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The Pipeline MLP sector is up 7.75% year-to-date [vs being up 3.21% at May's end] with a total return of 10.87% [vs 6.31% in May] and a distribution yield of 6.03% vs 6.16% in May. From the month, Pipelines were up 4.29%, with Copano leading the pack with a 19.23% gain, after being in the news with a major acquisition. ETP came in second at a 9.43% gain, after increasing its distribution. HEP was third with 8.75% after it too made a major acquisition. APL was a close fourth with a 8.54% gain, it too increasing its distribution. Share prices for KPP, TCLP and VLI fell slightly. Continuing the trend noticed from the start of this year, it is news - and not fundamentals -- that have moved sector prices. EPS estimates for 2005 and 2006 for both APL and HEP fell during the month - but news triumphed over numbers. So why even bother posting EPS estimates? Maybe I need a monthly reminder of this illogical condition. Or maybe I need to change my focus and realize that news is more tangible than numbers. And one other note: not all news is created equal - or so it seems. PAA - the fourth best stock in year to date price improvement - announced mid-month increased profit expectations, with adjusted net income per diluted unit expected to be 49% higher than previously announced. PAA ended the month with a less than sector average increase. Brokerage E DCF's are updated mid June, and there was a good bit of volatility in the numbers - which I found surprising. Of the twelve estimate changes, four were directionally towards the consensus and three were away, while five changes were movements that could not be classified as directional in that manner. [An estimate that was between the estimates of the other two brokerages and moved in one direction might be concidered generatring a new consensus - so those instances of movement were unclassified.] There were six estimate increases and six decreases. Brokerage C's data is from mid-month of May - which means it has been updated once - and volitility in those numbers were relatively mild. Brokerage B's data is partially from April [from which I retrieved the most estimates] and partially from January [for which it gave estimates for more MLPs than in its April update - and I do not know why]. Brokerage B's June update did not contain any DCF's - strange. Where Oil Is Mined, Not Pumped Justin Blum, Washington Post 6-15 Along Highway 63 outside Fort McMurray the rolling hills give way to massive open pits, huge waste ponds and tangles of pipes and refining equipment that spew smoke into the air. In the pits, shovel trucks load dirt into dump trucks that are so gigantic a driver has to climb a ladder attached to the front grille to get behind the steering wheel. The changing landscape reflects an ambitious quest to develop a new source of oil. Faced with tougher prospects for developing big new oil fields around the world, major companies including Exxon Mobil, Chevron, Royal Dutch/Shell and ConocoPhillips are sinking billions of dollars into projects to wring oil out of deposits of petroleum buried amid sand and clay. Until a few years ago, such projects -- called "oil sands" or "tar sands" -- sputtered at the fringes of the oil industry. But since technological breakthroughs brought down costs and oil prices have soared, companies have been investing heavily here. Oil-sands production is now profitable when a barrel of oil sells in the low $20s, analysts said -- far below the recent $50 range. Just outside this boomtown, huge machines dig up the earth and remove the oil sands, whose deposits of a substance called bitumen smell something like roofing tar and are as thick and sticky as molasses. Companies are mining hundreds of feet deep and running the unearthed deposits through a complex process to convert them into oil. Companies move enough dirt and oil sands in two days to fill Yankee Stadium. Factoring in the oil sands, Canada's proven oil reserves are reported to be nearly 180 billion barrels, second only to Saudi Arabia. U.S. energy officials say Canada's oil-sands deposits are among the largest in the world. The oil sands are buried under an area about the size of New York state. Companies here are producing increasing amounts of oil from this unconventional source -- about 1 million barrels a day. If all of that oil went to the United States, it would amount to roughly 5% of daily consumption. In 1995, oil derived from the sands was less than half the current amount. Alberta officials expect production to triple from today's level by 2020. Oil companies have been struggling to replace aging fields whose production has tapered off. Many have been frustrated by oil-rich countries in the Middle East and elsewhere that refuse to open their doors to Western companies. "We are all kind of fighting each other in the rest of the world where oil production is not increasing," said Michael Rodgers, a senior director of PFC Energy, a consulting firm. "We have to start thinking about unconventional resources. A lot of companies are saying, 'We do have this option in Canada.' " Canada was the top supplier of crude oil to the United States last year, providing about 16% of U.S. imports. Crude produced from the oil sands is making up a larger portion of what Canada sends to the United States. Even so, development of the oil sands is not happening fast enough to significantly reduce U.S. dependence on Middle Eastern oil. China's oil companies, eager to gain access to supplies to satisfy the country's growing energy needs, are buying into oil-sands projects and would like to import some of the oil. The oil sands are becoming increasingly important as the worldwide thirst for oil increases. Though profitability has improved, making oil out of the oil sands can be less lucrative than traditional oil development. Oil-sands production also requires spending money in different ways. With normal oil production, companies have to invest heavily in exploration and sometimes drill wells that come up dry. With oil sands, companies spend very little on exploration -- the soil here is loaded with bitumen -- but must devote large amounts of money to remove the deposits from the ground and change it into crude oil. The pickup in production transformed Fort McMurray from a remote hamlet to a thriving city. The demand for skilled workers is so high that some companies are importing them. Some companies would like to invest more but are constrained by a tight labor market, logistical complications and sophisticated machinery that takes years to build. At Syncrude Canada, which started producing from the oil sands here in 1978, the giant trucks rumbled through pits, the earth heaving from their weight. Fully loaded, some of the trucks weigh more than two Boeing 747 airplanes. The trucks haul away the top layers of dirt, exposing the espresso-colored oil sands. The sands are then collected and sent to processing facilities that separate the bitumen. It typically takes two tons of oil sands to produce one barrel of crude, which is 42 gallons. The companies move about 1 million tons of earth a day. In other locations, the oil sands are buried too far below the surface for mining. To reach them, steam can be injected underground to loosen the bitumen and allow it to flow though wells to the surface. A May 2003 chart from the American Petroleum Institute web site lists the top five crude oil imports from foreign countries to the U.S. for May breaks down as follows: 17.8% from Saudi Arabia; 16.5% from Canada; 12.8% from Venezuela; 12.0% from Mexico; 7.5% from Nigeria . Natural Gas Up Due to Electricity Production Jon Chavez, [Toledo, Ohio] Blade 6-12 For five years, there has been a giant sucking sound in the natural gas industry in the United States. Prices for the fuel were low until 1999, averaging $2 to $3 for a million BTUs. Since then, the price has climbed to $7. After the increase, many Toledoans' heating bills soared, often to several hundred dollars for a particularly cold month. What changed? New technology paved the way for cleaner, cheaper to build, and more efficient electricity generating plants that run on natural gas. To meet the nation's hunger for power, hundreds of the mini-power plants were constructed. Nearly 1,200 existed nationwide a year ago, the latest figures available. Twelve are operating in Ohio, and two more are under construction, including one in Fremont. Four more, three of which are in northwest Ohio, have been proposed but are on hold. The plants, such as the 600-megawatt Troy Energy LLC unit south of Toledo in Wood County's Troy Township, have added 200,000 megawatts of electricity generation capacity nationwide, which would power 200 million homes and compares with 13,000 megawatts of capacity owned by FirstEnergy Corp. But the plants, which operate just two months a year, are devouring the nation's annual natural gas supplies. Each one consumes about 1.6 billion BTUs an hour, enough to fuel 16,000 typical home furnaces. Gobbling up a fifth of the yearly inventories, the plants are meeting electricity demand but are keeping the natural gas supply line restricted and have prompted wild price swings in the heating fuel. Those swings have meant higher residential natural gas prices. And the situation seems unlikely to change for five to 10 years. The American Gas Association predicts consumption of gas by the electricity industry will hit 27% by 2010 and 33% by 2020. A spokesman for Dominion East Gas Co., a subsidiary of the company which owns the Troy Township plant, used a descriptive analogy. "If you have a milkshake and you share it with more people, you add more straws," Neil Durbin said. "But unless you put more milkshake into the cup you're going to have less milkshake to go around. That's what we have now." Such electricity-producing units, sometimes dubbed peaking plants or standby plants because their costs are high, typically run about 55 days a year. Still, they can sell that power to utilities during high-demand times, such as on extremely hot days when electricity-gobbling air conditioners are in heavy use. The changes brought about by operation of those plants is evident in what a metro Toledo customer of Columbia Gas of Ohio paid for natural gas in the past few years: 43 cents per 100 cubic feet in spring of 1999, 88 cents two years later, and 98 cents today. Gas-fired plants have changed the energy picture over the last several years. Natural gas consumption to make electricity has gone from 5.01 trillion cubic feet in 2000 to 5.22 trillion last year, although it peaked at 5.41 trillion in 2002, according to the U.S. Energy Information System. The new standby power plants are evident in Ohio's consumption. Such plants used 8.78 billion cubic feet in 2000, jumped to 21.47 billion in 2002, and now stand at 12.09 billion, federal records show. Electricity generation by these plants has dropped in Ohio - from 1.6 million megawatts in 2002 to 1.3 million megawatts last year - and it has risen nationally, to 618 million megawatts last year from 517 million in 2000. Some experts say too many of the plants were built in some areas. Still, their natural gas consumption was unanticipated five years ago, experts said. In part, that was because natural gas shortages had been forecast in previous decades and didn't materialize, so the industry was skeptical of prospects of shortages occurring after 2000, said Paul Wilkinson, vice president of policy analysis for the American Gas Association. The natural gas-fueled power plants have guzzled the surplus cushion of gas that historically was available prior to 1999. After 2000, the surplus started to disappear and new supplies were not being developed, partly because suppliers didn't believe the impact on supplies would be that great. In turn, the weather has affected natural gas use and has resulted in volatile wholesale prices. The Energy Information Administration's June natural gas price forecast is pessimistic. Even though stores of the fuel remain above the five-year average, a growing economy, regional power demands, and limited prospects for more gas production combine to possibly push prices to $7.50 per million BTUs by the end of the year. A report by a New York consulting firm, Pilot Energy Group, said that, if the weather this summer hits the 10-year average for temperatures, gas consumption will increase by 200 billion cubic feet. That's most of the 270 billion cubic feet in storage today, which is above the five-year average. "If there's a hot summer, you get a wild ride on prices later," said Joe O'Donnell, who is head of research for Aquila. He said part of the problem for natural gas consumers is that the commodity is so closely tied now to the price of oil. Crude oil is priced over $50 a barrel, partly because of unstable world supplies and also because of growing demand from China for oil. In turn, that causes more people to look at alternative fuels, like natural gas, and drives the price up as speculators gamble that gas demand will increase. "The normal cost of production of natural gas isn't $7 (per million BTUs). It's usually around $3.50. But with prices for crude so high, you have natural gas hovering halfway between the price of No. 2 and No. 6 fuel oil on the spot market," Mr. O'Donnell said. APL Declares Distribution of $.77 Per Common Unit for Q2 BusinessWire 6-13 Atlas Pipeline Partners announces that it has declared a quarterly distribution for the quarter ending June 30, 2005 in the amount of $.77 per common unit [up from 75 in Q1, 72 in Q4-03, 69 in Q3-04, and 63 in Q2-04]. This distribution will be paid on August 5, 2005 to unit holders of record at the close of business on June 30, 2005. Copano Agrees to Acquire ScissorTail Energy for $500 Million PRNewswire 6-20 Copano (CPNO) announced today that it has signed a definitive purchase agreement to acquire Tulsa-based ScissorTail Energy, LLC for $500 million in cash, subject to certain closing adjustments. Copano has also agreed to a $175 million private placement of equity to be completed at the closing of the acquisition. The balance of the consideration will be provided by underwritten debt financing as described below. The company anticipates the acquisition will close in the third quarter of 2005, subject to customary closing conditions including regulatory approvals. During the first quarter of 2005, ScissorTail, a provider of natural gas midstream services in Central and Eastern Oklahoma, achieved revenue and earnings before interest, taxes, depreciation and amortization ("EBITDA") of $73 million and $11.6 million, respectively, on natural gas throughput volumes of 121 MMcf/d. ScissorTail's assets consist primarily of 3,200 miles of gathering pipelines and three processing plants with current processing capacity of approximately 100 MMcf/d and expansion plans to increase capacity to 140 MMcf/d within the next nine months. Company Obtains Commitment of $175 Million Equity Private Placement in Conjunction With the Acquisition Institutional investors who have committed to participate in the $175 million private placement include Kayne Anderson MLP Investment Company, the Principal Strategies Group of Goldman, Sachs & Co., two funds managed by Tortoise Capital Advisors, LLC, two closed-end funds sub-advised by Fiduciary Asset Management, Alerian Capital Management, LLC, RCH Energy MLP Fund and two funds managed by Strome Investment Management, L.P. The equity securities to be sold in the private placement include approximately $55 million of Copano's Common Units and approximately $120 million of Class B Units. The Class B Units represent a new class of equity securities that is entitled to a special quarterly distribution equal to 110% of the distribution received by the Common Units, has no voting rights other than as required by law and is subordinated to the Common Units on dissolution and liquidation. The Class B Units may convert into Common Units if the conversion is approved by a vote of Copano's unitholders. Dividends in the Pipeline Elliott H. Gue, The Energy Strategist While oil seems to grab all the headlines, natural gas is the world's fastest-growing major source of energy. According to the Energy Information Administration (EIA), global natural gas consumption stood at about 90 trillion cubic feet in 2001 and is projected to reach more than 150 trillion cubic feet by 2025. The developing world will see the fastest growth in demand, but the US, too, will increasingly rely on natural gas for electricity generation. Already the globe's largest gas consumer, using about 20 trillion cubic feet of gas in 2001, the US is expected to consume nearly double that amount by 2025. This massive jump in consumption presents a number of problems. The first issue is finding new reserves of gas to fulfill demand. US domestic production has been woefully inadequate to meet demand since the late 1980s--the gap between demand and production has been and will continue to be filled by imports. Right now, the US imports most of its needs from Canada; in the future, liquefied natural gas (LNG) will account for an ever-larger share of consumption demand. The second problem is transportation. Domestically produced natural gas must be moved from wells to consumers. To make matters more difficult, many of the most productive wells are located deep underwater in the Gulf of Mexico or in remote land sites in the Rocky Mountains. And most wells located near major population centers have already been depleted--gas often has to move hundreds, even thousands, of miles from the well to consumers. And then there's imported gas. LNG may come into US ports by tanker ships, but when it's re-gasified it must be transported over land for hundreds or thousands of miles. Almost all of that natural gas consumed in the US is transported by pipeline. The US pipeline system has become increasingly complex in recent years to satisfy the need to carry gas from more distant regions to population centers. Booming demand for gas transportation is great news for investors. Third-party companies, other than those companies that explore for and produce gas, often own pipeline networks. Pipeline assets are extremely profitable and throw off tremendous amounts of free cash flow. And increased demand for natural gas spells continued growth for the best in the pipeline business. Better still, pipeline operators usually receive a fixed fee for transporting a given quantity of gas. That means that these companies are insulated from the sometimes wild price swings of natural gas - even relatively large shifts in commodity prices aren't likely to materially affect cash flows. Bottom line: The best in the business offer an opportunity to earn relatively safe, stable yields. Many pipeline companies in the US are organized as master limited partnerships (MLPs). MLPs pay out substantially all of their earnings to unitholders (the equivalent of shareholders for MLPs), so many are currently yielding around 6 percent. MLPs are simple to buy, trading right on the NYSE just like a stock. Pipeline companies get paid based on the volume of gas (or oil) pumped through their pipes. Therefore, it's better to own stocks with gathering and interstate pipelines located in regions with growing production. There are three main growth areas I see in the US gas market. The first is the deepwater Gulf of Mexico. Many of the largest oil and gas discoveries of the past two decades have occurred in very deep water. This region will account for a rising percentage of domestic production, and gas (and crude) from the region needs to be piped back onshore. Second, non-conventional reserves are growing quickly. Non-Conventional reserves are reservoirs of natural gas that were once too expensive to produce but new technology and higher gas prices are making them economical. The two most important non-conventional plays are the shales of Texas (particularly the Barnett Shale play) and the Rockies tight sands. Third, imported gas and LNG are growing rapidly. Companies located near major LNG facilities will see rising supplies of imported liquefied gas over the next few years that need to be transported. ENTERPRISE PRODUCTS PARTNERS (NYSE: EPD) covers all these bases. The company's largest business is NGL processing and transport, accounting for a little over half the company's annual revenues. Enterprise Products owns a total of 26 natural gas processing facilities. Some are so-called "straddle facilities" that perform additional processing on gas already in major pipeline systems. Other plants are designed to process raw gas directly from the gathering system. The company has 11 plants located in Louisiana and Mississippi that process gas from the deepwater Gulf of Mexico. And Enterprise also processes gas from pipelines and gathering systems in the Rockies and East Texas shale plays. According to the company, gas from the Gulf requires particularly heavy processing - the gas contains as much as 4 gallons of NGLs per million cubic feet of gas compared to just 1 or 1.5 from average gas produced onshore. In 2003, the company ran into big trouble because it was overexposed to commodity pricing volatility through its processing facilities. The reason is that the company had a lot of keep-whole contracts. These contracts involved Enterprise actually taking ownership of the NGLs in the gas stream. These contracts have been largely renegotiated. Enterprise is now normally compensated, based simply on the amount of gas processed. It doesn't take full ownership of the NGLs or gas itself. Alternatively, the company has some percent of liquids contracts that give it some exposure to NGL pricing, but not as much as under the keep-whole arrangements. The company also has over 13,000 miles of NGL pipes in service. Some of these are regulated meaning they charge regulated fees for transporting the NGLs. Most of this business is fee-based--Enterprise earns a fee for transporting NGLs with no direct commodity price risk. The company's second most important business is onshore pipelines, worth roughly 26 percent of revenues. This segment includes both interstate and intrastate pipelines and gathering systems; some of these systems are regulated and others, including most of the gathering systems, aren't. But in most cases, the company's pipeline revenues are fee-based--Enterprise receives a fee based on volume transported. This segment is particularly attractive given the location of the pipelines. The Texas Intrastate Pipeline pulls gas from the Gulf and regions such as the Barnett Shale play. And in a recent conference call Enterprise reported that some gas from LNG regasification facilities along the Texas Gulf Coast are already on its network. And the San Juan gathering system collects gas from New Mexico and Colorado, states with fast-growing unconventional gas plays. Finally - perhaps the most exciting aspect - is Enterprise Products' offshore business. This business accounts for only 12 percent of revenues right now, but there's significant room for growth. Enterprise owns a network of oil and gas pipelines in the Gulf of Mexico, as well as seven production platforms designed to gather gas and oil from offshore wells. Enterprise has also recently begun building an eight platform, the Independence Hub, to serve the deepwater Gulf. The floating semisubmersible platform (the platform will be partly sunk for stability) will be located in over 8,000 feet of water, the deepest such platform installed to date. The hub will be completed in late 2006 and is scheduled to start producing in 2007. The maximum daily production from the hub is about 850 million cubic feet per day and Enterprise has already signed up a number of companies to long-term, fee-based agreements to send gas through the hub. The stock's current yield stands just shy of 6 percent. Enterprise Plans To Construct New NGL Fractionator Business Wire 6-07 EPD today announced that it plans to proceed with the construction of a new natural gas liquids ("NGL") fractionator that will be located at the interconnection of the Mid-America Pipeline System (MAPL) and the Seminole Pipeline System (Seminole) near Hobbs, New Mexico. The new fractionator will be designed to handle up to 75,000 barrels per day of mixed NGLs which will be sourced from current and future processing plants located in the Rocky Mountain region, the Permian Basin, and in the Panhandle area of Texas and Oklahoma on MAPL. Additionally, Enterprise will construct a high rate purity ethane storage well near the new fractionator and reconfigure the interconnection between MAPL and Seminole. The project is estimated to cost approximately $130 million and is expected to be in operation by mid-2007. When the project is completed, the Hobbs fractionator will have access to the largest NGL market in the United States at Mont Belvieu, Texas through Seminole and the nation's second largest NGL market located at Conway, Kansas, as well as NGL consumers in the upper Midwest through MAPL. Enterprise also will have access to a growing local market which includes nearby refineries that consume NGLs as a blend stock to produce motor gasoline and increased propane demand in northern Mexico. This site also enhances Enterprise's value chain by adding fractionation capacity at a location that reduces the volume of mixed NGLs that the partnership may transport to Mont Belvieu on third party pipelines due to capacity constraints on Seminole, increases available capacity on Seminole and reduces the volumes Enterprise may offload to third party fractionators in the Mont Belvieu area. Enterprise Announces Investments in NGL Assets Business Wire 6-23 Enterprise [EPD] announced that it will make additional investments to expand its integrated network of natural gas liquids ("NGL") assets in the Permian basin and Mid-Continent region of the United States. These investments include the $144 million purchase of NGL underground storage and terminaling assets from a subsidiary of Ferrellgas, the expansion of the Mid-America Pipeline from Skellytown, Texas to Conway, Kansas and the purchase of the remaining interests in the Mid-America and Seminole Pipelines from an affiliate of Williams Companies. These investments and the previously announced project to construct a 75,000 barrel per day NGL fractionator and related storage facilities in Hobbs, Texas will strengthen Enterprise's business position in Conway, Kansas, the second largest NGL market in the United States, and the large Permian and Mid-Continent producing regions. It will also enhance Enterprise's capabilities to supply mixed NGLs and NGL purity products to Mont Belvieu, Texas. Each of these projects when completed will be immediately accretive to cash flow. "Upon completion of these projects over the next two years, Enterprise will have what we believe will be one of the strongest franchises linking the two largest NGL market hubs," said Robert Phillips, CEO of Enterprise. "In addition to broadening the array of fee-based services that we can provide to our customers, this system will also provide Enterprise with the opportunity to benefit from regional price differences for mixed NGLs and NGL products." "The expansion of the Mid-America pipeline from Skellytown to Conway will provide our partnership with commercial and operational flexibility to transport mixed NGLs and NGL purity products both north and south between our Hobbs location and the Conway market hub," continued Phillips. "This will integrate with and complement our existing portfolio of NGL assets and facilitate the partnership's ability to transport NGL purity products from the NGL fractionator that we are building at Hobbs to the Conway market hub." An affiliate of Enterprise has executed a definitive agreement with Ferrellgas to purchase three NGL underground storage facilities and four terminals for $144 million. The underground storage facilities are located in Kansas, Arizona and Utah and have a combined capacity of 6.1 million barrels. Approximately 70% of the aggregate storage capacity is leased to third party customers under fee-based contracts. The largest storage facility is located in Hutchinson, Kansas near the Conway NGL market hub. Enterprise plans to invest an additional $7 million to build a private 30-mile pipeline to connect the Hutchinson storage facility with the Mid-America hub and the large NGL storage complex at Conway. Enterprise will begin construction of this pipeline upon the closing of this transaction. The Arizona and Utah facilities provide strategic storage locations for refineries and wholesale propane customers in the western United States. This further complements Enterprise's West Coast wholesale marketing and fee-based refinery agency businesses. Also as part of this transaction, Enterprise has agreed to acquire four propane terminals in Minnesota and North Carolina. The Minnesota facilities are connected to Enterprise's Mid-America Pipeline while the terminals in North Carolina are connected by rail to the partnership's facilities on the Gulf Coast. These terminals provide above ground storage and delivery facilities for the distribution of propane by multi-state and independent retailers and large industrial consumers in the area. This transaction is expected to close in the third quarter of 2005, subject to regulatory approval. As part of the agreement, Ferrellgas has contracted with Enterprise to maintain a certain level of storage volume and terminal throughput for five years with the option to extend for an additional five years. Enterprise has begun engineering and design work to construct a 190-mile, 12-inch NGL pipeline that will have the capacity to move up to 67,000 barrels per day of mixed NGLs bi-directionally between Skellytown and Conway and an additional 35,000 barrels per day from Skellytown to Hobbs. Construction of the pipeline will begin in mid-2006 and is expected to be in service in the first quarter of 2007. Enterprise has exercised its option to acquire from an affiliate of Williams Companies a 2.0% indirect ownership interest in the Mid-America Pipeline and a 1.6% indirect ownership interest in the Seminole Pipeline for a total purchase price of $25 million. Upon completion of this transaction, which is expected by June 30, 2005, Enterprise will own 100% of the Mid-America Pipeline and 90% of the Seminole Pipeline. S&P Revises Enterprise Products Outlook to Stable Reuters 6-15 Standard & Poor's on Wednesday revised the outlook on Enterprise Products Partners LP's debt rating to stable from positive, citing the potential for the company to grow more aggressively than previously expected. An outlook revision to stable from positive indicates that a company is less likely to be upgraded over the next 24 months. An upgrade could have dramatically lowered Enterprise Products Partners' borrowing costs, because it would have raised the company to investment-grade status. Energy Transfer Partners Declares Increase in Distribution Business Wire 6-16 ETP announced today an increase in the quarterly cash distribution paid on the Partnership's outstanding limited partner units to $0.4875 per common unit (an annualized rate of $1.95 per common unit) for the quarter ended May 31, 2005. This latest increase represents an increase of $0.10 per common unit on an annualized basis. The Partnership's business operations continue to experience growth, and coupled with the recently announced expansion projects, have allowed the Partnership to meet its expectations. ETP Announces Acquisition of Four Retail Propane Companies Business Wire 6-28 Energy Transfer Partners announced that it has recently completed four acquisitions in its retail propane operation, Heritage Propane. The transactions were completed between May 24, 2005 and June 28, 2005. The retail propane businesses acquired are located in the states of California, Missouri, Texas and Maine. In total, operations were acquired in six locations, some of which blend with existing Heritage locations. The acquisitions represent an addition of over 7.2 million gallons annually to Heritage Propane. So far during fiscal year 2005, beginning Sept. 1, 2004, Heritage Propane has closed nine retail propane related acquisitions. Heritage has added nearly 19 million gallons annually and eight new district locations. Holly Energy Partners Acquires Pipelines from Holly Corp. PRNewswire 6-10 Holly Energy Partners (HEP) and Holly Corporation (HOC) announced that their Boards have approved a proposed transaction for Holly Energy to acquire the intermediate feedstock pipelines which connect Holly's Lovington, NM and Artesia, NM refining facilities. The transaction has also been approved by the Conflicts Committee of the Board of Directors of Holly Energy, which committee is comprised solely of independent outside directors of Holly Energy. The transaction is valued at $81.5 million, which will be paid at least 90% in cash and the remainder by transfer to Holly of HEP common units. Following the acquisition, HEP plans to expend approximately $3.5 million to expand the capacity of the pipelines to meet the needs of the previously announced expansion of Holly's Navajo Refinery. The feedstock pipelines consist of two parallel pipelines which originate in Lovington, NM and terminate at the Artesia refining facility. These pipelines consist of an 8-inch and a 10-inch pipeline. The pipelines are 65 miles in length, and have a current aggregate throughput capacity of 84,000 barrels per day (bpd). In addition, Holly has agreed to a 15-year pipelines agreement with a minimum annual volume commitment of 72,000 bpd on these pipelines, which transport crude oil, raw feedstocks, and partially finished refined products for Holly to the Artesia refinery. This acquisition is being made pursuant to an option to purchase these pipelines granted by Holly to Holly Energy at the time of Holly Energy's initial public offering in July 2004. Holly Energy Partners, L.P. Announces Pricing of Senior Notes PRNewswire 6-14 Holly Energy (HEP) announced that it has priced an offering of $35 million principal amount of its 6.25% senior notes due 2015. The offering has been made to qualified institutional buyers pursuant to Rule 144A and to certain persons in offshore transactions pursuant to Regulation S under the Securities Act of 1933. The offering is expected to close June 28, 2005, subject to customary closing conditions. The senior notes have been offered as additional debt securities under the indenture pursuant to which, on February 28, 2005, Holly Energy issued $150 million principal amount of 6.25% senior notes due 2015. The new notes and the notes previously issued under the indenture will be treated as a single class of debt securities. Like the previously issued notes, the new notes will be general unsecured obligations of Holly Energy. Holly Energy intends to use the proceeds of the offering to fund part of the cash portion of the $81.5 million consideration for Holly Energy's previously announced pending acquisition, which is currently expected to close before the end of July, of certain intermediate pipelines from Holly Corporation, or for general partnership purposes if the acquisition is not completed. MarkWest Receives Compliance Letter From AMEX PRNewswire 6-15 MarkWest Hydrocarbon today announced that it received a warning letter from the American Stock Exchange dated June 9, 2005, advising that the Company is not in compliance with AMEX requirements for failure to file with the SEC its Annual Report on Form 10-K for year ended December 31, 2004 and its Quarterly Report on Form 10-Q for Q1-05 by the prescribed filing deadlines. The compliance letter gives the Company until June 24, 2005 to submit a plan of action to bring the Company into compliance and until July 11, 2005 to regain compliance with AMEX requirements. The Company expects to submit its plan to AMEX on or before June 24, 2005, and otherwise comply with all requirements set forth by AMEX. MarkWest Reports Q1, Expands Capital Expenditures PRNewswire 6-23 MarkWest Energy Partners reported net income of $4.3 million for Q1, or $0.41 per diluted limited partner unit, compared to restated net income of $2.2 million, or $0.32 per diluted limited partner unit, for Q1-04. The Partnership previously announced that its financial statements for 02 and 03 and the first three quarters of 04 would be restated to reflect compensation expense allocated to it from the Partnership's parent company, MarkWest Hydrocarbon, for the sale of subordinated Partnership units and interests in the Partnership's general partner to certain of their employees and directors. The compensation expense affects reported earnings for these periods; however, the charge is entirely allocated to the GP and does not affect net income attributable to the LPs. Additionally, it is a non-cash item that did not affect management's determination of the Partnership's distributable cash flow for any period. The Partnership has recorded certain other adjustments to correct other errors in the financial statements for the first three quarters of 04, including adjustments to accruals for revenue and purchased product costs, adjustments for costs improperly capitalized as property, plant and equipment, adjustments to record capitalized interest on major construction projects in-process, adjustments to record as a financing lease a lease agreement previously entered into by an acquired business and adjustments to accrued property taxes. Other less significant adjustments and reclassifications were identified and recorded in conjunction with the restatement process. For the three months ended March 31, 2004, the restatement adjustments reduced net income by $0.4 million from $2.6 million to $2.2 million. On April 27, 2005, the board of of the GP of MarkWest declared the Partnership's quarterly cash distribution of $0.80 per unit for Q1-05. This distribution represents an increase of $0.02 per unit, or 3%, over the previous quarterly distribution. The first quarter distribution, totaling $9.8 million, was paid May 16, 2005, to unitholders of record on May 10, 2005. As a Master Limited Partnership, cash distributions to limited partners are largely determined based on Distributable Cash Flow (DCF). For the three months ended March 31, 2005, DCF was $12.3 million, compared to $6.0 million for the three months ended March 31, 2004. The improvement in Q1 results compared to 2004 was primarily attributed to: [1] The addition of our East Texas assets. We did not own these assets until Q3-04. [2] Improved gathering volumes on our Appleby and Western Oklahoma systems compared to the prior year. [3] Improved processing margins relative to the prior year. [4] Higher NGL and gas prices on our equity gallons and volumes. These positive factors were offset to some extent by: [1] Expenses incurred in our testing and repair program on the Appalachian Pipeline System (ALPS) as well as additional trucking costs for moving product while the line is out of service. The ALPS expenses will continue into Q2 and Q3 as we test and repair additional segments of the pipeline. [2] Reduced throughput volumes on our systems in Michigan. [3] Increased SG&A expense related to ongoing audit and compliance requirements. [4] Higher interest expense related to increased borrowing to fund acquisitions. The Partnership has also increased its capital expenditure budget for 2005 to approximately $75 million to fund organic growth opportunities, primarily in our Southwest business unit. A table has been included at the end of this press release providing additional details. The organic growth opportunities include additional expansions of our Foss Lake system in Oklahoma, and our Appleby and East Texas systems. These expansions are designed to support either new or existing gathering and/or processing contracts. All of these projects offer high return, low risk additions in key growth areas and should allow us to be even more competitive for future business. "New gas well completions in our East Texas and Western Oklahoma operating areas have surpassed our initial expectations for 2005 and we continue to see strong drilling plans from most of our producer clients," said Frank Semple, President and CEO. He added, "This $75 million of organic growth projects coupled with our recent $42 million acquisition of a 50% interest in the Starfish offshore pipeline system gives us over $117 million of new growth capital either planned or deployed so far this year. We also continue to evaluate several new acquisition and additional organic growth opportunities that could add to this total as the year progresses." Commenting on the first quarter, Mr. Semple went on to say, "Our first quarter financial results reflect the continued strong performance of our core assets. Net income and distributable cash flow nearly doubled compared to the same period last year. The resolution of our accounting and financial reporting issues have been a huge priority during the past several months, however, the end result is a stronger set of processes and capabilities to support our future growth. I am extremely pleased with the performance of our recent acquisitions, particularly the opportunities they are providing for high return internal expansion projects and I am very confident in our ability to continue to deliver strong results for our unitholders." Magellan Midstream Partners Announces Secondary Offering PRNewswire 6-06 MMP announced the sale by Magellan Midstream Holdings, L.P. ("Holdings"), the owner of the partnership's general partner, of 289,558 common units representing limited partner interests in the partnership in a secondary public offering. Wachovia is acting as the sole underwriter. The partnership will not receive any of the proceeds from this offering, and the partnership's number of outstanding units will remain unchanged. Following the offering, Holdings will continue to own 100% of the partnership's general partner interest but will no longer hold any limited partner units. Plains All American Raises Guidance PRNewswire 6-13 PAA announced today that it increased its guidance ranges for Q2 and full year 2005 and established guidance ranges for Q3 and Q4. "The Partnership's asset base and business model continue to perform well during volatile times in the crude oil markets," said Greg Armstrong, Chairman and CEO. "As a result, we have raised the midpoints of our second quarter 2005 guidance for adjusted EBITDA, adjusted net income, and adjusted net income per diluted unit to $110 million, $76.2 million and $1.03 per unit, respectively. This represents increases of 28%, 45% and 49%, respectively, over our previous guidance." S&P cuts TEPPCO Debt Ratings, Citing New Owners Reuters 6-14 Standard & Poor's on Tuesday cut TEPPCO debt ratings one step to the lowest investment-grade rating, citing an expected more aggressive growth strategy. S&P cut the oil transport company's corporate credit ratings to "BBB-minus" from "BBB." The outlook is stable. S&P said it reviewed the company after affiliates of EPCO Inc. acquired TEPPCO's general partner interest in February 2005. EPCO is a private unrated company, S&P added. This rating action affected about $1.5 billion of debt issued by TEPPCO, S&P said. TEPPCO Announces Sale of Additional 865,000 Units Business Wire 6-08 TPP today announced Citigroup Global Markets Inc. and UBS Securities LLC have purchased an additional 865,000 common units to cover over-allotments in connection with TEPPCO's equity offering that closed May 11, 2005. The purchase price was the offering price to the public of $41.75 per unit, less the underwriting discount. The sale brings the total number of common units outstanding to 69.9 million. The total net proceeds before expenses from the offering of 6,965,000 common units, including the additional common units sold through the over-allotment, were $279.2 million. Valero L.P. Receives Antitrust Clearance of Kaneb Merger Business Wire 6-15 Valero announced today that the U.S. FTC approved a consent decree for the proposed merger of Valero and Kaneb Services (KSL) and Kaneb (KPP). The merger is expected to close on 7-01-05. "We are pleased to receive FTC clearance and are excited about combining these two great organizations," said Curt Anastasio, president and CEO. "With our combined operations, we see outstanding opportunities to increase unitholder value through a wider array of growth opportunities than either partnership had independently. What's more, we expect that the merger will be accretive to cash flow and will position the partnership for further distribution increases. In fact, after closing on the transaction, management intends to recommend to our board of directors an increase in the annual distribution rate from $3.20 per unit to $3.42 per unit," he said. Monthly Rating Changes On 6-13 PAA was upgraded by Wachovia. On 6-09 coverage initiated by Stifel Nicolaus on SXL. On 6-06 PAA was downgraded by AG Edwards. On 6-02 PAA was upgraded by Smith Barney Citigroup. On 6-30, streetinsider.com reported that Oppenheimer initiated coverage on ETP with a buy rating; $36.00 price target. In the firm's opinion, current levels represent a good entry point given the company's ability to grow its distribution and operations. Data Contributions Those wishing to contributed data or articles to this site can contact me at factoids@flash.net. I will post and give credit to all contributors who wish to be acknowledged. I am especially thankful to anyone wishing to assist in giving DCF data. |