Pacific Energy Partners, L.P. Reports Record Earnings for First Quarter 2004.Business Editors LONG BEACH, Calif.--(BUSINESS WIRE)--April 28, 2004 Pacific Energy Partners, L.P. (NYSE NYSE See: New York Stock Exchange :PPX PPX Parallel Port Multiplexor PPX Popular Science Predictions eXchange (Popular Science magazine) PPX Point to Point Switching PPX Posture Planning Express ) announced net income for the three months ended March 31, 2004, of $8.1 million, or $0.31 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. limited partner unit compared to $6.1 million, or $0.29 per limited partner unit in the first quarter of 2003. The first quarter 2004 results are the highest quarterly earnings for the Partnership since its July July: see month. 2002 initial public offering. The results of the current quarter reflect the benefit of the Pacific Terminals storage and distribution system, which was acquired on July 31, 2003, and higher volumes and revenue on the Rocky Mountain pipelines, partially offset by lower volumes and revenue from the West Coast pipelines, lower margins in the gathering and blending blend v. blend·ed or blent , blend·ing, blends v.tr. 1. To combine or mix so that the constituent parts are indistinguishable from one another: operation, and increased maintenance expenses. On April 19, 2004, the Partnership announced a cash distribution of $0.4875 per unit for the first quarter of 2004, unchanged from the prior quarter but 5.4 percent higher than in the first quarter of 2003. The distribution will be paid on May 14, 2004, to record holders as of April 30, 2004. Distributable cash flow available to the limited partners' interest for the first quarter of 2004 was $13.5 million. On a weighted average and diluted basis, there were 25,149,000 limited partner units outstanding during the first quarter of 2004, approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 20 percent more units outstanding than in the first quarter of 2003, due to the August 2003 equity financing Equity Financing The act of raising money for company activities by selling common or preferred stock to individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. associated with the Pacific Terminals acquisition. Irvin Toole, Jr., President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , said, "We are pleased to report record first quarter earnings. The Pacific Terminals storage and distribution assets that were acquired last July have demonstrated their value this quarter, with income contribution more than offsetting the impact of lower West Coast pipeline volumes resulting primarily from unusually high levels of refinery maintenance in the Los Angeles Basin The Los Angeles Basin is the coastal sediment-filled plain located between the peninsular and transverse ranges in southern California in the United States containing the central part of the city of Los Angeles as well as its southern and southeastern suburbs (both in Los Angeles . We continue to expect net income per unit for 2004 to be in the range of $1.30 to $1.40 per limited partner unit and are forecasting net income for the second quarter of 2004 to be in the range of $0.26 to $0.30 per unit." Mr. Toole continued, "Regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. approvals for the previously announced Rangeland Pipeline acquisition have been received, and closing is expected to occur in May 2004. We also expect to sign a binding purchase and sale agreement for the Mid Alberta Alberta (ălbûr`tə), province (2001 pop. 2,974,807), 255,285 sq mi (661,188 sq km), including 6,485 sq mi (16,796 sq km) of water surface, W Canada. Pipeline assets during the same time period." OPERATING RESULTS BY SEGMENT WEST COAST OPERATIONS Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. was $12.3 million for the three months ended March 31, 2004 compared to $10.7 million in the corresponding period in 2003. This increase of 15 percent was primarily due to the income earned by Pacific Terminals, which acquired the EPTC EPTC S-ethyldipropylthiocarbamate; a thiocarbamate herbicide. storage and distribution assets on July 31, 2003, partially offset by lower revenue due to reduced pipeline volumes. Pipeline volumes for the three months ended March 31, 2004 were 16 percent lower compared to the corresponding period in 2003 primarily due to extensive maintenance downtime The time during which a computer is not functioning due to hardware, operating system or application program failure. at Los Angeles Basin refineries. Gathering and blending margins were also lower than in the prior year quarter, in part due to reduced demand for blended blend v. blend·ed or blent , blend·ing, blends v.tr. 1. To combine or mix so that the constituent parts are indistinguishable from one another: crude oil caused by new California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). gasoline gasoline or petrol, light, volatile mixture of hydrocarbons for use in the internal-combustion engine and as an organic solvent, obtained primarily by fractional distillation and "cracking" of petroleum, but also obtained from natural gas, by specifications. ROCKY MOUNTAIN OPERATIONS Operating income was $3.6 million for the three months ended March 31, 2004, compared to $3.3 million in the corresponding period in 2003. This increase of 9 percent was the result of higher pipeline volumes and revenue partially offset by moderately higher expenses for maintenance and power. The $3 million expansion of pipeline capacity to Salt Lake City remains on track to become operational during the second quarter of 2004. CAPITAL EXPENDITURES Capital expenditures were $2.4 million for the quarter ended March 31, 2004, of which $0.5 million was for sustaining capital projects. Pacific Energy Partners, L.P. is a Delaware Delaware, state, United States Delaware (dĕl`əwâr, –wər), one of the Middle Atlantic states of the United States, the country's second smallest state (after Rhode Island). limited partnership headquartered in Long Beach, Calif. Pacific Energy Partners is engaged principally in the business of gathering, transporting, storing and distributing crude oil and other related products in California and the Rocky Mountain region The Rocky Mountain Region is a floristic region within the Holarctic Kingdom in western North America (Canada and the United States) delineated by Armen Takhtajan and Robert F. Thorne. . Pacific Energy Partners generates revenues primarily by transporting crude oil on its pipelines and by leasing capacity in its storage facilities. Pacific Energy Partners also buys, blends and sells crude oil, activities that are complementary to its pipeline transportation business. We will host a conference call at 2:00 p.m. ET on Thursday Thursday: see week. , April 29, 2004, to discuss the results of the first quarter of 2004. Please join us at www.PacificEnergyPartners.com for the live broadcast. The call, with questions and answers, will continue to be available on our web site following the live discussion. This news release includes "forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. " statements within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact included or incorporated herein may constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. . Although the Partnership believes that the expectations reflected in the forward-looking statements are reasonable, it can give no assurance that such expectations will prove to be correct. The forward-looking statements involve risks and uncertainties that affect the Partnership's operations and financial performance. Among the factors that could cause results to differ materially are those risks discussed in the Partnership's filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December December: see month. 31, 2003.
PACIFIC ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands)
For the Three
Months Ended
March 31,
2004 2003
Operating revenues: ---- ----
Pipeline transportation revenue $24,727 $25,320
Storage and terminaling revenue 10,123 --
Crude oil sales, net of purchases 4,812 5,630
Net revenues 39,662 30,950
Expenses:
Operating 18,917 12,648
Transition costs -- 397
General and administrative 3,854 3,982
Depreciation and amortization 5,242 4,181
Total expenses 28,013 21,208
Share of net income of Frontier 393 341
Operating income 12,042 10,083
Net interest expense (4,107) (3,990)
Other income 142 35
Net income $8,077 $6,128
Weighted average units outstanding:
Basic 24,999 20,930
Diluted 25,149 21,000
Calculation of unitholders' interest in net income
for the three months ended March 31, 2004 and 2003:
---------------------------------------------------
Net income $8,077 $6,128
Less: General Partner's interest (162) (123)
Unitholders' interest in net income $7,915 $6,005
Basic net income per unit $0.32 $0.29
Diluted net income per unit $0.31 $0.29
PACIFIC ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND OPERATING HIGHLIGHTS BY SEGMENT
Three Months Ended March 31, 2004 and 2003
(Unaudited)
(In thousands)
Rocky Intersegment and
West Coast Mountain Intrasegment
Operations Operations Eliminations(1) Total
---------- ---------- -------------- -----
Three Months Ended March 31, 2004:
Segment revenue:
Pipeline transportation
revenue $15,691 $10,543 $(1,507) $24,727
Storage and
terminaling
revenue 10,223 -- (100) 10,123
Crude oil sales,
net of purchases 4,812 -- 4,812
Net revenue 30,726 10,543 39,662
Segment expenses:
Operating expense 14,706 5,818 (1,607) 18,917
Transition costs -- -- --
Depreciation and
amortization 3,765 1,477 5,242
Total expenses 18,471 7,295 24,159
Share of net income
of Frontier -- 393 393
Operating income $12,255 $3,641 $15,896
Operating Data (barrels per day, in thousands)
Line 2000 and Line 63
pipeline volume 133.6
Salt Lake City Core system volume 62.0
Western Corridor system volume 16.0
AREPI pipeline volume 43.9
Frontier pipeline volume 43.9
Three Months Ended March 31, 2003:
Segment revenue:
Pipeline transportation
revenue $17,334 $9,399 $(1,413) $25,320
Storage and
terminaling
revenue -- -- --
Crude oil sales,
net of purchases 5,630 -- 5,630
Net revenue 22,964 9,399 30,950
Segment expenses:
Operating expense 9,419 4,642 (1,413) 12,648
Transition costs -- 397 397
Depreciation and
amortization 2,822 1,359 4,181
Total expenses 12,241 6,398 17,226
Share of net income
of Frontier -- 341 341
Operating income $10,723 $3,342 $14,065
Operating Data (barrels per day, in thousands)
Line 2000 and Line 63
pipeline volume 159.3
Salt Lake City Core system volume 64.8
Western Corridor system volume 13.4
AREPI pipeline volume 35.5
Frontier pipeline volume 35.3
(1) Eliminations are required to account for revenue on services
provided by one subsidiary to another.
PACIFIC ENERGY PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, Dec. 31,
2004 2003
---- ----
(Unaudited)
Assets
Current assets $97,074 $68,796
Property and equipment, net 565,285 567,954
Investment in Frontier Pipeline Company 6,897 6,886
Other assets 16,284 6,567
Total assets $685,540 $650,203
Liabilities and Partners' Capital
Current liabilities $45,838 $49,991
Long-term debt 225,000 298,000
Other long term liabilities 10,832 7,145
Undistributed employee long-term incentive plan 1,397 738
Accumulated other comprehensive loss (9,844) (5,608)
Partners' capital 412,317 299,937
Total liabilities and
partners' capital $685,540 $650,203
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
For the Three
Months Ended
March 31,
2004 2003
---- ----
Cash flows from operating activities:
Net income $8,077 $6,128
Depreciation, amortization, non-cash employee
compensation under long-term incentive plan
and Frontier adjustment 6,108 6,142
Working capital adjustments (847) (6,376)
Net cash provided by operating activities 13,338 5,894
Cash flows from investing activities:
Acquisitions (9,920) --
Net additions to property and equipment
and other (2,413) (513)
Net cash used in investing activities (12,333) (513)
Cash flows from financing activities:
Issuance of common units, net of fees
and offering expenses 114,250 --
Capital contribution from the general partner 2,443 --
Proceeds from note payable to bank 16,500 --
Repayment of long-term debt (89,500) --
Deferred financing costs (175) --
Distributions to partners (12,390) (9,878)
Net cash provided by (used in) financing
activities 31,128 (9,878)
Net increase (decrease) in cash and cash equivalents 32,133 (4,497)
Cash and cash equivalents, beginning of period 9,699 23,873
Cash and cash equivalents, end of period $41,832 $19,376
PACIFIC ENERGY PARTNERS, L.P.
RECONCILIATION OF OPERATING INCOME BY SEGMENT TO CONDENSED
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands)
For the Three
Months Ended
March 31,
2004 2003
Operating income by segment: ---- ----
West Coast $12,255 $10,723
Rocky Mountain 3,641 3,342
15,896 14,065
General expenses and other income/(expense):(1)
General and administrative expense (3,854) (3,982)
Net interest expense (4,107) (3,990)
Other income 142 35
Net income $8,077 $6,128
CALCULATION OF DISTRIBUTABLE CASH FLOW(2)
(Unaudited)
(In thousands)
For the Three
Months Ended
March 31,
2004 2003
---- ----
Net income $8,077 $6,128
Plus: depreciation and amortization 5,242 4,181
Plus: amortization of debt issue costs 311 270
Plus: non-cash employee compensation under
long-term incentive plan 659 1,034
Less: sustaining capital expenditures (547) (324)
Distributable Cash Flow 13,742 11,289
Less: General Partner's interest (275) (226)
Unitholders' interest in Distributable Cash Flow $13,467 $11,063
(1) General and administrative expenses, net interest expense and
other income are not allocated among the West Coast and Rocky
Mountain operations.
(2) Distributable Cash Flow provides additional information for
evaluating our ability to make the minimum quarterly distribution
and is presented solely as a supplemental measure. You should not
consider Distributable Cash Flow as an alternative to net income,
income before taxes, cash flow from operations, or any other
measure of financial performance presented in accordance with
accounting principles generally accepted in the United States. Our
Distributable Cash Flow may not be comparable to similarly titled
measures of other entities. Additional information regarding
distributable cash flow is included in our annual report on Form
10-K for the year ended December 31, 2003.
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