July 18, 2002
| |
News Release July 18, 2002 |
TEPPCO
PARTNERS, L.P. REPORTS SECOND QUARTER AND FIRST HALF 2002 RESULTS
HOUSTON - TEPPCO Partners, L.P. (NYSE:TPP) today reported net income for second quarter 2002 of $24.4 million, or $0.39 per unit, compared with second quarter 2001 net income of $43 million, or $0.89 per unit on a diluted basis. Net income for six months ended June 30, 2002, was $51.2 million, or $0.84 per unit, compared with $68.8 million, or $1.45 per unit for six months ended June 30, 2001.
Second quarter and six months ended June 30, 2001, results included net income of $18.9 million, or $0.39 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. Excluding the settlement, net income for second quarter 2001 was $24.1 million, or $0.50 per unit, and net income for six months ended June 30, 2001, was $49.9 million, or $1.06 per unit.
Net income per unit for the 2002 periods reflects 7.5 million units issued subsequent to second quarter 2001. The weighted-average number of units outstanding for second quarter and six months ended June 30, 2002, was 46.3 million and 45.5 million, respectively, compared with 38.9 million and 38.4 million, respectively, for the corresponding 2001 periods.
"Second quarter and year-to-date 2002 results reflect the benefits from our recent Midstream Segment acquisitions, with increased movements on the Jonah Gas Gathering System and Chaparral NGL System making a significant contribution to TEPPCO's earnings," said Barry R. Pearl, president and chief executive officer of the general partner of TEPPCO. "Also, we continued to realize solid operating performance from our Upstream and Downstream Segments, with reduced operating costs offsetting the effect of lower Seaway Crude Pipeline movements and lower propane deliveries to midwest and northeast markets.
"We are increasing our range of projected full-year 2002 earnings before interest, taxes, depreciation and amortization (EBITDA) to $270 million to $290 million, primarily to reflect the recent acquisition of the Val Verde Gathering System," added Pearl.
OPERATING
RESULTS BY BUSINESS SEGMENT
Effective Jan. 1, 2002, TEPPCO realigned its three business segments to reflect
its entry into the natural gas gathering business and expanded scope of natural
gas liquids (NGLs) operations. The fractionation of NGLs (previously reported
as part of the Downstream Segment) and transportation of NGLs (previously reported
as part of the Upstream Segment) have been shifted to the Midstream Segment.
Prior year comparisons have been adjusted to conform with current presentation.
Upstream
Segment
The Upstream Segment includes crude oil transportation, storage, gathering and
marketing activities; and distribution of lubrication oils and specialty chemicals.
Operating income for the Upstream Segment was $6.7 million for second quarter 2002, compared with $7.1 million for second quarter 2001. The decrease was primarily due to increased labor and outside services expense. For the six months ended June 30, 2002, operating income for the Upstream Segment was $12.7 million, compared with $11 million for the corresponding 2001 period. The increase was primarily due to the full period impact in 2002 of crude oil gathering assets acquired in March 2001, partially offset by increased operating expenses during second quarter 2002.
Equity earnings from the investment in Seaway Crude Pipeline were $4.6 million and EBITDA from Seaway was $6.2 million for second quarter 2002, compared with $4.8 million and $7.2 million, respectively, for second quarter 2001. For the six months ended June 30, 2002, equity earnings from Seaway were $9 million and EBITDA from Seaway was $12.1 million, compared with $10 million and $14.1 million, respectively, for the corresponding 2001 period. The decrease in equity earnings and EBITDA 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 reduced volumes of foreign crude oil being shipped on Seaway.
Downstream
Segment
The Downstream Segment includes the transportation and storage of refined products,
liquefied petroleum gases (LPGs) and petrochemicals.
Downstream operating income was $18.6 million for second quarter 2002, compared with $41.3 million for second quarter 2001. The decrease was due to the $18.9 million settlement with Pennzoil in 2001, $2.7 million of lower LPGs transportation revenues and $1.7 million of revenue recognized upon the approval of market-based rates in 2001, offset by lower power costs in 2002. For the six months ended June 30, 2002, operating income was $42.2 million, compared with $69.6 million for the 2001 period. The decrease was due to the factors previously noted and warmer winter weather during first quarter 2002.
The equity loss from the investment in Centennial Pipeline LLC was $2.1 million and $2.9 million, respectively, for second quarter and six months ended June 30, 2002, compared with an equity loss of $0.2 million for the corresponding second quarter and six months ended June 30, 2001. The higher losses in 2002 resulted from operating expenses for the start-up of pipeline transportation activities.
Midstream
Segment
The Midstream Segment includes natural gas gathering services, and transportation
and fractionation of NGLs. This segment was significantly expanded with the
acquisition of the Jonah Gas Gathering Company on Sept. 30, 2001, and the Chaparral
NGL System acquired on March 1, 2002.
Operating income for the Midstream Segment was $11.7 million for second quarter 2002, compared with $4.7 million for second quarter 2001. For the six months ended June 30, 2002, operating income was $19.4 million, compared with $8.8 million for the 2001 period. The combined effect of the acquisitions of the Jonah Gas Gathering Company and Chaparral NGL System contributed $8.1 million and $12 million, respectively, to operating income during second quarter and six-month periods in 2002. The favorable impact of the acquisitions was partially offset by reduced transportation revenues on the Dean and Panola pipelines during second quarter and six-month periods in 2002.
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.
Second quarter 2002 interest expense was $16.8 million, offset by capitalized interest of $1 million and other income - net of $0.8 million. Interest expense was $15.4 million for second quarter 2001, offset by capitalized interest of $0.5 million and $0.4 million of other income - net.
For the six months ended June 30, 2002, interest expense was $33.6 million, offset by capitalized interest of $3.1 million and other income - net of $1.4 million. Interest expense was $31.7 million for the six months ended June 30, 2001, offset by capitalized interest of $0.9 million and $0.6 million of other income - net.
TEPPCO will host a conference call related to earnings performance at 8:05 a.m. CDT on Friday, July 19, 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 liquids pipelines; is engaged in crude oil transportation, storage, gathering and marketing; owns and operates natural gas gathering systems; 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 Web site 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
###
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TEPPCO Partners, L. P. |
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Three Months Ended |
Six Months |
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2002 |
2001 |
2002 |
2001 |
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Operating Revenues: |
|||||||||
|
Sales of crude oil and petroleum products |
$800.1 |
$978.8 |
$1,345.3 |
$1,686.3 |
|||||
|
Transportation - Refined Products |
31.8 |
51.4 |
56.9 |
77.6 |
|||||
|
Transportation - LPGs |
10.8 |
13.5 |
34.2 |
38.5 |
|||||
|
Transportation - Crude oil and NGLs |
17.7 |
11.4 |
30.1 |
22.3 |
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|
Gathering - Natural Gas |
11.4 |
- |
20.9 |
- |
|||||
|
Mont Belvieu operations |
2.9 |
3.0 |
7.4 |
5.9 |
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|
Other |
13.6 |
15.6 |
24.6 |
28.3 |
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|
|
|
|
||||||
|
Total Operating Revenues |
888.3 |
1,073.7 |
1,519.4 |
1,858.9 |
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Costs and Expenses: |
|||||||||
|
Purchases of crude oil |
788.0 |
965.9 |
1,321.2 |
1,664.5 |
|||||
|
Operating expenses - general |
38.5 |
33.6 |
74.5 |
65.4 |
|||||
|
Operating fuel and power |
7.2 |
10.2 |
15.8 |
18.8 |
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Depreciation and amortization |
17.6 |
10.9 |
33.6 |
20.8 |
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|
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Total Costs and Expenses |
851.3 |
1,020.6 |
1,445.1 |
1,769.5 |
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|
|
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Operating Income |
37.0 |
53.1 |
74.3 |
89.4 |
|||||
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|
|
|
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|
Interest expense - net |
(15.8) |
(14.9) |
(30.5) |
(30.8) |
|||||
|
Equity earnings (1) |
2.4 |
4.4 |
6.0 |
9.6 |
|||||
|
Other income - net |
0.8 |
0.4 |
1.4 |
0.6 |
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|
|
|
||||||
|
Net Income |
$24.4 |
$43.0 |
$51.2 |
$68.8 |
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Net Income Allocation: |
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|
Limited Partner Unitholders |
$16.5 |
$31.3 |
$35.1 |
$49.9 |
|||||
|
General Partner |
6.5 |
8.2 |
12.9 |
13.2 |
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|
Class B Unitholder |
1.4 |
3.5 |
3.2 |
5.7 |
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|
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Total Net Income Allocated |
$24.4 |
$43.0 |
$51.2 |
$68.8 |
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|
||||||
|
Basic Net Income Per Limited Partner |
$0.39 |
$0.90 |
$0.84 |
$1.45 |
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Diluted Net Income Per Limited Partner |
$0.39 |
$0.89 |
$0.84 |
$1.45 |
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|
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|
||||||
| Weighted Average Number of Limited Partner and Class B Units |
46.3 |
38.9 |
45.5 |
38.4 |
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(1) |
Significant equity method investments: |
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Seaway Crude Pipeline Company |
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|
Equity Earnings |
$4.6 |
$4.8 |
$9.0 |
$10.0 |
|||||
|
EBITDA |
6.2 |
7.2 |
12.1 |
14.1 |
|||||
|
Centennial Pipeline LLC |
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|
Equity Earnings (Loss) |
$(2.1) |
$(0.2) |
$(2.9) |
$(0.2) |
|||||
|
EBITDA |
(0.4) |
(0.2) |
(1.2) |
(0.2) |
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TEPPCO Partners, L.P. |
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Three Months Ended |
Downstream |
Midstream |
Upstream |
Intersegment Eliminations |
Consolidated |
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|
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|
Operating revenues |
$54.6 |
$24.4 |
$809.8 |
$(0.5) |
$888.3 |
||||
|
Operating expenses |
28.6 |
4.5 |
801.1 |
(0.5) |
833.7 |
||||
|
Depreciation and amortization |
7.4 |
8.2 |
2.0 |
- |
17.6 |
||||
|
|
|||||||||
|
Operating Income |
$18.6 |
$11.7 |
$6.7 |
$- |
$37.0 |
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|
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|
Three Months Ended |
Downstream |
Midstream |
Upstream |
Intersegment |
Consolidated |
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|
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|
Operating revenues |
$78.5 |
$7.4 |
$987.8 |
$- |
$1,073.7 |
||||
|
Operating expenses |
30.5 |
1.3 |
977.9 |
- |
1,009.7 |
||||
|
Depreciation and amortization |
6.7 |
1.4 |
2.8 |
- |
10.9 |
||||
|
|
|||||||||
|
Operating Income |
$41.3 |
$4.7 |
$7.1 |
$- |
$53.1 |
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|
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|
Six Months Ended |
Downstream |
Midstream |
Upstream |
Intersegment |
Consolidated |
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|
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|
Operating revenues |
$114.2 |
$42.7 |
$1,363.7 |
$(1.2) |
$1,519.4 |
||||
|
Operating expenses |
57.8 |
8.0 |
1,346.9 |
(1.2) |
1,411.5 |
||||
|
Depreciation and amortization |
14.2 |
15.3 |
4.1 |
- |
33.6 |
||||
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|
|||||||||
|
Operating Income |
$42.2 |
$19.4 |
$12.7 |
$- |
$74.3 |
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Six Months Ended June 30, 2001 (1) |
Downstream |
Midstream |
Upstream |
Intersegment |
Consolidated |
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|
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|
Operating revenues |
$140.8 |
$14.0 |
$1,704.1 |
$- |
$1,858.9 |
||||
|
Operating expenses |
57.8 |
2.4 |
1,688.5 |
- |
1,748.7 |
||||
|
Depreciation and amortization |
13.4 |
2.8 |
4.6 |
- |
20.8 |
||||
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|
|||||||||
|
Operating Income |
$69.6 |
$8.8 |
$11.0 |
$- |
$89.4 |
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(1) Certain 2001 amounts have been reclassified to conform
with current |
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TEPPCO Partners, L. P. |
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Six Months Ended |
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2002 |
2001 |
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Cash Flows from Operating Activities |
||||
Net income |
$51.2 |
$68.8 |
||
Depreciation, working capital and other |
46.3 |
(7.3) |
||
Net Cash Provided by Operating Activities |
97.5 |
61.5 |
||
Cash Flows from Investing Activities: |
||||
Proceeds from cash investments |
- |
3.2 |
||
Proceeds from sale of assets |
3.4 |
1.3 |
||
Purchase of Jonah Gas Gathering Company |
(7.3) |
- |
||
Purchase of Chaparral NGL System |
(132.1) |
- |
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|
Purchase of Val Verde Gathering System |
(444.2) |
- |
||
Purchase of crude oil assets |
- |
(20.0) |
||
Capital expenditures |
(63.6) |
(33.4) |
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Investment in Centennial Pipeline LLC |
(7.7) |
(25.1) |
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Net Cash Used in Investing Activities |
(651.5) |
(74.0) |
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Cash Flows from Financing Activities: |
||||
Issuance of Senior Notes |
497.8 |
- |
||
Proceeds from term loan and revolving credit facilities |
642.0 |
33.0 |
||
Debt issuance costs |
(7.0) |
- |
||
Payments on revolving credit facility |
(570.7) |
(41.0) |
||
Proceeds from issuance of LP units, net |
59.2 |
54.6 |
||
General Partner contributions |
1.2 |
1.1 |
||
Distributions paid |
(68.6) |
(49.5) |
||
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Net Cash Provided by (Used in) |
553.9 |
(1.8) |
||
Net Decrease in Cash and Cash Equivalents |
(0.1) |
(14.3) |
||
Cash and Cash Equivalents – beginning of period |
25.5 |
27.1 |
||
Cash and Cash Equivalents – end of period |
$25.4 |
$12.8 |
||
Supplemental Cash Information: |
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Interest paid during the period |
$19.5 |
$32.2 |
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TEPPCO Partners, L. P. |
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June 30, |
December 31, |
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Assets |
|||
|
Current assets |
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|
Cash and cash equivalents |
$25.4 |
$25.5 |
|
|
Other |
324.5 |
258.0 |
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|
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Total current assets |
349.9 |
283.5 |
|
|
Property, plant and equipment - net |
1,531.3 |
1,180.5 |
|
|
Intangible assets (1) |
502.0 |
251.5 |
|
|
Equity investments |
292.5 |
292.2 |
|
|
Other assets |
62.9 |
57.6 |
|
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|
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Total assets |
$2,738.6 |
$2,065.3 |
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Liabilities and Partners' Capital |
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|
Current liabilities |
|||
|
Notes payable |
$185.4 |
$360.0 |
|
|
Other |
357.4 |
308.8 |
|
|
|
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|
Total current liabilities |
542.8 |
668.8 |
|
|
Senior Notes |
887.7 |
389.8 |
|
|
Other long-term debt |
586.6 |
340.7 |
|
|
Other non-current liabilities |
29.3 |
17.2 |
|
|
Class B Units |
104.4 |
105.6 |
|
|
Partners' capital |
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|
Accumulated other comprehensive loss |
(20.0) |
(20.3) |
|
|
General partner's interest |
10.9 |
13.2 |
|
|
Limited partners' interests |
596.9 |
550.3 |
|
|
|
|||
|
Total partners' capital |
587.8 |
543.2 |
|
|
|
|||
|
Total liabilities and partners' capital |
$2,738.6 |
$2,065.3 |
|
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(1) Includes the value of long-term service agreements between |
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TEPPCO Partners, L. P. |
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Three
Months Ended June 30,
|
Six Months
Ended June 30,
|
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2002 |
2001 |
2002 |
2001 |
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Downstream Segment: |
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Barrels Delivered |
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|
Refined Products |
35.3 |
33.4 |
61.1 |
60.6 |
||||
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LPGs |
7.1 |
6.9 |
19.1 |
18.5 |
||||
|
Mont Belvieu Operations |
5.6 |
4.5 |
15.3 |
10.8 |
||||
|
|
|
|||||||
|
Total |
48.0 |
44.8 |
95.5 |
89.9 |
||||
|
|
|
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|
Average Tariff Per Barrel |
||||||||
|
Refined Products |
$0.90 |
$0.97 |
(1) |
$0.93 |
$0.97 |
(1) |
||
|
LPGs |
1.53 |
1.96 |
1.79 |
2.07 |
||||
|
Mont Belvieu Operations |
0.13 |
0.18 |
0.14 |
0.17 |
||||
|
Average System Tariff Per Barrel |
$0.90 |
$1.04 |
$0.98 |
$1.10 |
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|
Upstream Segment (2): |
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|
Margins: |
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|
Crude oil transportation |
$9.7 |
$8.9 |
$18.9 |
$17.0 |
||||
|
Crude oil marketing |
5.3 |
6.3 |
10.1 |
9.9 |
||||
|
Crude oil terminaling |
2.6 |
2.5 |
4.9 |
4.7 |
||||
|
LSI |
1.3 |
1.0 |
2.4 |
2.1 |
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|
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|
Total Margin |
$18.9 |
$18.7 |
$36.3 |
$33.7 |
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|
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|
Total barrels |
||||||||
|
Crude oil transportation |
21.7 |
21.9 |
42.8 |
37.6 |
||||
|
Crude oil marketing |
42.9 |
44.0 |
73.3 |
72.5 |
||||
|
Crude oil terminaling |
33.1 |
32.5 |
62.3 |
57.1 |
||||
|
Lubrication oil volume |
2.7 |
2.1 |
4.9 |
4.4 |
||||
|
Margin per barrel: |
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|
Crude oil transportation |
$0.449 |
$0.408 |
$0.442 |
$0.453 |
||||
|
Crude oil marketing |
0.124 |
0.143 |
0.137 |
0.136 |
||||
|
Crude oil terminaling |
0.077 |
0.078 |
0.078 |
0.082 |
||||
|
Lubrication oil margin |
$0.456 |
$0.461 |
$0.483 |
$0.483 |
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Midstream Segment (2): |
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Gathering - Natural Gas (3) |
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|
Bcf |
59.8 |
- |
110.0 |
- |
||||
|
Btu (in trillions) |
66.5 |
- |
122.2 |
- |
||||
|
Average fee per MMBtu |
$0.172 |
- |
$0.172 |
- |
||||
|
Transportation - NGLs |
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|
Total barrels |
15.6 |
5.4 |
23.5 |
10.2 |
||||
|
Margin per barrel |
$0.678 |
$1.024 |
$0.718 |
$1.024 |
||||
|
Fractionation - NGLs |
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|
Total barrels |
1.0 |
1.0 |
2.0 |
2.1 |
||||
|
Average rate per barrel |
$1.840 |
$1.831 |
$1.827 |
$1.805 |
||||
|
Sales - Condensate (3) |
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|
Total barrels (thousands) |
18.3 |
- |
50.6 |
- |
||||
|
$/barrel |
$28.37 |
- |
$23.99 |
- |
||||
|
(1) Excludes the effect of the Pennzoil-Quaker State Company settlement. |
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|
(2) Certain
2001 amounts have been reclassified to conform with current |
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(3) Operating data for Jonah Gas Gathering Company acquired effective Sept. 30, 2001. |
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