Unless otherwise indicated, the terms "
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
In this Form 10-Q, we make certain forward-looking statements, such as
statements regarding our plans, strategies, objectives, expectations, estimates,
predictions, projections, assumptions, intentions, resources and the future
impact of the coronavirus, or COVID-19, the responses thereto, the decline in
economic activity and the actions by oil producing nations on our business.
While these forward-looking statements, and any assumptions upon which they are
based, are made in good faith and reflect our current judgment regarding the
direction of our business, actual results will almost always vary, sometimes
materially, from any estimates, predictions, projections, assumptions or other
future performance suggested in this report. These forward-looking statements
can generally be identified by the words "anticipates," "believes," "expects,"
"plans," "intends," "estimates," "forecasts," "budgets," "projects," "will,"
"could," "should," "may" and similar expressions. These statements reflect our
current views with regard to future events and are subject to various risks,
uncertainties and assumptions, which may cause actual results to differ
materially. Please read Item 1A. "Risk Factors" contained in our Annual Report
on Form 10-K for the year ended
If one or more of these risks or uncertainties materialize, or if the underlying assumptions prove incorrect, our actual results may vary materially from those described in any forward-looking statement. Other unknown or unpredictable factors could also have material adverse effects on our future results. Readers are cautioned not to place undue reliance on this forward-looking information, which is as of the date of this Form 10-Q. We do not intend to update these statements unless we are required by the securities laws to do so, and we undertake no obligation to publicly release the result of any revisions to any such forward-looking statements that may be made to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events.
Our Management's Discussion and Analysis of Financial Condition and Results of Operations is presented in five sections: •Overview, including Trends and Outlook •Results of Operations •Liquidity and Capital Resources •Critical Accounting Policies •New Accounting Pronouncements
OVERVIEW
Our operations consist of three reportable business segments: pipeline, storage and fuels marketing. As ofMarch 31, 2021 , our assets included 9,915 miles of pipeline and 73 terminal and storage facilities, which provide approximately 72 million barrels of storage capacity. We conduct our operations through our subsidiaries, primarilyNuStar Logistics, L.P. (NuStar Logistics ) andNuStar Pipeline Operating Partnership L.P. (NuPOP). We generate revenue primarily from: •tariffs for transporting crude oil, refined products and anhydrous ammonia through our pipelines; •fees for the use of our terminal and storage facilities and related ancillary services; and •sales of petroleum products. The following factors affect the results of our operations: •economic factors and price volatility; •industry factors, such as changes in the prices of petroleum products that affect demand, or regulatory changes that could increase costs or impose restrictions on operations; •factors that affect our customers and the markets they serve, such as utilization rates and maintenance turnaround schedules of our refining company customers and drilling activity by our crude oil production customers; •company-specific factors, such as facility integrity issues, maintenance requirements and outages that impact the throughput rates of our assets; and •seasonal factors that affect the demand for products transported by and/or stored in our assets and the demand for products we sell. 18 -------------------------------------------------------------------------------- Table of Contents Recent Developments COVID-19. The coronavirus, or COVID-19, had a severe negative impact on global economic activity during 2020, significantly reducing demand for petroleum products and increasing the volatility of crude oil prices, beginning inMarch 2020 . While a number of countries, includingthe United States , have made significant progress in 2021 in deploying COVID-19 vaccines, which has improved economic conditions and outlook in those nations, many more continue to struggle to obtain and/or disseminate vaccinations to their populace, which is frustrating widespread global economic recovery. Even inthe United States , if we are unable to vaccinate a sufficient proportion of people to reach herd immunity or if vaccine-resistant strains emerge, we may face additional resurgence in COVID-19 case count in some regions, which could slow the pace of domestic economic improvement and undermine rebounding demand in the markets our assets serve.
Senior Notes. On
Term Loan Credit Agreement. On
Trends and Outlook
As America begins to recover from the impact of COVID-19 and begins returning to
normal activity and growth, we are seeing signs of stabilization and
improvement, across the
Within our pipeline segment, refined product demand on
We expect our second quarter 2021 operational results and throughputs for our
pipeline segment to be higher than the comparable period due to the precipitous
decline in overall demand for refined petroleum products in the second quarter
of 2020 following stay-home orders, business closures and other measures to
reduce the spread of the virus. For our storage segment, we expect our second
quarter 2021 results to be comparable to the prior year's quarter as we continue
to benefit from the contango market from last spring and renewable fuels-related
projects at our
We plan to continue to manage our operations with fiscal discipline in this turbulent environment and to evaluate divestitures of non-core assets to reduce leverage. For the full-year 2021, we expect reliability and strategic capital expenditures to be comparable to 2020. We expect to fund all of our expenses, distribution requirements and capital expenditures for the full-year 2021 using internally generated cash flows.
Our outlook for the partnership, both overall and for any of our segments, may
change, as we base our expectations on our continuing evaluation of several
factors, many of which are outside our control. These factors include, but are
not limited to, uncertainty surrounding the COVID-19 pandemic, including its
duration and lingering impacts to the economy; uncertainty surrounding future
production decisions by the
19 --------------------------------------------------------------------------------
Table of Contents
unplanned refinery downtime; crude oil prices; the supply of and demand for
crude oil, refined products and anhydrous ammonia; demand for our transportation
and storage services; the availability of personnel, equipment and services
essential to our operations; the ability to obtain timely permitting approvals;
and changes in laws and regulations affecting our operations. Please read Item
1A. "Risk Factors" in our Annual Report on Form 10-K for the year ended
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