News Release
Oct. 17, 2001

TEPPCO PARTNERS, L.P. REPORTS THIRD QUARTER RESULTS

HOUSTON – TEPPCO Partners, L.P. (NYSE:TPP) today reported net income for third quarter 2001 of $19.1 million, or $0.35 per unit on a diluted basis, compared with net income of $17.2 million, or $0.41 per unit for third quarter 2000. Current quarter results include $4.3 million, or $0.09 per unit, of environmental remediation expenses.

"TEPPCO’s net income for the third quarter was a record for any third quarter in TEPPCO’s history and the fourth consecutive quarter of record performance, even with the impact of the remediation expenses," said William L. Thacker, chairman and chief executive officer of the general partner of TEPPCO. "Margins and revenues for both the upstream and downstream segments were strong, despite some general weakness in the economy."

Per unit net income for the quarter reflects 5.95 million units issued since October 2000. The number of units outstanding for third quarter 2001 was 38.9 million, compared with 32.9 million for third quarter 2000. The increase in the quarterly distribution to $0.575 per unit announced on Oct. 17, 2001, resulted in an increase in allocation of third quarter net income to the general partner and a corresponding decrease of $0.04 per unit to the limited partners, compared with third quarter 2000.

Third Quarter Performance

Net income for the upstream segment was $3.7 million for third quarter 2001, compared with $8.1 million for third quarter 2000. Increases in transportation, terminal and crude oil marketing were offset by increases in operating and administrative costs from acquisitions, $4.3 million in environmental expenses, and ad valorem taxes. Equity earnings from the investment in Seaway were $5.9 million and earnings before interest, taxes, depreciation and amortization (EBITDA) were $7.8 million for the 2001 quarter, compared with $9.3 million and $10.8 million, respectively, for the 2000 quarter. The decrease in equity earnings in Seaway was due to lower third-party transportation volumes in third quarter 2001, compared to third quarter 2000, which was a record volume quarter for Seaway.

Downstream segment net income was $15.4 million, an increase of $6.3 million from third quarter 2000 net income of $9.1 million. The increase was the result of higher deliveries of refined products and liquefied petroleum gases (LPGs), revenues from the petrochemical pipelines placed in service in late 2000, and increased Mont Belvieu and other revenues. Costs increased in line with revenue improvement.

Upstream gross margin was $25.3 million for third quarter 2001, compared with $15.2 million in the 2000 quarter. The gross margin improvement was due to $9.3 million from transportation of crude oil and natural gas liquids (NGLs), which included $3.3 million shipped for an upstream segment affiliate on Seaway and $1 million of terminal revenue.

Downstream revenues were $60.4 million, compared with $53.1 million in third quarter 2000. The increase was due to $3.9 million in transportation revenues from refined products and LPGs due to higher transportation volumes of motor fuels, distillates and propane, offset by lower volumes of jet fuel, MTBE and butanes. Revenue from the petrochemical pipelines was $2.7 million and Mont Belvieu and other revenues contributed $0.7 million.

Costs and expenses, including fuel and power, were $51.2 million in third quarter 2001, compared with $39.3 million for the 2000 quarter. The $11.9 million increase was due to $6.3 million of operating, general and administrative costs from increased asset acquisitions and increased environmental costs of $4.3 million, higher ad valorem taxes of $1 million as a result of acquired assets, and $0.3 million from electric power costs.

Nine Months Performance

Record net income for nine months ended Sept. 30, 2001, was $87.9 million, or $1.79 per unit, compared with net income of $54.6 million, or $1.36 per unit, for the period ended Sept. 30, 2000. The increase of $33.3 million was due to $14.8 million from the settlement of a canceled transportation agreement with Pennzoil-Quaker State Company related to the sale of their refinery in Shreveport, La., contributions from asset acquisitions, the petrochemical pipelines, and higher transportation volumes of propane and distillates, offset by increased environmental expenses, property taxes, and electric power.

Net income for the upstream segment was $17.2 million for the first nine months of 2001, compared with $13.5 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, offset by higher environmental costs, ad valorem taxes and interest expense. Equity earnings from the investment in Seaway were $15.9 million and EBITDA was $22 million for the first nine months of 2001.

Downstream segment net income was $70.7 million for the first nine months of 2001, compared with $41.2 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 distillates, and deliveries of propane from the partnership’s terminal at Providence, R.I.

Upstream gross margin was $69.4 million for the first nine months of 2001, compared with $35.2 million for the 2000 period. The increase was due to higher margins of $27.9 on crude oil and NGL transportation, including $7.5 million shipped on Seaway for an upstream segment affiliate, terminal revenue of $5.7 million, and $0.8 million from increased sales of lubrication products.

Downstream segment revenues for nine months ended Sept. 30, 2001, were $204.9 million, including the $14.8 million settlement, compared with $171.2 million for nine months ended Sept. 30, 2000. The increase of $18.9 million, net of the settlement, was due to $10.8 million from transportation of refined products and LPGs, and $8.1 million from the petrochemical lines.

Costs and expenses, including fuel and power, were $135.4 million for the first nine months of 2001, compared with $110.0 million for the 2000 period. The $25.4 million increase included $14.4 million of higher operating, general and administrative expenses as a result of acquisitions, $4.3 million of increased environmental expenses, $3.4 million of higher ad valorem taxes, and $3.3 million from higher electric power costs.

Interest expense – net was $45.3 million for the first nine months of 2001, compared with $29.1 million for the 2000 period. The increase was the result of borrowings for asset acquisitions during the last half of 2000 and the partnership’s portion of the Centennial Pipeline project costs in 2001.

TEPPCO will host a conference call related to earnings performance at 8:05 a.m. CDT on Thursday, Oct. 18. 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; owns a 50-percent interest in Seaway Crude Pipeline Company and an undivided ownership interest in the Rancho and Basin Pipelines; and owns and operates a natural gas gathering system. 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: 704/382-8333

TEPPCO Partners, L. P.
FINANCIAL HIGHLIGHTS

(Unaudited - In Millions, Except Per Unit Amounts)

Three Months
Ended
September 30,

Nine Months
Ended
September 30,



2001

2000

2001

2000





Operating Revenues:

Sales of crude oil
and petroleum products

$915.3

$686.7

$2,601.6

$2,059.2

Transportation - Refined Products

32.1

29.5

109.7

90.2

Transportation - LPGs

15.7

14.5

54.2

48.0

Transportation - Crude oil and NGLs

12.2

7.9

34.5

15.8

Mont Belvieu operations

3.9

3.0

9.8

10.4

Other

11.6

8.3

39.9

24.7





Total Operating Revenues

990.8

749.9

2,849.7

2,248.3





Costs and Expenses:

Purchases of crude oil
and petroleum products

902.1

679.5

2,566.6

2,039.8

Operating expenses - general
and administrative

42.1

30.5

107.5

85.3

Operating fuel and power

9.1

8.8

27.9

24.7

Depreciation and amortization

10.4

9.2

31.2

25.7





Total Costs and Expenses

963.7

728.0

2,733.2

2,175.5





Operating income

27.1

21.9

116.5

72.8





Interest expense - net

(14.5)

(14.4)

(45.3)

(29.1)

Equity earnings (1)

5.7

9.3

15.3

9.3

Other income - net

0.8

0.4

1.4

1.6





Net Income

$19.1

$17.2

$87.9

$54.6





Net Income Allocation:

Limited Partner Unitholders

$12.1

$12.1

$62.0

$39.5

Class B Unitholder

1.4

1.6

7.1

5.3

General Partner

5.6

3.5

18.8

9.8





Total Net Income Allocated

$19.1

$17.2

$87.9

$54.6





Basic and Diluted Net Income

Per Limited Partner
and Class B Unit

$0.35

$0.41

$1.79

$1.36





Number of Limited Partner
and Class B Units

38.9

32.9

38.5

32.9





(1) Equity earnings for Seaway Crude Pipeline Company were $5.9 million and $15.9 million, respectively, for the three- and nine-month periods ended Sept. 30, 2001. Seaway EBITDA was $7.8 million and $22 million for the respective Sept. 30, 2001 periods. Seaway equity earnings and EBITDA was $9.3 million and $10.8 million, respectively, for the period from the July 21, 2000 acquisition date through Sept. 30, 2000.

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

Nine Months
Ended
September 30,

2001

2000


Cash Flows from Operating Activities

Net income

$87.9

$54.6

Depreciation, working capital and other

23.7

23.3


Net Cash Provided by Operating Activities

111.6

77.9


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 Jonah Gas Gathering Company

(359.8)

-

Purchase of Seaway Crude Pipeline
interest and other assets

-

(322.6)

Purchase of crude oil assets

(20.0)

(7.8)

Capital expenditures

(62.0)

(53.3)

Investments in Centennial Pipeline Company

(34.3)

(3.0)


Net Cash Used in Investing Activities

(471.6)

(387.2)


Cash Flows from Financing Activities:

Proceeds from term loan and revolving credit facility

427.0

367.0

Debt Issuance Costs

-

(7.1)

Payments on revolving credit facility

(41.0)

-

Proceeds from issuance of LP units, net

54.6

-

General Partner contributions

1.1

-

Distributions paid

(75.8)

(58.2)


Net Cash Provided by Financing Activities

365.9

301.7


Net Increase (Decrease) in Cash and Cash Equivalents

5.9

(7.6)

Cash and Cash Equivalents -- beginning of period

27.1

32.6


Cash and Cash Equivalents -- end of period

$33.0

$25.0


Supplemental Cash Information:

Interest paid during the period
(net of capitalized interest)

$52.0

$27.7


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

September 30, 2001

December 31, 2000


Assets

Current assets

Cash and cash equivalents

$33.0

$27.1

Other

332.2

336.3


Total current assets

365.2

363.4

Property, plant and equipment - net

1,001.6

949.7

Jonah Gas Gathering System (1)

359.8

-

Equity investments

269.9

241.6

Other assets

82.8

68.1


Total assets

$2,079.3

$1,622.8


Liabilities and Partners' Capital

Current liabilities

Notes payable

$360.0

-

Other

363.0

$358.3


Total current liabilities

723.0

358.3

Senior Notes

389.8

389.8

Other long-term debt

472.0

446.0

Other non-current liabilities and minority interest

16.0

8.3

Class B Units

106.3

105.4

Partners' capital

Accumulated other
comprehensive income

(15.0)

-

General partner's interest

11.8

1.8

Limited partners' interests

375.4

313.2


Total partners' capital

372.2

315.0


Total liabilities and partners' capital

$2,079.3

$1,622.8


(1) Business acquired effective Sept. 30, 2001. Allocation of purchase price will be made in conjunction with filing of Form 8-K/A.


TEPPCO Partners, L. P.
OPERATING DATA
(Unaudited - In Millions, Except Per Barrel, Per Gallon and MBbl/day Amounts)

Three Months
Ended
September 30,

Nine Months
Ended
September 30,



2001

2000

2001

2000





Downstream Segment:

Barrels Delivered

Refined Products

32.4

32.5

92.9

97.2

LPGs

8.9

9.1

27.4

27.4

Mont Belvieu Operations

5.3

5.5

16.2

19.2





TOTAL

46.6

47.1

136.5

143.8





Average Tariff Per Barrel

Refined Products (1)

$0.99

$0.91

$0.98

$0.93

LPGs

1.77

1.60

1.98

1.75

Mont Belvieu Operations

0.18

0.16

0.18

0.15





Average System Tariff Per Barrel

$1.05

$0.95

$1.08

$0.98





Upstream Segment

Margins:

Crude oil transportation

$9.2

$6.8

$26.2

$16.5

Crude oil marketing

3.6

3.9

9.3

9.5

Crude oil terminaling

2.8

1.8

7.5

1.8

NGL transportation

5.4

1.8

15.8

5.1

LSI

1.0

0.9

3.1

2.3

Seaway Crude
intercompany

3.3

-

7.5

-





Total Margin

$25.3

$15.2

$69.4

$35.2





(1) Excludes the effect of the Pennzoil-Quaker State Company settlement recorded second quarter 2001.