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May Summary: The Pipeline MLP sector is up 3.21% year-to-date [vs being up 4.67% at April's end] with a total return of 6.31% [vs 6.30% in April - a large number of MLPs paying dividends this month] and a distribution yield of 6.16% vs 6.15% in April. There were several MLP's having major downward 2005 and 2006 EPS estimate revisions [EEP, HEP, TCLP, VLI, and XTEX] which could have hurt the sector. But there is still a noticably lack of correlation between a stocks EPS revision and price movement - unlike other sectors. There were also some announcements of the sale of new units [by APL, BPL, MMP, TPP and SXL] which traditionally hurt prices in the month of sale and announcement. The ten year treasury closed on 5-31 at 4.00% [vs 4.20% on 4-29], which should have assisted price increases in the sector. This month I have added a "comment" column to the Monthly Earnings Estimates Changes vs Price Changes spreadsheet. And it turns out that two events explain most of the atypical monthly price movements: revision to the mean and fear of earnings dilution. Those MLPs that issued statements announcing the sale of new LP units have all disproportionately fallen - and appear to be the cause of the sector average falling for the month. And the three MLPs at the extreme of April's price movements - the one that rose the most and the two that fell the most - have reversed their last month performances. Brokerage C DCF's were updated mid-month. I did collect updated distributions from Yahoo, but that data showed a large number of significant and illogical changes. So I question the accuracy of the new data and chose not to input most of that data. There was also suspicous data with some FFO data for REITs at Yahoo. This is outside my power to correct and thus I can not say when it may be corrected. Oil fields in Texas showing their age Dan Piller, Ft Worth Star-Telegram 5-01 Texas' most famous and venerable oil fields are showing their age. The Permian Basin, which stretches from Lubbock and Midland to the New Mexico border and has long been the state's center of production, showed a decline in oil production from 304 million barrels in 1994 to 236 million barrels last year. The decline is even starker in East Texas, where production from the Red River to the Gulf Coast has dropped from 90.5 million barrels in 1994 to 43.5 million barrels last year. As that "easy" domestic oil production declines, the major oil companies, including Exxon Mobil and ChevronTexaco have responded by selling big chunks of their Texas holdings to a newer breed of producers, such as XTO Energy of Fort Worth and Kinder-Morgan of Houston. They, in turn, are using new technology to wring new production out of the old fields. "The name of the game is to replace reserves, and the big majors know they can't replace their reserves with the production from the mature Texas fields," said Mark Baxter, director of the Cary McGuire Energy Institute at Southern Methodist University in Dallas. "So they head for where the big new discoveries are, and that means going overseas." Baxter began his career as an engineer with Marathon Oil, working on the Yates Field in the Permian Basin. The field drove Texas production for decades, but the peak of production is in the past. In 1935, the 59,470 oil wells in Texas produced 375.6 million barrels of crude oil. That supplied the United States for the year, with enough surplus to cause the price of a barrel of oil to drop below $1 and provoke a crisis in the industry. Last year, about 154,000 Texas wells produced a grand total of 355 million barrels of oil. That figure is even more dismaying when put against the 1994 figure of 542 million barrels of Texas crude production. What has happened to Texas oil production? The short answer, as Exxon Mobil Chairman Lee Raymond has put it several times, is that Texas is a "mature" oil-producing field. It means that the field has passed its productive peak and that the time has come for producers to move on to bigger and better things. "Mature" means that the easy oil in pockets near the well casings has been taken. What's left is farther away, maybe locked in harder rock and lacking enough pressure to come to the well. Morris Burns of Midland, president of the Permian Basin Producers Association, said that "the majors are moving out because there aren't any more big elephants." The famous Yates Field, which since 1926 has produced 1.4 billion barrels of oil and has been the epicenter of Permian Basin production, now is being worked by Kinder-Morgan and XTO Energy. The Yates isn't what it once was. In 1994, the field produced a still-respectable 18.9 million barrels of oil. Last year, production totaled 7.1 million barrels. Still nice, but not like the old days. "That's a great old field, and most of us started as Permian Basin engineers," says Keith Hutton, an Odessa native and Texas A&M-trained engineer who last month was named to succeed Steffen Palko as president of XTO. XTO and Kinder-Morgan, which took over the field from Marathon two years ago, are trying injections of liquid carbon dioxide into old well formations to stimulate production. XTO is doing the same thing in the Russell Field in Gaines County. It got into the Russell Field with a minority interest bought from Arco in 1994, then bought everybody out last year to become 100 percent owner. The Russell Field has produced 64.3 million barrels since its discovery in 1943. But last year's production, 344,313 barrels, is little more than half the 647,627 barrels the Russell produced in 1994. Hutton says that XTO uses many new techniques to bring the Russell's production back to a semblance of its old self. Chief among them are 3-D seismic imaging, not available to previous producers, as well as hydraulic fracturing techniques to crack the rocks holding the crude more than 11,000 feet deep. As in the Yates Field, carbon dioxide injections are used to push oil closer to the wells. "We can do what is called a 'five-spot,' " Hutton said. "There are hundreds of wells in a field like that. You take one well that is surrounded by four others. The carbon dioxide is injected in the center well, and the flooding pushes the oil toward the other four wells." Early results are good, but not miraculous. When XTO took total control of the Russell Field wells, the field was producing at the rate of about 1,500 barrels per day. The carbon dioxide injections and the earlier fracturing have pushed production up to 2,200 barrels per day, and Hutton hopes he can hit 3,000 barrels. But it still falls far short of the 20,000-barrel-per-day peak of the Russell Field in the 1960s. Hutton is emphatic that the grand old Permian Basin fields will never again see the kind of production that made the region famous in the 1950s and '60s. In those days, Permian Basin production essentially met the U.S. domestic needs. "We'll work hard to get more production from those old fields, but we'll be doing a good job just to hold production flat," Hutton said. Even so, there is a new spring in the step of folks in the Permian Basin, which has endured almost two decades in the doldrums of low prices and declining production. "There's more drilling and permitting activity now than since the late 1970s," Burns says. "People recognize that the higher prices today are the result of demand, not curtailment of supply as we saw back then." Burns says old worries about price and just surviving in business have been replaced by concerns about shortages of drilling rigs and trained engineers and geologists. "The big need now is for more kids to study math and science in schools, so that we can create another generation of talent for the industry," Burns said. Texas' Future Lies in Natural Gas Dan Piller, Ft Worth Star-Telegram 5-01 The Fort Worth skyline is a testament to the enduring power of oil and gas. The City Center towers owe their origins to Sid Richardson's strike in the Keystone field of far West Texas. Burnett Plaza's heritage goes back to the Burkburnett field north of Wichita Falls. W.T. Waggoner, a North Texas rancher, hit gushers in the Electra field and built a 20-story landmark on Houston Street. Almost a century later, XTO Energy operates one of the city's top-performing companies from the Waggoner Building, managing a growing collection of natural gas fields. In the grand tradition of the oil barons, the company is considering adding its own downtown silhouette -- a 50-story office building. XTO symbolizes the new face of energy. Oil built Texas, but natural gas is powering a modern-day drilling boom as entrepreneurs try to extract their own fortunes from the ground beneath North Texas. Today, as production from established oil and gas fields in East and West Texas dwindles, it is the Barnett Shale field in North Texas that represents the next big strike. It's already showing signs of a gold rush. Dozens of jackknife towers are popping up around the edges of the Metroplex, many within sight of urban commuters. There are nearly as many drilling rigs in North Texas as in the Permian Basin, the historic center of the state's oil and gas industry. The promise of riches is attracting investment from far and wide. Devon Energy of Oklahoma, EOG Resources of Houston, Chief Oil & Gas of Dallas and XTO Energy are among the companies spending hundreds of millions of dollars to sink wells around Fort Worth. Over the past five years, at a pace rarely seen in energy fields, the Barnett Shale has become the largest gas-producing field in Texas -- and the third-largest in the United States. More than 3,000 wells have been drilled since Mitchell Energy widened development in the field in 1999. Last year, the play moved from its original base northwest of Fort Worth into Johnson, Parker and Hood counties. Land agents are scouting sites in Ellis, Hill and Bosque counties to the south and Erath and Palo Pinto counties to the west. Ross Perot Jr. is in the game, with 19 wells drilled in the past year on his Alliance property and elsewhere. Gas wells sit on evangelist Kenneth Copeland's ranch northwest of Fort Worth. Surveys have been conducted on the Pecan Plantation golf course near Granbury. Wells extend under Lake Pat Cleburne in Johnson County and the giant Wal-Mart distribution center in Cleburne. Industry dynamics have helped fuel the boom. The price of natural gas has tripled since 2000, driven largely by the federal Clean Air Act, which promoted demand for gas-fired power plants. By the end of January, 518 of the 544 working rigs in Texas were drilling for natural gas. "We're in what you could call the golden age of natural gas," said Stephen Holditch, chairman of the Petroleum Engineering Department at Texas A&M University. The ultimate payoff will be measured in the billions. Bernard Weinstein, an economist at the University of North Texas, estimates the annual impact of natural gas at $2 billion to $3 billion. Leases have been going for $500 to $1,000 an acre, he said. The royalty owner -- or the person who owns the mineral rights to a property -- typically gets 18 percent to 20 percent of the revenues from a well after taxes and pipeline and processing costs. "One thing is for sure," Hallman said. "People are a lot more careful about what they do with their mineral rights." Flo Williams owns the mineral rights to her land. She has received three lease offers from energy companies on her 100 acres south of Weatherford. But she's being careful. "I'm not doing a thing until my lawyer looks them over," she said. "But if it's good enough, I'll probably let them drill." She just might get rich. Barnett Shale wells average about 2 million cubic feet a day when they first come in. Under the standard royalties, that yields $11,250 per well per month, or $135,000 a year, to whoever owns the mineral rights. That's a good payoff, but the big money is made by production companies with the scientific and engineering know-how to conquer the tricky geology of the Barnett Shale. Investors in Hallwood Energy of Cleburne, for example, sold much of their position in the field last year to Chesapeake Energy of Oklahoma City for $360 million. The owners of Denver-based Antero Resources cashed in even bigger, selling their holdings to XTO this year for $700 million. That was XTO's entry into the Barnett Shale. But the Fort Worth company has already grown rapidly on the strength of natural gas production. XTO's stock is more than 25 times higher than it was when the company went public in 1993; last year, it was added to the Standard & Poor's 500 index. Bob Simpson, one of the company's founders and its chief executive, holds 11.5 million shares, worth more than $340 million at last week's prices.
(2004 production in billion cubic feet)
Atlas Pipeline Partners Announces Pricing of Equity Offering Businesswire 5-27 Atlas Pipeline Partners announces today that an offering of 2,300,000 of its common units was priced on May 26, 2005 at $41.95 per common unit. After underwriting discounts and commissions of $1.888 per common unit, Atlas Pipeline Partners will receive net proceeds of $92.1 million. Delivery of the proceeds is scheduled for June 2, 2005. APL has also granted the underwriters an over-allotment option to purchase an additional 345,000 common units exercisable within thirty days. Copano Reports First Quarter 2005 Results PRNewswire 5-09 "We are pleased to announce an 83% improvement in Copano's operating income to $6.4 million for Q1-05 as compared to Q1-04," said John Eckel, Chairman and Chief Executive Officer of Copano Energy. "Copano achieved this substantial increase in operating income despite a $1.7 million increase in its general and administrative costs of which $1.4 million will be reimbursed as a capital contribution by our pre-IPO investors pursuant to the 'G&A Cap' contained in our limited liability agreement. Additionally, our DCF prior to any retained cash reserves established by our board provided over 180% coverage of our increased distribution payable for the quarter." Net income was $5.4 million, or $0.51 per unit, for Q1-05 compared to a net loss of $0.6 million, or $0.43 per equivalent unit, for Q1-04. EBITDA for Q1-05 were $8.2 million, an increase of $3.1 million from EBITDA of $5.1 million for Q1-04. Revenue for Q1-05 increased approximately 32% to $126.8 million from $96.1 million in Q1-04. Total gross margin increased from $9.8 million in Q1-04 to $14.6 million in Q1-05. "In addition to the continuing positive impact of favorable natural gas and natural gas liquids prices, these operating results reflect increased natural gas liquids production and an improved contract and margin mix," added John Eckel. Operating Results by Business Segment Copano Pipelines is comprised of a series of gathering and intrastate transmission systems totaling 1,367 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 Q1-05, the Company gathered or transported an average of 358,659 MMBtu/d of natural gas on its pipelines, which included 229,798 MMBtu/d of natural gas on its wholly owned pipelines and 128,861 MMBtu/d on the Webb/Duval Gathering System, net of intercompany volumes. During Q1-04, the Company gathered and transported an average of 357,480 MMBtu/d of natural gas on its pipelines, which included 244,367 MMBtu/d of natural gas on its wholly owned pipelines and 113,113 MMBtu/d of natural gas on the Webb/Duval Gathering System, net of intercompany volumes. The reduction in volumes on its wholly owned pipelines was primarily attributable to the reduction of relatively low-margin transportation volumes. Gross margin for this segment in Q1-05 increased approximately 8% to $7.9 million compared to $7.3 million in Q1-04. The increase was the result of higher average natural gas prices during Q1-05, which caused an increase in margins associated with the Company's index price-related gas purchase and transportation arrangements and improvements in contract terms. 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 Q1-05, Copano Energy processed an average of 569,216 MMBtu/d of natural gas compared to 546,411 MMBtu/d during Q1-04. For the same period, the Houston Central Processing Plant produced an average of 16,276 barrels per day of natural gas liquids compared to an average of 13,145 barrels per day during Q1-04. Gross margin for the Copano Processing segment in Q1-05 increased to $6.6 million compared to $2.5 million in Q1-04. The increase in gross margin was the result of higher inlet throughput and higher production of natural gas liquids, or 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 $0.14 per gallon for Q1-05 compared to an average of $0.08 per gallon during Q1-04. On April 18, 2005, Copano Energy announced a first quarter 2005 cash distribution of $0.42 per unit for all of its outstanding common and subordinated units. This distribution, which represents a 5% increase above the minimum quarterly distribution, is scheduled to be paid on May 13, 2005 to holders of record at the close of business on May 2, 2005. Enterprise Reports First Quarter Results Business Wire 5-03 EPD reported net income for Q1-05 of $109.3 million, or $0.25 per unit on a fully diluted basis, compared to $62.5 million, or $0.26 per unit on a fully diluted basis, for Q1-04. Net income for Q1-04 included a $10.8 million, or $0.05 per unit, benefit related to changes in accounting principles. Enterprise's financial results for Q1-05 include the earnings associated with GulfTerra Energy Partners, L.P., which was merged into Enterprise on September 30, 2004, while the financial results for 2004 represent only those of Enterprise including its 50% ownership interest in the general partner of GulfTerra. Distributable cash flow for Q1-05 was $252.3 million compared to $87.4 million in Q1-04. On April 15, 2005, Enterprise's board of directors approved an increase in the partnership's quarterly cash distribution rate from $0.40 per unit to $0.41 per unit with respect to Q1-05, which is a 10.1% increase over the $0.3725 rate that was paid to partners in May 2004 with respect to Q1-04. Distributable cash flow for Q1-05 included $42.1 million of proceeds from the sale of Enterprise's 50% ownership interest in Starfish Pipeline, which was required by the FTC to complete the merger with GulfTerra, and provided 1.5 times coverage of the distribution to limited partners. Excluding these proceeds, DCF for Q1 was a record $210.2 million and provided 1.2 times coverage of the distribution to limited partners. "Enterprise reported solid financial results in the first quarter of 2005," said Robert G. Phillips, President and CEO of Enterprise. "We experienced strong demand for our services across most of our midstream energy value chain as a result of continued robust demand for natural gas, NGLs and crude oil. During the quarter, the partnership transported approximately 7.6 billion cubic feet per day of natural gas and 1.6 million barrels per day of NGLs and crude oil and fractionated 471,000 barrels per day of NGLs, butane and propylene net to our ownership interest. Our DCF for Q1 exceeded the declared cash distributions to partners by approximately $76 million. We will use this surplus to reinvest in our organic growth projects and to reduce debt. To date, the partnership has invested over $250 million in organic growth projects that are expected to be completed, go into service and begin generating new streams of cash flow over the next two years," stated Phillips. Revenue for Q1-05 increased by 50%, to approximately $2.6 billion compared to $1.7 billion for Q1-04. Operating income for the Q1-05 increased by 86% to $165.5 million compared to $88.8 million for Q1-04. Gross operating margin increased by 110% to $275.2 million for the first quarter of 2005 from $131.1 million for the same quarter in 2004. EBITDA increased by 109% to $266.3 million for Q1-05 from $127.4 million for Q1-04. Review of Segment Performance NGL Pipelines & Services - The NGL Pipelines and 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 70%, or $63.3 million, in Q1-05 to $153.3 million from $90.0 million in the same quarter in 2004. Enterprise's natural gas processing and related businesses accounted for $85.7 million of gross operating margin for this segment in Q1-05 compared to $22.4 million in Q1-04. This increase was primarily due to the contributions from the GulfTerra assets, the nine processing plants acquired from El Paso Corporation in Q3-04, increased margins from processing assets historically owned by Enterprise and earnings from the Indian Springs facility purchased from El Paso in the first quarter of this year. The processing business benefited from demand for NGLs by the petrochemical and motor gasoline industries. Gross operating margin from the NGL pipelines and storage business was $59.0 million during Q1-05 versus $62.8 million in Q1-04. The Mid-America and Seminole pipelines accounted for $44.0 million of the gross operating margin for the partnership's NGL pipelines and storage business during Q1-05 compared to $43.0 million in the same quarter of last year. An increase in margin from the purchase of additional ownership interests in the Dixie and Tri-States pipelines was more than offset by a $6.9 million decrease in gross operating margin from (1) import and export terminaling activities, as the result of strong domestic demand for NGLs, and (2) the South Louisiana NGL pipeline system, due in part to the lingering effects of Hurricane Ivan. Total transportation volumes for the NGL pipeline business averaged 1,394,000 BPD for Q1-05 compared to 1,368,000 BPD in the first quarter of last year. Transportation volumes for the Mid-America and Seminole pipelines increased by 7%, or 60,000 BPD, to 890,000 BPD in Q1-05 from 830,000 BPD in Q1-04. One of the partnership's objectives for 2005 was to seek relief through filings with the Federal Energy Regulatory Commission to increase the tariffs on the Mid-America and Seminole pipeline systems to recover the increased costs of operating the pipelines, principally fuel and pipeline integrity expenses. On March 1, 2005, the Mid-America and Seminole Joint Tariff Rate increases went into effect which should result in additional revenues of approximately $10 million per year. The Commission allowed an increase to the Mid-America local tariffs to become effective May 1, 2005, subject to refund and subsequent settlement discussions. As filed, this increase could provide additional annual revenues of approximately $12 million. Enterprise's NGL fractionation business earned gross operating margin of $17.7 million for Q1-05 compared to $8.2 million in Q1-04. NGL fractionation volumes for Q1-05 averaged 338,000 BPD versus 229,000 BPD in Q1-04. Onshore Natural Gas Pipelines & Services - The Onshore Natural Gas Pipelines and Services segment includes the EPD's onshore natural gas pipelines and natural gas storage businesses. Gross operating margin for this segment for Q1-05 was $79.4 million compared to $5.6 million in Q1-04. Onshore natural gas pipelines generated $71.5 million of gross operating margin in Q1-05 versus $5.6 million in the same quarter of 2004. Onshore transportation volumes were 5.7 trillion BTUs per day (Tbtu/d) compared to 0.6 Tbtu/d in Q1-04. Natural gas storage services accounted for $7.9 million of gross operating margin in Q1-05. This combined $73.8 million increase for the segment was due entirely to the contribution of the GulfTerra assets. Offshore Pipelines & Services - The Offshore Pipelines and Services segment includes EPD's offshore natural gas and crude oil pipelines and platforms. Gross operating margin for this segment for Q1-05 was $23.2 million compared to $1.0 million in Q1-04. Offshore natural gas pipelines recorded gross operating margin of $10.2 million on average throughput of 1.9 Tbtu/d in Q1-05 versus $1.0 million and 0.4 Tbtu/d, respectively, for Q1-04. Gross operating margin for the partnership's offshore platform services and production business was $10.2 million for Q1-05. Enterprise's offshore oil pipelines business recorded gross operating margin of $2.8 million in Q1-05 on net volumes of 121,000 BPD. This increase was 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 Q1-05 was $19.3 million compared to $24.1 million in Q1-04. Increases in gross operating margin from both the butane isomerization and propylene fractionation businesses were more than offset by an $8.5 million gross operating loss in our octane enhancement facility due to start up expenses related to modifications to the facility to add the capability of producing isooctane. As a result of the construction work, the facility was idle during the first quarter. First production of isooctane from the facility is expected in May 2005. Net income for Q1-05 includes a $5.4 million, or $0.01 per unit, gain on the sale of assets, which was principally the sale of the partnership's 50% ownership interest in Starfish Pipeline Company, LLC. Total debt outstanding at March 31, 2005 was approximately $4.2 billion, which represented 41.5% of the partnership's total capitalization. Enterprise had unrestricted cash of approximately $58 million at the end of the first quarter. Pacific Energy Partners Reports Earnings for Q1 Business Wire 5-04 Pacific Energy Partners (PPX) announced that recurring net income for Q1-05 was $10.3 million, or $0.34 per limited partner unit, compared to $8.1 million, or $0.31 per limited partner unit in Q1-04. The results for the first quarter reflect the benefit of the acquisition of the Rangeland pipeline system, higher pipeline volumes on the West Coast and in the Rocky Mountains, lower spending for Pacific Terminals, and the benefit of tariff increases on Line 2000 in May 2004 and on Line 63 in November 2004. Partially offsetting these increases were significantly lower gathering and blending margins for Pacific Marketing and Transportation ("PMT"), and pipeline repair costs associated with earth movement and stream erosion due to heavy rainfall in Southern California. "Our first quarter results continue to show the strength of our strategic business units," stated Irv Toole, President and CEO. "The Pacific Terminals storage and distribution system continues to produce strong financial results in our West Coast Business Unit. Our Rocky Mountain Business Unit has enjoyed increased market share for pipeline shipments, as well as the benefit of the Canadian pipelines we acquired in 2004. We're excited about the growth potential in both of our business units." On April 22, 2005, the Partnership announced an increase in its cash distribution to $0.5125 per unit for the first quarter of 2005, or $2.05 per unit annualized. This represents an increase of 2.5% over its fourth quarter 2004 distribution level and 5.1% over its first quarter 2004 distribution level. The distribution will be paid on May 13, 2005, to holders of record as of May 2, 2005. Irv Toole commented, "We're pleased to increase our cash distributions again this quarter. We've made substantial progress in the reclamation of the Line 63 oil release and are happy to report that Line 63 is back in operation. Our underlying business remains strong, and we look forward to further increases in our cash distributions as we execute our development plans for the Rangeland pipeline system, complete additional acquisitions, and pursue key expansion and development projects." Distributable cash flow available to the limited partners' interest for Q1-05 was $16.8 million. On a weighted average and diluted basis, there were 29,673,000 limited partner units outstanding during Q1-05, approximately 18% more units outstanding than in Q1-04. Operating Results by Segment West Coast Unit Operating income was $11.7 million for Q1-05, excluding the $2.0 million oil release expense, compared to $12.3 million in the corresponding period in 2004. West Coast pipeline volumes for Q1-05 were approximately 4% higher than in Q1-04. During the 2004 quarter, volumes were impacted by a significant amount of Los Angeles area refinery maintenance, resulting in lower volumes moving south to Los Angeles. In the 2005 quarter, the Partnership experienced incremental revenue from tariff increases on Line 63 and Line 2000 implemented in 2004. On May 1, 2005, the Partnership increased its Line 2000 tariffs by 4.8% ($0.065 per barrel). Line 2000 averaged approximately 85,000 barrels per day in Q1-05. On March 23, 2005, the Partnership experienced a significant oil release on Line 63 in northern Los Angeles County in the Pyramid Lake area which was caused by a rain-induced landslide, and is estimated at 3,400 barrels. The total costs associated with the oil recovery and restoration effort is estimated at $13.5 million. The Partnership believes that its insurance carrier will pay these costs, excluding a $2.0 million deductible. Additionally, the Partnership estimates the cost of pipeline repairs associated with the Pyramid Lake landslide at $1.0 million, and the costs to address earth movement and stream erosion problems at other locations along Line 63 and Line 2000 at $2.5 million, $0.6 million of which was incurred during Q1. The costs associated with the repairs of the pipelines are not covered by insurance. The Partnership has filed an application with the California Public Utilities Commission to implement a temporary surcharge of $0.10 per barrel on its Line 63 tariff rates to recover the repair costs associated with this pipeline. Pacific Terminals' storage facilities had a high rate of utilization during the quarter, as well as increased storage capacity. In Q4-04, vapor treating equipment was installed at a cost of $0.6 million at the Pacific Terminals facilities. The equipment is expected to reduce third-party contractor costs by approximately $1 million annually, and succeeded in reducing those costs in the first quarter by $0.3 million. PMT achieved above-average margins in Q1-04, but experienced lower margins in Q1-05, due to pricing pressures from steeply discounted crude oil imports. Contributing to the decrease in PMT's income was the interruption of a scheduled sale due to the shut-down of Line 63 in late March. Looking forward, a purchase contract that contributed to the unfavorable margins during the quarter expired on March 31, 2005. Rocky Mountain Unit Operating income was $9.6 million for Q1-05, compared to $3.6 million in Q1-04. The increase included the results of the Rangeland and MAPL acquisitions, which were completed in May and June of 2004, respectively, as well as increased market share for pipeline shipments of crude oil to Billings, Montana, and increased crude oil demand by Salt Lake City refiners. Due to a fire at Suncor Energy, Inc.'s oil sands production facility in Alberta, synthetic crude oil volumes to Salt Lake City were lower than in the 2004 quarter. Shippers' volumes are expected to return to normal during the second quarter of 2005. The development of the new receiving terminal and pump station for Rangeland, which will provide access to synthetic and other types of crude oil in Edmonton, continues to progress. Construction of this facility, together with additional tanks along the pipeline corridor, is expected to be complete and begin operations at the beginning of the fourth quarter of 2005. To further meet growing demand and the resulting volume increases in the Rocky Mountain region, the Partnership continues to work with shippers on various projects, including an expansion of Frontier Pipeline and a Phase II expansion of the Partnership's pipelines serving Salt Lake City. Buckeye Partners Prices Offering of LP Units PRNewswire 5-11 Buckeye (BPL), today announced that the Partnership has priced an offering of 2,500,000 limited partnership units at $45.20 per unit. The underwriters have been granted an option to purchase up to 375,000 limited partnership units to cover over- allotments, if any. The Partnership intends to use the net proceeds from this offering to reduce its indebtedness under its $400 million five-year revolving credit facility, which was used to fund the Partnership's recent acquisition of refined petroleum products pipelines and refined petroleum products terminals in the Northeastern United States from affiliates of Exxon Mobil Corporation. MMP Announces Secondary Offering of Common Units PRNewswire 5-04 Magellan Midstream Partners (MMP) announced the sale by Magellan Midstream Holdings, L.P. ("Holdings"), the owner of the partnership's general partner, of 2.1 million common units representing limited partner interests in the partnership in a secondary public offering. Wachovia Capital Markets, LLC is acting as the sole underwriter of the offering. TEPPCO Partners Announces Pricing Of Units Business Wire 5-05 Teppco announced today that it has priced 6.1 million units representing limited partner interests at $41.75 per unit. The offering is scheduled to close on May 11, 2005. The net proceeds from the offering of approximately $244 million will be used by TEPPCO to fund approximately $165 million of capital expenditures during the remainder of 2005 for revenue generating and system upgrade projects, to reduce amounts outstanding under its bank revolving credit facility and for general partnership purposes. Sunoco Announces Pricing of 2.5 Million Common Units PRNewswire 5-18 Sunoco Logistics Partners announced the pricing today of 2.5 million common units at a public offering price of $37.50 per unit. The underwriters have been granted an option to purchase up to 375,000 additional common units to cover over- allotments, if any. The Partnership intends to use all of the net proceeds from this offering to redeem 2.5 million common units owned by Sunoco Partners LLC, our general partner and a wholly-owned subsidiary of Sunoco, Inc. Crosstex Announces Distribution By Yorktown PRNewswire 5-20 Crosstex today announced that it has been advised by Yorktown Energy Partners, early investors in Crosstex Energy, Inc., that these entities have distributed approximately 727 thousand shares of the Corporation's common stock to their limited and general partners, effective May 19, 2005. After the distributions, the Yorktown Partnerships will collectively hold approximately 4.4 million shares of the Corporation's common stock. "With this distribution, the public float of XTEX's stock has increased to approximately six million shares, more than double its level prior to November of 2004. Distributions such as this will continue to improve the liquidity available to investors in the Corporation," said Barry E. Davis, President and Chief Executive Officer of Crosstex. "We also are gratified by the continued support of the principals of the Yorktown general partners, as they intend to continue to hold the shares they receive in the distribution." | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||