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NuStar Energy Inks $1.48B Deal to Expand in Permian Basin
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San Antonio-based pipeline operator NuStar Energy L.P. (NS - Free Report) recently signed an agreement to acquire the privately held Navigator Energy Services, LLC. The purchase of the Dallas-based pipeline company will mark the entry of NuStar in the Permian Basin.
Navigator Energy owns and operates crude oil transportation, pipeline gathering and storage assets located in the Midland Basin of West Texas. The assets include about 500 miles of crude oil pipelines, a pipeline gathering system having 400,000 barrels per day of pumping capacity and about 1 million barrels of crude oil storage capacity.
The transaction is valued at $1.48 billion subject to closing adjustments. The partnership plans to fund a portion of the purchase price of the deal through a public equity offering of 10.5 million common units and an underwriter’s option to purchase up to an additional 1.575M units. Subject to customary closing conditions and regulatory approvals, the deal is set for closure in May.
NuStar Energy currently operates about 8,700 miles of pipeline and 79 terminal and storage facilities in the U.S., Canada, Mexico, the Netherlands, St. Eustatius in the Caribbean and the U.K. The deal is in line with the company’s strategy to expand its operations into one of the most prolific basins in the U.S. The region’s extensive pipeline network and abundant labor supplies will enable the partnership to gain greater margins at the current crude prices. Other midstream players like Plains All American Pipeline, L.P. (PAA - Free Report) and Kinder Morgan, Inc. (KMI - Free Report) have also expanded their operations in the Permian Basin, which is the largest shale play in the U.S.
Notably, NuStar Energy also provided an update on its first-quarter outlook. The partnership expects net income between $55 million and $62 million, EBITDA to lie within the range of $149–$159 million and distributable cash flow to be between $100.7 million and $108.2 million.
Zacks Rank and Key Pick
NuStar Energy is a master limited partnership that engages in the transportation and storage of crude oil as well as refined products. The partnership reports its operation under three business segments: Storage, Pipeline and Fuels Marketing.
The partnership outperformed the Zacks categorized Oil and Gas Production and Pipeline MLB industry over the last six months. During the aforesaid period, units of NuStar Energy rallied almost 6.3% while the broader industry gained around 5.3%. However the partnership had posted a negative average earnings surprise of 33.74%.
NuStar Energy carries a Zacks Rank #3 (Hold).
PBF Logistics LP is a better-ranked partnership from the same industry, sporting a Zacks Rank #1 (Strong Buy). The partnership reported a positive average earnings surprise of 17.8% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
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NuStar Energy Inks $1.48B Deal to Expand in Permian Basin
San Antonio-based pipeline operator NuStar Energy L.P. (NS - Free Report) recently signed an agreement to acquire the privately held Navigator Energy Services, LLC. The purchase of the Dallas-based pipeline company will mark the entry of NuStar in the Permian Basin.
Navigator Energy owns and operates crude oil transportation, pipeline gathering and storage assets located in the Midland Basin of West Texas. The assets include about 500 miles of crude oil pipelines, a pipeline gathering system having 400,000 barrels per day of pumping capacity and about 1 million barrels of crude oil storage capacity.
The transaction is valued at $1.48 billion subject to closing adjustments. The partnership plans to fund a portion of the purchase price of the deal through a public equity offering of 10.5 million common units and an underwriter’s option to purchase up to an additional 1.575M units. Subject to customary closing conditions and regulatory approvals, the deal is set for closure in May.
NuStar Energy currently operates about 8,700 miles of pipeline and 79 terminal and storage facilities in the U.S., Canada, Mexico, the Netherlands, St. Eustatius in the Caribbean and the U.K. The deal is in line with the company’s strategy to expand its operations into one of the most prolific basins in the U.S. The region’s extensive pipeline network and abundant labor supplies will enable the partnership to gain greater margins at the current crude prices. Other midstream players like Plains All American Pipeline, L.P. (PAA - Free Report) and Kinder Morgan, Inc. (KMI - Free Report) have also expanded their operations in the Permian Basin, which is the largest shale play in the U.S.
Notably, NuStar Energy also provided an update on its first-quarter outlook. The partnership expects net income between $55 million and $62 million, EBITDA to lie within the range of $149–$159 million and distributable cash flow to be between $100.7 million and $108.2 million.
Zacks Rank and Key Pick
NuStar Energy is a master limited partnership that engages in the transportation and storage of crude oil as well as refined products. The partnership reports its operation under three business segments: Storage, Pipeline and Fuels Marketing.
The partnership outperformed the Zacks categorized Oil and Gas Production and Pipeline MLB industry over the last six months. During the aforesaid period, units of NuStar Energy rallied almost 6.3% while the broader industry gained around 5.3%. However the partnership had posted a negative average earnings surprise of 33.74%.
NuStar Energy carries a Zacks Rank #3 (Hold).
PBF Logistics LP is a better-ranked partnership from the same industry, sporting a Zacks Rank #1 (Strong Buy). The partnership reported a positive average earnings surprise of 17.8% in the trailing four quarters. You can see the complete list of today’s Zacks #1 Rank stocks here.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Click here for Zacks' private trades >>