However, its storage segment saw a weaker year-on-year operating income.

“Our strong first quarter results were primarily driven by higher renewal rates at several of our terminal facilities, incremental throughput fees associated with our Martin terminal acquisition and an increase in ammonia throughput
volumes due to a warmer spring season. In addition, we experienced improved results in our Fuels Marketing segment and a decrease in overall operating expenses during the quarter,” said Brad Barron, CEO of NuStar.

NuStar, 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 approximately 8,700 miles of pipeline and 79
terminal and storage facilities that store and distribute crude oil, refined products and specialty liquids. The partnership’s combined system has approximately 95 million bbl of storage capacity, and NuStar has operations in the United States, Canada, Mexico, the Netherlands, including St. Eustatius in the Caribbean, and the United Kingdom.

Net income in the first quarter was at $57.940 million versus $57.401 million a year ago. EBITDA was at $154.143 million, up from $147.536 million in the first quarter of 2016.

“For the last three years, we have been focused on de-risking our base business, strengthening our balance sheet and restoring our distribution coverage. But for the timing of our equity offering, which closed before the ex-dividend date for the first quarter common unit distribution, this would have been our twelfth consecutive quarter of distribution coverage, demonstrating, once again, the resiliency and strength of our legacy pipeline and storage operations,” Barron said.

Pipeline segment operating income in the first quarter rose to $65.028 million from $64.265 million a year ago, and storage segment operating income dropped to $53.759 million from $57.013 million in the first quarter of 2016.

Fuels marketing segment operating income turned in a profit of $5.140 million versus a loss of $773,000 a year ago.

On April 11, NuStar said that it will acquire Navigator Energy Services LLC for approximately $1.475 billion (the Navigator Acquisition), subject to purchase price adjustments, and expects to close the acquisition in the second quarter.

“Our base business delivered solid results in first quarter, and in the second quarter, we are poised to acquire Navigator’s Permian assets, providing a new platform for future growth in one of the most prolific basins in the United States. Given how the Navigator assets will complement our existing portfolio and their location in the Core of the Midland basin, these assets couldn’t be a better fit for NuStar,” Barron said.

Barron added that an acquisition of this size will cause NuStar’s distribution coverage to drop below a one-times coverage for the remainder of 2017, but with the anticipated ramp-up in EBITDA over the next few years, its current forecast indicates that NuStar could return to distribution coverage as early as the second half of 2018.

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