NuStar Energy L.P. (NS)
Q4 2012 Earnings Call
February 01, 2013, 03:00 pm ET
Executives
Chris Russell - VP, Investor Relations
Curt Anastasio - President & CEO
Steve Blank - EVP, CFO & Treasurer
Danny Oliver - SVP, Marketing & Business Development
Analysts
Brian Zarahn - Barclays Capital
Mark Reichman - Simmons
Cory Garcia - Raymond James
Steve Sherowski - Goldman Sachs
James Jampel - HITE Hedge
Kevin Cashman - Assurant
Presentation
Operator
Good afternoon. My name is McKenzie and I will be your conference operator today. At this time, I would like to welcome everyone to the NuStar Energy L.P. and NuStar GP Holdings LLC Fourth Quarter 2012 Earnings Conference Call. All lines have been placed on-mute to prevent any background noise. After the speakers' remarks there will be a question-and-answer session. (Operator Instructions) Thank you.
Mr. Chris Russell, you may begin your conference.
Chris Russell
Thank you, McKenzie. Good afternoon everyone and welcome to our conference call to discuss NuStar’s fourth quarter and full-year 2012 earnings results. We apologize for having to delay the call by one day. Our management team was out of the office yesterday attending the funeral of a long-time friend and business partner to NuStar.
With me today is Curt Anastasio, CEO and President of NuStar Energy L.P. and NuStar GP Holdings, LLC; Steve Blank, Executive Vice President, CFO and Treasurer and other members of our management team.
Before we get started, we would like to remind you that during the course of this call, NuStar management will make statements about our current views concerning the future performance of NuStar that are forward-looking statements within the meaning of the federal securities laws. These statements are subject to various uncertainties and assumptions described in our filings with the Securities and Exchange Commission, and will not be updated to conform to actual results or revised expectations.
During the course of this call, we will also make reference to certain non-GAAP financial measures. Our non-GAAP financial measures should not be considered as alternatives to GAAP measures. Reconciliations of these non-GAAP financial measures to U.S. GAAP may be found either in our earnings press release or on our website.
Now, let me turn the call over to Curt.
Curt Anastasio
Good afternoon and thanks for joining us today. We at NuStar had been busy the last several months completing transactions to change the strategic direction of the partnership away from the volatile margin based portions of our business and increasingly stable fee based pipeline and storage segments of our business where we have more opportunities than ever before.
On September 28th, we closed on the sale of a 50% interest in our Asphalt business to Lindsay Goldberg LLC and deconsolidated the resulting joint-venture from NuStar’s financial. This brought in about $425 million of cash and freed up capital to invest in Eagle Ford pipeline.
Effective January 1st, we sold the San Antonio Refinery and related assets to Calumet Specialty Products Partners for $100 million plus approximately $15 million for inventory. As a result of that sale, all financial results related to the San Antonio Refinery have been reported as discontinued operations in NuStar’s financial statements included in the earnings table.
At the same time, we've been expanding our fee based pipeline and storage businesses. In July, we completed another pipeline project in the Eagle Ford by connecting our Corpus Christi to Three Rivers’ refineries 16 inch crude oil pipeline to a 12 inch line constructed by TexStar. We are able to transport Eagle Ford Shale oil from Frio County in South Texas to Corpus Christi. In October, we completed another Eagle Ford Shale project with construction of a 55 mile, 12 inch line that will transport Eagle Ford crude to the Corpus Christi area. After completing that project NuStar can now move about 300,000 barrels a day of Eagle Ford crude to the Corpus Christi market.
During November, we entered into a long-term pipeline and terminal services agreement with ConocoPhillips which will add another 100,000 barrels a day of Eagle Ford throughput capacity. In conjunction with the pipeline services agreement, NuStar will build a 100,000 barrel terminal, truck offloading facilities and a pipeline connection to our existing 12 inch Pettus, Texas pipeline. Construction should be done by the fourth quarter of 2013. Under the terminal services agreement with ConocoPhillips, we’ll be expanding the dock capacity at our Corpus Christi North Beach terminal. The dock expansion should be done in the first quarter of 2014.
Then on December 14 of 2012, we took another major step to our growing fee base pipeline side of the business by closing on the acquisition of crude oil pipeline, gathering and storage assets in the Eagle Ford Shale from TexStar Midstream Services. Most of these assets have already been successfully integrated with our existing pipeline systems and have begun to produce EBITDA for NuStar.
In the last few weeks, we completed a 1 million barrel expansion project at our St. Eustatius in the Caribbean and a 700,000 barrel storage expansion project at our St. James, Louisiana terminal. Those projects will increase NuStar’s total storage capacity to around 96 million barrels.
The next step in our strategic redirection should occur later this first quarter of 2013 when we close on the acquisition of a natural gas liquids pipeline and two fractionation units, from TexStar Midstream Services. Those assets should start generating fee-based EBITDA early in 2014. So you can see we've been very busy. We're working quickly to change the strategic direction of NuStar. These significant transactions will generate more stable, more predictable and increased cash flows in 2013 and beyond.
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