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February Summary: The Pipeline MLP sector finished the month up 5.26% year-to-date [vs 3.70% in January] with a total return of 6.81% [vs 3.77% in January], led a 10.23% gain in but-out target TPP and a 6.31% gain in APL. Seven MLPs [BPL, EEP, EPD, ETP, MMP, MWE and PAA] had prices losses for the month. It should not come as a surprise that the three MLPs issuing news units during the month [BPL, EEP and PAA] all had price losses. Of the remaining four [EPD, ETP, MMP and MWE], all but one [EPD] had downgrades during February or late January. And the take-over of TPP by the GP of EPD may have put a temporary cloud of uncertainty over EPD. The sector average yield fell from 5.97% to 5.88% - a fall of 9 basis points. The 10 year treasury began January at 4.19% and rose to 4.36% - a rise of 17 basis points. Taken together, that makes a total of 26 basis points of spread compression. The current yield spread of 152 basis points is uncomfortably low. Rating Changes various press releases On 2-07 KeyBanc Capital Mkts downgraded MMLP from Buy to Hold. On 2-07 KeyBanc Capital Mkts downgraded MWE from Buy to Hold. On 1-28 RBC Capital Mkts downgraded ETP from Outperform to Sector Perform. On 1-28 Robert W. Baird downgraded VLI from Outperform to Neutral. On 1-24 Smith Barney Citigroup downgraded MMP from Buy to Hold. On 1-21 Smith Barney Citigroup downgraded SXL from Hold to Sell. On 1-13 RBC Capital Mkts downgraded NBP from Sector Perform tp Underperform. On 1-07 RBC Capital Mkts Initiated SXL at Underperform. New Units Issued various press releases Buckeye Partners L.P. said on 2-02 it had raised about $48 million through the sale of 1.1 million limited partnership units. Energy partnership Enterprise Products Partners on 2-11 said it sold 15 million common units at $27.05 each, yielding about $400 million to pay down debt. Energy company Enbridge Energy Partners on 2-10 said it had agreed to sell about $125 million in Class A common units directly to a group of investors to help repay some debt. The sale of 2.5 million units priced at $49.88 each is due to close on Feb. 11, and the proceeds will repay debt incurred to fund enhancements to crude oil and natural gas pipeline systems and recent acquisitions. Plains All American Pipeline announced on 2-25 the issuance and sale by the Partnership of 575,000 Common Units to a subsidiary of Vulcan Energy Corporation. Net proceeds from the private placement, including the general partner's proportionate capital contribution and expenses associated with the sale, will be approximately $22.3 million. The Partnership intends to use the net proceeds from the private placement to fund a portion of its 2005 expansion capital program. New Debt Issued various press releases Enterprise Products Partners (EPD) announced on 2-15 that its operating subsidiary, Enterprise Products Operating, has priced the private placement of $250 million of 10-year senior unsecured notes and $250 million of 30-year senior unsecured notes. A portion of the net proceeds from the sale of the notes will be used to refinance the Operating Partnership's outstanding $350 million of 8.25% Senior Notes due March 15, 2005. The remaining proceeds will be used for general partnership purposes, including the temporary repayment of indebtedness outstanding under its multi-year revolving credit facility. The 10-year notes will be issued at 99.379 percent of their principal amount and will have a fixed-rate interest coupon of 5.00% and a maturity date of March 1, 2015. The 30-year notes will be issued at 98.691 percent of their principal amount and will have a fixed-rate interest coupon of 5.75% and will mature on March 1, 2035. New S&P/Moody's/Fitch Credit Updates various press releases Enterprise Products Partners announced on 2-15 that Standard & Poor's Rating Services has affirmed the 'BB+' corporate credit rating of Enterprise and its operating subsidiary, Enterprise Products Operating L.P., and changed the outlook to "positive" from "stable." Standard & Poor's Ratings Services on 2-01 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. TEPPCO Partners, L.P. General Partner Acquired by EPCO press release of 2-24 TEPPCO Partners announced today that EPCO, Inc., a privately owned company controlled by Dan L. Duncan, has acquired its general partner, Texas Eastern Products Pipeline Company, LLC from Duke Energy Field Services, LLC. The acquisition is valued at $1.1 billion. Additionally, in a separate transaction, EPCO and its affiliates have agreed to purchase 2.5 million TEPPCO limited partner units, valued at approximately $100 million, from Duke Energy. "We believe our association with Dan Duncan and EPCO will provide considerable opportunities for TEPPCO," said Barry R. Pearl, president and chief executive officer of the general partner of TEPPCO. "Mr. Duncan has long been committed to the energy infrastructure business through his extensive holdings in Enterprise Products Partners L.P. Additionally, he has been one of the strongest general partners in the master limited partnership sector, as evidenced by his continual support of Enterprise's growth initiatives and capital requirements. The acquisition of TEPPCO's general partner should improve our ongoing business, growth prospects and long-term potential." "We are pleased to have the opportunity to acquire the general partner of TEPPCO," said Dan L. Duncan, chairman of EPCO, Inc. "I believe TEPPCO has an established franchise in the businesses and areas it operates. Strong fundamental growth of demand for energy products and supplies should position TEPPCO for growth in the future." Going forward, the general partners of both TEPPCO and Enterprise will continue to operate independently and will maintain separate boards of directors, management teams and offices. Both of the boards will continue to operate each partnership's business consistent with past practice. Additionally, TEPPCO and Enterprise will continue to separately and independently pursue commercial opportunities and growth strategies. Neither TEPPCO nor Enterprise were parties to this transaction. EPCO, Inc. and its affiliates separately own the general partner of Enterprise Products Partners (EDP) and approximately 145 million Enterprise common units in addition to the newly acquired TEPPCO interests. Enterprise Reports Record Results press release of 2-03 Enterprise Products Partners today announced its financial results for the three months and twelve months ended December 31, 2004. Reported results for Enterprise's fourth quarter and full year of 2004 include three months of results from GulfTerra Energy Partners, L.P., which merged into an affiliate of Enterprise on September 30, 2004. The partnership reported record quarterly net income of $115.4 million, or $0.28 per unit on a fully diluted basis, for the fourth quarter of 2004 compared to $34.2 million, or $0.13 per unit, for the fourth quarter of 2003. For the full year of 2004, Enterprise earned net income of $268.3 million, or $0.87 per unit, compared to $104.5 million, or $0.41 per unit, in 2003. Net income for the fourth quarter of 2004 included a gain on the sale of assets of approximately $15.1 million, or $0.04 per unit, related to the satisfaction of certain requirements of the sale agreement whereby a 50% interest in the Cameron Highway Oil Pipeline was sold to an affiliate of Valero Energy Corporation in 2003. Approximately $10.1 million of this gain was the non-cash recognition of a receivable that is due from Valero no later than December 31, 2006 while $5.0 million of the gain was associated with a cash payment received from Valero during the fourth quarter of 2004. Due to the continued effects of Hurricane Ivan on certain of our operations, it is estimated our earnings for the fourth quarter and full year of 2004 could have been higher by approximately $17 million, or $0.05 per unit, and $24 million, or $0.09 per unit, respectively, if not for a decrease in natural gas and natural gas liquid ("NGLs") volumes delivered to our facilities. This estimated impact is prior to any potential claims for recoveries under our business interruption insurance. Distributable cash flow for the fourth quarter of 2004 was a record $197.1 million compared to $74.6 million in the fourth quarter of 2003. Based on the partnership's declared distribution of $0.40 per unit with respect to the fourth quarter that will be paid on February 14, 2005, distributable cash flow provided 1.24 times coverage of this distribution. Distributable cash flow is a non-GAAP financial measure that is defined and reconciled, later in this press release, to its most directly comparable GAAP financial measure, cash provided by operating activities. "We are proud to announce record performance in our first quarter after completing the GulfTerra merger," said O.S. "Dub" Andras, Vice Chairman and Chief Executive Officer of Enterprise. "The strengths of our complementary businesses and approximately $120 million of annualized cash savings realized to date have made our merger with GulfTerra accretive to our partners. Our integrated and diversified businesses across the natural gas and NGL value chain generated distributable cash flow for the quarter that exceeded our cash distributions paid to partners by $34 million with each of our major business segments reporting a solid quarter." Revenue for the fourth quarter of 2004 increased by 101%, to approximately $2.9 billion compared to $1.4 billion for the fourth quarter of 2003. Operating income for the fourth quarter of 2004 increased by 165% to $175.3 million compared to $66.1 million for the fourth quarter of 2003. Gross operating margin increased by 156% to $279.2 million for the fourth quarter of 2004 from $109.0 million for the same quarter in 2003. Earnings before interest, taxes, depreciation and amortization ("EBITDA") increased by 176% to $275.6 million for the fourth quarter of 2004 from $99.9 million for the fourth quarter of 2003. Gross operating margin and EBITDA are non-GAAP financial measures that are defined and reconciled, later in this release, to their most directly comparable GAAP financial measure. Review of Segment Performance As a result of the merger, Enterprise revised its business segment reporting into four distinct segments. These segments are organized based on the type of services rendered and the products produced or sold. A schedule accompanying this press release lists the major assets that are included within each business segment. NGL Pipelines & Services - The NGL Pipelines & Services segment includes the partnership's NGL pipelines, storage facilities and fractionators and its natural gas processing plants and related NGL marketing activities. Gross operating margin for this segment increased by 78%, or $62.4 million, in the fourth quarter of 2004 to $142.5 million from $80.1 million in the same quarter in 2003. Enterprise's natural gas processing and related businesses accounted for $75.1 million of gross operating margin for this segment in the fourth quarter of 2004 compared to $7.6 million in the fourth quarter of 2003. This increase was due to the contributions from the GulfTerra assets and nine processing plants acquired from El Paso Corporation in the third quarter of 2004 as well as improved performance from Enterprise's legacy processing plants and NGL marketing business. The processing business benefited from favorable processing economics due to the continued strong demand for NGLs by the petrochemical and motor gasoline industries as a result of improvements in the U.S. and global economies. Gross operating margin from the NGL pipelines and storage business was $52.0 million during the fourth quarter of 2004 versus $61.0 million in the fourth quarter of 2003. The Mid-America and Seminole pipelines accounted for $44.7 million of the gross operating margin for the partnership's NGL pipelines and storage business during the fourth quarter of 2004. This is a 24%, or $8.5 million, increase from the $36.2 million these pipelines earned during the same quarter of 2003. This increase was more than offset by a decrease in gross operating margin from export terminal services; reduced demand for certain Louisiana NGL pipelines, in part due to lower volumes resulting from the effects of Hurricane Ivan; and pipeline integrity expenses. Total transportation volumes for the NGL pipeline business averaged 1,390,000 BPD for the fourth quarter of 2004 compared to 1,281,000 BPD in the fourth quarter of 2003. Transportation volumes for the Mid-America and Seminole pipelines increased by 15%, or 120,000 BPD, to 908,000 BPD in the fourth quarter of 2004 from 788,000 BPD in the same period of 2003. Enterprise's NGL fractionation business earned gross operating margin of $15.3 million for the fourth quarter of 2004 compared to $11.5 million in the fourth quarter of 2003. NGL fractionation volumes for the fourth quarter of 2004 averaged 304,000 BPD versus 241,000 BPD in the fourth quarter of 2003. "While we posted record results for the fourth quarter of 2004, the lingering effects of Hurricane Ivan reduced volumes delivered to some of our pipelines, natural gas processing and NGL fractionation facilities in eastern Louisiana due to damage to offshore wells and pipelines owned by third parties. We saw volumes increase in December; however, we estimate that for the fourth quarter these effects reduced gross operating margin by approximately $17 million," stated Andras. Onshore Natural Gas Pipelines & Services - The Onshore Natural Gas Pipelines & Services segment includes the partnership's onshore natural gas pipelines and natural gas storage businesses. Gross operating margin for this segment for the fourth quarter of 2004 was $72.0 million compared to $4.1 million in the fourth quarter of 2003. Onshore natural gas pipelines generated $64.8 million of gross operating margin in the fourth quarter of 2004 versus $4.1 million in the fourth quarter of 2003. Onshore transportation volumes were 5.6 trillion British thermal units per day (Tbtu/d) compared to 0.6 Tbtu/d in the fourth quarter of 2003. Natural gas storage services accounted for $7.2 million of gross operating margin in the fourth quarter of 2004. This combined $67.9 million increase for the segment was due to the contribution of the GulfTerra assets and increased margin and volume on the Acadian system. Offshore Pipelines & Services - The Offshore Pipelines & Services segment includes the partnership's offshore natural gas and crude oil pipelines and platforms. Gross operating margin for this segment for the fourth quarter of 2004 was $33.9 million compared to $0.1 million in the fourth quarter of 2003. Offshore natural gas pipelines recorded gross operating margin of $14.4 million on average throughput of 1.8 Tbtu/d in the fourth quarter of 2004 versus $0.1 million and 0.4 Tbtu/d, respectively, for the same quarter in 2003. Gross operating margin for the partnership's offshore platform services and production business was $13.6 million for the fourth quarter of 2004. Enterprise's offshore oil pipelines business recorded gross operating margin of $5.8 million in the fourth quarter of 2004 on net volumes of 138,000 BPD. The increase for this segment was primarily attributable to the contribution from the GulfTerra assets. Petrochemical Services - The Petrochemical Services segment includes the partnership's butane isomerization, propylene fractionation and octane enhancement businesses including related pipeline facilities. Gross operating margin for the Petrochemical Services segment during the fourth quarter of 2004 increased by 25%, or $6.1 million, to $30.8 million from $24.7 million in the same quarter of 2003. Each of the three businesses in this segment reported an increase in gross operating margin. Energy Transfer Names President, Eyes Targets Reuters 2-24 Energy Transfer Co., the majority owner of the general partner of U.S. natural gas company Energy Transfer Partners LP (ETP) , on Thursday named Dallas attorney John McReynolds, as its new president. McReynolds, who will resign from law firm Hunton & Williams to take up his new position on March 1, said Energy Transfer Partners LP has made it clear it is in an acquisition mode. "My move to Energy Transfer Co. is a further affirmation of that strategy," he said in a statement. Magellan Midstream Partners Reports Record Quarterly Earnings PRNewswire 2-02 Magellan Midstream Partners today reported record quarterly net income of $35.3 million for fourth-quarter 2004 compared to $18.0 million for fourth- quarter 2003, representing a 96 percent increase. Operating profit increased to $48.1 million during fourth-quarter 2004 from $27.4 million in the corresponding 2003 period, for a 76 percent increase. Fourth-quarter 2004 is the first financial reporting period to include results from the partnership's newly-acquired refined petroleum products pipeline system, which was purchased on Oct. 1, 2004. "Magellan's performance in 2004 has been exceptional," said Don Wellendorf, chief executive officer. "The strong performance of our business units allowed us to accomplish our goal of increasing cash distributions by 10 percent. During the year, we also refinanced our debt under much more favorable terms and acquired several strategic assets to strengthen our asset portfolio. These recent acquisitions are performing well, and Magellan enters 2005 in a strong financial and operational position." An analysis of variances by segment comparing fourth-quarter 2004 to fourth-quarter 2003 is provided below based on operating margin, a financial measure that reflects operating profit before general and administrative (G&A) expenses and depreciation and amortization: Petroleum products pipeline system. Pipeline operating margin was $59.1 million, an increase of $20.3 million. The current quarter benefited from operating results from the partnership's newly-acquired pipeline system as well as improved financial performance from its existing pipeline system. Transportation revenue per barrel shipped increased primarily due to longer- haul shipments and a mid-year tariff increase. Earnings also increased due to the partnership's March 2004 investment in the Osage pipeline and higher ancillary revenues. Operating expenses increased between periods primarily due to expenses associated with the new pipeline system, partially offset by lower environmental costs. Petroleum products terminals. Terminals operating margin was $15.1 million, an increase of $4.7 million. The 2004 period benefited from higher utilization and rates at the partnership's marine terminals and additional earnings from the ownership interests in 14 inland terminals that were acquired in Jan. 2004. Increased throughput at the partnership's other inland terminals and higher ancillary revenues further contributed to the positive variance. Ammonia pipeline system. Ammonia operating margin was $0.3 million, a decrease of $2.5 million. Higher system integrity costs and environmental accruals related to two pipeline releases during fourth-quarter 2004 were the primary contributors to the unfavorable variance. Depreciation, amortization and interest expenses increased between the fourth quarters of 2004 and 2003, principally due to acquisitions completed during 2004. G&A expenses declined between periods because higher G&A costs during 2004 resulting from recent acquisitions were more than offset by lower transition costs. The transition costs were related to the partnership's separation from the former owner of its general partner. Reported basic earnings per limited partner unit were 96 cents during fourth-quarter 2004 compared to 73 cents during 2003. Diluted earnings per limited partner unit were 95 cents during fourth-quarter 2004 and 73 cents during 2003. Management currently expects earnings of $3.80 per limited partner unit for 2005 and remains committed to its goal of raising distributions by 10 percent annually. Reported full-year 2004 earnings were $3.44 per limited partner unit, or $3.92 per unit excluding refinancing costs as shown on the accompanying schedule. Management expects that performance of the partnership's assets will continue to produce strong results including incremental earnings from recent acquisitions. This resulting improvement in earnings per unit is more than offset by the change in income allocation between limited partner and general partner interests associated with attaining the partnership's goal of increasing cash distributions by 10 percent. The combination of these items results in the 12-cent decline between years. Earnings for first-quarter 2005 are currently expected to be approximately 80 cents per unit. Holly Completes Acquisition of Alon USA Pipeline and Terminal Assets press release of 2-28 Holly Energy Partners announced today it has closed its previously announced acquisition of over 500 miles of light products pipelines, an associated tank farm and two light product terminals from Alon USA and certain of its affiliates for $120 million in cash and 937,500 HEP Class B Subordinated Units. The $120 million cash portion of the acquisition consideration was financed with proceeds from Holly Energy's previously announced private offering of $150 million 6.25% senior notes due 2015 that also closed today. The balance of the proceeds from the notes offering was used to repay outstanding indebtedness under Holly Energy's revolving credit agreement. The Class B Units will convert into an equal number of HEP common units in five years subject to certain conditions. Northern Border Partners, L.P. Reports Record Earnings press release of 2-07 Northern Border Partners today reported fourth quarter 2004 net income of $40.1 million or $0.80 per unit compared to net income of $30.5 million or $0.60 per unit in the fourth quarter 2003. For the full year 2004, Northern Border Partners reported net income of $144.7 million or $2.89 per unit as compared to a net loss of $88.5 million or a loss of $2.08 per unit in 2003. As reported earlier, 2003 net income reflected third-quarter non-cash charges of approximately $219 million to reflect asset and goodwill impairments in the gathering and processing segment. Full year 2003 earnings without the impairment charge would have been $130.6 million or $2.65 per unit. Cash flows as measured by earnings before interest, taxes, depreciation and amortization (EBITDA) increased to $100.4 million in the fourth quarter 2004 from $82.5 million in the fourth quarter of 2003. EBITDA for the full year 2004 was $366.9 million compared to $341.7 million for 2003. The impairment charges had no impact on 2003 EBITDA. Distributable cash flow (DCF) for fourth quarter 2004 was $54.3 million ($1.11 per unit) compared to $44.0 million ($0.89 per unit) in the fourth quarter 2003. DCF was $203.8 million ($4.15 per unit) for 2004 compared to $194.5 million ($4.05 per unit) for 2003. Results during the fourth quarter 2004 include an after-tax gain of $3.4 million from the sale of the Partnership's minority interest in the Gregg Lake/Obed Pipeline located in Alberta, Canada. The gain is reported in discontinued operations in the attached financial tables. Other items affecting fourth quarter 2004 results include a $1.2 million increase in net income due to a reduction in the allowance for doubtful accounts related to potential recoveries in the Enron bankruptcy. In addition, the fourth quarter 2004 net income includes $4.8 million from the reversal of a 2003 accrual related to the Partnership's potential costs of Enron's termination of its pension plans. The Partnership's potential obligation for pension plan termination costs was resolved late in 2004. Delivered volumes in the Partnership's interstate natural gas pipelines segment decreased slightly during fourth quarter 2004 to 283 billion cubic feet (Bcf) from 289 Bcf for the fourth quarter of 2003. Average gathering volumes increased to 1,048 million cubic feet per day (MMcf/d) during the fourth quarter 2004 compared to 998 MMcf/d for the fourth quarter 2003. Volumes on the Partnership's wholly-owned gathering systems in the Powder River Basin increased to 211 MMcf/d in the fourth quarter of 2004 from 204 MMcf/d in the fourth quarter of 2003. Processing volumes in the Williston Basin also increased to 58 MMcf/d for the fourth quarter of 2004 compared to 54 MMcf/d for the fourth quarter 2003. "We are pleased to report record earnings for 2004, driven by excellent performance in each of our business segments," said Bill Cordes, chairman and chief executive officer of Northern Border Partners. "In addition, 2004 was a watershed year for us, in that the relationship with Enron was brought to a close with ONEOK's purchase of their general partner interest and through the favorable resolution of a number of outstanding financial issues." "The management team has worked aggressively with both of our general partners to sharpen our focus on growth. With the support of these strong general partners, our strategy is to grow distributions to unitholders through both organic growth projects and strategic acquisitions," said Cordes. "2005 promises to be a challenging and exciting year for Northern Border." On January 21, 2005 the Partnership Policy Committee declared the Partnership's quarterly cash distribution of $0.80 per unit for the fourth quarter of 2004. The indicated annual rate is $3.20. The distribution is payable February 14, 2005 to unitholders of record on January 31, 2005. The Partnership also reiterated its guidance for 2005, stating that it continues to expect net income, excluding acquisitions, for 2005 to be in the range of $126 million to $131 million ($2.50 to $2.60 per unit). EBITDA in 2005 is anticipated to be approximately $345 million to $355 million. DCF for 2005 is expected to be $174 million to $182 million. An integral assumption underlying the Partnership's guidance for 2005 is fully recontracting Northern Border Pipeline at maximum rate levels. Northern Border Pipeline has a significant amount of capacity, approximately 800 MMcf/d, under contracts that expire by May 31, 2005. Northern Border Pipeline is aggressively marketing this capacity; however, it is possible that natural gas price differentials between Western Canada and the Midcontinent may not be great enough at certain times of the year to support maximum rate levels. Consequently, the Partnership believes a reduction in its guidance for 2005 net income and cash flow of $5 million to $10 million is possible. The impact on net income and cash flow may vary outside this range depending on actual natural gas price differentials experienced during the year. Plains All American Pipeline, L.P. Reports Record Results for 2004 press release of 2-24 Plains All American Pipeline today reported operating and financial results for the fourth quarter and full year of 2004. The Partnership reported net income of $24.7 million, or $0.32 per basic and diluted limited partner unit, for the fourth quarter of 2004 as compared to a net loss of $0.2 million, or $0.03 per basic and diluted limited partner unit, for the fourth quarter of 2003. For the year, the Partnership reported net income of $130.0 million, or $1.89 per basic and diluted limited partner unit, an increase of 119% and 87%, respectively, over net income of $59.5 million, or $1.01 per basic ($1.00 per diluted) limited partner unit, for 2003. "During 2004, we met or exceeded each of the goals that we established at the beginning of the year," said Greg L. Armstrong, Chairman and CEO of Plains All American. "We delivered operating and financial performance that exceeded our annual guidance, completed a total of approximately $550 million of acquisitions and completed or initiated several meaningful organic growth projects. The combination of all of these activities enabled us to increase our distribution to Unitholders by 8.9%." "We are also very pleased that despite the significant growth we experienced during the year, we maintained a strong balance sheet and ample liquidity," continued Armstrong. "Our disciplined approach to financing our growth was ultimately rewarded during the year as we achieved an investment grade credit rating at both rating agencies. As a result of these collective achievements, we believe 2004 was the most productive year in the history of our Partnership." Armstrong also noted that as a result of acquisitions and organic growth completed during 2004, segment profit from pipeline operations in the fourth quarter of 2004 was up 91% and segment profit from gathering, marketing, terminalling and storage operations was up approximately 17% as compared to the fourth quarter of 2003. These comparisons exclude the selected items impacting comparability noted below in both periods. Before taking into account selected items impacting comparability, earnings before interest, taxes, depreciation and amortization ("EBITDA") for the fourth quarter of 2004 were $60.5 million, an increase of 185% as compared with EBITDA of $21.2 million for the fourth quarter of 2003. EBITDA for the full year 2004 was $243.9 million, an increase of 72% as compared with EBITDA of $141.5 million for the full year 2003. (See the section of this release entitled "Non-GAAP Financial Measures" and the attached tables for discussion of EBITDA and other non-GAAP financial measures, and reconciliations of such measures to the comparable GAAP measures.) Both the fourth quarter and full year 2004 periods were impacted by compensation charges, charges relating to inventory valuation and asset impairment and other notable items that affected the comparability of results between reporting periods. Such selected items impacting comparability aggregated approximately $6.6 million, or $0.10 per basic and diluted limited partner unit, for the fourth quarter and approximately $9.2 million, or $0.14 per basic and diluted limited partner unit, for the full year of 2004. In addition to the selected items impacting comparability, in late December the Partnership experienced a pipeline release in West Texas, which negatively impacted fourth quarter results by $1.7 million, or approximately $0.02 per basic and diluted limited partner unit. Excluding the selected items impacting comparability, the Partnership's fourth quarter 2004 adjusted net income, adjusted net income per basic and diluted limited partner unit and adjusted EBITDA was $31.4 million, $0.42 per unit, and $67.2 million, respectively. Similarly, the Partnership's fourth quarter 2003 adjusted net income, adjusted net income per basic limited partner unit and adjusted EBITDA was $22.2 million, $0.37 per basic ($0.36 per diluted) unit, and $43.6 million, respectively. On a comparable basis, fourth quarter 2004 adjusted net income, adjusted net income per basic limited partner unit and adjusted EBITDA increased 41%, 14% and 54%, respectively, over fourth quarter 2003. Pacific Energy Partners Reports Earnings for Q4 and Full Year 2004 BusinessWire 2-02 Pacific Energy Partners announced fourth quarter and full year 2004 recurring net income in line with previously published guidance. Recurring net income for the three months ended December 31, 2004, was $9.4 million, or $0.31 per diluted limited partner unit, compared to recurring net income of $8.0 million, or $0.31 per diluted limited partner unit, in the fourth quarter of 2003. Recurring net income for the full year ended December 31, 2004, was $39.4 million, or $1.36 per diluted limited partner unit, compared to recurring net income of $26.7 million, or $1.16 per diluted limited partner unit, for full year 2003. On January 21, 2005, the Partnership announced an increase in its cash distribution to $0.50 per unit for the fourth quarter of 2004, or $2.00 per unit annualized. This represents an increase of 2.6% over its previous quarterly distribution level of $0.4875 per unit, or $1.95 per unit annualized. The distribution will be paid on February 14, 2005, to record holders as of January 31, 2005. "We had a very good year in 2004," stated Irv Toole, President and CEO. "Both of our strategic asset groups continue to strengthen and grow, as shown by our distribution increase this quarter. The Pacific Terminals storage and distribution system is a strong and growing asset in our West Coast segment. Our Rocky Mountain segment has enjoyed the benefits of a concerted marketing effort in the US, as well as the early impact of the Canadian pipelines we acquired in 2004. By entering this new market, we have gained access to growing synthetic crude oil production, as well as a customer base that will have a positive impact on our future volumes in the Rocky Mountains. In addition, increasing volumes on the Western Corridor and Salt Lake City Core systems further enhance our revenue growth. We're excited about the growth potential in both of our operating segments." FOURTH QUARTER RESULTS Recurring net income for the three months ended December 31, 2004, was $9.4 million, or $0.31 per diluted limited partner unit, compared to recurring net income of $8.0 million, or $0.31 per diluted limited partner unit, in the fourth quarter of 2003. Recurring net income for the 2004 quarter excludes a non-cash impairment expense of $0.8 million associated with the pending sale of an idle Pacific Terminals property. Recurring net income for the 2003 quarter excludes a $1.6 million rate case and litigation settlement expense. Including the non-recurring expenses, net income for the three months ended December 31, 2004, was $8.6 million, or $0.29 per diluted limited partner unit, compared to $6.4 million, or $0.25 per diluted limited partner unit, for the fourth quarter of 2003. The fourth quarter of 2004 reflects an increase in Pacific Terminals' storage and distribution revenues due to greater storage capacity and higher utilization. Pacific Pipelines experienced higher revenues due to improved volumes and tariff increases. The quarter also reflects the benefit of increased volumes and revenue on our Rocky Mountain pipelines. Offsetting these benefits were substantially lower gathering and blending margins of Pacific Marketing and Transportation ("PMT"). Included in fourth quarter 2004 results are two acquisitions: the Rangeland Pipeline system, which was acquired on May 11, 2004; and the Mid Alberta Pipeline ("MAPL"), which was acquired on June 30, 2004. Distributable cash flow available to the limited partners' interest for the fourth quarter of 2004 was $15.1 million. On a weighted average and diluted basis, there were 29,665,000 limited partner units outstanding during the fourth quarter of 2004, approximately 18% more units outstanding than in the fourth quarter of 2003. FULL YEAR RESULTS Recurring net income for the year ended December 31, 2004, was $39.4 million, or $1.36 per diluted limited partner unit, compared to recurring net income of $26.7 million, or $1.16 per diluted limited partner unit, for full year 2003. Recurring net income for the 2004 period excludes a non-cash impairment expense of $0.8 million and a $2.9 million financing expense. Of the $2.9 million financing expense, $2.3 million was a non-cash write-down of previously deferred financing costs, and $0.6 million was a cash payment to terminate interest swap agreements, both associated with our $250 million bond offering in June 2004 and repayment of our term loan. Recurring net income for the 2003 period excludes a $1.6 million rate case and litigation settlement expense. Including the non-recurring expenses, net income for the year ended December 31, 2004, was $35.7 million, or $1.23 per diluted limited partner unit, compared to $25.0 million, or $1.09 per diluted limited partner unit, for the year ended December 31, 2003. For the year ended December 31, 2004, the improvement in recurring net income was due primarily to increased Rocky Mountain volumes, the benefit of the Canadian acquisitions, and a full year benefit of Pacific Terminals, which was acquired on July 31, 2003. These benefits were partly offset by lower gathering and blending margins and lower West Coast pipeline volumes. For full year 2004, distributable cash flow available to the limited partners was $61.6 million. On a weighted average and diluted basis, there were 28,488,000 limited partner units outstanding for full year 2004, approximately 26% more units outstanding than in full year 2003. Our distribution coverage ratio for full year 2004 was 1.1 times. The distribution coverage ratio is the ratio of distributable cash flow available to the limited partners compared to distributions paid to them for the year. Pacific Energy Partners Approves of the Sale of Its General Partner BusinessWire 2-24 Pacific Energy Partners today announced that the California Public Utilities Commission ("CPUC") has approved the previously announced sale of its General Partner, by The Anschutz Corporation, to LB Pacific, LP, formed by Lehman Brothers Merchant Banking Group. The acquisition by LB Pacific, LP will include (i) a 100% ownership interest in Pacific Energy GP, Inc. (the "General Partner"), which owns a 2% general partner interest in Pacific Energy and the incentive distribution rights, and (ii) 10,465,000 subordinated units of Pacific Energy representing a 34.6% limited partner interest in Pacific Energy. The transaction is expected to close on March 3, 2005. TC PipeLines Announces 2004 Fourth Quarter Results PRNewswire 2-07 TC PipeLines today reported fourth quarter 2004 net income of $15.2 million or $0.82 per unit (all amounts in U.S. dollars) compared to $12.1 million or $0.66 per unit in the fourth quarter of 2003. For the twelve months ended December 31, 2004, the Partnership reported net income of $55.1 million or $2.99 per unit compared to $48.0 million or $2.63 per unit for the same period last year. Cash generated in the fourth quarter of 2004, including $1.7 million of cash distributed from the Partnership's investments in Northern Border Pipeline Company and Tuscarora Gas Transmission Company classified as a return of capital, increased $3.5 million to $16.9 million compared to $13.4 million for the same period in 2003. For the twelve months ended December 31, 2004, cash generated, including return of capital from Northern Border Pipeline and Tuscarora, amounted to $67.3 million. This was an increase of $16.7 million compared to $50.6 million for the same period last year. This increase was primarily due to higher cash distributions from Northern Border Pipeline compared to the prior year reflecting the impact of a change in its cash distribution policy effective January 1, 2004, as well as the negative impact to 2003 cash distributions resulting from refunds paid by Northern Border Pipeline to its shippers for electricity costs. The amounts refunded had previously been collected through company-use gas provision. "It's been another year of strong results for TC PipeLines," said Ron Turner, president and chief executive officer of the general partner, TC PipeLines GP, Inc. "Our pipeline investments continue to deliver the stable cash flows that underpin our cash distributions." Crosstex Signs Agreement for Construction of Barnett Shale Gas Pipeline PRNewswire 2-24 Crosstex Energy today announced that it has completed its project feasibility study and has entered into definitive agreements to proceed with construction of the North Texas Pipeline project. The project, to bring gas out of the Barnett Shale and into markets in the Midwest and East, was previously announced in December 2004. "We are very excited to have the opportunity to build the needed additional pipeline capacity and provide market outlets for the rapidly growing Barnett Shale production," said Barry E. Davis, President and Chief Executive Officer of Crosstex. "Chief Oil & Gas and other producers have done a great job in developing the largest gas field in Texas. The project is consistent with our strategy of focusing on producer relationships and providing the services required to get their gas to market. It also demonstrates our focus on grass roots construction projects in addition to acquisitions and opens a new core area in which we can grow our asset base and provide services." |