A lot of energy-industry M&A activity lately has been focused on the acquiring company gaining scale in a shale play or region where it’s already very active, usually the Permian. The latest multibillion-dollar deal in the energy space is different: Sunoco LP (stock ticker symbol SUN), which is primarily involved in fuel distribution east of the Mississippi and in Texas, is buying NuStar Energy (ticker NS), a midstream company with a mix of pipelines (crude oil, products and ammonia) and terminals, most of them within the U.S.’s midsection. As we discuss in today’s RBN blog, the combined company will have a massive footprint, with all kinds of opportunities for synergies and growth.
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There’s been so much going on in midstream M&A the past couple of years that we recently put together our first-ever Drill Down Report on the subject, in which we examined a number of the big-dollar deals of 2023. Like their upstream counterparts, midstreamers have been scaling back capital spending and instead focusing on improving the efficiency of existing operations, sometimes by acquiring others that held adjoining, complementary assets — or that gave the acquiring firm a strong foothold in a highly desirable production area. As we’ll get to in a moment, Sunoco LP has been quietly buying an impressive array of fuel terminals and other assets from others — including some from NuStar itself — and earlier this week announced its first multibillion-dollar acquisition.
First, a look at Sunoco LP. The master limited partnership (MLP), which was formed in 2012, is one of the largest independent fuel distributors in the U.S. — it distributes more than 8 billion gallons of motor fuel and other petroleum products annually across 40 states and Puerto Rico. Sunoco has 42 product terminals (white tank icons in Figure 1), most of them in the Northeast and Midwest, as well as thousands of wholesale and retail distribution sites (dark blue dots), mostly located east of the Mississippi or in Texas. In addition to being the exclusive wholesale supplier of Sunoco-branded gasoline and diesel, the company is one of the largest distributors of Chevron, Texaco, ExxonMobil and Valero motor fuels. And, as part of a 2018 agreement, Sunoco has a 15-year take-or-pay supply agreement with retailer 7-Eleven under which 7-Eleven will purchase a volume of fuel that provides Sunoco with a minimum amount of gross profit annually — that agreement is too complicated to explain here.
Sunoco LP’s Asset Portfolio
Figure 1. Sunoco LP’s Asset Portfolio. Source: Sunoco
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About the song
“House of the Rising Sun” is a traditional folk song recorded by British rock group, The Animals, in 1964, with arrangement credit given to Animal's keyboardist Alan Price. The lyrics tell the tale of a harsh life centered around a house of ill repute called the House of the Rising Sun in New Orleans. Rumor has it that the location for the House of the Rising Sun was 828-830 St. Louis Street in New Orleans’s French Quarter. The building is still there, and after a recent visit by Animal’s singer Eric Burdon, he stated, “The house was talking to me.” (One must keep in mind that Burden wrote the song, “A Girl Named Sandoz,” a love song to Sandoz Laboratories’ LSD-25, back in 1967, so who knows what he meant about talking houses.) The band had done an arrangement on the song and had been using it as a closer on a tour they were doing with Chuck Berry. After hearing the positive response to the song, producer Mickie Most took the band to DeLane Lea recording studio in London and recorded the tune in one take in May 1964. When the record was pressed it listed Alan Price as the arranger which led to great bitterness and strife within the band as Price got all the songwriter’s royalties on the record. It eventually led to him leaving the band in May 1965. The story went that there wasn’t enough room to list all the band members’ names on the record label, but one has to wonder why they didn‘t just list “The Animals” if that was the case. Released as single in the U.S. in June 1964, it went to #1 on the Billboard Hot 100 Singles chart and has been certified gold by the Recording Industry Association of America. Personnel on the record were: Eric Burdon (vocals), Hilton Valentine (guitar), Alan Price (Vox Continental organ), Chas Chandler (bass), and John Steel (drums, percussion).
The Animals is the American debut album of the band by the same name. As “The House of the Rising Sun” was only released in a singles format in the U.K. and U.S., the album was put together by the band’s U.S. label, MGM, to include the song and promote album sales. Produced by Mickie Most, the album was released in September 1964 and went to #7 on the Billboard 200 Albums chart. Two singles were released from the LP.
The Animals are an English rock band formed in Newcastle in 1962 by Eric Burdon, Alan Price, Hilton Valentine, Chas Chandler, and John Steel. They have released 10 studio albums (including ones released with Burdon under the Eric Burdon & The Animals moniker), five EPs, six compilation albums, and 25 singles. They were inducted into the Rock and Roll Hall of Fame in 1994. In September 1966, the original band broke up, with Burden moving to California and putting together a new band called Eric Burdon & The Animals. Chas Candler went on to discover and manage Jimi Hendrix and produce future British superstars Slade. Chandler died in July 1996 and Hilton Valentine died in January 2021. Eric Burdon continues to perform live with various touring musicians as The Animals.
