NuStar Energy L.P. (NYSE: NS) announced today that it has closed on the sale of 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 of approximately $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.
NuStar sold the refinery 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 to fund the growth of those fee-based pipeline and storage operations.
“The purchase of the refinery was an excellent opportunity for NuStar, but with our strategic direction to focus on and grow our pipeline and storage operations, it was the right time to sell it, and we are pleased that we found the right buyer in Calumet because they are a solid operator and they will continue the momentum we started by investing in the refinery and its employees,” said NuStar President and CEO Curt Anastasio. “The refinery has an outstanding group of employees who worked very hard to make tremendous improvements in the refinery’s safety, environmental performance, reliability, and efficiency, and Calumet is fortunate to be bringing them aboard.”
To facilitate the transition of the facilities from NuStar to Calumet, the two companies have entered into a transition services agreement in which NuStar will continue providing operational and administrative support for the next few months. Mike Milam, vice president and plant manager, announced that he has accepted an offer with Calumet and will continue in his leadership role at the refinery.