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Master limited partnership NuStar Energy L.P. (NS - Analyst Report) has closed the previously announced deal to purchase South Texas crude assets from privately held natural gas infrastructure provider TexStar Midstream Services LP.

As part of the transaction NuStar bought crude oil pipeline, gathering and storage properties in the South Texas Eagle Ford Shale play for a total consideration of about $325 million. Additionally, the partnership will procure natural gas liquids (NGL) assets in the play from TexStar for about $100 million. The NGL deal is likely to close by March 2013.

NuStar’s acquired crude assets consist of an oil pipeline system stretching from Frio County and LaSalle County to Live Oak County and can carry 100,000 barrels per day (BPD) of crude oil and have crude transmission and gathering lines spreading across 140 miles. The partnership will also get five storage terminals located with a total capacity of 643,400 barrels.

NuStar management expects to shell out at least $65 million over the next 18 to 24 months for integrating and completing the crude assets. The partnership expects earnings from the acquired properties be in the range of $10-$30 million for 2013, $10-$65 million for 2014 and $50-$70 million for 2015 and beyond.

NuStar forecasts that post closure, about $330 million of growth capital, will be needed to complete the NGL projects. The partnership sees profits of $40 to $60 million for 2014 and $70 to $90 million for 2015 and beyond from the NGL assets.

In a separate announcement, NuStar said that it will postpone the deadline on the Niobrara Falls Open Season from December 14, 2012 to February 15, 2013. The partnership expects that due to this extension, the potential shippers will get more time to evaluate the project and also for submit binding commitments.

San Antonio, Texas-based NuStar Energy engages in the transportation and storage of crude oil as well as refined products in the U.S., the Netherlands Antilles, Canada, Mexico, and the U.K. The company has three business segments: Storage, Transportation and Asphalt and Fuels Marketing.

NuStar, which was spun off from the U.S. refiner Valero Energy Corp. (VLO - Analyst Report) in 2006, currently retains a Zacks #5 Rank (short-term Strong Sell rating). We are also maintaining our long-term Underperform recommendation on the units.

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