News Release
July 20, 2001

TEPPCO PARTNERS, L.P. REPORTS
RECORD SECOND QUARTER AND FIRST HALF 2001 RESULTS

HOUSTON – TEPPCO Partners, L.P. (NYSE:TPP) today reported record net income for second quarter 2001 of $43 million, or $0.89 per unit on a diluted basis, compared with net income of $13.6 million, or $0.35 per unit for second quarter 2000.

Second quarter 2001 includes net income of $17.2 million, or $0.35 per unit, from the settlement of a canceled transportation agreement with Pennzoil-Quaker State Company related to the sale of their refinery in Shreveport, La. Due to the lack of capacity from the Gulf Coast, the loss of the Pennzoil volume has the potential to reduce income for the remainder of 2001 by about $5 million. Beginning in early 2002, this volume loss is expected to be substantially replaced by offering alternate service using the affected pipeline to transport additional Gulf Coast volumes to the Shreveport area as capacity becomes available on the TEPPCO system with the startup of Centennial Pipeline.

Per unit net income for the quarter reflects the 3.7 million unit offering made in October 2000, the 2.25 million unit offering made in January 2001, and the increase in allocation of net income to the general partner from the distribution increases in 2000. The number of units outstanding for second quarter 2001 was 38.9 million, compared with 32.9 million for second quarter 2000.

"TEPPCO’s second quarter was the best second quarter for the partnership since its inception, even with the exclusion of the settlement, said William L. Thacker, chairman and chief executive officer of the general partner of TEPPCO.

"The upstream and downstream segments performed above expectations, with the assets acquired in 2000 contributing as anticipated," continued Thacker. "The first half of 2001 was also a record, even without the effect of the settlement. The outlook for 2001 is for earnings in the $1.95 to $2.15 range, including the effect from the settlement."

Second Quarter Performance

Net income for the upstream segment was $8.8 million for second quarter 2001, compared with $3 million for second quarter 2000. The increase was due to improved crude oil and natural gas liquids (NGLs) transportation from asset acquisitions and increased production activity, and earnings contributed by the terminaling business. Increases in operating, administrative and interest costs were commensurate with the improvements in revenues and margins. Equity earnings from the investment in Seaway Crude Pipeline Company (Seaway) contributed approximately $4.8 million of earnings in the quarter. Earnings before interest, taxes, depreciation and amortization (EBITDA) from this investment were $7.2 million for the 2001 quarter.

Downstream segment net income was $34.2 million, an increase of $23.6 million from second quarter 2000 net income of $10.6 million. The increase was the result of the settlement of the transportation agreement, revenues from the petrochemical pipelines placed in service in late 2000, increased deliveries of liquefied petroleum gases (LPGs) and sales of products. Costs for operations, administration and interest expense increased in line with the revenue improvement and asset additions.

Upstream gross margin was $24.3 million for second quarter 2001, compared with $10.5 million in the 2000 quarter. The gross margin improvement was due to $11.5 million from transportation of crude oil and NGLs, which included $3.5 million shipped for an upstream segment affiliate on Seaway and $2.5 million of terminaling revenue, offset by a decrease of $0.5 million from crude oil marketing.

Downstream revenues were $80.5 million, including the $17.2 million cancellation settlement, compared with $54.3 million in second quarter 2000. The $4.6 million increase in transportation revenues, net of the settlement, from refined products and LPGs was due to higher transportation volumes of motor fuels, distillates, propane and butane. Revenue from the petrochemical pipelines was $2.7 million and sales of products increased $2.3 million.

Cost and expenses, including fuel and power, were $43.8 million in second quarter 2001, compared with $36.2 million for the 2000 quarter. The $7.6 million increase included $4.6 million of operating, general and administrative costs from increased asset acquisitions, $1.9 million from electric power costs due to increased transportation volumes and higher electric rates, and $1 million of higher ad valorem taxes as a result of acquired assets.

Interest expense — net was $14.9 million in second quarter 2001, compared with $7.3 million in second quarter 2000. The $7.6 million increase was due to borrowings under bank credit facilities to fund asset acquisitions and lower capitalized interest due to completion of the petrochemical pipelines. Proceeds from the issuance of additional limited partnership units in late 2000 and early 2001 were used to reduce bank debt.

First Half Performance

Record net income for six months ended June 30, 2001, was $68.8 million, or $1.45 per unit, compared with net income of $37.5 million, or $0.95 per unit, for the period ended June 30, 2000. The increase of $31.3 million was due to the $17.2 million settlement, contributions from crude oil and NGL asset acquisitions, the petrochemical pipelines, and higher transportation volumes of propane and butane. Net income and per unit amounts, net of the transportation agreement settlement, were $51.6 million, and $1.10, respectively.

Net income for the upstream segment was $13.5 million for the first half of 2001, compared with $5.4 million for the 2000 period. The increase was due to improved crude oil and NGLs transportation from asset acquisitions and increased production activity, and earnings from terminal related activities. Equity earnings from the investment in Seaway were $10 million, and EBITDA was $14.1 million for the first half of 2001.

Downstream segment net income was $55.3 million for the first half of 2001, compared with $32.1 million for the 2000 period. The increase was due to the settlement of the transportation agreement, revenues from the petrochemical pipelines, higher transportation volumes of propane and butane, and deliveries of propane from the partnership’s Providence, R.I., terminal.

Upstream gross margin was $44.1 million for the first six months of 2001, compared with $20 million for the 2000 period. The increase was due to higher margins of $18.6 million on crude oil and NGL transportation, including $4.2 million shipped on Seaway for an upstream segment affiliate, terminaling revenue of $4.7 million, and $0.7 million from increased sales of lubrication products.

Downstream segment revenues for six months ended June 30, 2001, were $144.6 million, including the $17.2 million settlement, compared with $118.1 million for six months ended June 30, 2000. The increase of $9.3 million, net of the settlement, was due to $4.7 million from transportation of refined products and LPGs, and $5.3 million from the petrochemical lines, offset somewhat by lower Mont Belvieu revenues.

Costs and expenses, including fuel and power, were $84.2 million for the first half of 2001, compared with $70.5 million for the 2000 period. The $13.7 million increase included $8.3 million of higher operating, general and administrative expenses, primarily as a result of acquisitions, $3 million from higher electric power costs, and $2.4 million of higher ad valorem taxes due to asset acquisitions.

Interest expense — net was $30.8 million for the first six months of 2001, compared with $14.7 million for the 2000 period. The increase was the result of borrowings for asset acquisitions during the last half of 2000.

TEPPCO will host a conference call related to earnings performance at 8:05 a.m. CT on July 23. Interested parties may listen via the Internet, live or on a replay basis at www.teppco.com.

TEPPCO Partners, L.P. is a publicly traded master limited partnership, which conducts business through various subsidiary operating companies. TEPPCO owns and operates one of the largest common carrier pipelines of refined petroleum products and liquefied petroleum gases in the United States; owns and operates natural gas liquid pipelines; is engaged in crude oil transportation, storage, gathering and marketing; and owns a 50-percent interest in Seaway Crude Pipeline Company and an undivided ownership interest in the Rancho and Basin Pipelines. Texas Eastern Products Pipeline Company, LLC, an indirect wholly owned subsidiary of Duke Energy Field Services, LLC, is the general partner of TEPPCO Partners, L.P. For more information, visit TEPPCO’s website at www.teppco.com.

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 factors discussed in TEPPCO Partners, L.P. filings with the Securities and Exchange Commission.

###

CONTACTS:

Investor Relations – Brenda J. Peters
Phone: 713/759-3954

Media Relations – Kathleen A. Sauvé
Phone: 713/759-3635
24-Hour: 800/618-4370

TEPPCO Partners, L. P.
FINANCIAL HIGHLIGHTS
(Unaudited - In Millions, Except Per Unit Amounts)

Three Months
Ended
June 30,

Six Months
Ended
June 30,



2001

2000

2001

2000



Operating Revenues:

Sales of crude oil and petroleum products

$978.8

$689.6

$1,686.3

$1,372.4

Transportation - Refined Products

51.4

32.7

77.6

60.7

Transportation - LPGs

13.5

10.4

38.5

33.5

Transportation - Crude oil and NGLs

11.4

3.8

22.3

7.9

Mont Belvieu operations

3.0

2.9

5.9

7.4

Other

15.6

8.3

28.3

16.5





Total Operating Revenues

1,073.7

747.7

1,858.9

1,498.4





Costs and Expenses:

Purchases of crude oil and petroleum products

965.9

682.9

1,664.5

1,360.3

Operating expenses - general and administrative

33.6

27.9

65.4

54.7

Operating fuel and power

10.2

8.3

18.8

15.8

Depreciation and amortization

10.9

8.4

20.8

16.6





Total Costs and Expenses

1,020.6

727.5

1,769.5

1,447.4





Operating income

53.1

20.2

89.4

51.0





Interest expense - net

(14.9)

(7.3)

(30.8)

(14.7)

Equity earnings (1)

4.4

-

9.6

-

Other income - net

0.4

0.7

0.6

1.2





Net Income

$43.0

$13.6

$68.8

$37.5





Net Income Allocation:

Limited Partners Unitholders

$31.3

$10.0

$49.9

$27.5

General Partner

8.2

2.3

13.2

6.3

Class B Unitholder

3.5

1.3

5.7

3.7





Total Net Income Allocated

$43.0

$13.6

$68.8

$37.5





Basic Income Per Limited Partner and Class B Unit:

$0.90

$0.35

$1.45

$0.95





Diluted Income Per Limited Partner and Class B Unit:

$0.89

$0.35

$1.45

$0.95





Weighted Average Number of Limited Partner and Class B Units

38.9

32.9

38.4

32.9

(1) Equity earnings for Seaway Crude Pipeline Company were $4.8 million and $10 million, respectively, for the three- and six-month periods ended June 30, 2001. Seaway EBITDA was $7.2 million and $14.1 million for the respective June 30, 2001 periods.

TEPPCO Partners, L. P.
Condensed Statements of Cash Flow (Unaudited) (In Millions)

Six Months
Ended
June 30,

2001

2000


Cash Flows from Operating Activities

Net income

$68.8

$37.5

Depreciation, working capital and other

(7.3)

27.0


Net Cash Provided by Operating Activities

61.5

64.5


Cash Flows from Investing Activities:

Proceeds from cash investments

3.2

1.5

Purchases of cash investments

-

(2.0)

Proceeds from sale of assets

1.3

-

Purchase of crude oil assets

(20.0)

-

Capital expenditures

(33.4)

(39.2)

Investments in Centennial Pipeline LLC

(25.1)

-


Net Cash Used in Investing Activities

(74.0)

(39.7)


Cash Flows from Financing Activities:

Proceeds from term loan and revolving credit facility

33.0

20.0

Payments on revolving credit facility

(41.0)

-

Proceeds from issuance of LP units, net

54.6

-

General Partner contributions

1.1

-

Distributions paid

(49.5)

(38.3)


Net Cash Used in Financing Activities

(1.8)

(18.3)


Net Increase (Decrease) in Cash and Cash Equivalents

(14.3)

6.5

Cash and Cash Equivalents -- beginning of period

27.1

32.6


Cash and Cash Equivalents -- end of period

$12.8

$39.1


Supplemental Cash Information:

Interest paid during the period (net of capitalized interest)

$32.2

$14.1




TEPPCO Partners, L. P.
Condensed Balance Sheets (Unaudited)
(In Millions)

June 30,
2001

Dec. 31,
2000


Assets

Current assets

Cash and cash equivalents

$12.8

$27.1

Other

354.2

336.3


Total current assets

367.0

363.4

Property, plant and equipment - net

982.7

949.7

Equity investments

262.3

241.6

Other assets

82.4

68.1


Total assets

$1,694.4

$1,622.8


Liabilities and Partners' Capital

Current liabilities

$359.9

$358.3

Senior Notes

389.8

389.8

Other long-term debt

438.0

446.0

Other non-current liabilities and minority interest

16.3

8.3

Class B Units

107.0

105.4

Partners' capital

Accumulated other comprehensive income

(4.7)

-

General partner's interest

6.2

1.8

Limited partners' interests

381.9

313.2


Total partners' capital

383.4

315.0


Total liabilities and partners' capital

$1,694.4

$1,622.8


TEPPCO Partners, L. P.
OPERATING DATA
(Unaudited - In Millions, Except Per Barrel Amounts) (1)

Three Months
Ended
June 30,

Six Months
Ended
June 30,

2001

2000

2001

2000





Downstream Segment:

Barrels Delivered

Refined Products

33.4

35.1

60.6

64.7

LPGs

6.9

6.6

18.5

18.3

Mont Belvieu Operations

4.5

6.6

10.8

13.7





TOTAL

44.8

48.3

89.9

96.7





Average Tariff Per Barrel

Refined Products (2)

$0.97

$0.93

$0.97

$0.94

LPGs

1.96

1.56

2.07

1.83

Mont Belvieu Operations

0.18

0.14

0.17

0.15





Average System Tariff Per Barrel

$1.04

$0.91

$1.10

$1.00





Upstream Segment

Margins:

Crude oil transportation

$8.9

$4.9

$17.0

$9.7

Crude oil marketing

2.8

3.3

5.7

5.6

Crude oil terminaling

2.5

-

4.7

-

NGL transportation

5.6

1.6

10.4

3.3

LSI

1.0

0.7

2.1

1.4

Seaway Crude intercompany

3.5

-

4.2

-





Total Margin

$24.3

$10.5

$44.1

$20.0





(1)

Certain amounts from prior periods have been reclassified to conform to current presentation.

(2)

Excludes the effect of the Pennzoil-Quaker State Company settlement.