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NuStar GP Holdings, LLC Reports Highest Quarterly Earnings in Company's History; Previously Announced Increase in Quarterly Distribution to $0.43 Per Unit

Posted on: Thursday, 23 October 2008, 09:00 CDT

NuStar GP Holdings, LLC (NYSE:NSH) today announced record earnings of $34.8 million, or $0.82 per unit, for the third quarter of 2008, nearly 2.5 times higher than the $14.1 million, or $0.33 per unit, earned in the third quarter of 2007. The third quarter 2008 results represent the highest quarterly earnings in the company's history. Distributable cash flow available to unitholders for the third quarter of 2008 was $18.3 million, or $0.43 per unit, compared to $15.1 million, or $0.35 per unit, for the third quarter of 2007.

With respect to the quarterly distribution to unitholders for the third quarter of 2008, NuStar GP Holdings, LLC previously announced that its board of directors had increased the quarterly distribution rate to $0.43 per unit, which would equate to $1.72 per unit on an annual basis. This quarterly distribution represents an increase of $0.07 per unit, or 19.4 percent, over the $0.36 distribution for the second quarter of 2008 and third quarter of 2007 and will be paid on November 14, 2008, to holders of record as of November 5, 2008.

"NuStar GP Holdings, LLC's record third quarter is due to NuStar Energy L.P.'s solid distribution increase and outstanding third quarter results, which primarily benefited from the strong contribution of the asphalt operations acquired in March. This allowed us to provide a significant increase in the distribution to our unitholders who benefit from the incentive distribution rights. NuStar Energy L.P.'s continued growth and disciplined financial strategy should translate into further distribution growth for NuStar GP Holdings, LLC," said Curt Anastasio, Chief Executive Officer and President of NuStar Energy L.P. and NuStar GP Holdings, LLC.

A conference call with management is scheduled for 11:00 a.m. ET (10:00 a.m. CT) today, October 23, 2008, to discuss the financial results for the third quarter of 2008. Investors interested in listening to the presentation may call 800-622-7620, passcode 67543575. International callers may access the presentation by dialing 706-645-0327, passcode 67543575. The company intends to have a playback available following the presentation, which may be accessed by calling 800-642-1687, passcode 67543575. A live broadcast of the conference call will also be available on the company's Web site at www.nustargp.com.

NuStar GP Holdings, LLC is a publicly traded limited liability company that owns the two percent general partner interest, an 18.5 percent limited partner interest and the incentive distribution rights in NuStar Energy L.P., one of the largest asphalt refiners and marketers in the U.S. and the second largest independent liquids terminal operator in the nation with operations in the United States, the Netherlands Antilles, Canada, Mexico, the Netherlands and the United Kingdom. For more information, visit NuStar GP Holdings, LLC's Web site at www.nustargp.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release includes forward-looking statements regarding future events. All forward-looking statements are based on the company's beliefs as well as assumptions made by and information currently available to the company. These statements reflect the company's current views with respect to future events and are subject to various risks, uncertainties and assumptions. These risks, uncertainties and assumptions are discussed in NuStar GP Holdings, LLC's 2007 annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission.

NuStar GP Holdings, LLC Consolidated Financial Information (Unaudited, Thousands of Dollars, Except Unit Data and Per Unit Data) Three Months Ended Nine Months Ended September 30, September 30, ----------------------- ----------------------- 2008 2007 2008 2007 ----------- ----------- ----------- ----------- Statement of Income Data: Equity in earnings of NuStar Energy L.P. $ 35,662 $ 15,033 $ 58,120 $ 36,541 General and administrative expenses (793) (665) (2,359) (2,208) Other expense, net (36) - (118) (2) Interest (expense) income, net (57) 29 (153) 43 ----------- ----------- ----------- ----------- Income before income tax benefit (expense) 34,776 14,397 55,490 34,374 Income tax benefit (expense) 34 (313) 103 (271) ----------- ----------- ----------- ----------- Net income $ 34,810 $ 14,084 $ 55,593 $ 34,103 =========== =========== =========== =========== Basic and diluted net income per unit $ 0.82 $ 0.33 $ 1.31 $ 0.80 =========== =========== =========== =========== Equity in Earnings of NuStar Energy L.P.: General partner interest (2%) $ 2,888 $ 927 $ 4,069 $ 2,176 General partner incentive distribution 6,929 4,915 17,835 13,238 ----------- ----------- ----------- ----------- General partner's interest in earnings of NuStar Energy L.P. 9,817 5,842 21,904 15,414 Limited partner interest in earnings of NuStar Energy L.P. 26,566 9,912 38,379 23,290 Amortization of step- up in basis related to NuStar Energy L.P.'s assets and liabilities (721) (721) (2,163) (2,163) ----------- ----------- ----------- ----------- Equity in earnings of NuStar Energy L.P. $ 35,662 $ 15,033 $ 58,120 $ 36,541 =========== =========== =========== =========== Distributable Cash (Note 1): Cash distributions from NuStar Energy L.P. associated with: General partner interest (2%) $ 1,318 $ 1,041 $ 3,740 $ 2,992 Incentive distribution rights (Note 2): 6,929 4,915 18,365 13,238 Limited partner interest-common units 10,872 10,083 31,003 29,156 ----------- ----------- ----------- ----------- Total cash distributions from NuStar Energy L.P. 19,119 16,039 53,108 45,386 Deduct expenses of NuStar GP Holdings, LLC: General and administrative expenses (793) (665) (2,359) (2,208) Income tax benefit (expense) 34 (313) 103 (271) Interest (expense) income, net (57) 29 (153) 43 ----------- ----------- ----------- ----------- Distributable cash flow $ 18,303 $ 15,090 $ 50,699 $ 42,950 =========== =========== =========== =========== Units outstanding 42,501,433 42,500,420 42,501,139 42,500,141 Distributable cash flow per unit $ 0.43 $ 0.35 $ 1.19 $ 1.01 =========== =========== =========== =========== Cash distributions to be paid to the unitholders of NuStar GP Holdings, LLC: Distribution per unit $ 0.43 $ 0.36 $ 1.15 $ 1.02 =========== =========== =========== =========== Total distribution $ 18,276 $ 15,300 $ 48,876 $ 43,350 =========== =========== =========== ===========

NuStar GP Holdings, LLC Consolidated Financial Information (Unaudited, Thousands of Dollars) Notes: 1. NuStar GP Holdings, LLC utilizes distributable cash flow as a financial measure which is not defined in United States generally accepted accounting principles. Management uses this financial measure because it is a widely accepted financial indicator used by investors to compare general partner performance. In addition, management believes that this measure provides investors an enhanced perspective of the ability to make a minimum quarterly distribution. Distributable cash flow is not intended to represent cash flows for the period, nor is it presented as an alternative to net income. It should not be considered in isolation or as a substitute for a measure of performance prepared in accordance with United States generally accepted accounting principles. The following is a reconciliation of net income to distributable cash flow to net cash provided by operating activities:

Three Months Ended Nine Months Ended September 30, September 30, ------------------- ------------------- 2008 2007 2008 2007 --------- --------- --------- --------- Net Income $ 34,810 $ 14,084 $ 55,593 $ 34,103 Less equity in earnings of NuStar Energy L.P. (35,662) (15,033) (58,120) (36,541) Plus cash distributions from NuStar Energy L.P. 19,119 16,039 53,108 45,386 Plus other expense, net 36 - 118 2 --------- --------- --------- --------- Distributable cash flow 18,303 15,090 50,699 42,950 Less cash distributions from NuStar Energy L.P. (19,119) (16,039) (53,108) (45,386) Plus distributions of equity in earnings of NuStar Energy L.P. 27,886 15,033 50,344 36,541 Net effect of changes in operating accounts 424 (1,276) (86) 1,284 --------- --------- --------- --------- Net cash provided by operating activities $ 27,494 $ 12,808 $ 47,849 $ 35,389 ========= ========= ========= ========= 2. NuStar Energy L.P.'s net income allocation for the first quarter 2008 to general and limited partners reflected total cash distributions based upon the partnership interests outstanding as of March 31, 2008. NuStar Energy L.P. issued approximately 5.1 million common units in April 2008. Actual distribution payments are made within 45 days after the end of each quarter as of a record date that is set after the end of each quarter. As such, the general partner's portion of the actual cash payment made with respect to the first quarter 2008, including the incentive distribution rights, was greater than the net income allocated to the general partner.

Source: Business Wire

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