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November Summary: The Oil Well Services & Equipment sector finished the month up 8.74% year-to-date [vs being up 3.62% at the end of October] with a sector average yield of 6.30% [vs a yield of 6.60% at the end of October - a fall of 30 basis points]. The Oil & Gas Operators sector finished the month up 4.34% year-to-date [vs 1.14% at the end of October] with a sector average yield of 6.54% [vs 6.74% at the end of last month - a fall of 20 basis points. The Propane sector finished the month up 9.12% year-to-date [vs 4.46% at the end of last month] with a sector average yield of 7.07% [vs 7.29% last month - a fall of 22 basis points.]. APL Reports Operating Results For Q3 press release of 11-08 Atlas Pipeline Partners reported revenues of $34.9 million and $43.7 million for the three and nine month periods ended September 30, 2004, respectively, compared to $4.2 million and $11.9 million for the similar periods ended September 30, 2003, respectively. The significant increase from period to period is reflective of the July 16, 2004 acquisition of Spectrum Field Services, Inc. Net cash provided by operations was $10.1 million and $17.7 million for the three and nine month periods ended September 30, 2004, respectively, compared to $6.4 million and $11.5 million for the similar periods ended September 30, 2003, respectively. Earnings before interest, taxes, depreciation and amortization ("EBITDA"), a non-GAAP measure, was $4.1 million and $10.6 million for the three and nine month periods ended September 30, 2004, respectively, compared to $3.2 million and $8.7 million for the three and nine month periods ended September 30, 2003, respectively. The following table reconciles EBITDA to our net income for the three and nine month periods ended September 30, 2004 and 2003. Enbridge Energy to Buy Texas Gas Assets From Devon Energy press release of 11-23 Oil and gas company Enbridge Energy Partners LP on Tuesday said it agreed to buy natural gas gathering and processing assets in North Texas from Oklahoma City-based Devon Energy Corp. for an undisclosed amount. The deal is expected to immediately boost Enbridge's distributable cash flow after closing by year-end. The acquired assets serve areas of the Fort Worth Basin, primarily in Jack, Palo Pinto and Parker counties. Its facilities include about 2,200 miles of gas-gathering pipelines and three processing plants with aggregate capacity of 81 million cubic feet of natural gas per day. Valero To Acquire Kaneb Services and Kaneb Pipe Line Partners press release of 11-01 Valero L.P. (VLI), Kaneb Services LLC (KSL) and Kaneb Pipe Line Partners (KPP) today announced that they have executed definitive agreements to merge Valero L.P. and Kaneb Partners to become the largest terminal operator and second largest petroleum liquids pipeline operator in the United States. As part of the transaction, Valero L.P. will also acquire all of Kaneb Services' equity securities for cash. The general partner of the combined partnership will continue to be owned by affiliates of Valero Energy Corporation (VLO). Kaneb Services and Kaneb Partners will become wholly owned subsidiaries of Valero L.P. The assets of the combined partnership, which will retain the name Valero L.P., will include approximately 9,700 miles of pipeline comprised of approximately 6,900 miles of refined product pipelines, 800 miles of crude oil pipelines and a 2,000-mile anhydrous ammonia pipeline. The combined partnership will also own 101 terminal facilities located in 30 states, Canada, Mexico, the Netherlands Antilles, Australia, New Zealand and the United Kingdom, as well as four crude oil storage tank facilities. The combined system will have approximately 85 million barrels of storage capacity. This is a great transaction for our investors. Upon closing of the merger, we intend to recommend to our board of directors an increase in the annual distribution from $3.20 per unit to $3.42 per unit, which would represent a nearly 7 percent increase. In addition, we expect this transaction will be significantly accretive to cash flow and will position us well for further distribution increases. With our combined operations, we see outstanding opportunities to increase unitholder value through a wider array of growth opportunities than either partnership had independently. And, we are fortunate to be adding key members from Kaneb's high-quality management team and its workforce, who are among the best in the industry," said Curt Anastasio, President and Chief Executive Officer of Valero L.P. The total value of the transaction is approximately $2.8 billion and is expected to close in the first quarter of 2005. Plains All American Pipeline Q3 Net Income Per Unit Up 195% press release of 11-03 Plains All American Pipeline reported net income of $41.7 million, or $0.59 per basic and diluted limited partner unit, for the third quarter of 2004. These financial results represent an increase of 252% and 195%, respectively, over net income of $11.9 million, or $0.20 per basic limited partner unit ($0.19 diluted), for the third quarter of 2003. For the first nine months of 2004, the Partnership reported net income of $105.3 million, or $1.58 per basic and diluted limited partner unit, an increase of 77% and 49%, respectively, over net income of $59.6 million, or $1.06 per basic limited partner unit ($1.05 diluted), for the first nine months of 2003. Earnings before interest, taxes, depreciation and amortization ("EBITDA") for the third quarter of 2004 were $71.2 million, an increase of 118% as compared with EBITDA of $32.7 million for the third quarter of 2003. Excluding selected items impacting comparability, the Partnership's third quarter 2004 adjusted net income, adjusted net income per basic and diluted limited partner unit and adjusted EBITDA would have been $38.1 million, $0.54 per unit, and $67.6 million, respectively. Also excluding selected items impacting comparability, the Partnership's third quarter 2003 adjusted net income, adjusted net income per basic and diluted limited partner unit and adjusted EBITDA would have been $22.4 million, $0.39 per unit, and $43.2 million, respectively. Excluding selected items impacting comparability, third quarter 2004 adjusted net income, adjusted net income per basic and diluted limited partner unit and adjusted EBITDA would have increased 70%, 38% and 56%, respectively, over third quarter 2003. Excluding these selected items impacting comparability, the Partnership's adjusted net income, adjusted net income per basic and diluted limited partner unit and adjusted EBITDA for the first nine months of 2004 would have been $107.9 million, $1.62 per unit, and $186.0 million, respectively. "Plains All American delivered record financial and operating performance for the second straight quarter," said Greg L. Armstrong, Chairman and CEO of the Partnership. "This quarter's results came in well ahead of our original guidance provided on August 4th and very much in line with the increased guidance range for the quarter that we provided on September 23rd. Relative to our original guidance, these strong results were driven by a combination of factors, including continued acceleration of acquisition-related synergies and our ability to capture increased margins from continued crude oil market volatility in our gathering, marketing, terminalling and storage segment. We also experienced higher than expected pipeline segment profit due to volume mix and higher realized prices on our pipeline loss allowance." Armstrong noted that the Partnership's reported results for the quarter were also influenced by several related factors, including the expansion of the Partnership's LPG business, the strengthening of the Canadian dollar and the resulting gain from foreign currency revaluation. Armstrong remarked that, similar to gains and losses associated with SFAS 133, the Partnership anticipates a substantial portion of the gain should reverse. Enterprise Reports Third Quarter 2004 Results press release 11-02 Enterprise Products Partners (EPD) announced its financial results for the three months and nine months ended September 30, 2004. Reported results for Enterprise for these periods do not include the results of GulfTerra Energy Partners, L.P., which was merged into Enterprise on September 30, 2004. Effective October 1, 2004, the financial results of GulfTerra will be included in the reported results of Enterprise. Enterprise reported net income of $61.3 million, or $0.21 per unit on a fully diluted basis, for the third quarter of 2004 compared to a net loss of $3.3 million, or a loss of $0.04 per unit, for the third quarter of 2003. Net income for the third quarter of 2004 was reduced by $5.8 million, or $0.02 per unit, primarily due to a non-cash impairment charge of $4 million related to the partnership's ownership interest in a natural gas liquid (NGL) storage facility which is being divested in accordance with the Federal Trade Commission consent order associated with the merger. Net income for the third quarter of 2003 included, and was reduced by, a non-cash charge of $22.5 million for the impairment of the book value of the partnership's ownership interest in an octane additive production facility. Revenue for the third quarter of 2004 increased to $2 billion from $1.2 billion in the third quarter of last year. Operating income for the third quarter of 2004 was $93.2 million compared to $30.6 million for the third quarter of 2003. Gross operating margin was $138 million for the third quarter of 2004 compared to $68.5 million for the same quarter in 2003. Both operating income and gross operating margin for the third quarter of 2004 were reduced by $4 million and for the third quarter of 2003 by $22.5 million for the respective non-cash impairment charges. Gross operating margin is a non-GAAP financial measure. Gross operating margin is defined and a schedule is provided to reconcile this measure to its most directly comparable GAAP financial measure, which is operating income, later in this press release. "Demand for our midstream services was strong throughout the third quarter as a result of increased demand for NGLs from the depressed levels of a year ago," said O.S. "Dub" Andras, Vice Chairman and Chief Executive Officer of Enterprise. "Despite the overall high prices for energy, demand for NGLs and natural gas has continued to increase with the recovery in the general economy. For the quarter, ethane demand by the ethylene industry increased by 22% from the third quarter of last year to 809,000 barrels per day and propane demand increased by 23% to 350,000 barrels per day. The ethylene industry is the largest single consumer of NGLs. As a result of this strong demand, most of our pipelines, fractionators and processing plants realized an increase in volumes. "The effects of Hurricane Ivan, however, have reduced volumes delivered to our facilities in Mississippi and eastern Louisiana since the middle of September. This resulted in a decrease in Enterprise's gross operating margin for the third quarter of approximately $7 million, or $0.03 per unit on a fully diluted basis. We expect that the effects of the hurricane will also reduce Enterprise's gross operating margin in the fourth quarter, which will include the gross operating margin of the former GulfTerra assets, by approximately $18 million. These amounts are prior to any reimbursements we may receive from coverage provided by business interruption insurance. We did not sustain any material property damage as a result of the storm," stated Andras. Enterprise & Atwater Complete Agreements for Deepwater Platform and Gas Pipeline press release of 11-10 In an industry first, five independent exploration and production companies and a midstream energy company have come together to facilitate the development of multiple ultra-deepwater, natural gas discoveries in the previously untapped Eastern Gulf of Mexico. Independence Hub, LLC, an affiliate of Enterprise Products Partners and the Atwater Valley Producers Group, which includes Anadarko Petroleum; Dominion; Kerr-McGee; Spinnaker Exploration and Devon Energy have executed agreements for the dedication, processing and gathering of natural gas and condensate production from six natural gas fields in the Atwater Valley, DeSoto Canyon and Lloyd Ridge areas of the deepwater Gulf of Mexico. As part of the transaction, the producers also have dedicated future production from a number of undeveloped blocks in the area for processing and gathering. Enterprise will design, construct, install and own Independence Hub, a 105-foot deep-draft, semi-submersible platform with a two-level production deck, which will be capable of processing 850 million cubic feet of gas per day. The platform, which is estimated to cost approximately $385 million, will be operated by Anadarko, and is designed to process production from the six anchor fields and has excess payload capacity to tie-back up to 10 additional fields. Independence Hub will be located on Mississippi Canyon block 920, in a water depth of 8,000 feet. This location was selected for the permanently anchored host facility based on favorable seafloor conditions and proximity to the identified anchor fields. First production is expected in 2007. Additionally, Enterprise will own, install and operate 140 miles of 24-inch pipeline, with a capacity of approximately 850 million cubic feet of gas per day, named Independence Trail. The pipeline, which is estimated to cost $280 million, will redeliver the production from Independence Hub into the Tennessee Gas Pipeline located in West Delta 68. Kinder Morgan Prices Public Offering of Common Units press release of 11-01 KMP announced it has priced the public offering of 5,500,000 common units representing limited partner interests at $46.00 per common unit, the closing price of the common units on the New York Stock Exchange on Nov. 4, 2004. The offering was increased by 10 percent from 5,000,000 common units due to strong demand. KMP has granted to the underwriters an option to purchase up to 825,000 additional common units to cover over allotments. Additionally, Kinder Morgan Management (KMR) agreed to sell 1,300,000 of its shares to Kayne Anderson MLP Investment Company in a substantially concurrent transaction. KMR will use the proceeds from the sale to purchase 1,300,000 i-units from KMP. Total combined gross proceeds to KMP from the underwritten common unit offering and the sale of i-units to KMR will be approximately $306.7 million. AmeriGas Partners Reports Record 2004 Results press release of 11-17 AmeriGas Propane (APU) reported record net income for the Partnership of $91.9 million, or $1.71 per limited partner unit, for the fiscal year ended September 30, 2004 compared to $72.0 million, or $1.42 per limited partner unit, for fiscal year 2003. Average diluted limited partner units outstanding increased 5.6% over the prior year. Earnings before interest expense, income taxes, depreciation and amortization (EBITDA) of $255.9 million for fiscal 2004 were significantly higher than the $234.4 million recorded in fiscal 2003. Weather was nearly 5% warmer than normal in fiscal 2004 compared to weather that was essentially normal in fiscal 2003 according to information published by the National Oceanic and Atmospheric Administration. Eugene V. N. Bissell, chief executive officer of AmeriGas, said, "This year we demonstrated our ability to grow internally as well as through acquisition. Notwithstanding warmer than normal weather and record high product cost, we achieved base business growth by improving customer service while maintaining competitive prices and controlling increases in our operating expenses. For fiscal 2005, we expect EBITDA in the range of $255 million to $260 million." Retail propane sales volumes in fiscal 2004 were nearly 1.1 billion gallons, down approximately 1.5% from the prior year. The negative effects of warmer winter weather and price-induced customer conservation were nearly offset by growth from acquisitions, PPX® cylinder exchange, strategic accounts and the base business. Revenues increased to $1.78 billion in fiscal 2004 from $1.63 billion in the prior-year as a result of record high selling prices reflecting record high propane product costs. Total margin increased due to higher average retail propane margins and greater margin from non-propane sales and services. Operating and administrative expenses increased principally as a result of higher compensation, distribution expenses and general insurance costs partially offset by the beneficial effects of the management realignment initiated in late fiscal 2003. Energy Transfer Partners Reports Record 2004 Fiscal Year End Results press release of 11-17 Energy Transfer Partners (ETP) reported record net income for the fiscal year ended August 31, 2004 of $99.2 million as compared to net income of $46.6 million for the eleven months ended August 31, 2003. EBITDA, as adjusted, for the fiscal year ended August 31, 2004 reached a record $196.9 million versus the $77.5 million reported for the eleven months ended August 31, 2003. The results for the fiscal year ended August 31, 2004 represent a financial reporting transition period following the January 20, 2004 combination of Energy Transfer's midstream and transportation operations and Heritage's propane operations. The business combination of Energy Transfer and Heritage (the Energy Transfer Transaction) resulted in a change of control causing Energy Transfer's financial statements to become those of the registrant. Reported fiscal 2004 actual results reflect the operations of Energy Transfer's midstream and transportation businesses for the entire reporting period but only Heritage's propane business for the period from the date of the business combination on January 20, 2004 through August 31, 2004. Fiscal 2003 historical results only include Energy Transfer's midstream and transportation operations. The aggregate results disclosed below reflect Heritage's historical results from September 1, 2003 through January 19, 2004, and of Heritage's historical results for the fiscal year ended August 31, 2003, together with the historical results for the years ended August 31, 2004 and 2003, for comparability purposes only. This aggregate information is not necessarily indicative of the results of operations that would have occurred had the transactions been made at the beginning of the periods presented or the future results of the combined operations. On an aggregate basis, net income for the fiscal year ended August 31, 2004 increased 57% to $121.8 million from the aggregate historical net income of $77.8 million for the eleven months ended August 31, 2003. Aggregate EBITDA, as adjusted, for the fiscal year ended August 31, 2004 was $249.8 million, a 33% increase from the aggregate historical EBITDA, as adjusted, of $188.4 million for the eleven months ended August 31, 2003. Both fiscal 2004 aggregate net income and aggregate EBITDA, as adjusted, includes non-recurring expense of $4.0 million associated with the Energy Transfer Transaction costs through August 31, 2004. Since the January 20, 2004 merger, the Partnership has: [1] Closed the acquisition of the midstream and natural gas assets of TXU Fuel System ("ET Fuel System") on June 2, 2004. The ET Fuel System includes approximately 2,000 miles of intrastate pipeline and related storage facilities located in Texas with a total system capacity of 1.3 billion cubic feet of natural gas per day. We believe that we will be able to increase throughput on, and therefore revenue from the ET Fuel System in future years through the addition of interconnects with other pipelines and other industrial users. [2] Completed the Bossier pipeline project, a 78-mile, 36-inch natural gas pipeline which became commercially operational on June 21, 2004. The Bossier pipeline has an initial capacity of 500 MMcf/d, which can be expanded to 1 Bcf/d, and has contracted under long-term agreements over 400 MMcf/d of capacity. [3]Closed the acquisition of certain East Texas midstream and natural gas assets of Devon Energy Corporation, known as the Texas Chalk and Madison Systems on November 1, 2004. The Devon assets include approximately 1,800 miles of gathering and mainline pipeline systems, four natural gas treating plants, condensate stabilization facilities, fractionation facilities and the 80MMcf/d Madison gas processing plant. Energy Transfer Partners Announces Intent to Increase Distribution press release of 11-29 Energy Transfer Partners (ETP) announced today that management will recommend to the Board of Directors an increase in the quarterly cash distribution from $0.825 to $0.875 per common unit ($3.50 annualized). This is an increase of $0.20 annually from the previous annual distribution. The increase results from the anticipated accretion provided by the acquisition of certain East Texas midstream natural gas assets purchased from Devon Energy Corporation on November 1, 2004. Ferrellgas Partners Sales and Profit Up in Q1 press release of 11-30 Ferrellgas Partners (FGP), one of the nation's largest propane distributors, today reported earnings for its first quarter ended October 31, 2004. Propane sales for the first quarter increased 5 percent to 185 million gallons, from 176 million gallons sold in the first quarter of fiscal 2004, primarily reflecting the contribution from the partnership's recently acquired Blue Rhino propane by portable tank exchange operations. "We are very pleased by the operating performance and growth prospects from the recently acquired Blue Rhino operations," said James E. Ferrell, Chairman, President and Chief Executive Officer. "We continue to believe that these operations allow us the opportunity for growth through the increasing acceptance of, and uses for, propane by portable tank exchange." Gross profit for the first quarter was a record $115.2 million, compared to gross profit results of $96.2 million reported in the first quarter of fiscal 2004. This increase in gross profit was primarily due to the contribution from the Blue Rhino operations, partially offset by the impact from the rapid increase in the wholesale cost of propane during the first quarter. Operating and general and administrative expenses for the first quarter were $89.0 million and $10.3 million, respectively, compared to $72.5 million and $6.9 million in the first quarter of fiscal 2004. Increases in these expenses primarily reflect acquisitions completed in the last twelve-month period and, to a lesser extent, anticipated costs associated with the on-going roll-out of the partnership's new technology initiative to its retail distribution outlets. Interest and depreciation and amortization expenses were $22.9 million and $19.8 million, respectively, compared to $16.8 million and $11.2 million in the first quarter of fiscal 2004. Increases in these expenses primarily reflect the impact of acquisitions completed in the last twelve-month period. Equipment lease expense for the first quarter was $5.8 million, as compared to $4.5 million in the prior fiscal year's first quarter. Inergy to buy Star Gas Propane CBSMarketWatch & Reuters 11-18 Inergy has agreed to acquire all of the partnership interests in Star Gas Propane for about $475 million, a move that'll create the nation's fifth-largest retail propane operator, Inergy said Thursday. said the deal to buy the propane operating partnership of Star Gas Partners (SGU), which is expected to close in December, will likely be "significantly accretive" to cash available for distribution to the unit's stakeholders. NRGY plans to finance the purchase with a combination of equity and debt. Star Gas said it was approached by Inergy about the deal last month, after it disclosed that it was having financial difficulties because its Petro heating oil unit had not been able to pass on the full effect of record heating oil prices to customers. Inergy Reports Fiscal 2004 Financial Results press release of 11-30 Inergy, L.P. (NRGY) reported income before interest, taxes, depreciation and amortization (EBITDA) of $42.8 million for the year ended September 30, 2004, an increase of $5.4 million, or 14%, from $37.4 million in 2003 representing the fourth consecutive year of an increase in EBITDA for Inergy. Net income for the year ended September 30, 2004, excluding the fiscal second quarter $18.2 million net charge to earnings associated with the early retirement of debt, was $13.6 million, or $0.54 per diluted limited partner unit, compared to net income of $13.5 million, or $0.78 per diluted limited partner unit in 2003. As previously announced, the Board of Directors of the Partnership's general partner increased Inergy's quarterly cash distribution to $0.425 per unit ($1.70 annually) for the quarter ended September 30, 2004. This represents a 10.4% increase over the distribution for the same quarter of the prior year. The distribution was paid on November 12, 2004, to unitholders of record as of November 5, 2004. For fiscal 2004, Inergy closed seventeen acquisitions with nine of these acquisitions closing since March 1, 2004. On Monday, Inergy announced that it had reached an agreement to acquire the propane assets of Moulton Gas Service, Inc., headquartered in Wapakoneta, OH. In addition, this morning Inergy announced that it has executed a definitive agreement to purchase 100% of the partnership interests in Star Gas Propane. Suburban Propane Adjusts 04 Earnings to Reflect a Non-Cash Pension Charge press release of 12-01 The effect of the adjustment is to increase fiscal 2004 pension expense for a non-cash charge of $5.3 million, thus reducing previously reported net income for fiscal 2004 from $59.6 million, or $1.97 per Common Unit, to $54.3 million, or $1.79 per Common Unit, and increasing the fiscal 2004 fourth quarter net loss from $28.7 million, or $0.92 per Common Unit, to a net loss of $34.0 million, or $1.09 per Common Unit. The adjustment also decreases previously reported EBITDA for fiscal 2004 from $137.2 million to $131.9 million and increases the previously reported EBITDA loss of $7.6 million for the fourth quarter of fiscal 2004 to a loss of $13.0 million. |