Publicly traded energy master limited partnership
NuStar Energy L.P.
) entered into a deal with North American specialty hydrocarbons
Calumet Specialty Products Partners LP
) to sell its San Antonio refinery and associated terminal in
Elmendorf, Texas. Indianapolis-based Calumet will pay $100
million for the purchase along with $15 million for the
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Per the deal, NuStar will sell the refinery, a terminal in
Elmendorf and a 12-mile pipeline that links the refinery to the
terminal. Along with these, Calumet will also acquire operating
and logistics assets and inventories of NuStar Refining LLC and
NuStar Logistics LP.
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, specialty solvents are also produced at the
NuStar will use the proceeds of this transaction to promote its
fee-based pipeline and storage operations. The deal is expected
to close on January 2, 2013.
Over the last few years, NuStar consolidated its business through
a combination of organic efforts and accretive acquisitions. We
believe the higher operating expenses associated with this
expanded asset base may lead to reduced returns going forward.
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.
) in 2006 - currently retains a Zacks #5 Rank (short-term Strong
Sell rating). We are also maintaining our long-term Underperform
recommendation on the unit.