August, 2021 [ExpressNews] – San Antonio-based pipeline operator NuStar Energy L.P. said Monday it will sell eight of its oil storage terminals outside Texas to Sunoco LP for $250 million.
The eight terminals represent 14.8 million barrels of storage capacity. That’s about a fifth of the total storage space throughout NuStar’s network, which spans the U.S and includes facilities in Mexico and Canada.
Seven of the eight terminals NuStar is selling are located on the East Coast and one is south of Chicago. The sale is expected to close before the end of this year.
NuStar, which will be left with 64 storage facilities in North America, said it sold the terminals because they no longer fit with its pipeline and storage business. The company’s network of facilities is centered in Texas and the Midwest.
“While these terminals are solid assets with great operations and employees, these facilities are no longer synergistic with NuStar’s core assets,” said Brad Barron, NuStar president and CEO. “Sunoco LP has assets in NY Harbor and in the Southeast U.S. that should provide such synergistic opportunities to ensure the continued success of these facilities and employees.”
Barron said NuStar will use proceeds from the sale to reduce the company’s debt.
At the end of the first quarter, NuStar said it had $3.4 billion in debt, and its debt has increased more than its earnings over the past year. Beginning in early 2020, the pandemic destroyed demand for refined products and has ravaged firms throughout the oil and gas industry.
“This divestiture will allow us to deploy the proceeds to further improve our debt metrics,” Barron said.
Sunoco is also acquiring another storage terminal in Maryland from Cato, Inc. for $5.5 million. Sunoco said purchasing the nine facilities would “result in a significant expansion of (Sunoco’s) midstream business,” and “enhance its platform for fuel distribution expansion.”
Sunoco distributes fuel to about 10,000 convenience stores and commercial customers across 30 states. The company is owned by Energy Transfer, a pipeline giant founded by Dallas billionaire Kelcy Warren.
Last December, NuStar sold two Texas City storage terminals that could store 3 million barrels for $106 million. The company said it used those proceeds to pay off debt.
NuStar will report second-quarter earnings Thursday.
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