (5,039 | ) | | — |
| | (4,898 | ) | Income before income tax expense | 122,782 |
| | 3,382 |
| | 121,004 |
| | 187,132 |
| | (304,220 | ) | | 130,080 |
| Income tax expense | — |
| | 81 |
| | 3 |
| | 7,214 |
| | — |
| | 7,298 |
| Net income | $ | 122,782 |
| | $ | 3,301 |
| | $ | 121,001 |
| | $ | 179,918 |
| | $ | (304,220 | ) | | $ | 122,782 |
| | | | | | | | | | | | | Comprehensive income (loss) | $ | 122,782 |
| | $ | (1,592 | ) | | $ | 121,001 |
| | $ | 195,595 |
| | $ | (304,220 | ) | | $ | 133,566 |
|
Condensed Consolidating Statements of Cash Flows For the Nine Months Ended September 30, 2018 (Thousands of Dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | NuStar Energy | | NuStar Logistics | | NuPOP | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated | Net cash provided by operating activities | $ | 296,475 |
| | $ | 60,254 |
| | $ | 90,482 |
| | $ | 361,320 |
| | $ | (445,211 | ) | | $ | 363,320 |
| Cash flows from investing activities: | | | | | | | | | | | | Capital expenditures | — |
| | (32,270 | ) | | (14,002 | ) | | (292,168 | ) | | — |
| | (338,440 | ) | Change in accounts payable related to capital expenditures | — |
| | 2,063 |
| | (6,209 | ) | | (14,484 | ) | | — |
| | (18,630 | ) | Proceeds from sale or disposition of assets | — |
| | 1,464 |
| | 20 |
| | 736 |
| | — |
| | 2,220 |
| Proceeds from insurance recoveries | — |
| | — |
| | — |
| | 78,419 |
| | — |
| | 78,419 |
| Acquisitions | — |
| | — |
| | (37,502 | ) | | — |
| | — |
| | (37,502 | ) | Investment in other long-term
assets | — |
| | — |
| | — |
| | (3,280 | ) | | — |
| | (3,280 | ) | Net cash used in investing activities | — |
| | (28,743 | ) | | (57,693 | ) | | (230,777 | ) | | — |
| | (317,213 | ) | Cash flows from financing activities: | | | | | | | | | | | | Debt borrowings | — |
| | 1,498,853 |
| | — |
| | 25,100 |
| | — |
| | 1,523,953 |
| Debt repayments | — |
| | (1,754,798 | ) | | — |
| | (23,700 | ) | | — |
| | (1,778,498 | ) | Issuance of Series D preferred units | 590,000 |
| | — |
| | — |
| | — |
| | — |
| | 590,000 |
| Payment of issuance costs for Series D preferred units | (34,187 | ) | | — |
| | — |
| | — |
| | — |
| | (34,187 | ) | Issuance of common units | 10,000 |
| | — |
| | — |
| | — |
| | — |
| | 10,000 |
| General partner contribution | 204 |
| | — |
| | — |
| | — |
| | — |
| | 204 |
| Distributions to preferred unitholders | (60,249 | ) | | (30,123 | ) | | (30,124 | ) | | (30,123 | ) | | 90,372 |
| | (60,247 | ) | Distributions to common unitholders and general partner | (236,549 | ) | | (118,275 | ) | | (118,274 | ) | | (118,290 | ) | | 354,839 |
| | (236,549 | ) | Cash consideration for Merger (Note 2) | (61,411 | ) | | — |
| | — |
| | 140 |
| | — |
| | (61,271 | ) | Proceeds from termination of interest rate swaps | — |
| | 8,048 |
| | — |
| | — |
| | — |
| | 8,048 |
| Net intercompany activity | (501,574 | ) | | 373,055 |
| | 115,609 |
| | 12,910 |
| | — |
| | — |
| Other, net | (2,430 | ) | | (4,062 | ) | | — |
| | (62 | ) | | — |
| | (6,554 | ) | Net cash used in financing activities | (296,196 | ) | | (27,302 | ) | | (32,789 | ) | | (134,025 | ) | | 445,211 |
| | (45,101 | ) | Effect of foreign exchange rate changes on cash | — |
| | — |
| | — |
| | (719 | ) | | — |
| | (719 | ) | Net increase (decrease) in cash and cash equivalents | 279 |
| | 4,209 |
| | — |
| | (4,201 | ) | | — |
| | 287 |
| Cash and cash equivalents as of the beginning of the period | 885 |
| | 29 |
| | — |
| | 23,378 |
| | — |
| | 24,292 |
| Cash and cash equivalents as of the end of the period | $ | 1,164 |
| | $ | 4,238 |
| | $ | — |
| | $ | 19,177 |
| | $ | — |
| | $ | 24,579 |
|
Condensed Consolidating Statements of Cash Flows For the Nine Months Ended September 30, 2017 (Thousands of Dollars) | | | | | | | | | | | | | | | | | | | | | | | | | | NuStar Energy | | NuStar Logistics | | NuPOP | | Non-Guarantor Subsidiaries | | Eliminations | | Consolidated | Net cash provided by operating activities | $ | 355,864 |
| | $ | 128,395 |
| | $ | 72,711 |
| | $ | 290,917 |
| | $ | (536,872 | ) | | $ | 311,015 |
| Cash flows from investing activities: | | | | | | | | | | | | Capital expenditures | — |
| | (34,964 | ) | | (18,138 | ) | | (167,515 | ) | | — |
| | (220,617 | ) | Change in accounts payable related to capital expenditures | — |
| | (1,223 | ) | | 4,445 |
| | 10,050 |
| | — |
| | 13,272 |
| Proceeds from sale or disposition of assets | — |
| | 1,947 |
| | 17 |
| | 59 |
| | — |
| | 2,023 |
| Investment in subsidiaries | (1,262,000 | ) | | — |
| | — |
| | (126 | ) | | 1,262,126 |
| | — |
| Proceeds from Axeon term loan | — |
| | 110,000 |
| | — |
| | — |
| | — |
| | 110,000 |
| Acquisitions | — |
| | — |
| | — |
| | (1,461,719 | ) | | — |
| | (1,461,719 | ) | Net cash (used in) provided by investing activities | (1,262,000 | ) | | 75,760 |
| | (13,676 | ) | | (1,619,251 | ) | | 1,262,126 |
| | (1,557,041 | ) | Cash flows from financing activities: | | | | | | | | | | | | Debt borrowings | — |
| | 1,901,504 |
| | — |
| | 69,700 |
| | — |
| | 1,971,204 |
| Debt repayments | — |
| | (1,856,739 | ) | | — |
| | (82,000 | ) | | — |
| | (1,938,739 | ) | Note offering, net of issuance costs | — |
| | 543,313 |
| | — |
| | — |
| | — |
| | 543,313 |
| Issuance of other preferred units, net of issuance costs | 371,802 |
| | — |
| | — |
| | — |
| | — |
| | 371,802 |
| Issuance of common units, net of issuance costs | 643,858 |
| | — |
| | — |
| | — |
| | — |
| | 643,858 |
| General partner contribution | 13,597 |
| | — |
| | — |
| | — |
| | — |
| | 13,597 |
| Distributions to preferred unitholders | (26,681 | ) | | (13,340 | ) | | (13,341 | ) | | (13,342 | ) | | 40,023 |
| | (26,681 | ) | Distributions to common unitholders and general partner | (331,222 | ) | | (165,611 | ) | | (165,611 | ) | | (165,627 | ) | | 496,849 |
| | (331,222 | ) | Contributions from affiliates | — |
| | 1,262,000 |
| | — |
| | 126 |
| | (1,262,126 | ) | | — |
| Net intercompany activity | 238,172 |
| | (1,873,773 | ) | | 119,917 |
| | 1,515,684 |
| | — |
| | — |
| Other, net | (3,366 | ) | | (1,486 | ) | | — |
| | (218 | ) | | — |
| | (5,070 | ) | Net cash provided by (used) in financing activities | 906,160 |
| | (204,132 | ) | | (59,035 | ) | | 1,324,323 |
| | (725,254 | ) | | 1,242,062 |
| Effect of foreign exchange rate changes on cash | — |
| | — |
| | — |
| | 1,637 |
| | — |
| | 1,637 |
| Net increase (decrease) in cash and cash equivalents | 24 |
| | 23 |
| | — |
| | (2,374 | ) | | — |
| | (2,327 | ) | Cash and cash equivalents as of the beginning of the period | 870 |
| | 5 |
| | — |
| | 35,067 |
| | — |
| | 35,942 |
| Cash and cash equivalents as of the end of the period | $ | 894 |
| | $ | 28 |
| | $ | — |
| | $ | 32,693 |
| | $ | — |
| | $ | 33,615 |
|
|