NuStar Energy L.P. (NYSE: NS) announced today that it has entered into a purchase agreement to sell its San Antonio refinery and related assets, including a terminal in Elmendorf, TX and a pipeline connecting the terminal and refinery, to Calumet Specialty Products Partners, L.P. (“Calumet”) for $100 million, plus closing date inventory estimated to be $15 million. NuStar purchased the refinery and terminal out of bankruptcy in April 2011 for $41 million, and the company has invested approximately $54 million since then on improvements to the refinery. NuStar announced its plans to sell the refinery last month as part of its strategic redirection away from the earnings volatility associated with the margin-based refining business in order to further grow its more stable, fee-based pipeline and storage operations through internal growth projects and acquisitions, especially in the Eagle Ford Shale region and other U.S. shale plays, where NuStar already has extensive pipeline and storage operations. NuStar will use proceeds from the transaction, which is expected to have an effective date of January 1, 2013 and close on January 2, to fund the growth of those fee-based pipeline and storage operations.
“As we stated when we announced our intent to sell the refinery, it was an excellent opportunistic purchase for us, even though fuels refining wasn’t part of our strategic plan,” said NuStar President and CEO Curt Anastasio. “The refinery has an outstanding group of employees and we enjoyed working with them to make a tremendous amount of improvements to the refinery that made it a safer and more environmentally sound facility that is also much more reliable and profitable.
“This transaction will give the refinery employees the opportunity to be a part of a refining company with multiple refineries that has the depth of refining resources and expertise to provide the support the refinery needs to succeed over the long-term,” Anastasio added. “This is especially important since we completed a joint venture for our asphalt refining assets with Lindsay Goldberg that essentially makes the San Antonio refinery a ‘stand-alone’ facility, which is a very difficult position for a refinery because it limits resources and available capital. Calumet is committed to safety excellence, as well as continued improvements at the refinery and in the surrounding community. And one of the key reasons we chose Calumet’s bid is because they are well-known for their commitment to their employees. Our San Antonio refinery employees received significant increases in their compensation and benefits when they joined NuStar, and Calumet is also known for their strong compensation and benefits programs.”