News Release
April 22, 2002

TEPPCO PARTNERS, L.P. REPORTS FIRST QUARTER 2002 RESULTS

HOUSTON - TEPPCO Partners, L.P. (NYSE:TPP) today reported net income for first quarter 2002 of $26.8 million, or $0.46 per unit, compared with first quarter 2001 net income of $25.7 million, or $0.55 per unit. Net income per unit for first quarter 2002 reflects 7.4 million units issued subsequent to first quarter 2001. The number of units outstanding at March 31, 2002, was 46.3 million, compared with 38.9 million at March 31, 2001.

"First quarter 2002 was one of the warmest on record, which resulted in decreased demand for propane. Due to higher inventories resulting from a somewhat softer economy, we also experienced reduced demand for refined products, particularly distillates and jet fuel," said William L. Thacker, chairman and chief executive officer of the general partner of TEPPCO. "These factors, however, were offset by a strong performance in the Upstream Segment, volumes gathered on the Jonah Gas Gathering System, acquired in September 2001, and the acquisition in March 2002 of the Chaparral NGL system.

"We are optimistic about the outlook for 2002 due to growing strength in the economy, firming of crude oil and natural gas prices, the start-up of the Centennial Pipeline and quality acquisition opportunities. We remain comfortable with 2002 projections for earnings before interest, taxes, depreciation and amortization (EBITDA) of $240 million to $260 million and net income of $90 million to $110 million," added Thacker.

Operating Results by Business Segment

Financial information regarding certain existing assets has been shifted between TEPPCO's three business segments to reflect those assets contribution more accurately. Year-to-year comparisons are adjusted to conform to current presentation.

Upstream Segment

The Upstream Segment includes crude oil pipeline transportation; storage, gathering and marketing activities; and distribution of lubrication oils and specialty chemicals.

Operating income for the Upstream Segment was $6 million for first quarter 2002, compared with $3.9 million for first quarter 2001. The increase was due to higher margins and lower operating expenses, offset somewhat by increases in depreciation and ad valorem taxes from acquisitions made in 2001.

Equity earnings from the investment in Seaway Crude Pipeline were $4.4 million and EBITDA from Seaway was $5.9 million for first quarter 2002, compared with $5.2 million and $6.6 million, respectively, for first quarter 2001. The decrease in equity earnings was due to a stipulation in the Seaway partnership agreement whereby TEPPCO's portion of equity earnings decreases from 80 percent to 60 percent on a pro-rated basis in 2002 (averaging 67 percent for 2002), and slightly reduced volumes of foreign crude oil being shipped on Seaway. Long-haul volume on Seaway averaged 169,000 barrels per day in the 2002 quarter, compared with 173,000 barrels per day in the 2001 quarter.

Downstream Segment

The Downstream Segment provides a wide range of service options for the transportation and storage of refined products, liquefied petroleum gases and petrochemicals. Downstream operating income was $23.6 million for first quarter 2002, compared with $28.3 million for first quarter 2001. The decrease was due to lower delivered volumes of refined products as a result of decreased demand for distillates and jet fuel, and warm weather that resulted in decreased demand for propane. Combined, these factors accounted for $2.7 million of lower revenues. Additionally, operating expenses increased $1.9 million primarily as a result of higher costs for outside services.

Midstream Segment

The Midstream Segment includes natural gas gathering services, fractionation of natural gas and transportation of natural gas liquids (NGLs). It was formed effective Sept. 30, 2001, with the acquisition of the Jonah Gas Gathering Company. This segment also includes the Chaparral NGL system acquired March 1, 2002.

Operating income for the Midstream Segment was $7.7 million for first quarter 2002, compared with $4.1 million for first quarter 2001. The first quarter 2001 performance does not include the Jonah Gas Gathering Company, acquired in September 2001, or the Chaparral NGL system, acquired in March 2002. Revenues were $18.3 million, operating expenses were $3.5 million and depreciation was $7.1 million for first quarter 2002, compared with revenues of $6.6 million, operating expenses of $1.1 million and depreciation of $1.4 million for first quarter 2001. The Jonah System operated at a level of 558 million cubic feet per day in first quarter 2002, and the Chaparral NGL system operated at a level of 107,000 barrels per day.

Financing Activities

TEPPCO completed an offering in February 2002 of senior unsecured notes for $500 million and a follow-on offering in March 2002 of 1.92 million limited partner units for approximately $58 million. The majority of the proceeds from these offerings were used to reduce a portion of borrowings outstanding under TEPPCO's bank credit facilities.

First quarter 2002 interest expense was $16.8 million, offset by capitalized interest of $2.1 million and other income - net of $0.6 million. Interest expense was $16.3 million for first quarter 2001, offset by capitalized interest of $0.4 million and $0.1 million of other income - net.TEPPCO will host a conference call related to earnings performance at 9 a.m. CDT on Monday, April 22, 2002. 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 petrochemical and natural gas liquid pipelines; is engaged in crude oil transportation, storage, gathering and marketing; owns and operates a natural gas gathering system; and owns a 50-percent interest in Seaway Crude Pipeline Company, an interest in Centennial Pipeline LLC, 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: 704/382-8333

###


TEPPCO Partners, L. P.
FINANCIAL HIGHLIGHTS
(Unaudited - In Millions, Except Per Unit Amounts)
           
        Three Months  
        Ended  
        March 31,  

      2002   2001
     
 
Operating Revenues:         
  Sales of crude oil and petroleum products   $545.2   $707.4
  Transportation - Refined Products   25.1   26.2
  Transportation - LPGs   23.4   25.0
  Transportation - Crude oil and NGLs   12.4   10.9
  Gathering - Natural Gas   9.5   -
  Mont Belvieu operations   4.5   2.9
  Other   11.0   12.8
     
 
           
 

     Total Operating Revenues

631.1   785.2
     
 
           
Costs and Expenses:        
  Purchases of crude oil and petroleum products   533.2   698.6
  Operating expenses - general and administrative   36.0   31.8
  Operating fuel and power   8.6   8.6
  Depreciation and amortization   16.0   9.9
     
 
           
 

     Total Costs and Expenses

593.8   748.9
     
 
           
 

     Operating Income

37.3   36.3
     
 
           
Interest expense - net   (14.7)   (15.9)
Equity earnings (1)   3.6   5.2
Other income - net   0.6   0.1
     
 
           
 

     Net Income

$26.8   $25.7
     
 
           
  Net Income Allocation:        

     Limited Partner Unitholders

$18.6   $18.6
 

      General Partner

6.4   4.9
 

      Class B Unitholder

1.8   2.2
     
 
           
 

      Total Net Income Allocated

$26.8   $25.7
           
  Basic and Diluted Net Income        
 

     Per Limited Partner and Class B
     Unit

$0.46   $0.55
     
 
           
 

Weighted Average Number of Limited
     Partner and
and Class B Units

44.6   37.9
     
 
           
           
(1) Equity earnings and EBITDA for Seaway Crude Pipeline Company were $4.4 million and $5.9 million, respectively, for the three months ended March 31, 2002, compared with $5.2 million and $6.6 million, respectively for the three months ended March 31, 2001.
 
 

 

TEPPCO Partners, L.P.
BUSINESS SEGMENT DATA
(Unaudited - In Millions)
 
                   
                   
Three Months Ended March 31, 2002  Downstream Midstream Upstream Consolidated  


 
 
 
 
Operating revenues $59.6   $18.3   $553.9   $631.1 (2)
Operating expenses 29.2   3.5   545.8 (1) 577.8 (2)
Depreciation and amortization 6.8   7.1   2.1   16.0  




                   
Operating Income
$23.6   $7.7   $6.0   $37.3  




                   
                   
Three Months Ended March 31, 2001 (3)  Downstream   Midstream   Upstream   Consolidated  


 
 
 
 
Operating revenues $62.3   $6.6   $716.3   $785.2  
Operating expenses  27.3   1.1   710.6 (1) 739.0  
Depreciation and amortization  6.7   1.4   1.8   9.9  




                   
Operating Income
$28.3   $4.1   $3.9   $36.3  




                   
                   
                   
                   
(1) Includes purchases of crude oil and petroleum products of $533.2 million and $698.6 million, for the three-month periods ended March 31, 2002 and 2001, respectively.  
(2) Consolidated amounts reflect the elimination of $0.7 million of inter-company transactions.   
(3) Certain 2001 amounts have been reclassified to conform to current 2002 presentation.   

 


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

Three Months
Ended
  March 31,  

      2002   2001

Cash Flows from Operating Activities
Net income  $26.8  $25.7
Depreciation, working capital and other (3.2) (3.1)

Net Cash Provided by Operating Activities       23.6         22.6


Cash Flows from Investing Activities:
Proceeds from cash investments  -           1.0
Proceeds from sale of assets  -               1.3
Purcahse of Jonah Gas Gathering Company (7.3) -  
Purchase of Chaparral and Quanah Pipelines   (132.0)  -  
Purchase of crude oil assets  -       (20.0)
Capital expenditures     (33.0)     (10.9)
Investments in Centennial Pipeline Company (3.4) (3.0)

Net Cash Used in Investing Activities   (175.7)       (31.6)

Cash Flows from Financing Activities:
Issuance of Senior Notes     497.8  -  
Proceeds from term loan and revolving credit facility     172.0         8.0
Debt issuance costs (4.1) -  
Payments on revolving credit facility   (540.7)     (41.0)
Proceeds from issuance of LP units, net       56.8       54.6
General Partner contributions         1.2         1.1
  Distributions paid     (33.5)       (24.0)

Net Cash Provided by (Used in) Financing Activities     149.5          (1.3)

Net Decrease in Cash and Cash Equivalents        (2.6)     (10.3)
Cash and Cash Equivalents -- beginning of period       25.5         27.1

Cash and Cash Equivalents -- end of period  $22.9    $16.8

Supplemental Cash Information:
  Interest paid during the period (net of capitalized interest)  $18.9    $26.7
   
 

 

 

 

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

         
    March 31,   December 31,
    2002   2001

         
Assets        
Current assets      
  Cash and cash equivalents $22.9   $25.5
  Other 259.5   258.0
         
Total current assets 282.4   283.5
         
Property, plant and equipment - net 1,332.0   1,180.5
Intangible Assets (1)  246.9   251.5
Equity investments 292.2   292.2
Other assets 58.7   57.6

         
Total assets $2,212.2   $2,065.3

         
         
Liabilities and Partners' Capital      
Current liabilities      
  Notes payable $       -   $360.0
  Other 274.2   308.8

         
Total current liabilities 274.2   668.8
         
Senior Notes  887.7   389.8
Other long-term debt 332.0   340.7
Other non-current liabilities 14.9   17.2
Class B Units 105.2   105.6
Partners' capital      
  Accumulated other comprehensive income (17.0)   (20.3)
  General partner's interest 12.7   13.2
  Limited partners' interests 602.5   550.3

         
Total partners' capital  598.2   543.2

         
Total liabilities and partners' capital  $2,212.2   $2,065.3

         
         
(1) Includes the value of long-term service agreements between TEPPCO and its customers.

 

TEPPCO Partners, L. P.
OPERATING DATA
(Unaudited - In Millions, Except as Noted)
 
 
       

Three Months
Ended
March 31,

     
     

      2002   2001


Downstream Segment:        
  Barrels Delivered        
 

     Refined Products

25.8   27.2
 

      LPGs

12.0   11.6
 

      Mont Belvieu Operations

9.7   6.3


           
 

     TOTAL

47.5   45.1


           
  Average Tariff Per Barrel        
 

     Refined Products

$0.98   $0.96
 

    LPGs

1.94   2.15
 

     Mont Belvieu Operations

0.15   0.17
           
  Average System Tariff Per Barrel $1.05   $1.16
           
Upstream Segment (1):        
  Margins:        
 

     Crude oil transportation

$9.2   $8.2
 

     Crude oil marketing

4.8   3.6
 

    Crude oil terminaling

2.3   2.1
 

     LSI

1.1   1.1


 

       Total Margin

$17.4   $15.0


           
  Total barrels        
 

     Crude oil transportation

21.1   15.7
 

     Crude oil marketing

30.4   29.7
 

     Crude oil terminaling

29.3   24.7
           
  Lubrication oil volume (total gallons): 2.2   2.3
           
  Margin per barrel:        
 

     Crude oil transportation

$0.436   $0.516
 

     Crude oil marketing

0.158   0.121
 

     Crude oil terminaling

0.079   0.086
           
  Lubrication oil margin (per gallon): $0.501   $0.503
           
Midstream Segment (1):        
  Gathering - Natural Gas (2)        
 

  Bcf

50.2   -
 

  Btu (in trillions)

55.7   -
           
 

  Average fee per MMBtu

$0.17   -
           
  Transportation - NGLs        
 

  Total barrels

4.6   4.8
 

  Margin per barrel

$0.554   $1.024
           
  Sales - Condensate (2)        
 

   Total barrels (thousands)

32.4   -
           
 

   $/barrel

$25.38   -
           
           
(1) Certain 2001 amounts have been reclassified to conform to current 2002 presentation. 
(2) Operating data for Jonah Gas Gathering Company acquired effective Sept. 30, 2001.