NuStar (NS) Announces Agreement to Acquire Crude Oil and Refined Product Terminal Assets from Martin Midstream Partners (MMLP)

October 21, 2016 7:05 AM EDT

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NuStar Energy L.P. (NYSE: NS) today announced that it has signed an agreement to purchase crude oil and refined product storage assets in the Port of Corpus Christi from Martin Midstream Partners L.P. (Nasdaq: MMLP) for a net $93 million. The acquisition, which is expected to close by the end of the fourth quarter of 2016, is expected to be immediately accretive to NuStar’s earnings based on the terminal’s current, actual volumes. It also reflects an approximate seven times multiple based on the forecasted four-year average earnings before interest, taxes, depreciation and amortization (EBITDA) attributable to the assets of $13.5 million annually. When combined with NuStar’s existing terminal operations in Corpus Christi, the acquisition will give NuStar over 3.6 million barrels of total storage in the Port of Corpus Christi, including 3.1 million barrels of crude oil storage and 577,000 barrels of refined product storage.

The terminal NuStar is acquiring includes 1.15 million barrels of total storage, which is comprised of 900,000 barrels of crude oil storage and 250,000 barrels of refined product storage. The terminal has direct connectivity to Eagle Ford crude oil production and receives crude oil and condensate via its connection to the Harvest Pipeline and through its six-bay truck rack. The terminal has access to two of the port’s deep-water crude oil docks, including exclusive use of the port’s new crude oil dock, and a barge dock. The terminal is located on 25 acres, and has room for further expansion.

NuStar also expects to achieve significant operational synergies between its existing North Beach Terminal and the Martin terminal, which are located adjacent to each other in the Port of Corpus Christi.

“Corpus Christi has been a strategic hub for NuStar for many years, and we are very pleased to make this acquisition that will not only solidify our presence there, but also give us the ability to serve a new pipeline and new customers, and provide us greater connectivity to domestic and international crude oil and refined products markets,” said NuStar President and CEO Brad Barron. “Just as importantly, it will also allow us to better serve our existing customers. With the use of the docks that are part of this acquisition, we are better able to meet the future needs of an existing customer who is interested in increasing volumes and the length of their contract with us.

“And this terminal fits perfectly within our acquisition criteria as it is synergistic with our existing assets, is immediately accretive to earnings and has additional upside growth potential,” Barron added.

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