From the San Antonio Business Journal
Midstream company NuStar Energy reported a profitable first quarter and is starting the second quarter with two financial transactions that will help to pay for a $1.475 billion deal to buy its first assets in the Permian Basin of West Texas.
NuStar Energy LP (ticker: NS) released its first quarter earnings before the market opened Monday morning. The San Antonio-based company reported making $57.9 million of net income on $487.4 million in revenue attributed to higher renewal rates at several of its terminal facilities. The company’s figures were up from the $44.8 million of net income on $405.7 million in revenue reported during the first quarter of 2016.
Company earnings per share missed analyst expectations by five cents. The stock closed at just below $48 per share on Monday. The company held a morning earnings call focused on a $1.475 billion deal to buy Dallas-based Navigator Energy Services LLC and all of its pipeline and storage terminal assets in the Permian Basin.
Over the past two weeks, NuStar has issued 14,375,000 new shares of stock to raise $665 million in addition to issuing $550 million in senior notes to help fund the Navigator acquisition deal. NuStar CEO Brad Barron said the deal is expected to close during the second quarter.
“Given how the Navigator assets will complement our existing portfolio and their location in the Core of the Core of the Midland basin, these assets couldn’t be a better fit for NuStar,” Barron said.
During the company’s first quarter earnings call, NuStar Energy Senior Vice President Danny Oliver said reiterated plans to link its new Permian Basin pipelines and storage terminals to its assets in the Eagle Ford Shale and Port of Corpus Christi.
“We’re taking to several customers in the Permian Basin who are interested in that project and have been for some time, so we haven’t launched an open season and i don’t expect that we will until we have a little more closure on those conversations,” Oliver said.
NuStar expects its Permian Basin assets to reach full volumes by 2019. During the earnings call, Olivar said linking those new assets to the NuStar’s marine terminal at the Port of Corpus Christi makes a lot of sense for many of its oil company customers.
“If you want to get to the water, people want to get to Corpus,” Oliver said. “They prefer Corpus over Houston. You can’t get to the water through Cushing or you wouldn’t expect to go that route just to go to Houston through Cushing. Most of the interest that we have are people that want the access to water.”
