Magellan Midstream Partners (MMP) 8-K Magellan Midstream Partners Reports Increased Quarterly Earnings

Exhibit 99.1

NYSE: MMP

Date:	July 27, 2005
Contact:	Paula Farrell
	(918) 574-7650
	paula.farrell@magellanlp.com

Magellan Midstream Partners Reports Increased Quarterly Earnings

TULSA, Okla. – Magellan Midstream Partners, L.P. (NYSE: MMP) today reported increased operating profit, net income and net income per limited partner unit for second-quarter 2005 compared to second-quarter 2004. The partnership also reported record quarterly transportation barrels shipped and inland terminal throughput during the current period.

Second-quarter 2005 operating profit was $51.4 million compared to $43.5 million for second-quarter 2004, representing an 18% increase. Net income increased to $39.0 million during second-quarter 2005 from $18.5 million in the corresponding 2004 period, a 111% increase. Net income per limited partner unit was 48 cents during second-quarter 2005 compared to 31 cents during 2004, for a 55% increase.

“Our second-quarter financial results were significantly better than last year primarily due to positive contributions from the pipeline system we acquired in Oct. 2004 and from debt refinancing costs that negatively impacted the 2004 period,” said Don Wellendorf, chief executive officer. “Magellan’s asset portfolio continues to generate strong earnings and cash flows, allowing us to increase our distribution again this quarter while maintaining sufficient headroom to provide future distribution growth potential.”

An analysis of variances by segment comparing second-quarter 2005 to second-quarter 2004 is provided below based on operating margin, a financial measure that reflects operating profit before general and administrative (G&A) expenses and depreciation and amortization:

Petroleum products pipeline system. Pipeline operating margin was $60.0 million, an increase of $10.6 million. Operating results from the pipeline system acquired during Oct. 2004 and additional equity earnings from our investment in the Osage pipeline were the primary contributors to the increase. Environmental expenses related to a May 2005 pipeline leak negatively impacted the current quarter.

Petroleum products terminals. Terminals operating margin was $18.2 million, an increase of $3.1 million, and represented record quarterly financial results for this segment. The 2005 period benefited from higher utilization and rates at the partnership’s marine terminals and the addition of the East Houston facility as part of the pipeline system acquisition in Oct. 2004. Further, record throughput at the partnership’s inland terminals and higher ancillary revenues benefited second-quarter 2005.

More

Page 2/2 Magellan Midstream Partners Reports Increased Quarterly Earnings

Ammonia pipeline system. Ammonia operating margin was unchanged between periods at $1.5 million. Incremental revenue from increased transportation volume during the current period was offset by higher system integrity expenses.

Depreciation, amortization and interest expenses increased between periods, all principally due to acquisitions completed during 2004. G&A expense also increased, primarily due to the impact of the partnership’s higher unit price which increases expenses related to its equity-based incentive program.

Second-quarter 2004 was burdened with $16.7 million of net refinancing costs that did not occur during the 2005 period.

Management continues to anticipate net income per limited partner unit of $2.05 for the full year, while remaining committed to its goal of raising distributions by at least 10% annually. Net income per unit for third-quarter 2005 is currently expected to be approximately 47 cents.

An analyst call with management regarding second-quarter 2005 financial results is scheduled today at 1:30 p.m. Eastern. To participate, dial (800) 289-0496 and provide code 7826471. Investors also may listen to the call via the partnership’s web site athttp://www.magellanlp.com/investors/calendar.asp.

Audio replays of the conference call will be available from 3:30 p.m. Eastern today through midnight on August 2. To access the replay, dial (888) 203-1112 and provide code 7826471. The replay also will be available athttp://www.magellanlp.com.

Management believes that investors benefit from having access to the same financial measures being utilized by the partnership. As a result, this news release includes a discussion of operating margin, which is an important performance measure used by management to evaluate the economic success of the partnership’s operations. Operating margin is a non-GAAP measure that reflects operating profit before G&A expenses and depreciation and amortization. A reconciliation of operating margin to operating profit accompanies this release.

About Magellan Midstream Partners, L.P.

Magellan Midstream Partners, L.P. is a publicly traded partnership formed to own, operate and acquire a diversified portfolio of energy assets. The partnership primarily transports, stores and distributes refined petroleum products. More information is available athttp://www.magellanlp.com.

###

Portions of this document may constitute forward-looking statements as defined by federal law. Although the partnership believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership’s filings with the Securities and Exchange Commission.

MAGELLAN MIDSTREAM PARTNERS, L.P.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per unit amounts)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2005			2004			2005
Transportation and terminals revenues	$	103,536		$	122,889		$	192,466		$	232,965
Product sales revenues		38,521			132,530			82,735			280,620
Affiliate management fee revenue		163			167			163			334
Total revenues		142,220			255,586			275,364			513,919
Costs and expenses:
Operating		42,911			51,800			79,911			96,055
Environmental		18,123			1,772			42,328			2,972
Environmental reimbursements		(17,909	)		—			(41,324	)		—
Product purchases		32,382			122,348			70,881			253,659
Depreciation and amortization		9,822			13,931			19,344			26,901
Affiliate general and administrative		13,507			15,134			26,394			30,260
Total costs and expenses		98,836			204,985			197,534			409,847
Equity earnings		148			804			268			1,322
Operating profit		43,532			51,405			78,098			105,394
Interest expense		8,704			12,864			17,219			25,282
Interest income		(1,000	)		(1,157	)		(1,446	)		(2,142	)
Debt prepayment premium		12,666			—			12,666			—
Write-off of unamortized debt placement costs		5,002			—			5,002			—
Debt placement fee amortization		656			731			1,338			1,463
Other income		(953	)		(1	)		(953	)		(300	)
Net income	$	18,457		$	38,968		$	44,272		$	81,091
Allocation of net income:
Limited partners’ interest	$	17,465		$	32,037		$	41,339		$	68,014
General partner’s interest		992			6,931			2,933			13,077
Net income	$	18,457		$	38,968		$	44,272		$	81,091
Basic net income per limited partner unit	$	0.31		$	0.48		$	0.75		$	1.02
Weighted average number of limited partner units outstanding used for basic net income per unit calculation		55,594			66,361			55,190			66,361
Diluted net income per limited partner unit	$	0.31		$	0.48		$	0.75		$	1.02
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation		55,720			66,604			55,298			66,536

MAGELLAN MIDSTREAM PARTNERS, L.P.

OPERATING STATISTICS

	Three Months Ended June 30,				Six Months Ended June 30,
	2004		2005		2004		2005
Petroleum products pipeline system:
Transportation revenue per barrel shipped (dollars per barrel)	$	1.002	$	1.015	$	0.991	$	1.010
Transportation barrels shipped (million barrels)		63.2		75.0		115.4		139.1
Petroleum products terminals:
Marine terminal average storage capacity utilized per month (million barrels)		15.6		16.7		15.6		16.6
Marine terminal throughput (million barrels)		5.7		13.5		11.2		25.9
Inland terminal throughput (million barrels)		26.1		28.9		46.6		55.0
Ammonia pipeline system:
Volume shipped (thousand tons)		162		186		381		338

MAGELLAN MIDSTREAM PARTNERS, L.P.

OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT

(Unaudited, in thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2005			2004			2005
Petroleum products pipeline system:
Transportation and terminals revenues	$	77,726		$	94,784		$	142,362		$	177,439
Less: Operating expenses		(33,557	)		(41,745	)		(62,013	)		(76,874	)
Environmental expenses		(14,549	)		(1,688	)		(38,437	)		(2,530	)
Add: Environmental expense reimbursement		14,469			—			37,573			—
Transportation and terminals margin		44,089			51,351			79,485			98,035
Product sales revenues		36,068			129,199			78,253			274,619
Less: Product purchases		(31,083	)		(121,522	)		(68,458	)		(251,647	)
��
Product margin		4,985			7,677			9,795			22,972
Add: Affiliate management fee revenue		163			167			163			334
Equity earnings		148			804			268			1,322
Operating margin	$	49,385		$	59,999		$	89,711		$	122,663
Petroleum products terminals:
Transportation and terminals revenues	$	22,978		$	25,506		$	43,813		$	51,016
Less: Operating expenses		(8,996	)		(9,639	)		(17,355	)		(18,821	)
Environmental expenses		(2,689	)		(52	)		(2,839	)		(90	)
Add: Environmental expense reimbursement		2,689			—			2,839			—
Transportation and terminals margin		13,982			15,815			26,458			32,105
Product sales revenues		2,453			3,741			4,482			6,411
Less: Product purchases		(1,299	)		(1,364	)		(2,423	)		(2,675	)
Product margin		1,154			2,377			2,059			3,736
Operating margin	$	15,136		$	18,192		$	28,517		$	35,841
Ammonia pipeline system:
Total revenues	$	2,985		$	3,506		$	6,585		$	6,207
Less: Operating expenses		(1,304	)		(2,012	)		(2,285	)		(3,414	)
Environmental expenses		(885	)		(32	)		(1,052	)		(352	)
Add: Environmental expense reimbursement		751			—			912			—
Operating margin	$	1,547		$	1,462		$	4,160		$	2,441
Segment operating margin	$	66,068		$	79,653		$	122,388		$	160,945
Add: Allocated corporate depreciation costs		793			817			1,448			1,610
Total operating margin		66,861			80,470			123,836			162,555
Less: Depreciation and amortization		(9,822	)		(13,931	)		(19,344	)		(26,901	)
Affiliate general and administrative		(13,507	)		(15,134	)		(26,394	)		(30,260	)
Total operating profit	$	43,532		$	51,405		$	78,098		$	105,394

Note: Amounts may not sum to figures shown on the consolidated statement of income due to intersegment eliminations and allocated corporate depreciation costs.

MAGELLAN MIDSTREAM PARTNERS, L.P.

ALLOCATION OF NET INCOME

(In thousands, unless otherwise noted)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2004			2005			2004			2005
Net income	$	18,457		$	38,968		$	44,272		$	81,091
Direct charges to the general partner:
Transition charges		195			—			823			—
Reimbursable general and administrative costs		2,425			601			3,562			1,644
Previously indemnified environmental charges		—			163			—			624
Depreciation charges associated with previously indemnified capital costs		—			8			—			13
Other		(562	)		—			(562	)		—
Total direct charges to general partner		2,058			772			3,823			2,281
Income before direct charges to the general partner		20,515			39,740			48,095			83,372
General partner’s share of income		14.87	%		19.39	%		14.05	%		18.42	%
General partner’s allocated share of net income before direct charges		3,050			7,703			6,756			15,358
Direct charges to general partner		2,058			772			3,823			2,281
Net income allocated to general partner	$	992		$	6,931		$	2,933		$	13,077
Net income	$	18,457		$	38,968		$	44,272		$	81,091
Less: net income allocated to general partner		992			6,931			2,933			13,077
Net income allocated to limited partners	$	17,465		$	32,037		$	41,339		$	68,014