NuStar Snaps Up AGE Refining Assets - Analyst Blog
April 19 2011 - 8:36AM
Zacks
San Antonio-based partnership NuStar Energy
L.P. (NS) has agreed to acquire certain refining and
midstream properties from the bankrupt AGE Refining Inc. for $41
million. The purchase – already cleared by the U.S. Bankruptcy
Court – is expected to close shortly. AGE Refining filed for
Chapter 11 on February 8, 2010, citing a cash-flow crunch and is
currently in the midst of a court-supervised sale process.
As per the deal, NuStar will buy AGE Refining’s 14,500
barrel-per-day refinery in San Antonio, Texas and a 200,000 barrels
terminal in Elmendorf, Texas from the refiner's Chapter 11
Bankruptcy trustee.
The low-cost refinery, which is based on the South Side of San
Antonio, is involved in the purchase and processing of crude oils
and condensates from across South Texas, including the rapidly
developing Eagle Ford Shale. It manufactures and sells a number of
products that include jet fuels, ultra-low sulphur diesel, naphtha,
reformates, liquefied petroleum gas, specialty solvents, and other
fuels, to commercial/retail customers and the US military.
The transaction, though relatively small, is being hailed as a
great acquisition by NuStar, immediately adding to its earnings and
distributable cash flow. The owner and operator of crude oil and
refined products pipelines and storage facilities believes that the
AGE Refining assets will provide the partnership with a significant
economic benefit by capitalizing on the lower cost light crude oil
coming out of the Eagle Ford Shale. NuStar also intends to take
advantage of lower transportation costs, given the proximity
of the refinery to its operations.
NuStar Energy – which competes in the ‘Oil and Gas Pipelines’
industry with firms like Buckeye Partners L.P.
(BPL) and Pioneer Southwest Energy Partners L.P.
(PSE) – has a Zacks #3 Rank (Hold rating) in the short run. It is
the fourth largest independent liquids terminal operator in the
world and second largest in the U.S., apart from being the number
one asphalt producer on the East Coast and number three asphalt
producer in the U.S.
BUCKEYE PARTNRS (BPL): Free Stock Analysis Report
NUSTAR ENERGY (NS): Free Stock Analysis Report
PIONEER SW EGY (PSE): Free Stock Analysis Report
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