News Release
Jan. 16, 2003

TEPPCO PARTNERS, L.P. REPORTS FOURTH QUARTER AND 2002 ANNUAL RESULTS

HOUSTON - TEPPCO Partners, L.P. (NYSE:TPP) today reported net income for 2002 of $117.9 million, or $1.79 per unit, compared with net income of $109.1 million, or $2.18 per unit for the year ended Dec. 31, 2001. Fourth quarter 2002 net income was $34.6 million, or $0.46 per unit, compared with fourth quarter 2001 net income of $21.2 million, or $0.40 per unit.

Results for the year ended Dec. 31, 2001, 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 the year ended Dec. 31, 2001, was $90.2 million, or $1.79 per unit.

Net income per unit for fourth quarter 2002 reflects 13.4 million units issued subsequent to fourth quarter 2001. The weighted-average number of units outstanding for fourth quarter and year ended Dec. 31, 2002, was 55.8 million and 49.2 million, respectively, compared with 41.4 million and 39.3 million, respectively, for the corresponding 2001 periods.

"Our acquisitions of the Val Verde Gathering System and the Chaparral NGL System, as well as capacity expansions completed in 2002 on the Jonah Gas Gathering System led to record net income for 2002," said Barry R. Pearl, president and chief executive officer of the general partner of TEPPCO. "Excluding the impact of the Pennzoil settlement in 2001, earnings before interest, taxes, depreciation and amortization (EBITDA) increased 36 percent to $281.9 million. Our upstream segment realized strong gathering and marketing margins, which served to offset the costs associated with the start-up of the Centennial Pipeline and our enhanced pipeline integrity program. All in all, our excellent 2002 results illustrate the strength and diversity of TEPPCO's asset portfolio.

"For 2003, we expect EBITDA to be in the range of $305 million to $325 million and earnings per unit in the range of $1.40 per unit to $1.65 per unit, which reflects the full year contribution of the Val Verde acquisition and Jonah expansions. We also anticipate improved results in our downstream segment with the further development of the Centennial Pipeline and continued solid performance in our upstream segment. TEPPCO expects to invest approximately $55 million in capital projects in 2003. This amount may increase depending on the pace of development of a number of attractive organic growth projects. We will continue our disciplined approach to growth while maintaining our strong financial condition," 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 transferred 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 $4.8 million for fourth quarter 2002, compared with $5.2 million for fourth quarter 2001. Increased gathering and marketing margins and transportation revenue were offset by increased depreciation expense and environmental remediation costs. Total year 2002 operating income for the upstream segment was $26.4 million, compared with $18.3 million for the corresponding 2001 period. The increase was primarily due to strong gathering and marketing margins, increased crude oil transportation revenue on the Red River and West Texas systems and lower environmental remediation expenses.

Equity earnings from the investment in Seaway Crude Pipeline were $4.7 million and the proportional interest in EBITDA was $6.3 million for fourth quarter 2002, compared with $2.6 million and $4.6 million, respectively, for fourth quarter 2001. The increase in fourth quarter 2002 was primarily due to increased transportation volumes. For the year ended Dec. 31, 2002, equity earnings were $18.8 million and the proportional interest EBITDA was $25.2 million, compared with $18.5 million and $26.7 million, respectively, for the corresponding 2001 period. Equity earnings and EBITDA for both the fourth quarter and year ended Dec. 31, 2002, reflect 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).

Downstream Segment
The downstream segment includes the transportation and storage of refined products, liquefied petroleum gases (LPGs) and petrochemicals.

Downstream operating income was $21.2 million for fourth quarter 2002, compared with $26.1 million for fourth quarter 2001. The decrease was primarily due to increased maintenance expenses, increased depreciation expense related to completed capital projects and higher property taxes. For the year ended Dec. 31, 2002, operating income was $83.1 million, compared with $117.7 million for the 2001 period. The decrease was primarily attributable to the $18.9 million gain related to the contract settlement with Pennzoil recognized in 2001, increased maintenance and environmental expenses and increased depreciation and property tax expenses.

The equity loss from the investment in Centennial Pipeline LLC was $1.8 million and $6.7 million, respectively, for fourth quarter and year ended Dec. 31, 2002, compared with an equity loss of $0.6 million and $1 million, respectively, for the corresponding fourth quarter and year ended Dec. 31, 2001. The losses in 2002 resulted from lower than anticipated volumes and higher operating expenses associated with the pipeline start-up.

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 Chaparral NGL System and the Val Verde Gathering System acquired in March and June 2002, respectively.

Operating income for the midstream segment was $22.2 million for fourth quarter 2002, compared with $3.4 million for fourth quarter 2001. The acquisitions of the Chaparral NGL System and Val Verde Gathering System contributed $9.8 million to operating income during the quarter. Additionally, expansion of the Jonah system resulted in an $11 million increase in operating income compared to fourth quarter 2001. For the year ended Dec. 31, 2002, operating income was $60.7 million, compared with $15.8 million for the 2001 period. The combined effect of the acquisitions of the Jonah Gas Gathering Company, Chaparral NGL System and Val Verde Gathering System contributed $49.8 million to operating income during 2002. The favorable impact of the acquisitions was partially offset by reduced transportation revenues on the Dean and Panola pipelines.

FINANCING ACTIVITIES

TEPPCO completed an offering in fourth quarter 2002 of 3.8 million limited partner units, which resulted in net proceeds of approximately $97.5 million. For year 2002, 13.4 million limited partner units were sold with net proceeds of approximately $372 million. The proceeds from these offerings were used to reduce a portion of borrowings outstanding under TEPPCO's bank credit facilities.

Fourth quarter 2002 interest expense - net was $17.3 million compared with $16.8 million for fourth quarter 2001. The increase was due to lower interest costs being capitalized in the 2002 period. For the year ended Dec. 31, 2002, interest expense was $70.5 million, offset by capitalized interest of $4.3 million. Interest expense was $66.1 million for the year ended Dec. 31, 2001, offset by capitalized interest of $4 million.

TEPPCO will host a conference call related to earnings performance at 8:05 a.m. CT on Friday, Jan. 17, 2003. Interested parties may listen via the Internet, live or on a replay basis at www.teppco.com or by dialing 800/289-0437. The confirmation code is 668376. Please call in five to 10 minutes prior to the scheduled start time. A replay of the conference call will be available for seven days by dialing 888/203-1112 with a confirmation code of 668376.

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 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. EBITDA is used as a supplemental financial measurement in the evaluation of our business and should not be considered as an alternative to net income as an indicator of our operating performance or as an alternative to cash flows from operating activities or other cash flow data calculated in accordance with accounting principles generally accepted in the United States of America or as a measure of liquidity.

CONTACTS:

Investor Relations - Brenda J. Peters
Phone: 713/759-3954
Toll Free: 800/659-0059
e-mail: bpeters@teppco.com

Media Relations - Kathleen A. Sauvé
Phone: 713/759-3635
24-Hour: 704/382-8333
e-mail: kasauve@teppco.com

###


TEPPCO Partners, L. P.
FINANCIAL HIGHLIGHTS

(Unaudited - In Millions, Except Per Unit Amounts)
                 
     
Three Months Ended December 31,
Twelve Months Ended December 31,
     


     
2002
2001 (1)
2002
2001 (1)




             
Operating Revenues:              
 Sales of crude oil and
 petroleum products
$712.0 
$618.2 
$2,823.8 
$3,219.8 
 Transportation - Refined Products
31.3 
29.6 
123.5 
139.3 
 Transportation - LPGs
27.9 
23.6 
74.6 
77.8 
 Transportation - Crude oil and
 NGLs
18.2 
10.4 
66.3 
44.9 
 Gathering - Natural Gas
36.1 
8.8 
90.1 
8.8 
 Mont Belvieu operations
4.1 
4.3 
15.2 
14.1 
 Other
12.3 
11.8 
48.7 
51.7 




  Total Operating Revenues
841.9 
706.7 
3,242.2 
3,556.4 




     
Costs and Expenses:
 Purchases of crude oil and
 petroleum products
698.7 
606.8 
2,772.4 
3,172.8 
 Operating expenses - general
 and administrative
55.8 
41.8 
176.7 
149.3 
 Operating fuel and power
11.3 
8.7 
36.8 
36.6 
 Depreciation and amortization
27.9 
14.7 
86.1 
45.9 




  Total Costs and Expenses
793.7 
672.0 
3,072.0 
3,404.6 




  Operating Income
48.2 
34.7 
170.2 
151.8 




     
Interest expense - net
(17.3)
(16.8)
(66.2)
(62.1)
Equity earnings
2.9 
2.1 
12.0 
17.4 
Other income - net
0.8 
1.2 
1.9 
2.0 




  Net Income
$34.6 
$21.2 
$117.9 
$109.1 




     
Net Income Allocation:
 Limited Partner Unitholders
$24.0 
$15.0 
$81.2 
$77.0 
 General Partner
8.7 
4.7 
29.7 
23.5 
 Class B Unitholder
1.9 
1.5 
7.0 
8.6 




  Total Net Income Allocated
$34.6 
$21.2 
$117.9 
$109.1 




     
Basic and Diluted Net Income
Per Limited Partner and Class B Unit
$0.46 
$0.40 
$1.79 
$2.18 




     
Weighted Average Number of Limited Partner and Class B Units
55.8 
41.4 
49.2 
39.3 
     
EBITDA    
 Net Income
$34.6 
$21.2 
$117.9 
$109.1 
 Interest expense - net
17.3 
16.8 
66.2 
62.1 
 Depreciation and amortization (D&A)
27.9 
14.7 
86.1 
45.9 
 TEPPCO's pro-rata percentage
 of joint venture interest
 expense and D&A
3.4 
1.9 
11.7 
8.3 




 Total EBITDA
$83.2 
$54.6 
$281.9 
$225.4 




                 
(1) Certain 2001 amounts have been reclassified to conform with current 2002 presentation.
 
TEPPCO Partners, L.P.
BUSINESS SEGMENT DATA

(Unaudited - In Millions)
             
Three Months Ended December 31, 2002 Downstream Midstream Upstream Intersegment
Eliminations
Consolidated






             
Operating revenues
$70.5 
$49.9 
$722.1 
$(0.6)
$841.9 
Operating expenses
40.9 
13.2 
712.3 
(0.6)
765.8 
Depreciation and amortization
8.4 
14.5 
5.0 
27.9 
   




   
 Operating Income
$21.2 
$22.2 
$4.8 
$- 
$48.2 
   




             
             
Three Months Ended December 31, 2001 (1) Downstream Midstream Upstream Intersegment
Eliminations
Consolidated






             
Operating revenues
$64.8 
$16.2 
$626.0 
$(0.3)
$706.7 
Operating expenses
32.1 
7.1 
618.4 
(0.3)
657.3 
Depreciation and amortization
6.6 
5.7 
2.4 
14.7 
   




   
 Operating Income
$26.1 
$3.4 
$5.2 
$- 
$34.7 
   




             
             
Twelve Months Ended December 31, 2002 Downstream Midstream Upstream Intersegment
Eliminations
Consolidated






             
Operating revenues
$243.5 
$138.9 
$2,861.8 
$(2.0)
$3,242.2 
Operating expenses
130.3 
33.5 
2,824.1 
(2.0)
2,985.9 
Depreciation and amortization
30.1 
44.7 
11.3 
86.1 
   




   
 Operating Income
$83.1 
$60.7 
$26.4 
$- 
$170.2 
   




             
             
Twelve Months Ended December 31, 2001 (1) Downstream Midstream Upstream Intersegment
Eliminations
Consolidated






             
Operating revenues
$264.2 
$37.2 
$3,255.3 
$(0.3)
$3,556.4 
Operating expenses
119.8 
11.5 
3,227.7 
(0.3)
3,358.7 
Depreciation and amortization
26.7 
9.9 
9.3 
45.9 
   




   
 Operating Income
$117.7 
$15.8 
$18.3 
$- 
$151.8 
   




             
(1) Certain 2001 amounts have been reclassified to conform with current 2002 presentation.
             
 
TEPPCO Partners, L. P.
Condensed Statements of Cash Flows (Unaudited) (In Millions)
           
     
Twelve Months Ended
December 31,
     
     
     
2002
2001

Cash Flows from Operating Activities
 Net income  
$117.9 
$109.1 
 Depreciation, working capital and other  
117.0 
59.8 

           
Net Cash Provided by Operating Activities  
234.9 
168.9 

           
Cash Flows from Investing Activities:        
 Proceeds from cash investments  
4.2 
 Proceeds from sale of assets  
3.4 
1.3 
 Purchase of Jonah Gas
 Gathering Company
 
(7.3)
(359.8)
 Purchase of Chaparral and
 Quanah Pipelines
 
(132.4)
 Purchase of Val Verde Gathering System  
(444.2)
 Purchase of ARCO assets  
(11.0)
 Purchase of crude oil assets  
(20.0)
 Capital expenditures (1)  
(133.3)
(107.6)
 Investment in Centennial Pipeline LLC  
(10.9)
(65.0)

           
Net Cash Used in Investing Activities  
(724.7)
(557.9)

           
Cash Flows from Financing Activities:        
 Issuance of Senior Notes  
497.8 

 Proceeds from term loan
 and revolving credit facility

 
675.0 
546.1 
 Debt issuance costs  
(7.0)
(2.6)
 Payments on revolving credit facility  
(943.7)
(291.4)
 Proceeds from termination
 of interest rate swaps
 
44.9 
 Proceeds from the issuance of
 LP units, net
 
372.5 
234.9 
 General Partner contributions  
7.6 
4.8 
 Distributions paid  
(151.8)
(104.4)

           
Net Cash Provided by Financing Activities  
495.3 
387.4 

           
Net Increase (Decrease) in Cash
and Cash Equivalents
 
5.5 
(1.6)
Cash and Cash Equivalents -- beginning
of period
 
25.5 
27.1 

           
Cash and Cash Equivalents -- end of period  
$31.0 
$25.5 

           
Supplemental Cash Flow Information:        
 Interest paid during the period
 (net of capitalized interest)
 
$48.9 
$61.5 

           
           
(1) Includes capital expenditures for maintaining existing operations of $18.6 million in 2002, and $18.5 million in 2001.
 
TEPPCO Partners, L. P.
Condensed Balance Sheets (Unaudited)
(In Millions)
         
   
December 31,
2002
December 31,
2001
   

Assets      
Current assets      
 Cash and cash equivalents
$31.0 
$25.5 
 Other
329.6 
258.0 

   
Total current assets
360.6 
283.5 
 
Property, plant and equipment - net
1,587.8 
1,180.5 
Intangible assets (1)
465.4 
251.5 
Equity investments
284.7 
292.2 
Other assets
72.2 
57.6 

   
Total assets
$2,770.7 
$2,065.3 

   
   
Liabilities and Partners' Capital
Current liabilities
 Notes payable
$- 
$360.0 
 Other
366.8 
308.8 

   
Total current liabilities
366.8 
668.8 
   
Senior Notes
945.7 
375.2 
Other long-term debt
432.0 
340.7 
Other non-current liabilities
31.0 
31.8 
Class B Units
103.4 
105.6 
Partners' capital
 Accumulated other comprehensive loss
(20.1)
(20.3)
 General partner's interest
12.8 
13.2 
 Limited partners' interests
899.1 
550.3 

   
Total partners' capital
891.8 
543.2 

   
Total liabilities and partners' capital
$2,770.7 
$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 December 31,
 
Twelve Months Ended
December 31,
       
     
 
     
2002
2001
2002
2001
     
 
 
 
Downstream Segment:              
 Barrels Delivered              
  Refined Products
37.1 
30.0 
138.2 
122.9 
  LPGs
12.7 
12.6 
40.5 
40.0 
  Mont Belvieu
  Operations
7.5 
6.9 
28.9 
23.1 
     
  Total
57.3 
49.5 
207.6 
186.0 
     
 
 
 
     
 Average Tariff
 Per Barrel
  Refined Products
$0.85 
$0.99 
$0.89 
$0.98 
  LPGs
2.19 
1.89 
1.84 
1.95 
  Mont Belvieu
  Operations
0.17 
0.18 
0.15 
0.18 
     
  Average System Tariff
  Per Barrel
$1.05 
$1.10 
$0.97 
$1.09 
     
Upstream Segment (1):
 Margins:
  Crude oil transportation
$10.9 
$7.9 
$39.1 
$34.1 
  Crude oil marketing
5.5 
5.1 
22.9 
22.5 
  Crude oil terminaling
2.4 
2.7 
10.1 
10.2 
  LSI
1.3 
1.0 
4.8 
4.1 
     
 
 
 
   Total Margin
$20.1 
$16.7 
$76.9 
$70.9 
     
 
 
 
     
 Total barrels
  Crude oil transportation
21.1 
21.3 
82.8 
78.7 
  Crude oil marketing
35.9 
49.9 
139.2 
159.5 
  Crude oil terminaling
33.7 
34.6 
127.4 
121.9 
     
 Lubrication oil volume
 (total gallons):
2.6 
2.2 
9.6 
8.8 
     
 Margin per barrel:
  Crude oil transportation
$0.512 
$0.373 
$0.471 
$0.434 
  Crude oil marketing
0.155 
0.104 
0.165 
0.141 
  Crude oil terminaling
0.072 
0.077 
0.080 
0.083 
     
 Lubrication oil margin
 (per gallon):
$0.484 
$0.461 
$0.500 
$0.471 
     
Midstream Segment (1):
 Gathering - Natural
 Gas (2)
  Bcf
119.5 
45.5 
340.7 
45.5 
  Btu (in trillions)
120.9 
50.7 
353.7 
50.7 
     
  Average fee
  per MMBtu
$0.299 
$0.174 
$0.255 
$0.174 
     
 Transportation - NGLs
 (3)
  Total barrels
15.0 
5.5 
54.0 
21.5 
  Margin per barrel
$0.727 
$0.934 
$0.720 
$0.961 
     
 Fractionation - NGLs
  Total barrels
1.1 
1.0 
4.1 
4.1 
  Margin per barrel
$1.806 
$1.815 
$1.824 
$1.813 
     
 Sales - Condensate
  Total barrels
  (thousands)
22.4 
16.2 
80.0 
16.2 
  Margin per barrel
$27.81 
$19.91 
$25.39 
$19.91 
                   
                   
                   
                   
(1) Certain 2001 amounts have been reclassified to conform with current 2002 presentation.
(2) Operating data for Jonah Gas Gathering Company and Val Verde Gathering System acquired effective Sept. 30, 2001 and June 30, 2002, respectively.
(3) Operating data for Chaparral NGL System acquired March 1, 2002.