Sunoco to buy storage terminals from NuStar Energy, Cato, Incorporated

Sunoco recently agreed to acquire eight refined product storage terminals from NuStar Energy, and one refined product terminal from Cato, Incorporated for a combined $255.5 million.

These acquisitions will result in a “significant” expansion of Sunoco’s midstream business, enhance its platform for fuel distribution expansion, and allow Sunoco to remain within its long-term leverage and coverage target levels, the company said.

The NuStar acquisition includes seven terminals on the East Coast and one in the Midwest in the following locations: Andrews Air Force Base, Md.; Baltimore, Md.; Blue Island, Ill.; Jacksonville, Fla.; Linden, N.J.; Paulsboro, N.J.; Piney Point, Md.; and Virginia Beach, Va. The terminals have an aggregate storage capacity of approximately 14.8 million barrels, handle primarily refined products, and are accessed via pipeline, truck, rail, and marine vessels.

The purchase price for the NuStar terminals is $250 million.

The sale is expected to close later this year, subject to the satisfaction of customary closing conditions, the companies said.

“While these terminals are solid assets with great operations and employees, these facilities are no longer synergistic with NuStar’s core assets, which, in the current competitive climate is critical to their long-term success,” said Brad Barron, president and CEO of NuStar. “Sunoco LP has assets in NY Harbor and in the Southeast U.S. that should provide such synergistic opportunities to ensure the continued success of these facilities and employees.

“This divestiture will allow us to deploy the proceeds to further improve our debt metrics, and we continue to expect to self-fund our spending from our internally generated cash flows, in 2021 and beyond.”

The Cato terminal is a gasoline and distillate terminal located in Salisbury, Md., with approximately 140 thousand barrels of storage and is accessed via truck and marine vessels. As part of the transaction, Cato agreed to a five-year extension of its existing SUN fuel distribution contract.

Sunoco is a master limited partnership with core operations that include the distribution of motor fuel to approximately 10,000 convenience stores, independent dealers, commercial customers, and distributors located in more than 30 states, as well as refined product transportation and terminalling assets.

Sunoco’s general partner is owned by Energy Transfer.