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First Reserve sheds Texas oil transport company for $1.5bn

The deal comes more than two months after the energy buyout firm sold its infrastructure unit to BlackRock.

Energy buyout firm First Reserve has sold an oil transportation company in Texas to NuStar Energy for $1.47 billion.

NuStar's acquisition of Navigator Energy gives the pipeline and terminal operator access to assets located in the West Texas Permian Basin, an oil-rich area it has not yet entered. Navigator's assets include 500 miles of crude oil transportation pipelines, more than 200 connected producer tank batteries and around 1 million barrels of crude oil storage capacity.

The acquisition is expected to close in May and is subject to closing conditions. The terms of the deal may change when closing is reached, according to a statement.

“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 chief executive Bardley Barron said.

Barron said the company expects its investment to return high single digit multiples “when coupled with future growth capex to build out the system”.

For First Reserve, the deal is another sale of a major asset from its energy buyout business this year.

In February, First Reserve agreed to sell to BlackRock its infrastructure unit for an undisclosed amount. The sale of First Reserve Energy Infrastructure Funds sent 37 investment professionals and support staff to BlackRock as First Reserve positioned itself to focus more on energy buyouts.

In 2016, First Reserve and BlackRock jointly invested $900 million to buy a 45 percent equity stake in two gas pipelines from a subsidiary of PEMEX, Mexico's national oil group.