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September Summary: The Oil Well Services & Equipment sector finished the month up 4.68% year-to-date [vs being down 0.86% at the end of August] with a sector average yield of 6.55% [vs a yield of 6.79% at the end of August - a fall of 24 basis points]. The Oil & Gas Operators sector finished the month up 1.20% year-to-date [vs -5.36% at the end of August] with a sector average yield of 6.56% [vs 7.01% at the end of last month - a fall of 45 basis points]. The Propane sector finished the month down 5.37% year-to-date [vs -0.23% at the end of last month] with a sector average yield of 7.29% [vs 7.64% - a fall of 35 basis points]. The 10-year Treasury note yielded 4.19% [vs 4.12% last month - up 7 basis points]. "Ratings" were updated on 9-29. The January 'Oil & Well Service' ratings had been dummy numbers - so they were replaced by September ending numbers. The other two sectors use May ratings for the begining ratings. And there were several ratings upgrades since the last update. APL Raises Distribution press release of 9-20 Atlas Pipeline Partners announced that it has declared a quarterly distribution for the period ending September 30, 2004 in the amount of $.69 per common unit [from 63]. The distribution will be paid on November 5, 2004 to unit holders of record at the close of business on September 30, 2004. Michael Staines, President and Chief Operating Officer said, "We are delighted to announce the highest distribution yet in the history of the Partnership. In July we completed the acquisition of Spectrum Field Services, Inc., a privately owned natural gas gathering and processing company headquartered in Tulsa, Oklahoma, which, as we expected, has been highly accretive to our unitholders." Atlas Pipeline owns and operates more than 3,280 miles of natural gas gathering pipelines in Oklahoma, Texas, Pennsylvania, New York and Ohio to which more than 5,200 wells are currently connected. In addition, the Partnership owns and operates a gas processing facility in Velma, Oklahoma. Buckeye [BPL] Buys 5 Pipelines press release of 9-29 Buckeye Pipe Line Company today announced that the Partnership had closed on the purchase of five refined petroleum products pipelines and 24 petroleum products terminals in the Midwestern United States from affiliates of Shell Oil Products. The purchase price paid for the assets was $517 million. The acquired pipelines include the following: [1] The "North Line System," a 309-mile pipeline originating at the ConocoPhillips Wood River, Illinois refinery, which delivers refined products to Chicago and other areas in Illinois and Indiana. [2] The "East Line System," a 354-mile pipeline also originating at the ConocoPhillips Wood River refinery, which delivers refined products across Illinois and Indiana and connects with Buckeye's existing pipeline in Lima, Ohio. [3] The "Two Rivers Pipeline System," a 191-mile pipeline which receives product from Explorer pipeline at a tank farm located in Hartford, Illinois and terminates at a 1.3 million barrel terminal located on the Ohio River in Mt. Vernon, Indiana. The Mt. Vernon terminal is also among the assets acquired from Shell. [4] The "St. Louis 6-Inch Pipeline" and the [5] "ATF Pipeline," originating at the ConocoPhillips Wood River refinery and terminating at a terminal in the St. Louis area and at the Lambert-St. Louis Airport, respectively. Of the 24 refined petroleum products distribution terminals purchased from Shell, 9 are located on the pipelines purchased from Shell and 12 active and 3 inactive distribution terminals are located on other major Midwest refined products pipeline systems (such as the Wolverine and West Shore pipelines) or along the Ohio River. The 24 terminals purchased in total have aggregate storage capacity of approximately 9.3 million barrels. EEP Sells More Units press release of 9-9 Enbridge Energy Partners today announced the pricing of a public offering of 3.2 million of its Class A Common Units at a public offering price of $47.90 per unit {raing units outstanding to 54.78 million}. The offering is scheduled to close on September 15. Enbridge Partners intends to use the net proceeds from this offering to repay indebtedness under its revolving credit facility, which was incurred primarily to fund acquisitions and capital expenditures to enhance existing systems. Kaneb Announces Two Terminal Acquisitions press releases of 9-9 and 9-30 Kaneb announced on 9-9 that it had acquired the Linden, N.J., terminal of ExxonMobil Oil Corporation. The terminal is located next to Kaneb's existing terminal in New York Harbor. This latest acquisition consists of nine petroleum storage tanks with a combined capacity of 370,000 barrels located on 65 acres. Products are received from various pipeline connections and delivered into trucks through eight loading lanes. "This terminal has a very high historical volume resulting in high tank turnover per month and significant synergies will be realized in combination with Kaneb's existing terminal which is interconnected with this new terminal," said Edward D. Doherty, Chairman and CEO of Kaneb Pipe Line Company LLC, the Partnership's general partner. Kaneb announced on 9-30 that it had acquired 100% of the shares in Ross Chemical & Storage Company. The assets of Ross consist of a chemical and petroleum storage terminal at Grangemouth in Scotland which provides storage and terminal services for various petroleum and chemical customers. The terminal will complement Kaneb's existing Scottish terminals in Leith and Clydebank. This latest acquisition consists of 44 storage tanks with a combined capacity of almost 400,000 barrels. Transportation modes available to the terminal include marine vessels, pipelines, and trucks. Magellan Midstream Acquires Shell Assets press release 10-01 Magellan Midstream Partners announced today that it has closed its previously announced acquisition of more than 2,000 miles of refined petroleum products pipelines from affiliates of Shell Oil Products US for approximately $490 million plus working capital and transaction costs. The acquired assets are located in Colorado, Kansas, Oklahoma and Texas and include six active terminals and six system storage facilities that have a combined storage capacity of approximately 6.4 million barrels. This acquisition is an excellent fit with our pipeline and terminals network and provides us with our own direct connection to the U.S. Gulf Coast refining region," said Don Wellendorf, chief executive officer. "The response by our customers has been very positive. We intend to begin work immediately on capital projects to expand the interconnections with our existing assets which will enhance our capabilities to better serve our customers' growing need for transportation and terminal services." The acquisition, including working capital and transaction costs, was financed initially with approximately $180 million of cash on hand, comprised in part of proceeds raised from equity offerings earlier this year to pre-fund the acquisition, and borrowings of $300 million under a short-term acquisition facility and $50 million under an existing revolving credit facility. In connection with the acquisition, Magellan's partnership agreement was amended to reduce the incentive cash distributions to be paid to the general partner by $1.25 million, $5 million and $3 million for 2004, 2005 and 2006, respectively. Overall, the acquisition is expected to be immediately accretive to cash available for distributions by at least 15 cents per limited partner unit annually. Magellan alss announced that it plans to sell 2.6 million common units in a registered offering. Management intends to use the net proceeds from this offering to repay a portion of the short-term debt used initially to fund the partnership's recent acquisition of more than 2,000 miles of petroleum products pipeline systems. MarkWest Energy Partners To Sell Units press release 9-13 MarkWest Energy Partners announced today that it has filed a preliminary prospectus supplement for an offering of 2,159,138 common units pursuant to an effective shelf registration statement on Form S-3 previously filed with the Securities and Exchange Commission. The underwriters have the option to purchase up to 323,870 additional units to cover over-allotments, if any. The offering includes 2,000,000 common units to be sold by the Partnership and 159,138 common units to be sold by certain selling unitholders. The Partnership will not receive any proceeds from the common units offered by the selling unitholders. The Partnership intends to use the net proceeds from the offering to repay a portion of the outstanding indebtedness incurred to fund its recent acquisition of American Central Eastern Texas Gas Company, Limited Partnership's Carthage gathering system and gas processing assets [announced at the end of July, costing $240 million]. The Carthage gathering system has been constructed over the last 10 years and offers both low- and high-pressure service to producers in the Carthage Field, gathering gas from the Cotton Valley, Pettit and Travis Peak formations. The system consists of approximately 180 miles of pipeline connected to approximately 1,700 wells with an additional 82 miles of pipeline currently under construction. The gathering system also includes approximately 65,000 horsepower of compression with an additional 35,000 horsepower currently being installed. Current system throughput is approximately 245 MMcf/d and is anticipated to increase to approximately 310 MMcf/d by the end of 2004 due to the connection to the system of additional contracted volumes. The gathering system has a capacity of approximately 350 MMcf/d. Also included in the acquisition is a 175 MMcf/d processing facility currently under construction and an NGL pipeline to be constructed in 2005. Plains All American Acquires Propane Storage Facility press release 9-15 Plains All American Pipeline announced today that it has acquired, through its subsidiary Plains LPG Services, the Schaefferstown Propane Storage Facility from Koch Hydrocarbon. The total purchase price was approximately $32 million. In connection with the transaction, the Partnership also acquired an additional $14.2 million of inventory. The transaction was funded through a combination of cash on hand and borrowings under the Partnership's revolving credit facilities. The facility is located approximately 65 miles northwest of Philadelphia near Schaefferstown, Pennsylvania, and has the capacity to store approximately 20.0 million gallons of refrigerated propane. In addition, the facility has 19 bullet storage tanks with an aggregate capacity of 570,000 gallons. Propane is delivered to the facility via truck or pipeline and is transported out of the facility by truck. In addition, the transaction also included approximately 61 acres of land and a truck rack. Plains All American Raises 3Q Outlook press release 9-23 Plains All American Pipeline LP on Thursday said it raised its third-quarter outlook to exceed previously announced guidance, based on its performance in July and August and its expected performance in September. Net income is expected to be $38.1 million to 42.6 million, or 54 cents to 60 cents per limited partner unit. Earnings excluding items are expected to be $38.8 million to $43.3 million, or 55 cents to 61 cents per unit. Earnings before interest expense, income taxes, and depreciation and amortization, or EBITDA, is expected at between $67.3 million and $71.3 million, with EBITDA excluding items coming in at $68 million to $72 million for the quarter. Analysts surveyed by Thomson First Call expect the company to earn $31 million, or 47 cents a unit, with EBITDA of $62.9 million for the third quarter. Plains All American said damage to its facilities from Hurricane Ivan was relatively minor, though it is too early to tell how fourth-quarter volumes will be impacted by the storm. Additionally, the company plans to recommend an increase in its quarterly dividend to 60 cents per unit, or $2.40 per unit annually -- a 4 percent increase over its current annual dividend of $2.31 per unit. Northern Border Pipeline Company Announces Expansion Project press release 9-23 Northern Border Pipeline Company announced today that during a recently concluded open season, it received commitments from shippers sufficient to support a proposed expansion of its pipeline system into the Chicago market area. The "Chicago Expansion III Project" would expand capacity of the Northern Border Pipeline from Harper, Iowa, to Chicago by approximately 130 million cubic feet per day or approximately 15 percent to meet additional demand on this segment of the pipeline system. The project would add a 16,000 horsepower compressor in Iowa and make minor modifications to existing facilities. Capital costs are estimated to be approximately $20 million and the target in service date is spring 2006. Construction is subject to approval by the Federal Energy Regulatory Commission. Northern Border Pipeline Company is a general partnership that owns and operates a 1,249-mile interstate pipeline that transported approximately 22 percent of all Canadian gas imported into the United States in 2003. EPD Completes GulfTerra Deal press release 9-30 Enterprise Products Partners said on Thursday that it had purchased GulfTerra Energy Partners and expects annual cash savings of $140 million from the deal. The Houston energy partnership said it expects an increase in its quarterly cash distribution to at least 39.5 cents per unit starting in November 2004. GulfTerra was 90 percent owned by El Paso Corp (EP0). Kinder Morgan Acquires Kaston Pipeline Company press release 8-31 Kinder Morgan Energy today announced it has purchased 100 percent of Kaston Pipeline Company for approximately $100 million in cash. As was previously announced, KMP entered into an agreement in January of this year to operate Kaston's crude oil pipeline system in West Texas and had signed a letter of intent to purchase a substantial equity stake in the pipeline prior to year end. Kinder Morgan Chairman, CEO and President Richard D. Kinder said the acquisition provides KMP with strategically located infrastructure that will benefit the company's growing CO2 business. "This acquisition is expected to be immediately accretive to earnings and cash flow at KMP and produce approximately $18 million per year in distributable cash flow," Kinder said. (Distributable cash flow is defined as net income before DD&A less sustaining capital expenditures.) The 450-mile Kaston crude oil pipeline system is the sole source of crude oil for Western's 107,000 barrel per day refinery in El Paso, Texas, and KMP has entered into a long-term transportation contract with Western. With a total capacity of 115,000 barrels per day, the system consists of four main- line sections, numerous gathering systems and truck off-loading stations. Energy Transfer Partners Acquires Boland Energy press release 9-01 Energy Transfer Partners today announced the acquisition of the assets of Boland Energy, Beaufort, Mo., for a combination of cash and ETP common units, by its retail propane division, Heritage Operating, L.P. Boland Energy delivers approximately 4.8 million gallons annually in the rural market west of St. Louis. Energy Transfer Partners, L.P. is a publicly traded partnership owning and operating a diversified portfolio of energy assets. The Partnership's natural gas operations include approximately 6,500 miles of natural gas gathering and transportation pipelines with an aggregate throughput capacity of 3.8 billion cubic feet of natural gas per day, with natural gas treating and processing assets located in Texas, Oklahoma, and Louisiana. The Partnership is the fourth largest retail marketer of propane in the United States, serving more that 650,000 customers from 310 customer service locations in 32 states extending from coast to coast. Energy Transfer Partners Declares 10% Increase in Quarterly Distribution press release 9-20 ETP announced today a 10% increase in the quarterly cash distribution to $0.825 per common unit (an annualized rate of $3.30 per unit) on the Partnership's outstanding limited partner units for the fourth quarter of fiscal 2004 ended August 31, 2004. The $0.825 per common unit quarterly distribution represents an increase of $0.075 per common unit (an annualized increase of $0.30 per unit) over the distribution paid for the third quarter of fiscal 2004. Ferrellgas Announces Earnings for Fiscal Year 2004 press release 9-30 Propane sales for the fiscal year were 874 million gallons, compared to near-record propane sales volumes of 899 million gallons sold in fiscal year 2003, as gallon growth from acquisitions in fiscal year 2004 was offset by the impact from warmer than normal winter heating season temperatures and customer conservation resulting from historically high wholesale propane costs. In fiscal year 2004, national temperatures were 5% warmer than normal. Gross profit for the fiscal year was a record $553.5 million, compared to gross profit results of $530.7 million reported in fiscal year 2003. This fiscal year's gross profit results reflect contributions from acquisitions completed during the fiscal year, partially offset by reduced propane sales volumes and an anticipated lesser contribution from risk management activities. Operating and general and administrative expenses for the fiscal year were $325.6 million and $34.5 million, respectively, compared to $298.0 million and $28.0 million in the prior fiscal year. Interest expense and depreciation and amortization expense were $74.5 million and $57.1 million, respectively, compared to $63.7 million and $40.8 million in the prior fiscal year. Increases in these expenses in fiscal year 2004 primarily reflect the impact of acquisitions completed in the fiscal year. Equipment lease expense for the fiscal year was $19.7 million, down slightly from $20.6 million in the prior fiscal year. Adjusted EBITDA and net earnings for fiscal year 2004 were $173.7 million and $28.6 million, respectively, compared to a near record-setting $184.0 million and $56.7 million achieved during fiscal year 2003. |