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 LOS ANGELES, Oct. 14 /PRNewswire/ -- Santa Fe Pacific Pipeline Partners L.P., (NYSE: SFL) announced third quarter 1993 net income, excluding litigation and environmental provisions, of $19.1 million, or $0.98 per unit, an 11 percent increase from adjusted net income of $17.2 million, or $0.88 per unit, for third quarter 1992. For the quarter, a $12 million provision for resolution of East Line litigation matters and a $15 million provision for environmental remediation costs were recorded. Including the litigation and environmental provisions, the third quarter net loss was $7.3 million, or $0.37 per unit.
 Excluding the provisions for litigation and environmental remediation, net income for the first three quarters of 1993 was $51.3 million, or $2.62 per unit, 6 percent higher than adjusted income for the 1992 period. Net income, including the provisions, for the nine months ended Sept. 30, 1993, was $24.9 million.
 The Partnership also announced a cash distribution of 70 cents on each preference and common unit for the third quarter of 1993. This is the 20th quarterly distribution paid by the Partnership and the 10th consecutive distribution of 70 cents per unit. The distribution is payable Nov. 15, 1993, to holders of record as of Oct. 29, 1993.
 Irvin Toole Jr., chairman, president and chief executive officer of the General Partner stated, "Third quarter earnings, excluding the provisions, were very strong. The charges for litigation and environmental remediation costs relate to cash expenditures expected during 1993 as well as a number of future years and therefore, are not expected to materially affect annual cash flows or the Partnership's levels of distributions."
 Revenues of $56.8 million were $3.4 million, or 6 percent, higher than the prior year quarter as a result of higher volumes, increased terminal charges and a longer average pipeline haul.
 Commercial volumes, which account for 96 percent of total volumes, increased 3.1 percent during the quarter, however, military volumes decreased 14 percent. In total, volumes increased 2.2 percent for the quarter.
 Operating expenses of $28.3 million, excluding provisions, increased $1.6 million, or 6 percent, over the prior year quarter primarily as a result of increased field operating expenses and litigation costs. Capital expenditures for the quarter were $4.6 million, an increase of $0.2 million over the same period last year. Full year capital spending is still expected to be approximately $21 million.
 As previously announced, the Partnership entered into a settlement with Navajo Refining Co. during the third quarter of 1993, whereby Navajo agreed to dismiss its pending civil litigation against the Partnership in New Mexico and to withdraw any challenge to the direction of flow of the partnership's six-inch pipeline between Phoenix and Tucson, Ariz., including any such challenge in a current proceeding before the Federal Energy Regulatory Commission ("FERC"). The partnership agreed to pay to Navajo an undisclosed sum of money over three years, and to provide additional pipeline capacity between El Paso, Texas, and Phoenix if certain events related to volumes and proration of pipeline capacity should occur within the next five years. Based on the terms of the Navajo settlement and the anticipated legal fees and other costs related to defense and resolution of the FERC proceeding and the remaining civil action brought by El Paso Refinery L.P., the Partnership recorded a $12 million charge to earnings during the third quarter of 1993. Cash outlays associated with this charge are expected to be incurred over a four-year period.
 Also during the third quarter of 1993, the Partnership completed a previously announced re-evaluation of its environmental remediation liabilities and, as a result, increased the existing reserve for environmental remediation costs by recording a $15 million charge to earnings. The charge reflects the estimated cost of completing a number of remediation projects, as well as the cost of performing preliminary environmental investigations at several locations. The cash expenditures relating to the charge are expected to be made during the next 10 years, with most of the expenditures occurring over the next five years. The Partnership previously recorded a $10 million provision in the third quarter of 1992 for remediation costs at Sparks, Nev., and two sites in California.
 Santa Fe Pacific Pipeline Partners L.P. is the largest independent refined petroleum products pipeline in the United States in terms of revenue generated. The Partnership serves six Western states with approximately 3,300 miles of common carrier pipeline and 14 truck loading terminals.
 Consolidated Statement of Income
 and Operating Highlights
 (In thousands, except per unit and per barrel amounts)
 Three months ended Nine months ended
 Sept. 30, Sept. 30,
 1993 1992 1993 1992
 Operating revenues
 Trunk revenues $44,573 $41,972 $128,177 $120,232
 Storage and
 terminaling revenues 9,743 8,955 27,872 25,720
 Other revenues 2,462 2,455 7,625 7,335
 Total operating
 revenues 56,778 53,382 163,674 153,287
 Operating expenses
 Field operating
 expenses 8,743 7,753 26,560 23,217
 General and
 expenses 5,589 4,647 16,953 14,505
 Facilities costs 4,695 4,963 14,751 14,357
 Depreciation and
 amortization 4,672 4,597 14,221 13,608
 Power cost 5,540 5,697 13,891 13,604
 Provisions for
 environmental and
 litigation costs 27,000 10,000 27,000 10,000
 Product (gains)
 losses (939) (975) (2,089) (2,133)
 Total operating
 expenses 55,300 36,682 111,287 87,158
 Operating income 1,478 16,700 52,387 66,129
 Interest expense 9,347 9,340 27,711 27,574
 Other income, net 388 165 716 646
 Net income (loss)
 before minority
 interest and
 cumulative effect
 of accounting change (7,481) 7,525 25,392 39,201
 Less minority interest
 in net (income) loss
 before cumulative
 effect of
 accounting change 155 (156) (527) (813)
 Net income (loss) before
 cumulative effect of
 accounting change (7,326) 7,369 24,865 38,388
 Cumulative effect of
 change in accounting
 for postretirement and
 benefits, net of
 minority interest --- --- --- 16,407
 Net income (loss) ($7,326) $7,369 $24,865 $21,981
 Net income excluding
 provisions and
 cumulative effect of
 accounting change $19,114 $17,164 $51,305 $48,181
 Per unit amounts(a)
 Net income (loss)
 before cumulative
 effect of
 accounting change ($0.37) $0.38 $1.27 $1.97
 Cumulative effect of
 accounting change --- --- --- (0.84)
 Net income (loss)
 per unit ($0.37) $0.38 $1.27 $1.13
 Net income per unit
 excluding provisions
 and cumulative effect
 of accounting change $0.98 $0.88 $2.62 $2.46
 Cash distributions
 declared per unit $0.70 $0.70 $2.10 $2.10
 Operating Data:
 Barrels delivered 85,642 83,830 245,836 241,492
 Barrel miles (millions) 11,989 11,528 34,398 33,625
 Total revenue
 per barrel $0.66 $0.64 $0.67 $0.63
 (a) Based on 19,148,148 preference and common units outstanding during all periods presented.
 Condensed Consolidated Balance Sheet
 (In thousands)
 Sept. 30, Dec. 31,
 1993 1992
 Current assets $80,473 $58,389
 Property, plant and equipment, net 621,550 618,098
 Other assets 8,334 8,365
 Total assets $710,357 $684,852
 Liabilities and partners' capital:
 Current liabilities $49,248 $21,593
 Long-term debt 355,000 355,000
 Other long-term liabilities 42,172 27,763
 Minority interest 1,143 1,486
 Partners' capital 262,794 279,010
 Total liabilities and partners' capital $710,357 $684,852
 Condensed Consolidated Statement of Cash Flows
 Three Months Ended Nine Months Ended
 Sept. 30, Sept. 30,
 1993 1992 1993 1992
 Cash flows from
 operating activities:
 Net income (loss)
 before cumulative
 effect of accounting
 change ($7,326) $7,369 $24,865 $38,388
 Depreciation, working
 capital and other
 adjustments 42,892 27,161 49,613 37,238
 Net cash provided by
 operating activities 35,566 34,530 74,478 75,626
 Cash flows from
 investing activities:
 Capital expenditures (4,554) (4,367) (16,137) (23,021)
 Other 47 504 243 777
 Net cash used by
 investing activities (4,507) (3,863) (15,894) (22,244)
 Cash flows from
 financing activities:
 Distributions to
 partners and minority
 interest (13,984) (13,984) (41,952) (41,952)
 Increase in
 cash and cash
 equivalents 17,075 16,683 16,632 11,430
 Cash and cash
 Beginning of period 26,913 21,391 27,356 26,644
 End of period $43,988 $38,074 $43,988 $38,074
 -0- 10/14/93
 /CONTACT: Thomas L. Lambert, manager, investor relations of Santa Fe Pacific Pipeline Partners, 213-486-7766/

CO: Santa Fe Pacific Pipeline Partners L.P. ST: California IN: OIL SU: ERN DIV

JB-LM -- LA033 -- 2482 10/14/93 17:49 EDT
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Publication:PR Newswire
Date:Oct 14, 1993

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