Cornerstone Announces Weather-Affected Second Quarter Earnings.

WATSONVILLE, Calif.--(BUSINESS WIRE)--Feb. 3, 1999--Cornerstone Propane GP, Inc. -- the managing general partner of Cornerstone Propane Partners, L.P. ("Cornerstone" or the "Partnership"), today announced its operating results for the quarter and six months ended December 31, 1998.

For the quarter ended December 31, 1998, net income was $4.5 million or $.21 per unit, compared to $9.5 million or $.54 per unit reported in the same period last year.

Temperatures across the United States during the second quarter were unseasonably mild, with conditions in the markets served by Cornerstone reporting average temperatures that were 16% warmer than last year and 13% warmer than normal. Information provided by the National Oceanic and Atmospheric Administration indicated that this past fall was the warmest on record since such reporting began in the 1890s.

These conditions had an adverse impact on the Partnership's normal winter heating sales volumes and earnings. Retail volumes for the quarter were 73.6 million gallons, down 1.3 million gallons (1.7%) from the same quarter last year, reflecting the impact of mild weather offset to some extent by the Partnership's added acquisition gallons. Revenues for the quarter were of $224.1 million, down $17.7 million (7.3%) from the same period in 1998.

A significant component of the revenue decrease was related to the lower product costs, which were passed along in part to customers in the form of reduced selling prices. Lower product costs reflect reduced demand from a mild fall heating season, combined with high national propane inventories.

The Partnership's second quarter operating cash flow, defined as Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA"), was $16.0 million versus $18.9 million in the same quarter last year, a decrease of $2.9 million (15.3%). This represents an EBITDA of approximately $.22 per retail gallon in the second quarter of 1999 as compared to $.25 per gallon for the second quarter of 1998. The impact of adverse weather conditions was offset to some extent by higher gross profit margins, which for the quarter averaged $.63 per retail gallon up 7% from $.58 in 1998.

In mid-December of 1998, the Partnership consummated the acquisition of Propane Continental, Inc., the nation's 19th largest propane company. This was a significant acquisition for the Partnership and combines two businesses with similar operational and service strategies. With this addition Cornerstone now has operations in thirty-four states and further strengthens Partnership's geographical diversity and future growth opportunities.

"I'm encouraged by the Partnership's management of margins at our service centers this year versus last year, especially in such a warm year," said Keith G. Baxter, CEO. "In addition, our aggressive internal and external growth continues to lead the industry and positions us beautifully to take advantage of a return to more seasonal weather."

Cornerstone Propane Partners, L.P. and subsidiaries condensed consolidated statements of operations for the quarter and six months ended December 31, 1998 and 1997 are presented below. Figures are in thousands of dollars except for per unit data.

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                  Cornerstone Propane Partners, L.P.
            Condensed Consolidated Statements of Operations
               Quarter and Six Months Ended December 31,

                             Quarter Ended        Six Months Ended
                       ---------------------   ---------------------
                        Dec. 31,    Dec. 31,    Dec. 31,     Dec. 31,
                         1998        1997        1998         1997

Revenues              $ 224,053   $ 241,778   $ 394,044    $ 393,935
Gross profit             46,261      43,693      72,960       67,995
Depreciation
 & amortization           5,687       4,307      10,809        8,901
Interest expense          5,793       5,036      10,926        9,817
Net income(loss)
 after taxes              4,457       9,502      (4,808)       1,808

Retail gallons
 sold                    73,631      74,969     113,009      116,245
EBITDA (a)            $  15,976   $  18,876   $  16,994    $  20,578
EBITDA per Unit       $     .78   $    1.08   $     .84    $    1.19
Net income(loss)
 per unit             $     .21   $     .54   $    (.23)   $     .10


(a)  EBITDA is defined as earnings before interest, income taxes,
     depreciation and amortization. EBITDA should not be considered as
     an alternative to net income or loss (as an indicator of
     operating performance) or as an alternative to cash flow (as a
     measure of liquidity or ability to service debt obligations) and
     it is not in accordance with nor superior to generally accepted
     accounting principles but provides additional information for
     evaluating the Partnership's ability to distribute the Minimum
     Quarterly Distribution (MQD).

     Cornerstone Propane Partners, L.P. and subsidiaries condensed
consolidated balance sheets as of December 31, 1998 and June 30, 1998
are presented below.

                  Cornerstone Propane Partners, L.P.
                 Condensed Consolidated Balance Sheets
               as of December 31, 1998 and June 30, 1998

                                     Dec. 31, 1998   June 30, 1998
Assets                                (unaudited)      (audited)
------                                -----------      ---------
Current Assets                           $ 95,844       $ 53,221
Property, plant and equipment,
net of accumulated depreciation           324,920        275,288
Other assets, net                         338,468        244,002
                                      -----------      ---------
Total Assets                             $759,232       $572,511

Liabilities and Partners' Capital
---------------------------------
Current Liabilities                      $ 94,967       $ 51,595
Long-term debt                            329,502        237,138
Other non-current liabilities               9,692          4,184
Partner's Capital Accounts                325,071        279,594
                                      -----------      ---------
Total Liabilities and
 Partners' Capital                       $759,232       $572,511

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Cornerstone Propane Partners, L.P. is a master limited partnership. The Partnership believes it is the nation's fourth largest retail propane marketer serving over 440,000 customers with sales of approximately 300 million retail gallons annually in 34 states through 310 customer service centers.

Through its Coast Energy Group division, the Partnership also markets over 570 million gallons of natural gas liquids annually to resellers and end users and averages approximately 285,000 mmbtu's per day in natural gas sales and 12,400 barrels per day in crude oil sales. For more information, please visit our website at www.cornerstonepropane.com.

The information presented herein may contain certain "forward-looking statements" within the meaning of the federal securities laws. The Partnership's actual future performance will be affected by a number of factors, risks and uncertainties, including without limitation, weather conditions, regulatory changes, competitive factors, the Partnership's success in dealing with the Year 2000 issues and the operations of vendors, suppliers and customers, many of which are beyond the Partnership's control. Future events and results may vary substantially from what the Partnership currently foresees, and there can be no assurance that the Partnership's actual results will not differ materially from its expectations. The Partnership undertakes no obligation to publicly release any revision to these forward-looking statements to reflect events or circumstances after the date of such statements or reflect the occurrence of anticipated or unanticipated events.