UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 27, 2012
NuStar Energy L.P.
(Exact name of registrant as specified in its charter)
| Delaware | 001-16417 | 74-2956831 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
2330 North Loop 1604 West
San Antonio, Texas 78248
(Address of principal executive offices)
(210) 918-2000
(Registrant’s telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.02 | Results Of Operations And Financial Condition. |
On January 27, 2012, NuStar Energy L.P., a Delaware limited partnership, issued a press release announcing financial results for the quarter ended December 31, 2011. A copy of the press release announcing the financial results is furnished with this report as Exhibit 99.1, and is incorporated herein by reference.
The information in this report is being furnished, not filed, pursuant to Item 2.02 of Form 8-K. Accordingly, the information in this report, including the press release, will not be incorporated by reference into any registration statement filed by NuStar Energy L.P. under the Securities Act of 1933, as amended, unless specifically identified therein as being incorporated therein by reference.
NON-GAAP FINANCIAL MEASURES
The press release announcing the earnings discloses certain financial measures, EBITDA, distributable cash flow, and distributable cash flow per unit, that are non-GAAP financial measures as defined under SEC rules. The press release furnishes a reconciliation of these non-GAAP financial measures to their nearest GAAP financial measures. Management uses these financial measures because they are widely accepted financial indicators used by investors to compare partnership performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the partnership’s assets and the cash that the business is generating. None of EBITDA, distributable cash flow or distributable cash flow per unit is intended to represent cash flows for the period, nor are they presented as an alternative to net income or cash flow from operations. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| 99.1 | Press Release dated January 27, 2012. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| NuStar Energy L.P. | ||||||
| By: | Riverwalk Logistics, L.P. | |||||
| its general partner | ||||||
| By: | NuStar GP, LLC | |||||
| its general partner | ||||||
| Date: January 27, 2012 | By: | /s/ Amy L. Perry | ||||
| Amy L. Perry | ||||||
| Vice President, Assistant General Counsel and Corporate Secretary | ||||||
EXHIBIT INDEX
| Number |
Exhibit | |
| 99.1 | Press Release dated January 27, 2012. | |
Exhibit 99.1
NuStar Energy L.P. 2011 Full Year Distributable Cash Flow, EBITDA and
Operating Income Higher than 2010
Fourth Quarter 2011 Results
Benefit from the Completion of Internal Growth Projects
Expect Results to Continue to Improve in 2012
SAN ANTONIO, January 27, 2012 – NuStar Energy L.P. (NYSE: NS) today announced its fourth quarter distributable cash flow available to limited partners was $63.1 million, or $0.95 per unit, compared to 2010 fourth quarter distributable cash flow of $66.7 million, or $1.03 per unit. For the year ended December 31, 2011, distributable cash flow available to limited partners was $307.9 million, or $4.74 per unit, up from the $280.7 million, or $4.43 per unit earned in 2010.
Earnings before interest, taxes, depreciation and amortization (EBITDA) were $98.7 million for the fourth quarter of 2011 compared to $113.6 million for the fourth quarter of 2010. For the year ended December 31, 2011, EBITDA was $490.4 million, higher than the $482.8 million in 2010.
Operating income was $47.9 million for the fourth quarter of 2011 compared to $70.5 million for the fourth quarter of 2010. For the year ended December 31, 2011, operating income was $314.0 million, outpacing the $302.6 million generated in 2010.
Net income applicable to limited partners for the fourth quarter was $19.8 million, or $0.30 per unit, compared to $41.9 million, or $0.65 per unit, earned in the fourth quarter of 2010. For the year ended December 31, 2011, net income applicable to limited partners was $180.7 million, or $2.78 per unit, compared to $200.9 million, or $3.19 per unit, in 2010.
The partnership also announced that its board of directors has declared a fourth quarter 2011 distribution of $1.095 per unit. This fourth quarter 2011 distribution will be paid on February 10, 2012, to holders of record as of February 7, 2012. For 2011, NuStar Energy L.P. declared a distribution of $4.36 per unit, which was $0.08 per unit or approximately 2% higher than the $4.28 per unit distribution declared in 2010. Distributable cash flow available to limited partners covers the distribution to the limited partners by 0.87 times for the fourth quarter of 2011 and 1.09 times for the year ended December 31, 2011.
“Even though the U.S. and global economic conditions continued to be very challenging this past year and oil and gas volatility remained high, NuStar was able to generate more distributable cash flow, EBITDA and operating income in 2011 than in 2010,” said Curt Anastasio, President and
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Chief Executive Officer of NuStar Energy L.P. and NuStar GP Holdings, LLC. “Additional earnings produced by the completion of several internal growth projects, the acquisition of the San Antonio refinery and crude oil trading in our fuels marketing operations more than offset the negative impact of reduced pipeline throughput volumes and lower than expected asphalt demand.”
With regard to fourth quarter 2011 results Anastasio added, “Results in both our storage and transportation segments were higher than last year’s fourth quarter. Our storage segment benefited primarily from the 3rd quarter 2011 completion of a storage expansion project at our St. James, Louisiana terminal facility. Increased tariffs and new revenue streams from two Eagle Ford shale internal growth projects contributed to improved results in our transportation segment.”
Anastasio noted that, “While lower results in our asphalt and fuels marketing segment, primarily due to lower margins in our asphalt operations, offset the increased fourth quarter results in our storage and transportation segments, the non-recurring hedging gains associated with our San Antonio refinery of approximately $16.4 million helped partially offset the negative impact of the lower asphalt operations margins.”
2012 Outlook
Commenting on the 2012 outlook for NuStar Energy L.P., Anastasio said, “We expect NuStar’s EBITDA to be higher than 2011. EBITDA in all three of our segments is also expected to exceed 2011 results.”
In regard to internal growth spending Anastasio added, “NuStar continues to identify internal growth projects that should contribute to our EBITDA growth over the next several years. Currently we expect to spend $350 -$400 million on internal growth projects during 2012.”
A conference call with management is scheduled for 10:00 a.m. ET (9:00 a.m. CT) today, January 27, 2012, to discuss the financial and operational results for the fourth quarter of 2011. Investors interested in listening to the presentation may call 800/622-7620, passcode 39023181. International callers may access the presentation by dialing 706/645-0327, passcode 39023181. The company intends to have a playback available following the presentation, which may be accessed by calling 800/585-8367, passcode 39023181. A live broadcast of the conference call will also be available on the company’s Web site at www.nustarenergy.com.
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NuStar Energy L.P. is a publicly traded, limited partnership based in San Antonio, with 8,417 miles of pipeline; 89 terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids; and two asphalt refineries and a fuels refinery with a combined throughput capacity of 118,500 barrels per day. The partnership’s combined system has approximately 98 million barrels of storage capacity. One of the largest asphalt refiners and marketers in the U.S. and the second largest independent liquids terminal operator in the nation, NuStar has operations in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, the United Kingdom and Turkey. For more information, visit NuStar Energy L.P.’s Web site at www.nustarenergy.com.
This release serves as qualified notice to nominees under Treasury Regulation Sections 1.1446-4(b)(4) and (d). Please note that 100% of NuStar’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of NuStar’s distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate for individuals and corporations, as applicable. Nominees, and not NuStar, are treated as the withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.
Cautionary Statement Regarding Forward-Looking Statements
This press release includes forward-looking statements regarding future events. All forward-looking statements are based on the partnership and company’s beliefs as well as assumptions made by and information currently available to the partnership and company. These statements reflect the partnership and 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 Energy L.P. and NuStar GP Holdings, LLC’s 2010 annual reports on Form 10-K and subsequent filings with the Securities and Exchange Commission.
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NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information
(Unaudited, Thousands of Dollars, Except Unit Data and Per Unit Data)
| Three Months Ended December 31, |
Year Ended December 31, |
|||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Statement of Income Data: |
||||||||||||||||
| Revenues: |
||||||||||||||||
| Services revenues |
$ | 217,249 | $ | 205,542 | $ | 825,938 | $ | 791,314 | ||||||||
| Product sales |
1,709,856 | 988,670 | 5,749,317 | 3,611,747 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues |
1,927,105 | 1,194,212 | 6,575,255 | 4,403,061 | ||||||||||||
| Costs and expenses: |
||||||||||||||||
| Cost of product sales |
1,663,096 | 927,678 | 5,460,520 | 3,350,429 | ||||||||||||
| Operating expenses |
138,522 | 123,004 | 529,002 | 486,032 | ||||||||||||
| General and administrative expenses |
33,620 | 33,917 | 103,453 | 110,241 | ||||||||||||
| Depreciation and amortization expense |
43,932 | 39,149 | 168,286 | 153,802 | ||||||||||||
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|
|
|
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|
|
|
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| Total costs and expenses |
1,879,170 | 1,123,748 | 6,261,261 | 4,100,504 | ||||||||||||
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|
|
|
|
|||||||||
| Operating income |
47,935 | 70,464 | 313,994 | 302,557 | ||||||||||||
| Equity in earnings of joint venture |
4,461 | 2,929 | 11,458 | 10,500 | ||||||||||||
| Interest expense, net |
(21,037 | ) | (20,221 | ) | (83,681 | ) | (78,280 | ) | ||||||||
| Other income (expense), net |
2,408 | 1,052 | (3,291 | ) | 15,934 | |||||||||||
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|
|
|
|||||||||
| Income before income tax expense |
33,767 | 54,224 | 238,480 | 250,711 | ||||||||||||
| Income tax expense |
3,568 | 2,689 | 16,879 | 11,741 | ||||||||||||
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|
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| Net income |
$ | 30,199 | $ | 51,535 | $ | 221,601 | $ | 238,970 | ||||||||
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| Net income applicable to limited partners |
$ | 19,782 | $ | 41,936 | $ | 180,714 | $ | 200,886 | ||||||||
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|
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| Net income per unit applicable to limited partners: |
$ | 0.30 | $ | 0.65 | $ | 2.78 | $ | 3.19 | ||||||||
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| Weighted average limited partner units outstanding |
66,226,386 | 64,610,549 | 65,018,301 | 62,946,987 | ||||||||||||
| EBITDA (Note 1) |
$ | 98,736 | $ | 113,594 | $ | 490,447 | $ | 482,793 | ||||||||
| Distributable cash flow (Note 1) |
$ | 74,739 | $ | 76,854 | $ | 351,263 | $ | 320,226 | ||||||||
| December 31, 2011 |
December 31, 2010 |
|||||||||||||||
| Balance Sheet Data: |
||||||||||||||||
| Debt, including current portion (a) |
$ | 2,293,030 | $ | 2,137,080 | ||||||||||||
| Partners’ equity (b) |
2,864,335 | 2,702,700 | ||||||||||||||
| Debt-to-capitalization ratio (a) / ((a)+(b)) |
44.5 | % | 44.2 | % | ||||||||||||
NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Barrel Data)
| Three Months Ended December 31, |
Year
Ended December 31, |
|||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Segment Data: |
||||||||||||||||
| Storage: |
||||||||||||||||
| Throughput (barrels/day) |
735,521 | 677,736 | 693,269 | 669,435 | ||||||||||||
| Throughput revenues |
$ | 21,858 | $ | 19,520 | $ | 80,246 | $ | 75,605 | ||||||||
| Storage lease revenues |
126,705 | 113,740 | 486,525 | 444,233 | ||||||||||||
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| Total revenues |
148,563 | 133,260 | 566,771 | 519,838 | ||||||||||||
| Operating expenses |
72,409 | 65,634 | 285,639 | 263,820 | ||||||||||||
| Depreciation and amortization expense |
23,081 | 20,067 | 87,737 | 77,071 | ||||||||||||
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|
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| Segment operating income |
$ | 53,073 | $ | 47,559 | $ | 193,395 | $ | 178,947 | ||||||||
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|
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| Transportation: |
||||||||||||||||
| Refined products pipelines throughput (barrels/day) |
528,818 | 531,626 | 514,261 | 529,946 | ||||||||||||
| Crude oil pipelines throughput (barrels/day) |
333,899 | 342,417 | 305,890 | 371,726 | ||||||||||||
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|
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|
|
|
|||||||||
| Total throughput (barrels/day) |
862,717 | 874,043 | 820,151 | 901,672 | ||||||||||||
| Revenues |
$ | 85,043 | $ | 83,255 | $ | 311,514 | $ | 316,072 | ||||||||
| Operating expenses |
29,345 | 28,100 | 114,726 | 116,884 | ||||||||||||
| Depreciation and amortization expense |
12,893 | 12,588 | 51,175 | 50,617 | ||||||||||||
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|
|
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|
|
|
|||||||||
| Segment operating income |
$ | 42,805 | $ | 42,567 | $ | 145,613 | $ | 148,571 | ||||||||
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|
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| Asphalt and fuels marketing: |
||||||||||||||||
| Product sales |
$ | 1,710,020 | $ | 989,896 | $ | 5,759,099 | $ | 3,615,890 | ||||||||
| Cost of product sales |
1,669,005 | 933,151 | 5,490,384 | 3,371,854 | ||||||||||||
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| Gross margin |
41,015 | 56,745 | 268,715 | 244,036 | ||||||||||||
| Operating expenses |
47,344 | 35,994 | 160,850 | 132,918 | ||||||||||||
| Depreciation and amortization expense |
6,131 | 5,003 | 22,636 | 20,257 | ||||||||||||
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| Segment operating (loss) income |
$ | (12,460 | ) | $ | 15,748 | $ | 85,229 | $ | 90,861 | |||||||
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| Consolidation and intersegment eliminations: |
||||||||||||||||
| Revenues |
$ | (16,521 | ) | $ | (12,199 | ) | $ | (62,129 | ) | $ | (48,739 | ) | ||||
| Cost of product sales |
(5,909 | ) | (5,473 | ) | (29,864 | ) | (21,425 | ) | ||||||||
| Operating expenses |
(10,576 | ) | (6,724 | ) | (32,213 | ) | (27,590 | ) | ||||||||
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| Total |
$ | (36 | ) | $ | (2 | ) | $ | (52 | ) | $ | 276 | |||||
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| Consolidated Information: |
||||||||||||||||
| Revenues |
$ | 1,927,105 | $ | 1,194,212 | $ | 6,575,255 | $ | 4,403,061 | ||||||||
| Cost of product sales |
1,663,096 | 927,678 | 5,460,520 | 3,350,429 | ||||||||||||
| Operating expenses |
138,522 | 123,004 | 529,002 | 486,032 | ||||||||||||
| Depreciation and amortization expense |
42,105 | 37,658 | 161,548 | 147,945 | ||||||||||||
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|
|||||||||
| Segment operating income |
83,382 | 105,872 | 424,185 | 418,655 | ||||||||||||
| General and administrative expenses |
33,620 | 33,917 | 103,453 | 110,241 | ||||||||||||
| Other depreciation and amortization expense |
1,827 | 1,491 | 6,738 | 5,857 | ||||||||||||
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| Consolidated operating income |
$ | 47,935 | $ | 70,464 | $ | 313,994 | $ | 302,557 | ||||||||
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NuStar Energy L.P. and Subsidiaries
Consolidated Financial Information - Continued
(Unaudited, Thousands of Dollars, Except Per Unit Data)
Notes:
| 1. | NuStar Energy L.P. utilizes two financial measures, EBITDA and distributable cash flow, which are not defined in United States generally accepted accounting principles. Management uses these financial measures because they are widely accepted financial indicators used by investors to compare partnership performance. In addition, management believes that these measures provide investors an enhanced perspective of the operating performance of the partnership’s assets and the cash that the business is generating. Neither EBITDA nor distributable cash flow are intended to represent cash flows for the period, nor are they presented as an alternative to net income. They should not be considered in isolation or as substitutes for a measure of performance prepared in accordance with United States generally accepted accounting principles. |
The following is a reconciliation of net income to EBITDA and distributable cash flow:
| Three Months Ended December 31, |
Year Ended December 31, |
|||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Net income |
$ | 30,199 | $ | 51,535 | $ | 221,601 | $ | 238,970 | ||||||||
| Plus interest expense, net |
21,037 | 20,221 | 83,681 | 78,280 | ||||||||||||
| Plus income tax expense |
3,568 | 2,689 | 16,879 | 11,741 | ||||||||||||
| Plus depreciation and amortization expense |
43,932 | 39,149 | 168,286 | 153,802 | ||||||||||||
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| EBITDA |
98,736 | 113,594 | 490,447 | 482,793 | ||||||||||||
| Less equity in earnings of joint venture |
(4,461 | ) | (2,929 | ) | (11,458 | ) | (10,500 | ) | ||||||||
| Less interest expense, net |
(21,037 | ) | (20,221 | ) | (83,681 | ) | (78,280 | ) | ||||||||
| Less reliability capital expenditures |
(9,082 | ) | (15,704 | ) | (50,339 | ) | (54,031 | ) | ||||||||
| Less income tax expense |
(3,568 | ) | (2,689 | ) | (16,879 | ) | (11,741 | ) | ||||||||
| Plus distributions from joint venture |
4,977 | 2,125 | 14,374 | 9,625 | ||||||||||||
| Mark-to-market impact on hedge transactions (a) |
9,174 | 2,678 | 456 | (17,640 | ) | |||||||||||
| Contingent loss adjustment |
— | — | 3,250 | — | ||||||||||||
| Other non-cash items |
— | — | 5,093 | — | ||||||||||||
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| Distributable cash flow |
$ | 74,739 | $ | 76,854 | $ | 351,263 | $ | 320,226 | ||||||||
| EBITDA |
$ | 98,736 | $ | 113,594 | $ | 490,447 | $ | 482,793 | ||||||||
| EBITDA attributable to noncontrolling interest |
29 | — | 415 | — | ||||||||||||
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| EBITDA attributable to NuStar Energy L.P. |
$ | 98,707 | $ | 113,594 | $ | 490,032 | $ | 482,793 | ||||||||
| Distributable cash flow |
$ | 74,739 | $ | 76,854 | $ | 351,263 | $ | 320,226 | ||||||||
| Distributable cash flow attributable to noncontrolling interest |
53 | — | 441 | — | ||||||||||||
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| Distributable cash flow attributable to NuStar Energy L.P. |
$ | 74,686 | $ | 76,854 | $ | 350,822 | $ | 320,226 | ||||||||
| General partner’s interest in distributable cash flow |
11,598 | 10,160 | 42,956 | 39,531 | ||||||||||||
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| Limited partners’ interest in distributable cash flow |
$ | 63,088 | $ | 66,694 | $ | 307,866 | $ | 280,695 | ||||||||
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| Distributable cash flow per limited partner unit |
$ | 0.95 | $ | 1.03 | $ | 4.74 | $ | 4.43 | ||||||||
| (a) | Distributable cash flow excludes the impact of unrealized mark-to-market gains and losses that arise from valuing certain derivative contracts, as well as the associated hedged inventory. The gain or loss associated with these contracts is realized in distributable cash flow when the contracts are settled. |