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March Summary: The Pipeline MLP sector is up 2.21% year-to-date [vs being up 5.26% at February's end] with a total return of 3.76% [vs 6.81% in February] and a distribution yield of 6.07% vs 5.88% in February - a rise of 19 basis points. The ten year treasury ended the month at 4.50% [vs 4.36% on 2-28 - a rise on 14 basis points] after reaching a high of 4.62% on the 28th. Are Pipelines Right for You? Josh Peters, CFA Morningstar.com 3-25 In March, DividendInvestor [Morningstar's newsletter focused on high-yielding and high-quality dividend payers,] zeroed in on the pipeline industry with analyst Michael Cumming. Michael covers pipelines as well as international oil stocks for Morningstar. Morningstar DividendInvestor: How have several of the pipelines earned wide-moat ratings? Michael Cumming: Pipelines offer by far the cheapest way to ship crude and refined oil products and natural gas over long distances. Trains and trucks offer some competition, but pipelines are much less labor-intensive and require relatively little maintenance. There are significant barriers to entry as well. Acquiring the regulatory approvals and rights of way to build a new pipeline is a long and difficult process, and the large investment required prevents competitors from building new lines without a demonstrated economic need. However, the vast majority of pipelines have regulatory caps on investment returns, which places the industry at the narrow end of our wide-moat category: modest economic profits, but sustainable for a very long time. MDI: Would falling energy prices pose a risk to pipeline earnings? Cumming: Pipelines earn revenue based on the amount of oil or gas transported instead of the price of the hydrocarbons themselves. Demand for energy is relatively inelastic - most people don't drive their cars or run the air conditioner more if energy prices are low - so the volume of oil and gas transported will remain relatively steady over time. MDI: Should investors be concerned about these firms' policies of paying out almost all of their operating cash flow as distributions? Cumming: Since the volume of product transported stays relatively stable, pipeline revenue is too. This stability allows pipelines to raise debt or equity in the capital markets anytime they need funding for expansion projects or acquisitions, making retained earnings less important. These companies are very careful to make sure cash flow will cover all expenses and unitholder distributions, and most maintain a reasonable reserve. The last thing these partnerships want to do is cut distributions, a move that would damage the price of the units. MDI: It's surprising that a sector with such high payout ratios has had such attractive distribution growth. How have these pipeline partnerships created so much value? Cumming: Acquiring underused or inefficient assets can create a lot of value for these firms. Recent transactions have involved major integrated energy firms selling in-house assets with excess capacity to dedicated pipeline operators, such as Magellan Midstream Partners' purchase of pipeline assets from Shell last year. The dedicated pipeline operator sells excess capacity to other parties while continuing to provide transportation services to the original owner, thus generating significantly higher revenue. Pipelines can also realize synergies by making the combined operating and maintenance efforts more efficient. MDI: The yield on pipelines relative to Treasury bonds is near record lows. Does this make the sector unattractive? Cumming: Low interest rates have caused investors to chase yields in all forms, including pipeline partnerships. But rates aside, demand for pipelines has grown as investors become more comfortable with the structure of master limited partnerships (MLPs) and a lengthening record of stable and growing returns. Of course, the boost that low initial valuations gave to historical returns probably won't be repeated, and the sector may come under pressure as interest rates rise. That said, many of the pipeline companies have growth opportunities that will help offset an increase in rates, and it makes sense for the firms with the best distribution growth prospects to trade at below-average current yields. MDI: What should investors expect for distribution growth? Cumming: On average, we expect distribution growth to slow from the robust pace of the past few years. While distributions have grown in excess of 5% for some companies recently, we expect most to fall in the 2%-4% range, with top performers at 5% or slightly higher. We think most pipelines are fairly valued to slightly overvalued, but internal projects can still generate 1%-2% growth in cash flows. The cash-flow impact of acquisitions will vary widely based on the size of the deal and price paid. Acquisition multiples are up substantially--the attractive economics of a pipeline aren't a secret anymore, and financial buyers (including Warren Buffett's Berkshire Hathaway) have become a factor. But since deal financing is raised externally, the industry's investors can control what the MLPs are allowed to pay. MDI: What are some of the risks for pipelines? Cumming: The biggest risks that pipelines face involve regulation. Pipelines held by MLPs do not pay income taxes and could be severely affected if that special tax status were changed or taken away. Most pipelines can be susceptible to adverse rulings regarding the rates of return allowed by regulators. Environmental regulation can be costly for pipelines, and spills or leaks are always a concern. Some pipelines companies, like Valero LP, derive a large percentage of their revenue from one customer. In this case, Valero LP will diversify its customer base away from parent Valero Energy with its acquisition of Kaneb Pipe Line Partners. While most pipelines do not own the oil that passes through the pipes, some (like Plains All American) take title to the oil, a business that can be abused by rogue traders. Controls are generally in place to avoid serious losses, but the practice is very capital-intensive and earns very slim margins. MDI: Most of the pipelines get a C grade for corporate stewardship. Is that something investors should be concerned about? Cumming: All of the pipeline companies that are organized as MLPs get dinged because limited partners have little say in the management of the operation. Aside from this mark, several would earn a B grade. It should be noted that C is considered average, so governance at these companies is not a big concern. Kinder Morgan Energy Partners earns a B even with the penalties for MLPs. MDI: What are your favorite pipelines right now? Cumming: My favorite pipeline is TransCanada, the largest natural-gas carrier in Canada. It owns some of the most vital gas pipelines in Canada and is well positioned to benefit from new sources of gas, including imports of liquefied natural gas and proposed pipelines from gas sources in Alaska and the Mackenzie Delta region. The company recently announced plans to convert one of its underused pipelines to carry oil from the Alberta oil sands into the Midwestern United States. Success in one or more of these projects should ensure TransCanada's cash flow for years to come. Among the U.S.-based MLPs that we have talked so much about, my favorite right now is Buckeye Partners. Last year, Buckeye announced acquisitions of two big pipeline systems that fit nicely with its own systems and competencies. The company should be able to increase utilization of these assets, which will allow it to increase distributions to unitholders. As for two others that I like, Magellan's record of distribution increases should continue, while Enterprise Products Partners looks poised to build on its dominant position in the Gulf Coast. MDI: Are there any pipelines you would avoid? Cumming: I don't see any that I would be emphatic about avoiding, but I would be cautious with Williams and El Paso, both of which are still struggling to recover after the energy-trading business collapsed around Enron. I'm also less than enthusiastic about MLPs with poor records for increasing cash distributions, such as Northern Border Partners. There are certainly pipelines available with better growth prospects. MDI: Great interview--thanks, Michael. Fuel Pipeline Built, but Relief Isn't Delivered Dana Calvo, LA Times 3-26 A long-awaited pipeline finally is carrying fuel across Texas to help ease Arizona's heavy dependence on California for gasoline and other petroleum products. But like a rescue party cut off at the pass, the newly operational Longhorn Pipeline won't provide relief for overburdened California refiners anytime soon. That's because the Longhorn, which originates outside Houston, comes to a dead end in El Paso. A connecting pipeline is too full to take the fuel to Tucson and Phoenix, and an expansion won't be completed until next year. In the meantime, the gasoline, diesel and jet fuel are being pumped into trucks and ferried across New Mexico to Arizona, reducing to a trickle the 10 million gallons a day that the Longhorn is capable of carrying. "Right now, it doesn't mean a lot for Californians," but someday the pipeline could deliver gasoline to Arizona representing more than 4% of California's daily demand, said David Hackett of Stillwater Associates. "That [fuel] that used to leave L.A. [for Arizona] would now never leave L.A.." The Longhorn's owners see their pipeline as a vital link between the Gulf Coast states, which are thick with refineries, and Arizona, which has none and must import about 5.5 million gallons of fuel a day from California. "When it comes to energy supply and demand, the world is tied together," said Richard Rabinow, president of Longhorn Partners Pipeline. "While we don't directly connect to Phoenix or Los Angeles, the fact that there is a way for refined product that originates on the Gulf Coast to get to Phoenix changes the logistics in the United States." California energy officials hope that the Longhorn project eventually will enable Golden State refiners to keep more of the gasoline they produce inside the state. California has 13 refineries that produce the state's unique recipe for cleaner-burning gasoline. They operate at maximum capacity to satisfy California's gas needs, as well as to help supply Arizona, Nevada and Oregon. Demand for fuel in Southern California, Nevada and Arizona continues to go up, said Gordon Schremp, senior fuels specialist at the California Energy Commission. In 2004, fuel demand among Californians increased 1.6% to nearly 44 million gallons a day. In Arizona, demand grew 3% to more than 6 million a day. With fuel supplies stretched so thin, experts say any disruption can cause prices to skyrocket. "It's all just-in-time supply," said California state Sen. Christine Kehoe (D-San Diego). Last year, Kehoe introduced a bill to help gasoline retailers shop for cheaper gas by forcing California refiners to allow their dealers to buy generic gas from any supplier and pay the oil companies separately for the additives that make each brand of fuel unique. The legislation never got out of committee. "We have an extremely tight supply and just a few producers in California, so the market, without any collusion and communication on their part, can very easily be subject to price spikes," Kehoe said. Indeed, California gas prices have risen nearly 20% this year, propelled by oil price increases. The Longhorn saga began 10 years ago, with a vision to overhaul a 50-year-old neglected system of pipes. Longhorn Partners Pipeline spent $300 million to add 250 miles of pipe and modernize the entire network, which originates in Galena Park, an industrial park east of the company's Houston headquarters. Longhorn began sending petroleum products across Texas last summer, but the fuel had nowhere to go except the local El Paso market. A second pipeline, known as the East Line, already runs at full capacity from El Paso to Phoenix, supplying about 30% of the Arizona city's gasoline. (The other 70% comes into Arizona by way of a pipeline originating in Colton.) To relieve the bottleneck, East Line owner Kinder Morgan said the company planned to install more than 200 miles of fatter pipe to handle the additional fuel brought by the Longhorn. Houston-based Kinder Morgan is applying for permits to expand the pipeline and doesn't expect to complete construction until 2006. The expansion would enable refiners to send about 44,000 barrels of refined product to Arizona cities that currently depend primarily on California hydrocarbons. Longhorn Partners stockpiled supplies until mid-February, when they began trucking fuel to Arizona. Since then, nearly 500 truckloads, each holding 7,500 to 8,400 gallons, have crossed into Arizona. "Now consumers have an alternative," Longhorn Partners' Rabinow said. "If Kinder Morgan expands their pipeline, that will provide even more flexibility." Atlas Pipeline Partners, L.P. Reports Record Operating Results Businesswire 3-15 Atlas Pipeline Partners reported revenues of $91.3 million for the year ended December 31, 2004 compared to $15.7 million for the year ended December 31, 2003. Net income was $18.3 million or $2.60 per limited partner unit for the year ended December 31, 2004 as compared to $9.6 million or $2.17 per limited partner unit for the year ended December 31, 2003. Distributions to limited partners declared during 2004 were $2.67 per common unit, compared to $2.39 per common unit during 2003, a 12% increase. The significant increases in revenues, distributions and net income from period to period reflect improvements in transported volumes and transportation fees, and the July 2004 acquisition of Tulsa, Oklahoma based Spectrum Field Services, Inc. EBITDA was $24.3 million for the year ended December 31, 2004 compared to $11.7 million for the year ended December 31, 2003. Atlas Pipeline Partners, L.P. is active in the gas gathering and processing segment of the mid-stream natural gas industry. In Appalachia, it owns and operates more than 1,400 miles of natural gas gathering pipelines in western Pennsylvania, western New York and eastern Ohio to which more than 4,500 wells are currently connected. APL currently gathers approximately 53 million cubic feet ("mcf") of gas per day from these wells. In the Mid-Continent region of southern Oklahoma and northern Texas, APL owns and operates approximately 1,900 miles of gas gathering pipeline serving approximately 600 wells. Currently, APL transports approximately 66 million cubic feet of gas per day to its gas processing facility in Velma, Oklahoma where natural gas liquids (NGL) are removed. APL then sells the resulting gas and NGL and remits a portion of those proceeds to the producer. In both Appalachia and the Mid-Continent, the fees paid to APL are either a percentage of the gross selling price of the gas or NGL or a fixed fee per mcf transported. Copano Energy, L.L.C. Reports Q4 and Year-End 2004 Results PRNewswire 3-09 Copano Energy on 3-09 announced its financial results for the quarter and year 2004. "We are pleased to announce improved operating results for the fourth quarter," said John Eckel, Chairman and CEO of Copano Energy. "Continuing the trends we reported in the prior quarter, Copano benefited from a favorable natural gas processing environment as well as improved margins in our pipeline segment. As a result of the completion of our IPO in November and the significant changes in our capital structure, per unit information and interest expense as reported in Q4, like in Q3, will not be comparable to future periods." Net loss was $2.4 million, or $0.39 per equivalent unit, for Q4 compared to a net loss of $1.3 million, or $0.90 per equivalent unit, for Q4-03. Fourth quarter 2004 results included one-time interest expense charges of approximately $9.2 million primarily related to the remaining discount and issuance costs associated with the redeemable preferred units which were redeemed using proceeds from the IPO. Such redemption is considered an early extinguishment of debt. The weighted average number of equivalent units outstanding in Q4 was 6,094,460. Following the IPO, total units outstanding as of December 31, 2004 were 10,575,378 comprised of 7,056,252 common units and 3,519,126 subordinated units. EBITDA for Q4-04 were $11.0 million, an increase of $5.7 million from EBITDA of $5.3 million for Q4-03. Revenue for the fourth quarter of 2004 increased approximately 35% to $120.3 million from $89.3 million in Q4-03. Total gross margin increased from $10.1 million inQ4-03 to $17.5 million in Q4-04. Full Year 2004 Results Net loss for the year ended December 31, 2004 was $0.9 million, or $0.35 per equivalent unit, compared with a net loss of $4.7 million, or $6.21 per equivalent unit, for the year ended December 31, 2003. EBITDA was $29.5 million for the year compared with $13.5 million in the prior year period. Revenue in 2004 increased approximately 14% to $437.7 million from $384.6 million in 2003. Total gross margin rose approximately 65% to $51.5 million in 2004 from $31.2 million in 2003. Also as a result of Copano's November 2004 initial public offering and the significant changes in our capital structure, full year 2004 results per equivalent unit will not be comparable to future periods. Operating Results by Business Segment - Copano Pipelines The Copano Pipelines segment is comprised of a series of gathering and intrastate transmission systems totaling 1,366 miles of pipelines, which include 144 miles of pipelines owned by Webb/Duval Gatherers, an unconsolidated general partnership in which the Company owns a 62.5% interest. All of Copano Energy's pipeline operations are located in the Texas Gulf Coast region. During Q4-04, the Company gathered or transported an average of 232,723 MMBtu/d of natural gas on its wholly owned pipelines and Webb/Duval gathered or transported 118,653 MMBtu/d of natural gas net of intercompany volumes. During Q4-03, the Company gathered and transported an average of 254,787 MMBtu/d of natural gas on its wholly owned pipelines and Webb/Duval gathered or transported a net 114,033 MMBtu/d of natural gas. The reduction in volumes was primarily attributable to the reduction of relatively low-margin transportation volumes. Gross margin for this segment in Q4-04 increased approximately 30% to $8.7 million compared to $6.7 million in Q4-03. The increase was the result of higher average natural gas prices during Q4-04, which caused an increase in margins associated with the Company's index price-related gas purchase and transportation arrangements, and beneficial changes in contract terms. Operating Results by Business Segment - Copano Processing Copano Processing includes the Houston Central Processing Plant and the Sheridan NGL pipeline that extends from the tailgate of the processing plant to the Houston area. During Q3-04, Copano Energy, through its Copano Processing segment, processed an average of 545,742 MMBtu/d of natural gas compared to 485,636 MMBtu/d during Q4-03. For the same period, the Houston Central Processing Plant produced an average of 16,004 barrels per day of natural gas liquids compared to an average of 11,020 barrels per day during Q4-03. Gross margin for the Copano Processing segment in Q4-04 increased to $8.8 million compared to $3.4 million in Q4-03. The increase in gross margin was the result of higher inlet throughput and higher production of NGL volumes combined with improved natural gas and NGL pricing. The improvement in commodity prices is reflected in the increase in the Company's "standardized" processing margin, which rose to an average of $0.193 per gallon for the fourth quarter of 2004 compared to an average of $0.077 per gallon during the fourth quarter of 2003, and an average of $0.129 per gallon during the third quarter 2004. In order to isolate and consistently track changes in commodity price relationships, the Company calculates a hypothetical "standardized" processing margin. This processing margin is based on a fixed set of assumptions with respect to liquids composition and fuel consumption per recovered gallon, which the Company believes is generally reflective of its business. Because these assumptions are held stable over time, changes in underlying natural gas and natural gas liquids prices drive changes in the standardized processing margin. Copano Energy's financial results are not derived from the standardized processing margin. This calculation, instead, is an evaluation tool used by management. Results of operations may not necessarily correlate to changes in the standardized processing margin because of the impact of factors other than commodity price relationships, such as volumes, changes in natural gas liquids composition, recovery rates and contract terms. Martin Midstream Partners Reports Q4 and 2004 Results press release of 3-16 MMLP reported net income for the fourth quarter of 2004 of $4.4 million, on revenues of $91.6 million, compared to net income for the fourth quarter of 2003 of $3.6 million, on revenues of $52.6 million. MMLP's net income per limited partner unit for the fourth quarter of 2004 was $0.51, compared to net income per limited partner unit for the fourth quarter of 2003 of $0.50. MMLP reported net income for the year ended December 31, 2004 of $12.3 million, on revenues of $294.1 million, compared to net income for the year ended December 31, 2003 of $12.0 million, on revenues of $192.7 million. MMLP's net income per limited partner unit for the year ended December 31, 2004 was $1.45, compared to net income per limited partner unit for the year ended December 31, 2003 of $1.64. The Company's distributable cash flow for the fourth quarter and year ended December 31, 2004 was $5.5 million and $18.0 million, respectively. Distributable cash flow is a non-GAAP financial measure which is explained in greater detail below under "Use of Non-GAAP Financial Information". The Company has also included below a table entitled "Distributable Cash Flow" in order to show the components of this non-GAAP financial measure and its reconciliation to the most comparable GAAP measurement. The Company's distributable cash flow for 2004 was 17% higher than in 2003. As a result, even after issuing 1.3 million additional common units in its February 2004 follow-on public offering, MMLP was able to increase the annualized distributions paid on both its common and subordinated units from $2.00 in 2003 to $2.10 in 2004, a 5% increase. In January 2005, the Company again increased its quarterly distributions on its units to an annualized rate of $2.14, an additional increase over 2004 levels of almost 2%. Magellan Midstream Announces Two-for-One Split PRNewswire 3-14 The board of directors for the general partner of Magellan Midstream Partners announced today a two-for-one split of the partnership's limited partner units. Holders of record at the close of business on April 5, 2005 will receive one additional limited partner unit for each unit owned on that date. The units will be distributed on April 12, 2005. "The growth in Magellan's asset portfolio and earnings since our initial public offering in Feb. 2001 has resulted in nearly a 200 percent increase in our unit price," said Don Wellendorf, chief executive officer. "This split reflects our confidence in the future growth of Magellan and will make our equity more accessible for new investors." Following the two-for-one split, the current annual cash distribution of $3.65 per unit will become $1.825 per unit, or 45.625 cents per unit on a quarterly basis. MarkWest Announces Delayed Filing Form 10-K PRNewswire 3-30 MarkWest Energy Partners today announced that it must delay completion and filing of its 2004 Annual Report on Form 10-K with the Securities and Exchange Commission beyond the prescribed filing deadline, notwithstanding the Partnership's dedication of significant resources to its timely completion. During the course of completing its financial reporting processes for its 2004 Annual Report on Form 10-K, the Partnership identified certain material weaknesses in its internal control over financial reporting. The weaknesses principally relate to the accounting control functions for the Partnership's Southwest business unit. The operations of the Partnership's Southwest business unit acquired in 2003 and 2004 were accounted for in more than one location. Plains All American Raises Guidance for Q1-05 PRNewswire 3-17 Plains All American Pipeline announced today that it has increased its guidance ranges for first quarter 2005 earnings before interest expense, income taxes, and depreciation and amortization ("EBITDA"), net income and net income per limited partner unit. Today's guidance increases and replaces the first quarter 2005 guidance furnished by the Partnership on Form 8-K on February 24, 2005. Based on the Partnership's performance in January and February and anticipated performance for March, management currently estimates that EBITDA for the first quarter will range from $75 million to $81 million. Management estimates that net income (EBITDA less estimated depreciation and amortization expense and estimated interest expense) will range from $42.0 million to $48.9 million, and that net income per basic limited partner unit will range from $0.57 ($0.56 diluted) to $0.67 ($0.66 diluted) per unit. The mid-points of these revised ranges exceed the mid-points of the February 24th guidance ranges by 12%, 22% and 24%, respectively. Pacific Energy Reports Oil Release Business Wire 3-23 Pacific Energy Partners reported that its operations control center in Long Beach, California became aware of an oil release on its Line 63 pipeline from Bakersfield to Los Angeles.The release was likely caused by a landslide resulting from the recent heavy rainfall. The pipeline was immediately shut down and the spill location isolated by closing valves to minimize the amount of oil released. Approximately 1,000 barrels (42,000 gallons) were released into Posey Canyon and entered a cove in Pyramid Lake. Crosstex Reports Q4 and Full Year 2004 Results PRNewswire 3-08 Crosstex Energy today reported fourth quarter and full year earnings. Both XTEX and [GP?] XTXI continued their track record of solid growth in the fourth quarter and full year 2004, which supported increases in distributions and dividends from both companies. "With the LIG acquisition and the continued growth of our treating business, our employees continue to drive our results higher," said Barry E. Davis, President and Chief Executive Officer of the Crosstex Energy companies. "We have been able to continue this growth while maintaining our emphasis on return on total invested capital. Our emphasis on return, as opposed to accretion alone, will compel us to focus more resources on organic growth projects as the driver of our next growth steps in preference to acquisitions, given the current market environment." The Partnership reported net income of $6.1 million, or $0.22 per limited partner unit, in the quarter ended December 31, 2004, compared to net income in the fourth quarter of 2003 of $5.5 million, or $0.26 per unit. Full year 2004 results for the Partnership were net income of $23.7 million, or $0.95 per unit, compared to net income of $15.2 million or $0.88 per unit in 2003. The Partnership's Distributable Cash Flow for the quarter was $11.9 million, or 2.58 times the amount required to cover its Minimum Quarterly Distribution of $0.25 per unit, and 1.17 times the amount required to cover its recently increased distribution of $0.45 per unit. This is an increase of $3.2 million, or 37%, over Distributable Cash Flow of $8.7 million in the 2003 fourth quarter. For the full year of 2004, Distributable Cash Flow was $42.2 million, or 2.29 times the amount required to cover the Minimum Quarterly Distribution and 1.14 times the amount required to cover its actual distributions of $37.0 million. Distributable Cash Flow for the year increased more than 40 percent from the 2003 figure of $29.5 million. Distributable Cash Flow is a non-GAAP financial measure and is explained in greater detail under "Non-GAAP Financial Information." Also, in the tables at the end of this release is a reconciliation of this measure to net income. The increase in Distributable Cash Flow was due to growth in the Partnership's gross margin, to $33.2 million compared to $18.5 million in the corresponding 2003 period, an increase of 80%. Gross margin from the Midstream business segment increased by $13.0 million, or 98 percent, to $26.3 million, due to growth in on-system gathering and transmission volumes of 104 percent, and to growth in processed volumes of 182%. The acquisition of Louisiana Intrastate Gas (LIG) Pipeline Company and its subsidiaries on April 1, 2004 was the main driver of growth in Midstream gross margins. LIG contributed $10.8 million to gross margin in the quarter. Gross margin for the quarter from the Treating segment increased by $1.7 million, or 33%, to $7.0 million. Improvements in margins of the Seminole plant provided $266 thousand of the increase. Growth in the number of treating plants in service from 52 at the end of Q4-03 to 74 at the end of the Q4-04 created the remaining increase in Treating margins. For similar reasons, gross margin for the year increased from $59.7 million to $112.3 million, or 88 percent. Of the $52.6 million gross margin increase for the year, $43.5 million was contributed from the midstream segment. In addition to improvements from the LIG acquisition ($27.7 million for the nine months it was owned in 2004), midstream margins increased $7.9 million due to the DEFS assets acquired mid-year 2003. Treating margins improved $9.1 million year over year, $4.5 million of which is due to ownership of the Seminole plant for only six months in 2003, and $4.1 million due to the net growth in treating plants in service. These improvements were offset by increases in operating expenses of $5.9 million and $20.4 million for the quarter and year respectively, primarily associated with the new assets in service. General and administrative expenses increased by $5.1 million and $13.2 million for the quarter and year, respectively. The Partnership's general and administrative costs were capped in 2003. Without such a cap, annual general and administrative expenses would have been $10.2 million in 2003 compared to $20.1 million in 2004, an increase of $9.9 million. This increase is related to the staffing increases around the LIG acquisition and the significant infrastructure improvements being made at the company to support future growth. Also included in general and administrative costs are $2.7 million associated with the implementation of new computer systems, outside consultants and audit work related to compliance with Sarbanes Oxley and corporate development costs. Interest expense increased $1.8 million and $5.8 million for the quarter and year, respectively, as the Partnership has financed its growth in 2004 with debt. The Partnership's capital structure is still very conservative. Rating Changes various press releases On 3-29 RBC Capital Mkts Upgraded ETP from Sector Perform to Outperform. On 3-21 RBC Capital Mkts Downgraded MMLP from Sector Perform to Underperform. On 3-29 Smith Barney Citigroup Upgraded TPP from Hold Buy. New Units Issued & New Debt various press releases Enterprise Products Partners on 3-11 announced that the underwriters of Enterprise's recent equity offering have exercised their option to purchase an additional 2,250,000 common units to cover over-allotments. This sale is part of the Company's equity offering that was priced on Feb. 10, 2005 and is at the offering price to the public of $27.05 per unit. TC PipeLines 30 3-17 announced the pricing of the previously announced offering of 3,500,000 common units owned by its general partner and an affiliate, both indirect subsidiaries of TransCanada Corporation (TransCanada). TransCanada has priced the 3,500,000 common units at $37.04 US per unit based on the closing price of the units on the Nasdaq National Market on March 17, 2005 resulting in net proceeds to TransCanada of approximately $124 million US. The Partnership will not receive any proceeds from the sale of the common units offered. The underwriters have the option to purchase up to 525,000 additional units on the same terms and conditions to the extent more than 3,500,000 common units are sold in the offering. On 3-08 Kinder Morgan Energy Partners sold $750 million in a two-part debt deal, said joint lead manager Citigroup GlobalMarkets Inc. Lehman Brothers and Wachovia were the other joint lead managers for the sale. KMP sold $250 million with a coupon of 5.15% that matures on 3/1/2015 with a MOODY'S rating of Baa2 and $500 million with a coupon of 5.80% that matures on 3/15/2035 with a MOODY'S rating of Baa1. |