NuStar Energy of San Antonio, one of the largest independent liquids terminal and pipeline operators in the nation, announced Wednesday that it has entered into an agreement to acquire Navigator Energy Services for $1.5 billion.
Headquartered in Dallas, Navigator owns and operates crude oil transportation, pipeline gathering, and storage assets in the Midland Basin of West Texas, the largest section of the oil-rich greater Permian Basin.
With the acquisition, NuStar would add to its current 8,700 miles of pipeline and 79 terminal and crude oil storage facilities. Additions include:
- 500 miles of crude oil mainline transportation pipelines with 74,000 barrels per day, ship-or-pay volume commitments and deliverability of approximately 412,000 barrels per day through multiple outbound interconnects.
- A pipeline gathering system with more than 200 connected producer tank batteries capable of more than 400,000 barrels per day of pumping capacity covering more than 500,000 dedicated acres.
- 1 million barrels of crude oil storage capacity with 440,000 barrels leased to third parties.
NuStar already possesses 95 million barrels of storage capacity, operating in the United States, Canada, Mexico, the Netherlands, St. Eustatius in the Caribbean, and the United Kingdom.
According to a recent Reuters report, the oil and gas industry last year poured more than $28 billion into land acquisitions in the Permian Basin region, more than triple what it spent in 2015: “Those deals set the stage for much larger investments needed to extract the oil from the ground, and they illustrate how the Permian Basin has become the epicenter for the U.S. shale resurgence after a historic oil price crash.”
The Permian Basin is a sedimentary basin 250 miles wide and 300 miles long. It extends from just south of Lubbock to just south of Midland and Odessa, then westward into the southeastern part of New Mexico. The Midland Basin is the largest of several components in the greater Permian Basin, occupying most of the eastern half.
According to officials, NuStar’s acquisition is expected to close in May, if all closing conditions are met and regulatory approvals completed.
“We are excited about starting 2017 with a strategic acquisition, and the addition of Navigator’s Permian assets marks NuStar’s entry into one of the most prolific basins in the United States,” NuStar President and CEO Bradley Barron stated in a news release.
“We expect that the purchase price, when coupled with modest future growth capex to build out the system, will result in a high single digit multiple as volumes ramp over time.”
“The Navigator team has built a truly unique company predicated on a customer-first philosophy underpinned by a group of employees focused on flawless execution,” stated Mark Saxe, managing director of First Reserve Energy Infrastructure Fund. “We are confident NuStar will have tremendous success integrating Navigator and transitioning it into the next phase of growth.”
