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AnonymousNov 7, 2007 (Reuters) – Independent midstream partnership NuStar Energy LP said it agreed to acquire CITGO Asphalt Refining Co’s asphalt operations and assets, making it the largest asphalt refiner on the U.S. East Coast.
San Antonio, Texas-based NuStar will pay $450 million plus working capital of about $100 million, at closing, for the assets.
The deal would add two asphalt refineries with a combined throughput capacity of 104,000 barrels per day (bpd) and three terminals to NuStar Energy’s existing asphalt business. The purchased assets include a 74,000 bpd refinery in Paulsboro, New Jersey, and a 30,000 bpd refinery in Savannah, Georgia.
These assets will contribute an additional 4.8 million barrels of storage capacity to the over 81 million barrels of total storage capacity that NuStar Energy L.P. currently has. Separately, the company reported third-quarter earnings that beat analysts’ expectations.
Shares of the company rose 2.09 percent to $63.45 in midday trade on the New York Stock Exchange. (Reporting by Hezron Selvi, Sreerupa Mitra in Bangalore; Editing by Saumyadeb Chakrabarty
Story link: http://www.reuters.com/article/marketsNews/idUKBNG3951420071107?rpc=44
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Update:
NuStar Energy L.P. to Acquire CITGO Asphalt Refining Company’s Asphalt Operations and Assets for $450 Million Plus Working Capital
Wednesday November 7, 7:29 am ET
Partnership to Become Largest Asphalt Refiner on the U.S. East CoastSAN ANTONIO–Nov 7, 2007 (BUSINESS WIRE)–NuStar Energy L.P. today announced that it has executed a definitive agreement to acquire CITGO Asphalt Refining Company’s asphalt operations and assets for $450 million plus working capital estimated to be $100 million at closing. As a result, NuStar Energy L.P. will add two asphalt refineries with a combined throughput capacity of 104,000 barrels-per-day (BPD) and three terminals to its existing asphalt business, which includes eight terminals and nearly 2.6 million barrels of storage. The acquisition will make NuStar the largest asphalt refiner on the U.S. East Coast.
The purchased assets include a 74,000 BPD asphalt refinery in Paulsboro, New Jersey, a 30,000 BPD asphalt refinery in Savannah, Georgia, which is the only refinery and asphalt producer on the Southeast seaboard; and three asphalt terminals. Altogether, these assets will contribute an additional 4.8 million barrels of storage capacity to the over 81 million barrels of total storage capacity that NuStar Energy L.P. currently has. In addition, NuStar gains access to 20 terminals with a total storage capacity of approximately 3.8 million barrels that are used by the company and leased from various third parties. Four of these 20 terminals are currently leased from NuStar Energy L.P.
“This is a great acquisition for our investors in NuStar Energy L.P. and NuStar GP Holdings, LLC and the employees and the communities where these assets are located,” said Bill Greehey, Chairman of NuStar Energy L.P. and NuStar GP Holdings, LLC. “We are purchasing some very strategic assets for about 50 percent of their replacement value and we expect they’ll generate attractive levels of returns.
“This acquisition is a milestone for NuStar’s heavy oil strategy as it gives us a leading presence in one of the most attractive asphalt markets in the country. Given the tight supply and demand balance we foresee going forward in this business, the timing of this acquisition couldn’t be better,” he said.
“We continue to see a significant backlog of U.S. refinery upgrading expansion projects, particularly coker projects that allow refiners to process cheaper types of crude oil. Since coker units process more of the byproducts that were formerly used to produce asphalt, we expect the supply of asphalt will tighten and asphalt margins will increase. So with this acquisition, we expect we’ll be able to take advantage of coker margins without having to invest in a coker, which can be a very expensive endeavor. As a result, we believe this is an excellent opportunity to acquire asphalt assets at attractive prices, significantly less than their replacement values,” said Greehey.
Curt Anastasio, NuStar Energy L.P.’s Chief Executive Officer said, “With this transaction, we now have a solid footing in what we see as a great business, which provides us further leverage to selectively increase our exposure to it. We expect this acquisition will be accretive to cash flows and earnings and is an excellent complement to our existing business. In addition, this acquisition will continue to diversify NuStar’s customer base and expand our geographic presence.”
NuStar Energy L.P. expects the transaction to close around year-end, subject to customary regulatory approvals including those under the Hart-Scott-Rodino Antitrust Improvements Act.
This news article @ http://biz.yahoo.com/bw/071107/20071107005685.html?.v=1
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NuStar Energy L.P. will host a conference call at 11:00 a.m. ET (10:00 a.m. CT) today, November 7, 2007, to discuss this transaction. Anyone interested in listening to the presentation can call 800/622-7620, passcode 20992515, or visit the partnership’s Web site at http://www.nustarenergy.com. International callers may access the call by dialing 706/645-0327, passcode 20992515. The company intends to have a playback available following the presentation, which may be accessed by calling 800/642-1687, passcode 20992515. A live broadcast of the conference call will also be available on the partnership’s Web site at http://www.nustarenergy.com. In addition, further information about the transaction is provided in a management presentation posted to the NuStar Energy L.P. and NuStar GP Holdings, LLC Web sites at http://www.nustarenergy.com and http://www.nustargp.com in the Investors portion of the Web sites.
NuStar Energy L.P. is a publicly traded, limited partnership based in San Antonio, with 9,113 miles of pipeline, 85 terminal facilities and four crude oil storage tank facilities. The second largest independent liquids terminal operator in the world, NuStar has operations in the United States, the Netherlands Antilles, Canada, Mexico, the Netherlands and the United Kingdom. The partnership’s combined system has over 81 million barrels of storage capacity, and includes crude oil and refined product pipelines, refined product terminals, a petroleum and specialty liquids storage and terminaling business, as well as crude oil storage facilities. For more information, visit NuStar Energy L.P.’s Web site at http://www.nustarenergy.com.
CITGO, based in Houston, Texas, is a refiner, transporter and marketer of transportation fuels, lubricants, petrochemicals, refined waxes, asphalt and other industrial products. The company is owned by PDV America, Inc., an indirect wholly owned subsidiary of Petróleos de Venezuela, S.A., the national oil company of the Bolivarian Republic of Venezuela. For more information, visit http://www.citgo.com. Cautionary Statement Regarding Forward-Looking Statements
This press release includes forward-looking statements within the meaning of the Securities Litigation Reform Act of 1995 regarding future events and the future financial performance of NuStar Energy L.P. All forward-looking statements are based on the partnership’s beliefs as well as assumptions made by and information currently available to the partnership. These statements reflect the partnership’s current views with respect to future events and are subject to various risks, uncertainties and assumptions. These risks, uncertainties and assumptions are discussed in NuStar Energy L.P.’s 2006 annual report on Form 10-K and subsequent filings with the Securities and Exchange Commission.Contact: NuStar Energy, L.P., San Antonio
Investors, Mark Meador, Director,
Investor Relations: 210-918-2895
or
Media, Mary Rose Brown, Senior Vice President,
Corporate Communications: 210-918-2314
Web site: http://www.nustarenergy.com
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Here are a couple of updates on the Sale of CITGO’s Asphalt refineries in Paulsboro & Savannah to NuStar Energy for $550 million for the 104 MBD combined capacity (& terminals) – which works out to be $4325/Bbl Capacity. About 1/4 of the current replacement cost on larger/complex Refineries and while these are very simple topping units; they are very large & more integrated into the asphalt side of the business with tankage and terminals as opposed to some of the normal Refineries asphalt units or asphalt topping refineries. The capacity cost on these refineries is still significantly below the replacement values.
The purchase moves NuStar into top producer slot on the US East Coast as largest Asphalt Refiner. And since NuStar is already the worlds 2nd largest independent liquid terminal operator there could be a logistical advantage for asphalt imports. PDVSA supplied about ~half of the demand for these plants with Boscan crude.
One of the interesting things looking at asphalt refineries – is the difference between the EIA US Refinery survey compared to the OGJ US Refinery survey. The EIA has 143 US refineries listed, while the OGJ has 131 US refineries listed and it has been ~this way since 2003. Most of the difference is the 2002 & 2003 OGJ de-listed 13 US refineries that were asphalt topping units which are still operating while the EIA still includes them. And adding more confusion to issue – the OGJ has added several global refineries to its list that are simple asphalt topping refineries.
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NuStar completes buy of CITGO asphalt operations
Web Posted: 03/20/2008 11:10 AM CDT
Vicki Vaughan Express-News Business Writer
San Antonio-based NuStar Energy LP announced today that it has completed its acquisition of CITGO Asphalt Refining Co.’s asphalt operations and assets for $450 million, along with inventory of about $360 million.
The acquisition is expected to vault NuStar into the Fortune 500 for the first time, ranking it in 393rd place.
The acquisition will give NuStar the capacity to produce and sell more than 36 million arrels of asphalt and light products a year. NuStar will become the No. 3 producer of asphalt in the U.S. NuStar’s new assets include a 74,000 barrel-a-day asphlat refinery in Paulsboro, N.J. and a 30,000 barrel-a-day refinery in Savannah, Ga. It also is buying three asphalt terminals.
“We’re excited to have completed this acquisition as we now have a leading presence in one of the most attractive asphalt markets in the country and a solid footing in what we see as a great business going forward,” NuStar Chairman Bill Greehey said. “We are purchasing some very strategic assets for around 50 percent of their replacement value and we’re expecting them to make a significant contribution to our earnings.”
NuStar, formerly Valero LP, separated from Valero Energy Corp. last year.
vvaughan@express-news.net
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