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January Summary: The Pipeline MLP sector finished the month up 3.70% year-to-date with a total return of 3.77% [only one MLP paid dividends in January], led by nine percent gains in ETP and HEP. Only three MLPs [CPNO, SXL, TCLP] had prices losses for the month. The sector average yield fell from 6.19% to 5.97% - a fall of 24 basis points]. Probably most of that fall in yeild was attribitable to price gains in expectation of imminient future dividend gains. The 10 year treasury began January at 4.26% and fell to 4.19% - a fall of 7 basis points. Distribution History:
MMP Increases Distribution for Fifteenth Consecutive Quarter press release of 1-26 The board of directors for the general partner of Magellan Midstream Partners (MMP) has increased the partnership's quarterly cash distribution to 91.25 cents per unit for the period Oct. 1 through Dec. 31, 2004. The new distribution, which equates to $3.65 per unit on an annualized basis, will be paid Feb. 14, 2005 to unitholders of record at the close of business on Feb. 8, 2005. Including the latest distribution, the partnership will have paid distributions equal to $3.5225 per unit related to 2004 compared to $3.17 per unit related to 2003, an increase in excess of 11 percent. Associated with the announced distribution, approximately 1.4 million of the partnership's subordinated units will convert to common units on Feb. 9, the day following the record date. Magellan's partnership agreement provides for the conversion because quarterly distributions have equaled or exceeded the partnership's 52.5 cents per unit minimum quarterly distribution for four consecutive years. The conversion does not impact the amount of cash distributions paid or the total number of units outstanding. Following the conversion, the partnership will have 2.9 million subordinated units, all of which are currently held by the owner of the partnership's general partner. Plains All American Pipeline Acquires South Louisiana Assets From Shell press release of 1-12 Plains All American Pipeline announced today that it has acquired south Louisiana crude oil pipeline assets from Shell Pipeline Company LLC. The purchase price for the assets was approximately $12 million and was funded with cash on hand and borrowings under the Partnership's revolving credit facility. The effective date of the acquisition is January 1, 2005. "The Capline and Link acquisitions that we completed in 2004 have established a strong platform for further growth and consolidation of Gulf Coast crude oil assets," said George R. Coiner, Senior Group Vice President of the Partnership. "These Shell assets fit extremely well with our existing operations in the area and enhance our ability to service our producer and refinery customers in south Louisiana." Coiner also stated that the Partnership intends to spend approximately $8 million during 2005 to make modifications and improvements to the acquired assets and to integrate them into Plains All American's existing asset base. The primary assets that are included in the acquisition are as follows: * Terrebonne Bay Gathering System * Golden Meadow Gathering System * Bay St. Elaine Pipeline * Turtle Bayou Gathering System * Cocodrie to Houma Pipeline * Patterson Station * Cocodrie Station Plains All American Pipeline Declares Increased Distribution press release of 1-25 Plains All American Pipeline announced a cash distribution of $0.6125 per unit ($2.45 per unit on an annualized basis) on all of its outstanding limited partner units. The distribution will be payable on February 14, 2005, to holders of record of such units at the close of business on February 4, 2005. The distribution represents an increase of approximately 8.9% over the February 2004 distribution and approximately 2.1% over the November 2004 distribution. Copano Energy Declares Cash Distribution press release of 1-18 Copano Energy (CPNO) today announced an adjusted cash distribution for the partial period from the closing of its initial public offering on November 15, 2004 through December 31, 2004 of $0.20 per unit for all of its outstanding common and subordinated units. The distribution will be payable on February 14, 2005, to holders of record of such units at the close of business on February 1, 2005. "We are pleased to be making our first distribution for this partial period, which is based on our stated minimum quarterly distribution amount," said John Eckel, Chairman and Chief Executive Officer of Copano Energy. "Our next distribution will represent an entire quarter and is expected to be a minimum of $0.40 per unit." ETP Announces Purchase of Houston Pipeline and Recommends Increase Distribution 1-26 Energy Transfer Partners announced today that it has acquired from AEP Corporation the controlling interests in the companies that own the Houston Pipeline system and related storage facilities. Under the terms of the transaction, which closed on Jan. 26, 2005, the Partnership's natural gas midstream and transportation operating partnership, La Grange Acquisition, L.P. acquired all but a 2% limited partner interest in the entity owning the assets of the system known as HPL. The HPL system is comprised of approximately 4,200 miles of intrastate pipeline with aggregate capacity of 2.4Bcf/day, substantial storage facilities and related transportation assets. The transaction, valued at approximately $825 million, subject to working capital adjustments, was financed by the Partnership through a combination of borrowings under its current credit facilities and a private placement of $350 million of Partnership Common Units with institutional investors. "HPL is one of the most extensive natural gas midstream systems in Texas and the Gulf Coast. This acquisition enables the Partnership to expand its current transportation systems into areas where it did not previously have a presence. The combination of the Partnership's current midstream transportation assets with the HPL system will allow natural gas from the premier producing basins in Texas direct access to the Houston Ship Channel industrial corridor, the largest industrial natural gas consuming area in the U.S.," said Steve Anderson, Vice President, Mergers and Acquisitions, of the Partnership's midstream operating partnership. Management expects that this transaction will be immediately accretive to the unitholders and, due to measures that it intends to implement to operate these assets, this transaction is expected to result in $0.40-$0.50 per common unit of distributable cash flow on an annual basis. As a result, management will recommend to the board of directors a $0.20 increase in the annual cash distribution from $3.50 to $3.70 per common unit. Enterprise Products Increases Distribution Reuters 1-19 Energy partnership Enterprise Products Partners L.P. (EPD) said on Wednesday it is increasing its quarterly cash distribution rate to partners to $0.40 per common unit, to be paid on Feb. 14 to unitholders of record on Jan. 31. It said that on an annual basis, the distribution rate is $1.60 per common unit, a 7.4 percent increase from the annual distribution rate of $1.49 per common unit paid in the first quarter of 2004. MarkWest to Acquire 50% Interest in Starfish Pipeline From Enterprise press release of 1-25 MarkWest Energy Partners (MWE) announced that it has entered into a Purchase and Sale Agreement with an affiliate of Enterprise Products Partners (EPD) to acquire Enterprise Products' 50% non-operating membership interest in Starfish Pipeline Company for $42.1 million. The acquisition is expected to generate cash flow from operations in 2005 of approximately $7.1 million per year. The acquisition requires Federal Trade Commission approval under the terms of a consent agreement with respect to Enterprise Products' merger with GulfTerra Energy Partners, L.P. Starfish owns the FERC regulated Stingray natural gas pipeline, and the unregulated Triton natural gas gathering system and the West Cameron dehydration facility, all located in the Gulf of Mexico or onshore in southwestern Louisiana. Kinder Morgan Energy Partners Increases Quarterly Distribution to $0.74 press release of 1-18 Kinder Morgan Energy Partners (KMP) today announced an increase in its quarterly cash distribution per common unit to $0.74 ($2.96 annualized). Payable on Feb. 14, 2005, to unitholders of record as of Jan. 31, 2005, the distribution represents a 9 percent increase over the fourth quarter 2003 cash distribution per unit of $0.68 ($2.72 annualized). In total, KMP declared cash distributions for 2004 of $2.87 per unit, up 9 percent from $2.63 per unit for 2003 and exceeding the company's published annual budget of $2.84 per unit. KMP reported record annual and quarterly earnings with annual income of $831.6 million, or $2.22 per limited partner unit, up 20 percent from 2003 income before a change in accounting principle of $693.9 million, or $1.98 per unit. For the fourth quarter, KMP had income of $227.3 million, or $0.59 per unit, a 24 percent increase over income of $183.7 million, or $0.51 per unit, in the fourth quarter of 2003. Chairman, CEO and President Richard D. Kinder said, "KMP had an outstanding year in 2004. Our stable assets generated cash flow to support distributions of more than $975 million for the year, and we increased the distribution per unit in all four quarters. We generated distributable cash flow in excess of distributions of approximately $46 million, exceeding our 2004 published annual budget of $28 million. Our success was attributable to both strong internal growth and contributions from acquisitions. We invested approximately $574 million in capital expansion projects in 2004 and also made acquisitions totaling more than $600 million." Overview of Business Segments All four of KMP's business segments reported increased earnings before DD&A for both 2004 and the fourth quarter versus comparable periods in 2003, with total segment earnings before DD&A up almost 19 percent for the year and 22 percent for the quarter. The Products Pipelines segment delivered an 8 percent increase in 2004 earnings before DD&A to $475.5 million, compared to $441.6 million for 2003. Fourth quarter earnings before DD&A were up over 6 percent to $121.6 million compared to the fourth quarter of 2003. "Growth in this segment was driven by contributions from the acquired Southeast terminals (which significantly exceeded our acquisition plan) and strong earnings from the Cochin pipeline system and the West Coast terminals," Kinder said. Overall segment revenues increased by about 5 percent in 2004 over 2003, primarily attributable to fees from ethanol blending at the West Coast terminals, total volume growth of almost 2 percent on Pacific and strong performance by Central Florida. The segment fell just short of its published annual budget of 9 percent growth primarily due to accruals for civil litigation and environmental reserves. For 2004, total refined products volumes grew 2 percent compared to 2003. Total refined products volumes were down about 1 percent in the fourth quarter due to the extended shut-in of a refinery connected to Plantation following Hurricane Ivan, but volumes on Plantation did rebound in December. Jet fuel volumes, boosted by strong military and solid commercial demand, were up nearly 6 percent for the year and relatively flat in the fourth quarter. Gasoline volumes were up 2 percent for the year and relatively flat for the quarter. Diesel volumes that were up nearly 1.5 percent through the third quarter, were down nearly 4 percent in the fourth quarter and relatively flat for the year. Gasoline and diesel volumes in the fourth quarter were impacted primarily by the refinery issue on Plantation noted previously. The Natural Gas Pipelines segment produced 2004 earnings before DD&A of $410.7 million, up 10 percent from $373.4 million in 2003, and ahead of its published annual budget of 3 percent growth. Fourth quarter earnings before DD&A were up over 7 percent to $106.9 million compared to the same period the previous year. "Annual growth in this segment was attributable primarily to the Texas Intrastate Pipeline Group, which significantly outperformed its annual budget," Kinder said. In 2004, the Texas Intrastate Group successfully: continued to reduce risk in its sales business and capture incremental short term market opportunities; increased term sales by 10 percent year over year; received strong performance from capital investments; and generated incremental earnings from value added services. This segment also benefited from two months of earnings from the acquisition of TransColorado, which was effective Nov. 1, 2004. Earnings declined on Trailblazer in 2004 compared to 2003 due to lower rates that became effective Jan. 1, 2004. Looking ahead in this segment, KMP expects TransColorado to contribute first year distributable cash flow of approximately $35 million. "TransColorado is a very stable asset, as we have entered into long-term, fixed-price contracts for most of the pipeline's transportation capacity through 2007," Kinder said. "Growth opportunities are also positively impacting TransColorado's financial performance. TransColorado completed a significant expansion project last summer and another one is under way." The CO2 segment delivered 2004 earnings before DD&A of $353.5 million, up 74 percent from $203.6 million in 2003, and well ahead of its published annual budget of 58 percent growth. Fourth quarter earnings before DD&A were up 85 percent to $113.7 million compared to the fourth quarter of 2003. "The superb growth in this segment was attributable to increased oil production at both the SACROC and Yates fields, strong CO2 delivery volumes, an increase in our interest in the Yates Field to 50 percent and the third quarter purchase of the Kaston Pipeline Company (renamed the Wink Pipeline)," Kinder said. KMP continues to pursue CO2 flood projects at both the SACROC and Yates fields. Average oil production at the SACROC Unit in the Permian Basin in Scurry County, Texas, increased almost 41 percent for the year. In the fourth quarter, average production was up over 39 percent to 32.2 thousand barrels per day (MBbl/d) from 23.1 MBbl/d for the comparable period in 2003. Average production in December 2004 was over 33 MBbl/d. KMP invested approximately $300 million in SACROC during 2004. Average oil production at the Yates Field, located south of Midland, Texas, increased about 3 percent for the year. In the fourth quarter, average production at Yates was up 16 percent to 21.4 MBbl/d from 18.4 MBbl/d for the same period a year ago, with average production in December of 22.5 MBbl/d. CO2 pipeline delivery volumes increased by 27 percent for the year. The CO2 segment is one of the only areas where KMP is exposed to commodity price risk, but that risk is mitigated by a long-term hedging strategy intended to generate more stable realized prices. The realized weighted average oil price per barrel, with all hedges allocated to oil, was $25.72 for the year and $26.84 for the fourth quarter. The realized weighted average NGL price per barrel, allocating none of the hedges to NGLs, was $31.33 for the year and $36.33 for the fourth quarter. The Terminals segment reported a 9 percent increase in 2004 earnings before DD&A to $263.2 million, compared to $240.8 million in 2003, and ahead of its published annual budget of 7 percent growth. Fourth quarter earnings before DD&A were up 10 percent to $67.1 million compared to the same period the previous year. "Growth in the fourth quarter was driven by the acquisition in October of 21 terminals and two transload facilities along the Mississippi River system, which were purchased for approximately $71 million. Growth for the year was primarily attributable to record throughput at the liquids terminals on the Houston Ship Channel and higher coal and synfuel volumes at bulk terminals in the Southeast," Kinder said. Throughput at the bulk terminals increased by 19 percent in 2004 compared to 2003 and by 35 percent in the fourth quarter (including acquisitions), while throughput at the liquids terminals was up 8 percent for the year and 3 percent in the fourth quarter. Outlook In December, KMP announced it expects to declare cash distributions of $3.13 per limited partner unit for 2005. The 2005 outlook represents 9 percent growth over the declared distribution of $2.87 per unit for 2004. "We are optimistic about our chances of making accretive acquisitions in 2005, but we did not include the benefits of any acquisitions in our expectations," Kinder explained. S&P revises Kinder Morgan Outlook to Negative Reuters 2-01 Standard & Poor's Ratings Services on Tuesday affirmed its "BBB+" corporate credit rating on Kinder Morgan Energy Partners L.P. (KMP) and revised its outlook to negative from stable. KMP had about $4.8 billion of debt outstanding as of the end of 2004, S&P noted in a statement. "The outlook revision reflects the partnership's increased business risk from its growing oil and gas production unit," S&P said. Moody's revises Northern Border Outlook to Stable Reuters 1-31 Moody's Investors Service on Monday revised to stable from negative its ratings outlook on Northern Border Partners LP, citing debt reduction and stability in some units. The outlook change also applies to the company's main subsidiary Northern Border Pipeline Company, Moody's said. Holly Energy Partners Declares Distribution press release of 2-01 Holly Energy Partners (HEP) today announced declaration of its cash distribution, for the fourth quarter of 2004, of $0.50 per unit. The distribution will be paid February 17, 2005 to unit holders of record February 10, 2005. Crosstex Announces Dividend and Distribution Increases press release of 1-25 The Crosstex Energy companies, Crosstex Energy, L.P. (Nasdaq: XTEX - News; the "Partnership") and Crosstex Energy, Inc. (Nasdaq: XTXI - News; the "Corporation"), today announced an increase in fourth quarter distributions and dividends. The companies have increased distributions and dividends every quarter since the initial public offering of each company. Fourth quarter distributions and dividends are as follows: * Quarterly distributions on the Partnership's common and subordinated units will increase from $0.43 per unit to $0.45 per unit, payable February 16 to unitholders of record on February 3. * Quarterly dividends on the Corporation's common stock will increase from $0.35 per common share to $0.39 per common share, payable February 16 to shareholders of record on February 3. "Since the IPO at the end of 2002, we have realized a compounded annual growth rate of 34 percent in the Partnership's quarterly distributions, and we've increased the Corporation's quarterly dividends 30 percent since its IPO in the first quarter of last year," said Barry E. Davis, President and Chief Executive Officer of the Crosstex Energy companies. "The record of increases in every quarter since we have become publicly held underscores our commitment to sustained growth and to sharing that growth with our unitholders and shareholders. We are confident that the growth will continue into 2005." Valero L.P. Reports Q4 and Full Year 2004 - Increases Distribution press release of 1-31 Valero (VLI) today announced net income applicable to limited partners of $17.9 million, or $0.78 per unit, for the fourth quarter of 2004, compared to $18.3 million, or $0.79 per unit, for the fourth quarter of 2003. For the full year 2004, net income applicable to limited partners was $72.5 million, or $3.15 per unit, compared to $65.6 million, or $3.02 per unit, for the full year 2003. Distributable cash flow available to limited partners for the fourth quarter was $22.4 million, compared to $20.0 million for the fourth quarter of 2003. With respect to the quarterly distribution to unitholders payable for the fourth quarter of 2004, Valero L.P. also announced that it has declared a distribution of $0.80 per unit payable February 14, 2005 to holders of record as of February 7, 2005. "We had another solid quarter operationally, despite the previously announced plant-wide turnaround at Valero Energy's Benicia refinery," said Curt Anastasio, Valero L.P.'s Chief Executive Officer. "The turnaround at the Benicia refinery, where we own the crude storage facilities, decreased storage throughputs by around 47,000 barrels per day, affecting fourth quarter earnings by roughly four cents per unit. "For the full year, we closed out another record year as our earnings were up 13 cents per unit or 10 percent year over year and we finished with a strong distribution coverage ratio of 1.23 times. Looking back at 2004, we are proud of our many accomplishments, including capping the general partner's incentive distribution rights at 25 percent, delivering an 8.5 percent increase in the annual distribution, acquiring two state-of-the art asphalt terminals from Royal Trading, commissioning a new propane storage and distribution terminal in Nuevo Laredo, Mexico, and, most importantly, announcing our agreement to acquire Kaneb Services. "With regard to the Kaneb acquisition, the companies continue to work diligently to complete the transaction. Our proxy materials have been declared effective by the SEC and have been distributed to Valero and Kaneb unitholders and shareholders. The date for the special meetings of the unitholders of Valero L.P. and Kaneb Partners and shareholders of Kaneb Services has been set for March 11. Further updates will be provided on the acquisition as the closing date approaches. We remain excited about the opportunities and synergies created by the proposed merger with Kaneb Partners and are enthusiastic about the support received for the combination of these two great companies," said Anastasio. Upgrades & Downgrades press releases from various dates On 1-24 Smith Barney Downgraded its rating on Magellan Midstream Partners (MMP) to "hold" from "buy," citing valuation. On 1-11 KeyBanc Capital Mkts / McDonald initiated coverage of CPNO, rating it 'Hold'. On 1-05 RBC Capital Mkts initiated coverage of CPNO, rating it 'Outperform'. On 1-13 RBC Capital Mkts Downgraded NBP from Sector Perform to Underperform. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||