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NuStar Arm Extends Open Season

Zacks Equity Research

NuStar Logistics LP, a fully owned affiliate of San Antonio-based publicly traded partnership NuStar Energy LP (NS), announced the extension of its South Texas Crude Oil open season to Sep 30, 2013.

The Master Limited Partnership (MLP) is assessing shipper interest in the committed space to facilitate the movement of Eagle Ford Shale crude oil from NuStar’s South Texas Crude Oil Pipeline System to its Corpus Christi North Beach facility.

The Binding Open Season, which started on Jul 17, was previously expected to close on Aug 30 but was extended to accommodate the request of several shippers. The move will provide more time to the prospective shippers to contract for the committed space.

The South Texas System Project is expected to be in service in two phases. The first phase, with a capacity of 30,000 barrels per day, will be available for service to the committed shippers by third-quarter 2014. Phase 2 will be available to shippers during the first quarter of 2015 with an additional capacity of 60,000 barrels.

NuStar’s South Texas Crude Oil Pipeline System currently transports approximately 100,000 barrels per day and with completion of the extension by early 2015, the transportation capacity is expected to double. The Pipeline System includes transmission and gathering lines spread over 200 miles.

NuStar engages in the transportation and storage of crude oil as well as refined products in the U.S., Canada, Mexico, the Netherlands, U.K and Turkey.

NuStar currently holds a Zacks Rank #5 (Strong Sell), implying that it is expected to drastically underperform the broader U.S. equity market over the next one to three months.

However in the near-term, one can look at oil and gas production pipeline MLPs like Magellan Midstream Partners LP (MMP), Delek Logistics Partners LP (DKL) and Pioneer Southwest Energy Partners LP (PSE) that offer value. Magellan Midstream retains a Zacks Rank #1 (Strong Buy), while Delek Logistics and Pioneer Southwest Energy have Zacks Rank #2 (Buy).

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