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NuStar Closes Refinery Sale

Zacks Equity Research

Publicly traded energy master limited partnership NuStar Energy L.P. (NS) completed the sale of its San Antonio refinery and associated terminal in Elmendorf, Texas to North American specialty hydrocarbons producer Calumet Specialty Products Partners LP (CLMT).

Per the deal, NuStar sold the refinery, a terminal in Elmendorf and a 12-mile pipeline that links the refinery to the terminal. Indianapolis-based Calumet also acquired the operating and logistics assets and inventories of NuStar Refining LLC and NuStar Logistics LP. Calumet paid $100 million for the purchase along with $15 million for the inventory.

The San Antonio refinery was purchased by NuStar in April 2011, and has a capacity of 14,500 barrels per day of crude oil. Jet fuels, ultra-low sulfur diesel, naphtha, reformates, liquefied petroleum gas and specialty solvents are also produced at the complex.

NuStar will use the proceeds of this transaction to promote its fee-based pipeline and storage operations. Both the companies also entered into a transition services contract which entails NuStar to provide operational and administrative support for the coming few months.

San Antonio, Texas-based NuStar Energy engages in the transportation and storage of crude oil as well as refined products in the U.S., the Netherlands Antilles, Canada, Mexico, and the U.K. The company has three business segments: Storage, Transportation and Asphalt and Fuels Marketing.

Acquisitions have historically played a major role in the partnership’s growth profile and are expected to remain significant in the future. NuStar may find it difficult to complete accretive transactions moving forward, which could restrict its growth rate.

NuStar – which was spun off from the U.S. refiner Valero Energy Corp. (VLO) in 2006 – currently retains a Zacks #3 Rank (short-term Hold rating).

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