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NuStar GP Holdings, LLC (NYSE:NSH)

Q4 2013 Earnings Call

February 05, 2014 10:00 am ET

Executives

Chris Russell - Vice President of Investor Relations for Nustar GP LLC

Bradley C. Barron - Chief Executive Officer, President, General Counsel and Assistant Secretary

Daniel S. Oliver - Senior Vice President of Marketing & Business Development - NuStar GP LLC

Thomas R. Shoaf - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Analysts

Brian J. Zarahn - Barclays Capital, Research Division

Steven C. Sherowski - Goldman Sachs Group Inc., Research Division

Mark L. Reichman - Simmons & Company International, Research Division

Cory J. Garcia - Raymond James & Associates, Inc., Research Division

Paul Jacob

James Jampel

Selman Akyol - Stifel, Nicolaus & Co., Inc., Research Division

Jeffrey Birnbaum - UBS Investment Bank, Research Division

Operator

Good morning. My name is Amy, and I will be your conference operator today. At this time, I would like to welcome everyone to the NuStar Energy L.P. and NuStar GP Holdings, LLC Fourth Quarter 2013 Earnings Conference Call. [Operator Instructions] Mr. Russell, you may begin your conference.

Chris Russell

Thank you, Amy. Good morning, and welcome to today's call. On the call today are NuStar Energy L.P. and NuStar GP Holdings, LLC's President and CEO, Brad Barron; Executive Vice President and CFO, Tom Shoaf; and other members of our management team.

Before I get started, we'd like to remind you that during the course of this call, NuStar may make statements about our current views concerning the future performance of NuStar that are forward-looking statements within the meaning of the federal securities laws. These statements are subject to the various uncertainties and assumptions described in our filings with the Securities and Exchange Commission and will not be updated to conform to actual results or revised expectations.

During the course of this call, we'll also make reference to certain non-GAAP financial measures. These non-GAAP financial measures should not be considered as alternatives to GAAP measures. Reconciliations of these non-GAAP financial measures to U.S. GAAP may be found either in our earnings press release or on our website.

Now let me turn the call over to Brad.

Bradley C. Barron

Good morning. Thank you for joining us today. I would like to begin by thanking Curt Anastasio and Steve Blank for the many years of valuable leadership and service they provided to NuStar.

Over the past year, Curt and Steve worked hard on the strategic redirection of the company, and I'm pleased to say that we've made a lot of progress in our efforts to significantly reduce the company's exposure to margin-based operations while continuing to invest in growing our fee-based storage and pipeline operations. Let me recap some of the steps we've taken to eliminate the margin risk from our business.

In early 2013, we completed the sale of San Antonio Refinery. We used the proceeds from that sale to fund the growth of some of our fee-based pipeline and storage operations. Then in the third quarter of 2013, we signed a supply agreement that allowed us to improve the profitability of our St. Eustatius bunkering operations by significantly reducing our working capital requirements.

2014 is off to a good start as well. It's only early February, and we have already terminated the crude oil supply agreement with PDVSA. Terminating this contract ends our obligation to purchase 35,000 barrels per day of crude, and it took over $1 billion of potential risk off the table for NuStar.

Then on Monday we announced that we signed an agreement with Lindsay Goldberg, our joint venture partner in the asphalt business, to divest our remaining 50% interest in that business. This will reduce our financial liability by $100 million within 6 months of close. We expect to close this transaction and fully exit the asphalt business by the end of February.

Let me say a few words about that deal. So at closing, NuStar's $250 million, 7-year revolving credit facility to the JV will immediately convert to a $175 million term loan, dropping to $150 million 6 months after closing. The entire loan balance is expected to be paid in full no later than September 2019.

While we will continue to provide up to $150 million of credit support in the form of guarantees and letters of credit, this support begins to decline 2 years after closing, terminates in September of 2019. We also expect the asphalt JV to change its name at closing, which will eliminate potential confusion in the marketplace and among investors. When we close, NuStar will no longer own any refining assets. This is a great outcome for us. Our future net income results will not be burdened by the volatility of asphalt refining, and we will be able to focus 100% on growing our fee-based storage and pipeline operations.

Speaking of our fee-based businesses, this morning we announced that we signed a long-term agreement with Occidental Petroleum. Under this agreement, Occi will ship NGLs on NuStar's currently idled 200-mile, 12-inch pipeline between Mont Belvieu and Corpus Christi, Texas. While Occi will use the majority of the line's 110,000-barrel per day capacity, we will continue to market any remaining capacity. We expect to spend around $135 million to get this line into full service. It will begin generating distributable cash flow for us in the second quarter of 2014 and is expected to be placed in full service in the second quarter of '15. Once the line is in full service, it is expected to generate approximately $23 million per year of incremental EBITDA.

As we also mentioned in this morning's press release, we expect to complete NuStar's new private dock at our Corpus Christi North Beach Terminal by the end of this month. That's more than 2 months ahead of schedule. This new state-of-the-art dock will more than double our current loading capacity in Corpus Christi, and it will allow us to load crude oil simultaneously on all 3 of our docks at or above the capacity of any competitor in Corpus. This additional capacity will also allow NuStar to handle all the new crude volumes associated with Phase 1 and Phase 2 of the South Texas crude oil pipeline expansion project, as well as any additional volumes shipped on our pipeline systems to Corpus.

Phase 1 of the South Texas project is now scheduled to start up in May of 2014 and will allow for increased throughputs of up to 35,000 barrels per day. Phase 2 is still expected to come online during the first quarter of 2015 and will allow for an additional 65,000 barrels per day.

Turning to other items. On Monday we announced approximately $400 million of noncash charges we were taking for 2013, and we discussed the impact this would have on our fourth quarter results. The vast majority of these charges are related to our St. Eustatius and Point Tupper terminals. Due to the changing market conditions and the application of certain accounting rules, we were required to write down the goodwill associated with those facilities.

At the same time, we wrote down the asset values of a few nonstrategic terminals. I want to emphasize that the write-downs associated with St. Eustatius and Point Tupper are related to goodwill only. These facilities are very profitable for us, and we plan to continue to invest and grow our operation at these key locations.

While these noncash write-downs did affect our fourth quarter EBITDA and EPU, there was no effect on distributable cash flow, our debt-to-EBITDA ratio or our future segment earnings guidance.

So moving on to our fourth quarter results. EPU, adjusted for the asset write-downs, was $0.21 per unit, which was within our guidance range of $0.20 to $0.30.

Our continuing operations produced DCF available to limited partners of $0.97 per unit, which is higher than our guidance range of $0.80 to $0.90 per unit. As a result, our coverage ratio for the fourth quarter was 0.89x. That's our highest coverage ratio since the third quarter of 2011.

Turning to the fourth quarter segment results. Each of our 3 business segments generated adjusted EBITDA higher than last year's fourth quarter. In our pipeline segment, we continue to see increased throughputs in our Eagle Ford pipeline system, and we're encouraged by customer interest in our pipeline and terminal loading facilities.

EBITDA in our pipeline segment increased to $78 million or $16 million higher than the fourth quarter of 2012.

Total pipeline revenues increased 15%, mainly due to increased throughputs on our Eagle Ford pipelines.

Excluding the noncash charges we discussed earlier, storage segment adjusted EBITDA was $62 million for the quarter. This is $3 million higher than last year's fourth quarter and comes despite a decrease in segment revenues of $12 million as operating expenses were down by $15 million.

In the fourth quarter, our fuels marketing segment earned $7 million of EBITDA, which is slightly higher than the $6 million for the fourth quarter of 2012. NuStar's G&A expenses last quarter were $25 million, $4 million less than they were in the fourth quarter of 2012. Our interest expense was $34 million, that's up $12 million from fourth quarter of 2012. This increase was mainly due to higher borrowing costs associated with the January 2013 issuance of around $400 million of junior subordinated notes. NuStar's year-end debt balance was $2.7 billion, while our debt-to-EBITDA ratio was 4.4.

Equity earnings in joint ventures were negative $13 million for the quarter. Our remaining 50% share of the asphalt joint venture, which we expect to divest in February, generated losses of $18 million, while our 50% interest in the Linden, New Jersey storage terminal earned $5 million during the quarter. Last week NuStar Energy's Board of Directors declared a distribution of $1.095 per unit, and the distribution will be paid on February 14. NuStar GP Holdings board declared a fourth quarter distribution of $0.545 per unit, which will be paid on February 18.

Now let's shift over to our projections for the first quarter of 2014. We expect first quarter EBITDA results for the pipeline segment to be higher than first quarter of 2013, but lower than last quarter. We expect the pipeline segment to continue to benefit from the completion of our Eagle Ford Shale projects. However, this will be tempered by some of our customers' refinery turnarounds during the quarter.

We project EBITDA in our storage segment to be lower than the first quarter 2013, primarily due to the reduced LLS to WTI profit-sharing benefits at our St. James terminal. However, adjusted EBITDA for the first quarter of '15 should improve over last quarter, primarily due to the benefit of our second St. James rail-car offloading facility, which was completed in November of last year.

Results in our fuels marketing segment should continue to benefit from our improved bunker operations. In addition, the segment should benefit from refined products blending and our crude oil trading activities at the St. James terminal. The segment's first quarter EBITDA should be higher than the first quarter of last year and comparable to last quarter.

During the first quarter, we expect G&A to be in the range of $23 million to $24 million, depreciation and amortization expense of around $47 million to $48 million and interest expense in the range of $33 million to $34 million. Based on these projections, first quarter earnings per unit should be $0.30 to $0.40 per unit, while distributable cash flow from continuing operations per limited partner unit should be in the range of $0.85 to $0.95 per unit.

Based on the recent developments I mentioned in my opening remarks, we have updated our full year financial projections for 2014 as well. Let me walk you through those.

For the full year 2014, pipeline segment EBITDA is projected to be $40 million to $60 million higher when compared to 2013. 2014 EBITDA growth is expected to come from a full year's benefit from the Eagle Ford project we completed in August of last year, increased throughputs due to the February completion of our dock that I mentioned earlier, third quarter 2014 startup of Phase 1 of our South Texas Crude Oil Pipeline System Project and the July 1, 2014, FERC tariff adjustments.

Our 2014 storage segment EBITDA is projected to be comparable to '13. EBITDA growth realized from the completion of our second unit train at the St. James terminal in November of last year and from additional storage throughputs associated with the completion of some of our Eagle Ford Shale projects will likely be offset by reduced profit-sharing proceeds on our first St. James unit train. This is a result of the narrowing of the LLS to WTI spread that I mentioned earlier.

2014 EBITDA results in our fuels marketing segment are expected to be in the range of $10 million to $30 million. Most of the projected increase in the segment's results is driven by recent improvements in our bunkering operations.

As we mentioned in the past, our fuels marketing segment expects to pay our storage segment around $25 million in annual storage fees for tankage utilized to support fuels marketing's operations. These fees provide our storage segment with EBITDA in locations that are otherwise challenged. So based on these projections, we expect to be incurring our distribution in the second half this year. We also expect to cover the distribution for all of 2014.

As you've heard this morning, we've made a lot of progress over the past couple of months with regard our goal to reduce the company's exposure to margin-based operations, while continuing to grow the fee-base side of the business. We're currently pursuing a number of other exciting new business opportunities that should allow us to increase our distributable cash flows, improve our coverage ratios and restore distribution growth in both NuStar Energy and NuStar GP Holdings. Our employees are focused on continuing to run our operations safely and reliably, executing our growth projects on time and on budget and identifying new opportunities to increase cash flows and DCF. We're very excited about the tremendous potential we see through our fee-based operations and improve our earnings in the month and years ahead.

Let me turn it over to the operator, and we'll open it up for Q&A.

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from Brian Zarahn, Barclays.

Brian J. Zarahn - Barclays Capital, Research Division

On the Corpus Belvieu NGL pipeline, can you provide a little more color as to the contract with Occi, the duration, is it take or pay or volume-based?

Bradley C. Barron

Yes, I'm going to let Danny Oliver, our Senior Vice President of Business Development, take that question.

Daniel S. Oliver

Yes, it's a 5-year initial term. It is take or pay. As Brad mentioned, without getting too many specifics, they do have a take or pay on the majority of that 110,000 barrel per day line. And it's expected to go into full service in Q2 of 2015.

Brian J. Zarahn - Barclays Capital, Research Division

And then the -- is the take or pay -- does that capacity ramp up, or is it a fixed capacity from 2015 forward?

Daniel S. Oliver

It's a fixed capacity from 2015 forward.

Brian J. Zarahn - Barclays Capital, Research Division

Okay. Any just general sense of how much other capacity that remains available on the line that's not contracted?

Daniel S. Oliver

We have close to 1/3 of the line's still available.

Brian J. Zarahn - Barclays Capital, Research Division

Okay. Is there a general sense of expected maintenance CapEx for the NGL line once it's in service?

Daniel S. Oliver

Well, we've already spent a lot of money on maintenance and reliability issue, prepping the existing line for the new service. And then there will be a brand-new connection from where the line currently terminates in Houston to Mont Belvieu. So we shouldn't have anything extraordinary on the horizon there.

Brian J. Zarahn - Barclays Capital, Research Division

Okay. And then any update on your expected financing plans for 2014 expansion CapEx?

Bradley C. Barron

Currently we're just planning right now to use our revolver -- revolving credit facility to do that. We don't have any real immediate plans to go into the capital markets at this time.

Brian J. Zarahn - Barclays Capital, Research Division

And the last one for me, any update on potential terminal asset sales?

Bradley C. Barron

No, we don't have any big sales planned anytime soon.

Operator

Your next question is from Steve Sherowski of Goldman Sachs.

Steven C. Sherowski - Goldman Sachs Group Inc., Research Division

You mentioned your target for excess coverage in 2014. At what level would you become comfortable with considering distribution increases going forward?

Bradley C. Barron

What I talked about was covering our distribution in 2014, and once we return to full distribution coverage, that's when we'll start examining when and how to increase the distribution. So we need to first get back to full cover, and then we'll take it under advisement.

Steven C. Sherowski - Goldman Sachs Group Inc., Research Division

Okay. And on your credit extension through Lindsay Goldberg, are there any opportunities to terminate those agreements before -- between 2017, 2019? Or are you pretty much locked into -- or just limited to excess cash flows from that JV paying down your credit?

Bradley C. Barron

You described it correctly. I mean, we're -- those agreements will run to 2019, but they can be paid down by excess cash flows from the JV.

Steven C. Sherowski - Goldman Sachs Group Inc., Research Division

Okay. And just on Corpus Christi, would you remind me what is the current loading capacity at that facility, and what is the utilization rate currently?

Daniel S. Oliver

The existing dock last year was fully utilized because we split that dock with a competing terminal. But since then, we are both -- as of February, we will both have our own docks as well. So the capacity increase is quite significant. We went from splitting one dock to now splitting one, and we each have our own dock with similar capacities. But we can load at 30,000-barrel per hour rates at both docks, and it's clearly more capacity than what we currently need to clear all of the Eagle Ford out of the system.

Operator

Your next question is from Mark Reichman of Simmons.

Mark L. Reichman - Simmons & Company International, Research Division

A lot of my questions had been asked, but what do you expect with your projection of 85% to 95% Bcf in the first quarter? What does that assume on maintenance CapEx in the first quarter?

Thomas R. Shoaf

Mark, let me -- for the first quarter, it would be about $8 million.

Mark L. Reichman - Simmons & Company International, Research Division

$8 million, okay. And on the -- you may have already stated it and I missed it. What's the amount you have remaining under your revolver? And what is your actual borrowing capacity?

Thomas R. Shoaf

We've got about $830 million available under the revolver as of the year end. And the revolver is a $1.5 billion revolver.

Mark L. Reichman - Simmons & Company International, Research Division

$1.5 billion. Okay, great. Also with regard to the write-downs, your guidance for incremental EBITDA is really pretty much unchanged from your December guidance by segment. So the write-down, it seems like you'd kind of already -- you already had a pretty good handle on the earnings power of the storage facility -- of the storage segment going forward, pre-write-down. Is -- I just wanted to ask also about asset divestitures, I think in prior calls you had mentioned the possibility that Piney Point could be a potential. Could you provide just a little color on your thinking around the Piney Point asset?

Daniel S. Oliver

On the Piney Point asset, we have reduced all of our operating expenses to minimum. We believe that, that terminal is a contango terminal and its best position is to wait until a contango comes back. We have very little operating expenses, and we're just holding it.

Operator

Your next question comes from Cory Garcia of Raymond James.

Cory J. Garcia - Raymond James & Associates, Inc., Research Division

Kind of going back to the storage segment and sort of thinking about sort of the divestitures across your asset base. Should we be thinking about the potential for any conversion from sort of a refined product tankage in the crude service, particularly thinking about some of the coastal assets that you have that are pretty well positioned for any potential there?

Daniel S. Oliver

We certainly have at some of our challenged terminals, for instance, where we may have been in fuel oil service and there's just no demand for that. We're certainly looking at opportunities to change service and get into it, maybe a distillate blending mode, an export mode. Yes, so we absolutely look at that when we're trying to fill some of those blank spots in the storage segment.

Cory J. Garcia - Raymond James & Associates, Inc., Research Division

Okay. It would still be a distillate or more refined product feel versus anything out right to crude service, right?

Daniel S. Oliver

Yes. I think our -- as far as the Eagle Ford goes, those tanks were in crude service before, and as we built this Eagle Ford system, they're still in crude service, they're just pointed in a different direction, loading out instead of receiving in. But I think most of our other locations, we're sticking with products. We're just considering changing product service.

Cory J. Garcia - Raymond James & Associates, Inc., Research Division

Okay. Yes, that makes sense. Switching over to your St. James rail terminal, congrats on obviously bringing that second phase online. Would you remind us how much of the volumes across that facility are take or pay? I believe it was, I think, it was 110 if you kind at look at the EOG and your second ship around Phase 2. Is that the right number to kind of be thinking about?

Bradley C. Barron

That's in the ballpark. That's right at it.

Daniel S. Oliver

That's about right.

Cory J. Garcia - Raymond James & Associates, Inc., Research Division

Have you been approached by anybody in terms of any backhaul opportunities for condensate? I know it's sort of an off-the-wall question, but every now and then, that kind of works its way out there.

Daniel S. Oliver

We've had some discussions about adding heavy crude into -- from Western Canada into the St. James mix. Right now it's predominantly Bakken, light crude. So those trains are not going back to Western Canada. So they're not really looking at that backhaul opportunity. If we end up, at some point in the future, adding heat to that facility to bring in the heavy crudes or maybe even a dill bit, a diluted crude from Western Canada, then I think we could look at that. But right now all of our customers are in the Bakken play.

Operator

Your next question comes from Paul Jacob of Crédit Suisse.

Paul Jacob

The first one I had was with Corpus coming online a little bit sooner than you had anticipated, do you expect that Eagle Ford volumes will ramp faster than what you outlined before?

Daniel S. Oliver

We do think we're going to see some quicker ramp-up. Now we -- our contracts are really set up more in line with our expansion of the pipeline. This removes a kind of a bottleneck that we've experienced at the dock. But our contracted volumes are expected to come up really with the completion of the Phase 1 project in the third quarter of this year. But I do think with the removal of that bottleneck, we'll see some volumes start to sneak in a little early.

Paul Jacob

Okay. That's helpful. And then could you describe just a little bit more detail surrounding the bunkering fuel improvements that you talked about?

Daniel S. Oliver

Yes. So I will tell you that in the bunkering operation at St. Eustatius, we signed a supply agreement. And with that supply agreement, the supplier of the fuel oil took over and began paying over $3 million in tank rental revenues to NuStar L.P. versus the bunkering operation paying that. So there's $3 million more external revenue coming in the door. Going with the supplier, we will not have backwardation cost on the inventory. That totals a little over $2 million worth of help on the backwardation. The fact that we have over $60 million worth of working inventory that will be off the books and will now be supplied by the third-party supplier is there's over $3 million worth of interest expense that we won't have. And we have optimized our operations. And with that, we have been able to reduce a barge and one vessel along with the fuel, that's a little over $7 million. Even though the bunker calls this year haven't been lower, they have been about the same, the volume per call has been down. But we anticipate this to come back. And so we see that the bunker operation will have a very big improvement over 2013.

Paul Jacob

Okay. And then last one for me. I'm just kind of curious how the profit-sharing is working on the CBR terminal. Maybe -- is there any chance you can kind of put it in terms of if that spread were to drop by, say, $1, what the impact to your EBITDA might be?

Daniel S. Oliver

You said CBR, you mean the St. James unit train facility?

Paul Jacob

Yes.

Daniel S. Oliver

Well, I can't get into details really on that, but I would tell you that there is no profit-sharing when the WTI-LLS spread is below $7. It's been below $7 since, I don't know, April or May of last year. We touched that level in January, but we're back down below that now. So we don't have anything in our forecast in regards to that profit-sharing for this year. If it happens, that would be great, but we're not counting on it.

Operator

Your next question comes from James Jampel of HITE.

James Jampel

What business opportunities particularly excite you when you look at your footprint and your operations? Where will you be focusing? What levers will you be pulling? Where would you like NuStar to be, say, in 2016?

Bradley C. Barron

In the short term, our main focus is Eagle Ford. That's where our biggest opportunities are. We also see opportunities around our St. Eustatius terminal. There's always opportunities around our St. James terminal. So we'll be looking at all of those and probably be looking at our Point Tupper terminal as well. So those are my primary focuses for the next 2 years.

James Jampel

Are there any lines of businesses that you might be reviewing for deemphasis or any prospects for cost-cutting?

Bradley C. Barron

We have been so focused on moving away from margin-based businesses and the announcement of the -- getting out of the asphalt JV completes our exit from the refining business. And so, as I said in the speaker notes, we're going to be 100% focused on growing our fee-based pipeline and storage business. And we would like to grow that in a balanced way, but whichever opportunity comes along has the best return within our system that makes sense strategically for us, that's what we're going to pursue.

Operator

Your next question comes from Brett Riley [ph] of Zimmer.

Unknown Analyst

Just had a question on the NGL pipeline with Occi. Could you remind us what the payments will be starting in the second half of '14?

Daniel S. Oliver

They're -- what the payment will be?

Unknown Analyst

Yes. The magnitude relative to the $23 million?

Daniel S. Oliver

Yes. It's less than the $23 million because we're quite a bit less than the $23 million because we're not in full service. But I don't think we've given any guidance, but it's something in the $5 million to $10 million range.

Unknown Analyst

Okay. And with respect to the deficiency payments that you had in the quarter, is that something which is expected to continue for the remainder of the year? And if you could break out how much was deficiency payment versus construction funding?

Thomas R. Shoaf

Brett, are you talking about the other items on the DCF schedule?

Unknown Analyst

Exactly.

Thomas R. Shoaf

The items we've talked about yesterday on the [indiscernible].

Bradley C. Barron

Yes, most of that relates to settlement of a legal dispute, so it's not really deficiency payments.

Unknown Analyst

Okay. So it was just mislabeled?

Thomas R. Shoaf

Part of it is a deficiency payment. But it's not as much as a deficiency payment as it is a P&D [ph] payment. We've basically received a payment in advance on some construction cost and some pipeline movements. And we'll recognize the revenue or amortize the revenue over the next 12 to 18 months. But we took the benefit from the cash payment in our DCF statement for the...

Bradley C. Barron

For the fourth quarter.

Unknown Analyst

Okay. And is that something we'll see in 2Q and 3Q?

Thomas R. Shoaf

At this point in time, we don't know for sure.

Operator

Your next question comes from Jet Carat [ph] of [indiscernible].

Unknown Analyst

Your G&A and your OpEx, particularly on the storage side, are still significantly wide of your peer group. What kind of opportunities are there to get the G&A down and same thing in your OpEx per barrel? What levels are you trying to reach and what more can be done?

Daniel S. Oliver

On the OpEx side of the business for the pipeline and storage business, we have 3 primary focuses for OpEx reduction and a study into the OpEx for benchmarking. But the first one comes from looking at risk-based inspection on our API 653 tanks. Second one comes from the energy optimization in our pipeline systems. The third one centers around maintenance planning and maintenance execution. And then like I said, in order to really take a look and begin benchmarking ourselves against competition, we are going to be looking at a study that we will complete in 2014 that will help us compare it on a dollar-per-barrel basis and in a storage basis.

Unknown Analyst

Okay, that's helpful. Any initial thoughts on the magnitude by which you could reduce that, or is it too soon to tell?

Daniel S. Oliver

It's too soon to tell. I could give you a range, but it's -- I think it would be best if I just wait.

Unknown Analyst

Okay. Are there unique factors affecting your business because it seems like that would be an area where you can add significant value immediately? Are there things that factor into your OpEx per barrel calculation that wouldn't affect the peer group that makes you look so drastically different?

Daniel S. Oliver

Well, we do have a lot of very large marine terminals, St. Eustatius, Point Tupper, Corpus and Amsterdam. Those typically run a much higher OpEx level than a normal landlocked terminal because you're employing tugs and barges and assist vessels and whatnot. So yes, I do think there are some unique circumstances because of the rather large footprint in the marine terminal business.

Unknown Analyst

Okay. And then the G&A rate, the $23 million to $24 million, is that a good run rate going forward or is there the opportunity to cut that down as well?

Bradley C. Barron

That's a pretty good run rate going forward.

Operator

Your next question comes from Selman Akyol of Stifel.

Selman Akyol - Stifel, Nicolaus & Co., Inc., Research Division

I just wanted to follow up on the G&A question. So you were down 15% from last year, but up fairly sharply from third quarter and a run rate around $19 million. So can you just talk a little bit about the dynamics that's going on there?

Thomas R. Shoaf

Well, I mean, for G&A, I mean, we said we have a run rate of about $23 million, $24 million. And this year, we've actually -- we did a lot of cutting in that area to the tune of $20 million to $30 million worth of cuts across the board that bled in from G&A and also went into OpEx and all that. So we went through some pretty significant cuts this year to try and reduce that. So that was kind of our objective, and we got there, so...

Daniel S. Oliver

Selman, you asked about the third quarter versus fourth quarter numbers. I mean, the G&A has been varying up and down a little bit just because as the unit price changes, some of our compensation plans change too. So that expense can go down when unit price drops, and it can go up when the unit price increases.

Operator

Your next question comes from Jeff Birnbaum of UBS.

Jeffrey Birnbaum - UBS Investment Bank, Research Division

Sorry if I missed this earlier, but did you give an update on kind of how recontracting is going on some of the storage terminals that you've really been discussing the most in the past few quarters?

Daniel S. Oliver

I can give you a little update. In 2013, we think we realized the majority of some of the lower storage rates that we've seen prevalent really throughout the world [ph]. We think we've taken the brunt of most of that. We do have a few locations where we have some underutilized assets that's still looking to fill some tanks. It's a little early to talk about some of these, but we have some exciting things, we think, going on, and some of those facilities, I think, will be a real positive turn in our outlook for 2014. But we're still working on getting those contracts executed. But I think, in all, I'm pretty positive about what's going on here for the rest of 2014, getting back to a fully or more fully utilized system.

Jeffrey Birnbaum - UBS Investment Bank, Research Division

Okay. And then one more, following up on some of the Eagle Ford volume questions and the comments on some of the strength you've been seeing in that system. Do you know what the volumes actually were on that system in the fourth quarter and what overall drove crude throughput down quarter-over-quarter and year-over-year?

Daniel S. Oliver

Eagle Ford throughputs in the fourth quarter were around 190,000 barrels a day, or at that level.

Thomas R. Shoaf

At the end of fourth quarter.

Daniel S. Oliver

And we're about at that level today. And really, as I mentioned earlier, while we may see some of those early volumes trickle in for the expansion that's coming online in the third quarter of this year, I think our next real step-up is when that expansion is complete in the third quarter.

Operator

[Operator Instructions] There are no further questions at this time. Sir, do you have any closing remarks?

Chris Russell

Thanks, Amy. We just like to thank everybody for joining us on the call today. And if anybody has any additional follow-up questions, please feel free to call us, call the Investor Relations Department of NuStar. Thank you very much.

Operator

Thank you for participating in today's teleconference. At this time, you may all disconnect.

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Source: NuStar GP Holdings, LLC Management Discusses Q4 2013 Results - Earnings Call Transcript

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