NuStar Energy L.P.

NuStar reported third-quarter 2023 EBITDA of $180 million, up $2 million from $178 million in the third quarter of 2022. Adjusted DCF was $93 million and adjusted distribution coverage was 1.84x. Pipeline segment EBITDA was $170 million, up $15 million or about 10% year over year, while storage EBITDA was $36 million, about $5 million lower than a year ago. Fuels Marketing EBITDA was $8 million, comparable to the prior year. For the full year 2023, management reiterated adjusted EBITDA guidance of $720 million to $740 million. Permian crude volumes averaged 523,000 barrels per day in Q3; October averaged 533,000 barrels per day and Q4 average is expected to be about 540,000 barrels per day. The company ended Q3 with a debt-to-EBITDA ratio of 3.83x and $665 million available on its $1 billion unsecured revolver. Capital spending guidance for 2023 includes $120 million to $130 million of strategic capital and $25 million to $30 million of reliability capital.

Brad Barron framed the quarter as solid and emphasized execution on strategic priorities: stronger pipeline results, recovery in Permian volumes, and successful completion of the Series D redemption ahead of schedule. He highlighted growth opportunities in low-carbon ammonia and said NuStar expects these low-multiple, high-return projects to make it the premier low-carbon ammonia logistics provider in the U.S. His tone was confident and constructive, while still stressing a focus on free cash flow, leverage discipline, and reliability.

Tom Shoaf said Q3 EBITDA of $180 million was modestly above last year, supported by Pipeline EBITDA of $170 million, while Storage EBITDA fell to $36 million due to contract changes, customer transitions, and tank maintenance. He noted that the company redeemed the remaining $8.3 million of Series D preferred in September after raising $222 million net of fees in common equity, and said the balance sheet ended at 3.83x debt-to-EBITDA with $665 million available on the revolver. He also detailed 2023 capex guidance of $120 million to $130 million of strategic capital and $25 million to $30 million of reliability capital, and said higher interest rates have increased expense mainly through floating-rate hybrids, partly offset by rate escalations and other cost actions.

Analysts focused on leverage, Permian volume recovery, storage run-rates, interest-rate sensitivity, and the outlook for fuels marketing and ammonia. Management said its leverage target remains below 4x, that Q4 Permian exit rates are likely to be 545,000 to 550,000 barrels per day rather than the higher range discussed previously, and that storage should improve modestly in Q4 as Corpus Christi reset levels and volumes have picked up above MVC levels. On fuels marketing, management said full-year results should land just below last year’s near-record level, with some Q4 upside possible depending on butane blending volumes. On ammonia, they said planned investments are likely to be spread over several years and focused on smaller, low-multiple projects rather than one large capital-heavy build.