NuStar completes purchase of South Texas crude assets from TexStar
SAN ANTONIO--(BUSINESS WIRE)--Dec. 14, 2012--
NuStar Energy L.P. (NYSE: NS) today announced that it has closed on the
purchase of crude oil pipeline, gathering and storage assets in the
Eagle Ford Shale region from TexStar Midstream Services LP for
approximately $325 million. The company is also acquiring natural gas
liquids (NGL) assets from TexStar that are also in the Eagle Ford Shale
region for approximately $100 million, and that acquisition is expected
to close in the first quarter of 2013, subject to certain closing
conditions.
The closing of the TexStar acquisition comes on the heels of NuStar’s
announcement that the company plans to sell its San Antonio refinery,
and another announcement that it has entered into a long-term pipeline
and terminal services agreement with ConocoPhillips that will allow
expansion of NuStar’s South Texas Crude Oil Pipeline System. All of
these transactions are part of NuStar’s announced strategic redirection
away from the margin-based refining and marketing business in order to
further grow its fee-based pipeline and storage operations through
internal growth projects and acquisitions.
“The TexStar acquisition and related projects make NuStar one of the top
logistics players in the Eagle Ford Shale region. The crude oil assets
we are purchasing from TexStar will be integrated with our existing
pipeline and storage system in South Texas, and this will further
integrate NuStar with producers and marketers of Eagle Ford Shale crude
oil,” said Curt Anastasio, president and CEO of NuStar. It will also
provide Eagle Ford crude producers with greater ability to move
production to Corpus Christi, where they will have access to NuStar’s
Corpus Christi storage and dock space that can be utilized for shipments
to other markets.
“It is important to note that these crude oil assets should begin
generating cash flow immediately, and NuStar takes on no commodity or
margin risk as a result of this transaction or the NGL asset
transaction,” Anastasio added.
Crude Oil Assets
The crude asset acquisition includes a crude pipeline system that spans
from LaSalle County and Frio County to Live Oak County. The system has
the capacity to transport 100,000 barrels per day (BPD) of crude oil and
consists of approximately 140 miles of crude transmission and gathering
lines. NuStar is also acquiring five storage terminals located along the
pipeline system that have a combined capacity of 643,400 barrels. They
include TexStar’s Gardendale terminal in LaSalle County, its Highway 85
terminal in Frio County, its Highway 97 and Highway 16 terminals in
McMullen County, and its Oakville terminal in Live Oak County. The
TexStar system was connected to NuStar’s recently constructed
600,000-barrel Oakville storage terminal and the crude is transported to
NuStar’s 1.6-million-barrel Corpus Christi North Beach storage terminal
via its existing 16-inch pipeline.
Anastasio noted that the system is currently transporting approximately
70,000 BPD, and that its 100,000-BPD capacity should be reached by
mid-2013. Approximately 90 percent of the throughput on this system is
secured by long-term, take-or-pay commitments and acreage dedications
from Eagle Ford producers and marketers.
NuStar expects to spend $65 to $85 million over the next 18 to 24 months
(with the majority being spent in 2013) to integrate and complete crude
gathering and terminal assets, and projected EBITDA from the assets is
expected to range between $10 and $30 million in 2013, between $45 and
$65 million in 2014, and between $50 and $70 million in 2015 and beyond
when the assets are completed and fully integrated.
Anastasio noted that approximately $330 million of growth capital will
be required to complete NGL projects after that acquisition closes, and
estimated EBITDA generated from the NGL assets should be in the $40 to
$60 million range in 2014, and in the $70 to $90 million range in 2015
and beyond upon completion of the NGL asset projects.
“As we’ve said, this transaction has the potential to significantly
transform NuStar’s earnings potential for the foreseeable future, and
there are many more exciting opportunities before us,” said Anastasio.
About NuStar Energy
NuStar Energy L.P., a publicly traded master limited partnership based
in San Antonio, is one of the largest independent liquids terminal and
pipeline operators in the nation. NuStar currently has 8,433 miles of
pipeline; 82 terminal and storage facilities that store and distribute
crude oil, refined products and specialty liquids; a fuels refinery with
a throughput capacity of 14,500 barrels per day; and 50% ownership in
two asphalt refineries with a combined throughput capacity of 104,000
barrels per day. The Partnership’s combined system has approximately 94
million barrels of storage capacity, and NuStar has operations in the
United States, Canada, Mexico, the Netherlands, including St. Eustatius
in the Caribbean, the United Kingdom and Turkey. For more information,
visit NuStar Energy L.P.'s Web site at www.nustarenergy.com.
About TexStar
TexStar is a full service midstream company focused on providing a full
suite of midstream services to producers in South Texas. TexStar’s goal
is to provide the highest netback possible to producers for gas and
natural gas liquids by providing low cost gathering, treating,
compression and processing as well as access to multiple product
outlets. TexStar’s gas assets include over 500 miles of low pressure
sour gas gathering systems located primarily in Frio and LaSalle
counties, an acid gas treater and injection well ultimately capable of
processing more than 250 MMCfd of inlet gas, a high pressure rich gas
system consisting of over 130 miles of 24" and 16" inlet trunk lines and
over 40 miles of 20” residue take away. Both the high pressure rich gas
line and the residue take away line are currently co-owned through a
joint venture with TEAK Midstream, LLC. Additionally, TexStar is
currently constructing a cryogenic processing plant designed for 250
MMcfd of inlet gas capacity with estimated ethane recoveries in excess
of 90%, which should be operational in April 2013. TexStar is
headquartered in San Antonio, TX and is a portfolio company of funds
managed by EIG Global Energy Partners and HM Capital Partners, LP. More
information can be found at TexStar’s website www.TexStarMS.com.
Within the text of this release, we make reference to certain
non-GAAP financial measures, which should not be considered as
alternatives to GAAP measures. Reconciliations of these non-GAAP
financial measures to the most directly comparable financial measure
calculated in accordance with GAAP are included on our website at www.nustarenergy.com
within the Investors tab.
Source: NuStar Energy L.P.
Media:
NuStar Energy L.P.
Mary Rose Brown, 210-918-2314
maryrose.brown@nustarenergy.com
or
TexStar
Midstream Services LP
Bruce Kates, 866-768-7794
Bruce.Kates@TexStarMS.com
or
Investors:
NuStar
Energy L.P.
Chris Russell, 210-918-3057
chris.russell@nustarenergy.com