HOUSTON -- TEPPCO Partners, L.P. (NYSE:TPP) today reported second-quarter net income of $12.5 million, or $0.79 per limited partner unit. This compares with 1997 record second-quarter net income of $13.1 million, or $0.85 per limited partner unit.

"A continuation of warmer-than-normal weather into the second-quarter of 1998 and high propane inventory levels in TEPPCO’s market area resulted in propane deliveries that were 30 percent lower than during the second quarter of last year. Offsetting lower propane deliveries were record second quarter refined products deliveries, up 2 percent over 1997, and the contribution from the fractionators in Weld County, Colorado, which were purchased on March 3 1, 1998," said William L. Thacker, chairman, president and chief executive officer. "Additionally, positive impact from the refinancing of the Partnership’s debt in January 1998 and cost containment efforts contributed to a solid performance for the quarter."

Operating revenues of $51.6 million for the quarter were 2 percent below the $52.7 million for the second quarter of 1997, due primarily to the decreased propane deliveries noted above.

Operating expenses, including fuel and power, for the quarter were $26.0 million, slightly less than the 1997 second-quarter expenses of $26.2 million. The decrease was due to lower volume related and insurance costs offset by increases in expenses related to the addition of the fractionators, employee benefits and supplies and services.

Interest expense declined $0.8 million from the second quarter of 1997 due to the debt refinancing, offset somewhat by the additional interest expense from the debt related to the purchase of the fractionators.

Other income-net for the quarter was $1.1 million compared with $0.9 million for the 1997 second quarter. The increase was due to recognition of $0.4 million of gain on the disposition of assets, offset by lower interest income earned on cash balances and lower interest capitalized on construction balances related to capital projects.

Net income for the six months ended June 30, before loss on early extinguishment of debt was $25.7 million, or $1.60 per limited partner unit, compared with $30.9 million, or $1.99 per limited partner unit for the same period in 1997. The year-to-date loss after the charge of $72.8 million for early extinguishment of debt was $47.1 million, or $2.96 per limited partner unit.

Operating revenues of $101.8 million for the first half of 1998 were $6.3 million less than the $108.1 million for the first six months of 1997. The decrease was primarily due to the previously noted warmer-than-normal weather which persisted throughout the first six months of the year.

Operating expenses, including fuel and power, were $50.6 million for the first half of 1998, compared with $50.9 million for the same period in 1997. The decrease was due to lower fuel and power costs resulting from a 6 percent decrease in volumes delivered, reduced insurance, and supplies and services costs, offset by increased expenses for the addition of the fractionators, the connection to Colonial Pipe Line near Beaumont, Texas, which was completed during the second quarter 1997 and increased benefits costs.

Interest expense decreased $2.3 million during the first six months of 1998 compared with the first six months of 1997 due to the debt refinancing, offset somewhat by the interest expense associated with debt related to the purchase of the fractionators noted above.

Other income-net for the first six months of 1998 was $1.9 million compared with $2.4 million for the first six months of 1997. The decrease was due to the same factors noted above for the quarter.

This release may contain certain forward-looking information regarding the Partnership, including projections, estimates, forecasts, plans and objectives. Although management believes that all such statements are based upon reasonable assumptions, no assurance can be given that the actual results will not differ materially from those contained in such forward-looking statements.

TEPPCO Partners, L.P. is a publicly owned master limited partnership. TE Products Pipeline Company, Limited Partnership, the operating partnership, is one of the largest common carrier pipelines of refined petroleum products and liquefied petroleum gases in the United States.