NuStar Energy L.P. (NYSE: NS) today announced that it has signed an agreement to purchase crude oil pipeline, gathering and storage assets and natural gas liquids (NGL) assets in the Eagle Ford Shale region from TexStar Midstream Services LP for $425 million. The asset acquisition will close in two separate transactions and will likely be financed with a combination of borrowings under NuStar’s credit facility and junior subordinated notes. The crude oil assets will be acquired first followed by the acquisition of the NGL assets a couple of months later.
The crude oil and NGL assets NuStar is acquiring will be integrated with NuStar’s existing pipeline operations in the region. Upon successful completion of Federal Trade Commission review, the acquisition of the crude oil assets is expected to close in early December, while the NGL asset transaction is expected to be completed early in the first quarter of 2013, subject to certain closing conditions.
The company also announced today that it has initiated a sale process for its San Antonio refinery and related terminal in Elmendorf, Texas (purchased out of bankruptcy in April 2011). The assets include a pipeline NuStar constructed, which connects the terminal to the refinery.
“The TexStar acquisition and refinery divestiture are the next critical steps in our strategic redirection of NuStar away from the margin-based refining and marketing business in order to further grow our fee-based pipeline and storage operations through internal growth projects and acquisitions,” said NuStar President and CEO Curt Anastasio. “NuStar was actually the first company to move Eagle Ford crude by pipeline, and we are fortunate to have extensive pipeline and terminal assets already in operation throughout the Eagle Ford region. In fact, we have more high-return investment opportunities in stable, fee-based transportation and storage projects than we have seen in the history of our company. With this acquisition, we are capturing the opportunity to fill up previously under-utilized and idle pipelines and to construct new pipeline connections and other logistics assets for further growth.