News Release
Jan. 15, 1999

TEPPCO PARTNERS, L.P. REPORTS FOURTH QUARTER AND ANNUAL 1998 EARNINGS

HOUSTON -- TEPPCO Partners, L.P. (NYSE:TPP) today reported net income for both the quarter and year ended December 31, 1998.

Net income for 1998, before a loss on early extinguishment of debt, was $53.4 million, or $1.61 per limited partner unit, compared with net income of $61.3 million, or $1.95 per limited partner unit, for the year ended December 31, 1997. The net loss for the year after the charge of $72.8 million for early extinguishment of debt was $19.4 million, or $0.60 per limited partner unit.

Fourth quarter net income was $15.0 million, or $0.42 per limited partner unit, compared with 1997 fourth quarter net income of $18.9 million, or $0.60 per limited partner unit. The 1998 quarter included a non-cash charge of $2.9 million to reflect the adjustment of inventory to a lower-of-cost-or-market basis.

The calculation of net income per limited partner unit for the quarter and year ended December 31, 1998, is based on the weighted-average number of units including the 3.9 million Class B units issued in conjunction with the acquisition of the crude oil assets, effective November 1, 1998. The weighted-average number of units for the fourth quarter and year ended December 31, 1998, was 31.6 million and 29.7 million, respectively, compared with 29.0 million units for the fourth quarter and year ended Dec. 31, 1997, respectively.

"Throughout 1998, the U.S. energy sector experienced unprecedented warm weather, high inventories of LPGs and refined products, and historically low product prices. The result of these factors was an end to TEPPCO’s string of six consecutive years of record earnings," said William L. Thacker, chairman, president and chief executive officer. "During the year, TEPPCO took steps to mitigate these weather and inventory effects, including the acquisition of the fractionation and crude oil assets, the refinancing of the partnership’s debt, and expense controls. These efforts, coupled with record deliveries of refined products and improved utilization of the pipeline, which resulted in record mainline volumes for seven months during 1998, were significant accomplishments during a difficult year.

"In spite of the negative impact of numerous circumstances, TEPPCO’s cash flow remained strong in 1998. As we look ahead to 1999, we anticipate a return of normal winter weather, continued strong demand for refined products and solid contributions from the 1998 acquisitions which should put TEPPCO back on track, " Thacker added.

Operating revenues for 1998 were $429.6 million, which included revenues of $217.8 million for November and December from the crude oil assets acquisition. The operating revenues for the products system were $211.8 million, or a decrease of 5 percent from 1997 operating revenues of $222.1 million. The decline was due to a 24 percent drop in LPG’s volumes delivered, primarily propane, as a result of the record warm weather and high levels of inventory; a 15 percent decline in Mont Belvieu revenues as a result of decreased demand for storage and related services; and virtually no sales of product inventory because of low product prices.

Offsetting these declines somewhat were record deliveries of 130.5 million barrels of refined products, up 9 percent from the then record 120.0 million barrels delivered in 1997. Additionally, the revenue contribution from the fractionation assets purchased in March 1998, added $5.5 million for the year.

Operating expenses for 1998 totaled $322.7 million, including $216.5 million from the crude oil segment, which were primarily purchases of crude oil. The products system operating expenses were $107.1 million, including fuel and power, an increase of $0.3 million from 1997 operating expenses of $106.8 million. The increase was due to higher costs for operating supplies and services, including a non-cash charge of $3.5 million to adjust for the lower value of operating inventory, rentals and costs associated with the fractionation assets. The increases were offset substantially by lower throughput-related, compensation and sales tax expenses.

Operating revenues for the fourth quarter were $273.6, including $217.9 million for crude oil sales and transportation. The operating revenues for the products system were $55.7 million, or a decrease of 8 percent from fourth quarter 1997 operating revenues of $60.7 million. The decrease was due primarily to a 27 percent decline in LPGs volumes delivered, offset somewhat by record fourth quarter deliveries of refined products, which were up 16 percent from the 1997 fourth quarter.

Operating expenses for the quarter were $244.2 million, including $216.5 million from the crude oil segment. The products system operating expenses were $28.7 million, including fuel and power, compared with $28.0 million for the 1997 fourth quarter. The increase was due primarily to the non-cash charge of $2.9 million mentioned above, offset somewhat by lower compensation, outside services and throughput-related expenses.

TEPPCO Partners, L.P. is a publicly owned master limited partnership which conducts business through two operating partnerships. TE Products Pipeline Company, Limited Partnership is one of the largest common carrier pipelines of refined petroleum products and liquefied petroleum gases in the United States. TCTM, L.P. is a crude oil gathering, transportation, storage and marketing company operating primarily in Texas and Oklahoma.

Except for the historical information contained herein, the matters discussed in this news release are forward-looking statements that involve certain risks and uncertainties. These risks and uncertainties include, among other things, market conditions, governmental regulations and other factors discussed in TEPPCO’s filings with the Securities and Exchange Commission.

Contact: Eric W. Thode
Phone: (713) 759-3635
24 Hour Phone: (704) 94-0681
Email: media_relations@duke-energy.com
Contact: Brenda J. Peters
Phone: (713) 759-3954
24 Hour Phone: (704) 94-0681
Email: media_relations@duke-energy.com