Magellan Midstream Partners (MMP) 8-K Magellan Midstream Partners Announces Third-Quarter Financial Results

Exhibit 99.1

NYSE: MMP

Date:	Nov. 1, 2006
Contact:	Paula Farrell
	(918) 574-7650
	paula.farrell@magellanlp.com

Magellan Midstream Partners Announces Third-Quarter Financial Results

Record Quarterly Volumes Generated by Petroleum Products Pipeline and Inland Terminals

TULSA, Okla. – Magellan Midstream Partners, L.P. (NYSE: MMP) today reported third-quarter 2006 operating profit of $44.4 million compared to $53.7 million for third quarter 2005. For the nine months ended Sept. 30, 2006, operating profit grew to $178.7 million from $159.1 million in the comparable 2005 period.

Net income was $30.6 million during third quarter 2006 versus $40.8 million in third quarter 2005. For the nine months ended Sept. 30, 2006, net income grew to $136.3 million from $121.8 million in the corresponding 2005 timeframe.

“The performance of Magellan’s core operating assets continued to be excellent, setting record quarterly volumes for our petroleum products pipeline system and inland terminals,” said Don Wellendorf, chief executive officer. “However, our strong operational performance was offset by the impact on product margins of the recent sharp downturn in petroleum prices. Even with the impact of declining product prices in the quarter, our cash-flow generation continues on a record-setting pace for the year 2006.”

An analysis of variances by segment comparing third quarter 2006 to third quarter 2005 is provided below based on operating margin, a financial measure that reflects operating profit before affiliate general and administrative (G&A) expense and depreciation and amortization:

Petroleum products pipeline system. Pipeline operating margin was $54.1 million, a decline of $12.8 million due to lower product margins. The reduced product margin resulted from a significant drop in the price of petroleum products during Sept. 2006, which impacts inventory values related to a third-party supply agreement assumed by the partnership as part of an Oct. 2004 acquisition. The partnership values its cost of product sold utilizing a weighted average inventory price methodology, which can significantly reduce product margin in a rapidly declining price environment because the weighted average inventory cost of product sold is valued much higher than the corresponding product sales revenues, which are recorded at current lower market prices. Accounting rules require an adjustment of the carrying value of inventories to current market values if those values are lower, which further negatively impacted third-quarter 2006 results. For comparative purposes, the 2005 period experienced rapidly increasing product prices, an environment with the opposite impact on product margin as the product sales revenues are significantly higher than the weighted average inventory cost of the product sold.

Transportation revenues increased between periods primarily due to higher diesel fuel and gasoline shipments, which resulted in record quarterly volumes transported for this segment. The current quarter also benefited from higher fees for services such as additive injections and leased storage.

Operating expenses in this segment decreased between periods primarily due to the smaller impact from asset retirements and product losses during 2006. These reductions were partially offset by increased integrity spending and higher environmental expenses during the current period. The increased environmental costs principally were associated with a risk mitigation agreement entered in third quarter 2006, which transferred certain historical environmental risks to a third party to minimize the partnership’s future financial exposure to potential cost increases related to remediation work at these sites.

Petroleum products terminals. Terminals operating margin was $22.3 million, an increase of $6.7 million. The 2006 period benefited from higher rates and from expansion projects completed over the past year at the partnership’s marine terminals. The current period further benefited from record throughput and higher additive fees at the partnership’s inland terminals, from incremental operating results from the Wilmington, Delaware marine facility which was acquired in Sept. 2005, and from higher product margins.

Ammonia pipeline system. Ammonia operating margin was a loss of $0.6 million, a decrease of $1.3 million. Higher expenses during the current period resulting from increased integrity spending primarily resulted in the unfavorable variance.

Depreciation and amortization increased between quarters primarily due to capital spending over the last year. G&A expense increased due to higher equity-based compensation expense related to a higher unit price and additional unit awards.

Net income per limited partner unit was 43 cents during third quarter 2006 compared to 56 cents during 2005. For the nine months ended Sept. 30, 2006, net income per limited partner unit was $1.60 compared to $1.58 for the corresponding 2005 period.

Management currently expects net income per limited partner unit for 2006 of approximately $2.20, which results in a fourth-quarter 2006 estimate of approximately 60 cents per unit. Management’s goal for distribution growth in 2006 remains 8% to 10%.

In addition, the partnership continues to project that the large majority of its operating margin will be generated by its fee-based operations, with less than 10% expected to come from product-margin related activities on an annual basis beyond 2006. As previously noted, management does not develop distribution growth targets based on the expectation that the high petroleum pricing environment experienced during 2006 will continue in future years.

Based on the progress of expansion projects currently underway or in advanced stages of development, management currently expects expansion capital spending of approximately $140.0 million during 2006. An additional $115.0 million is expected to be spent during 2007 and 2008 to complete these projects. Both amounts are exclusive of potential future acquisitions and the development of additional expansion projects.

Consistent with past practice, management intends to provide 2007 guidance for net income per limited unit, capital spending and distribution growth targets in early 2007.

An analyst call with management regarding third-quarter 2006 financial results and 2006 outlook is scheduled today at 1:30 p.m. Eastern. To participate, dial (800) 406-5356 and provide code 7901645. 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 4:30 p.m. Eastern today through midnight on Nov. 8. To access the replay, dial (888) 203-1112 and provide code 7901645. 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 and supporting schedules include the non-generally accepted accounting principles measures of operating margin and distributable cash flow, which are important performance measures used by management to evaluate the economic success of the partnership’s operations. Operating margin reflects operating profit before G&A expense and depreciation and amortization, and distributable cash flow reflects the cash available to pay distributions. Reconciliations of operating margin to operating profit and distributable cash flow to net income accompany 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.

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Portions of this document may constitute forward-looking statements as defined by federal law. Although management 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 September 30,						Nine Months Ended September 30,
	2005			2006			2005			2006
Transportation and terminals revenues	$	131,647		$	144,702		$	370,272		$	413,448
Product sales revenues		182,129			171,762			457,089			493,464
Affiliate management fee revenue		167			173			501			518
Total revenues		313,943			316,637			827,862			907,430
Costs and expenses:
Operating		63,379			62,529			159,434			168,220
Environmental		6,942			8,522			9,914			11,261
Product purchases		160,500			169,741			414,159			458,193
Depreciation and amortization		14,498			15,182			41,399			45,739
Affiliate general and administrative		15,784			17,042			46,044			47,806
Total costs and expenses		261,103			273,016			670,950			731,219
Equity earnings		909			814			2,231			2,479
Operating profit		53,749			44,435			159,143			178,690
Interest expense		13,846			14,359			39,508			43,116
Interest income		(1,287	)		(482	)		(3,429	)		(1,729	)
Interest capitalized		(299	)		(714	)		(679	)		(1,346	)
Debt placement fee amortization		731			679			2,194			2,034
Other (income) / expense		—			—			(300	)		339
Net income	$	40,758		$	30,593		$	121,849		$	136,276
Allocation of net income:
Limited partners’ interest	$	37,143		$	28,335		$	105,157		$	106,163
General partner’s interest		3,615			2,258			16,692			30,113
Net income	$	40,758		$	30,593		$	121,849		$	136,276
Basic net income per limited partner unit	$	0.56		$	0.43		$	1.58		$	1.60
Weighted average number of limited partner units outstanding used for basic net income per unit calculation		66,361			66,361			66,361			66,361
Diluted net income per limited partner unit	$	0.56		$	0.43		$	1.58		$	1.60
Weighted average number of limited partner units outstanding used for diluted net income per unit calculation		66,592			66,644			66,610			66,537

MAGELLAN MIDSTREAM PARTNERS, L.P.

OPERATING STATISTICS

	Three Months Ended September 30,				Nine Months Ended September 30,
	2005		2006		2005		2006
Petroleum products pipeline system:
Transportation revenue per barrel shipped (dollars per barrel)	$	1.053	$	1.052	$	1.035	$	1.053
Transportation barrels shipped (million barrels)		79.4		84.5		222.0		231.4
Petroleum products terminals:
Marine terminal average storage capacity utilized per month (million barrels)		18.6		18.8		18.5		18.9
Inland terminal throughput (million barrels)		28.6		31.7		83.6		89.7
Ammonia pipeline system:
Volume shipped (thousand tons)		149		159		487		537

MAGELLAN MIDSTREAM PARTNERS, L.P.

OPERATING MARGIN RECONCILIATION TO OPERATING PROFIT

(Unaudited, in thousands)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2005		2006			2005		2006
Petroleum products pipeline system:
Transportation and terminals revenues	$	103,307	$	111,139		$	286,406	$	307,713
Less: Operating expenses		52,836		49,649			129,710		129,367
Environmental expenses		4,420		7,574			6,950		9,488
Transportation and terminals margin		46,051		53,916			149,746		168,858
Product sales revenues		180,165		166,452			449,124		478,841
Less: Product purchases		160,362		167,275			412,009		450,291
Product margin		19,803		(823	)		37,115		28,550
Add: Affiliate management fee revenue		167		173			501		518
Equity earnings		909		814			2,231		2,479
Operating margin	$	66,930	$	54,080		$	189,593	$	200,405
Petroleum products terminals:
Transportation and terminals revenues	$	25,358	$	30,900		$	76,374	$	96,642
Less: Operating expenses		9,838		11,289			28,659		35,963
Environmental expenses		1,620		(4	)		1,710		122
Transportation and terminals margin		13,900		19,615			46,005		60,557
Product sales revenues		2,514		5,310			8,925		14,623
Less: Product purchases		816		2,595			3,491		8,288
Product margin		1,698		2,715			5,434		6,335
Operating margin	$	15,598	$	22,330		$	51,439	$	66,892
Ammonia pipeline system:
Transportation and terminals revenues	$	3,745	$	3,517		$	9,952	$	11,666
Less: Operating expenses		2,197		3,211			5,611		7,745
Environmental expenses		902		952			1,254		1,651
Operating margin	$	646	$	(646	)	$	3,087	$	2,270
Segment operating margin	$	83,174	$	75,764		$	244,119	$	269,567
Add: Allocated corporate depreciation costs		857		895			2,467		2,668
Total operating margin		84,031		76,659			246,586		272,235
Less: Depreciation and amortization		14,498		15,182			41,399		45,739
Affiliate general and administrative		15,784		17,042			46,044		47,806
Total operating profit	$	53,749	$	44,435		$	159,143	$	178,690

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 September 30,						Nine Months Ended September 30,
	2005			2006			2005			2006
Net income	$	40,758		$	30,593		$	121,849		$	136,276
Direct charges to the general partner:
Reimbursable general and administrative costs		1,049			(31	)		2,693			934
Previously indemnified environmental charges		6,055			8,323			6,692			8,381
Total direct charges to general partner		7,104			8,292			9,385			9,315
Income before direct charges to general partner		47,862			38,885			131,234			145,591
General partner’s share of income		22.40	%		27.13	%		19.87	%		27.08	%
General partner’s allocated share of net income before direct charges		10,719			10,550			26,077			39,428
Direct charges to general partner		7,104			8,292			9,385			9,315
Net income allocated to general partner	$	3,615		$	2,258		$	16,692		$	30,113
Net income	$	40,758		$	30,593		$	121,849		$	136,276
Less: net income allocated to general partner		3,615			2,258			16,692			30,113
Net income allocated to limited partners	$	37,143		$	28,335		$	105,157		$	106,163

MAGELLAN MIDSTREAM PARTNERS, L.P.

DISTRIBUTABLE CASH FLOW

(Unaudited, in millions)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2005		2006		2005		2006
Net income	$	40.7	$	30.6	$	121.8	$	136.3
Add: Depreciation and amortization(1)		15.2		15.9		43.6		47.8
Equity-based incentive compensation		2.7		4.4		7.1		8.2
Direct charges to general partner		7.1		8.3		9.4		9.3
Asset retirements and impairments		6.5		1.4		8.1		6.0
Less: Maintenance capital (net of indemnified spending)		6.6		6.8		14.1		17.5
Other		1.4		1.5		4.1		3.7
Distributable cash flow(2)	$	64.2	$	52.3	$	171.8	$	186.4

⁽¹⁾ Depreciation and amortization includes debt placement fee amortization.

⁽²⁾ Distributable cash flow does not include fluctuations related to working capital or spending for which the partnership has received, or expects to receive, reimbursement through third party indemnifications.