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NuStar Energy L.P.

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NuStar has successfully weathered crude's historic decline through its large and diverse asset portfolio that provides highly certain cash flows. NuStar’s fee-based transportation and storage assets make it less susceptible to commodity price weakness. The partnership’s acquisition of Navigator Energy Services marked NS’s entry into Permian, thus boosting revenues.  Further its merger decision with its general partner and elimination of IDRs will likely lower the cost of capital, thereby creating a more efficient and transparent structure. However, as a part of the merger, NS is also set to reduce its quarterly distribution which is likely to dampen investor’s confidence. As it is, NuStar's debt-to-equity ratio of nearly 2 is significantly above the industry average. As such we take a cautious stance on the prospects of the sock.


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