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NuStar Energy Reports Bunker Fuel Marketing Deal, Sees Cutting Working CapEx by $40-50M

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As part of its announced strategy to review and strengthen its bunker fuel marketing operations, NuStar Energy L.P. (NYSE: NS) today announced it has signed a fuel oil supply agreement with a major fuel oil trading company. This agreement enables NuStar to create a “back-to-back” trading model in which NuStar purchases bunker fuel supply from this company to fulfill the needs of its customers in St. Eustatius and the Caribbean. This trading model will allow NuStar to reduce working capital tied to inventory, reduce exposure to price volatility and hedge ineffectiveness, and better manage operating expenses. In fact, the agreement will help NuStar lower its working capital expenses by $40 to $50 million, and save the company related attendant interest and hedging costs.

“This agreement is a very positive step in our efforts to strengthen the bunker marketing operations within our fuels marketing segment, which has been impacted by weak demand and difficult market conditions,” said NuStar President and CEO Curt Anastasio. “This agreement allows us to remain in a competitive position as a bunker fuel marketer, while reducing our exposure to price risks and dramatically reducing our working capital expenses related to our bunker marketing operations. We also believe that it creates opportunities to grow our fuel oil business in the Caribbean.”

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