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SECURITIES AND EXCHANGE COMMISSION
þ | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Delaware | 05-0527861 | |
State or other jurisdiction of incorporation or organization | (I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
(Registrant’s telephone number, including area code)
Securities Registered Pursuant to Section 12(b) of the Act:
Title of each class | Name of each exchange on which registered | |
Common Units representing limited partnership interests | NASDAQ |
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• | Terminalling and storage services for petroleum products and by-products; | ||
• | Natural gas services; | ||
• | Marine transportation services for petroleum products and by-products; and | ||
• | Sulfur and sulfur-based products processing, manufacturing, marketing and distribution. |
• | Terminalling and Storage. We own or operate 17 marine terminal facilities and six inland terminal facilities located in the United States Gulf Coast region that provide storage and handling services for producers and suppliers of petroleum products and by-products, lubricants and other liquids. We also provide land rental to oil and gas companies along with storage and handling services for lubricants and fuel oil. We provide these terminalling and storage services on a fee basis primarily under long-term contracts. | ||
• | Natural Gas Services. Through our acquisitions of Prism Gas Systems I, L.P. (“Prism Gas”) and Woodlawn Pipeline Co., Inc. (“Woodlawn”), we have ownership interests in over 669 miles of gathering and transmission pipelines located in the natural gas producing regions of Central and East Texas, Northwest Louisiana, the Texas Gulf Coast and offshore Texas and federal waters in the Gulf of Mexico as well as a 265 MMcfd capacity natural gas processing plant located in East Texas. In addition to our natural gas gathering and processing business, we distribute natural gas liquids (“NGLs”). We purchase NGLs primarily from natural gas processors. We store NGLs in our supply and storage facilities for resale to propane retailers, refineries and industrial NGL users in Texas and the Southeastern United States. We own an NGL pipeline which spans approximately 200 miles running from Kilgore to Beaumont, Texas. We own three NGL supply and storage facilities with an aggregate above ground storage capacity of approximately 3,000 barrels and we lease approximately 2.2 million barrels of underground storage capacity for NGLs. |
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• | Marine Transportation. We own a fleet of 40 inland marine tank barges, 17 inland push boats and four offshore tug barge units that transport petroleum products and by-products primarily in the United States Gulf Coast region. We provide these transportation services on a fee basis primarily under annual contracts. In addition, our marine segment manages our sulfur segment’s marine assets. | ||
• | Sulfur Services. We process and distribute sulfur predominately produced by oil refineries primarily located in the United States Gulf Coast region. We own one offshore tug barge unit and two inland barges and an inland tug that transports sulfur primarily in the United States Gulf Coast region. We process molten sulfur into prilled, or pelletized, sulfur under both fee-based volume contracts and buy/sell contracts at our facilities in Port of Stockton, California and Beaumont, Texas. We own and operate six sulfur-based fertilizer production plants and one emulsified sulfur blending plant that manufacture primarily sulfur-based fertilizer products for wholesale distributors and industrial users. These plants are located in Illinois, Texas and Utah. In October 2007, we completed the construction of a sulfuric acid production plant in Plainview, Texas which processes molten sulfur into sulfuric acid. |
• | Pursue Organic Growth Projects. We continually evaluate economically attractive organic expansion opportunities in new or existing areas of operation that will allow us to leverage our existing market position, increase the distributable cash flow from our existing assets through improved utilization and efficiency, and leverage our existing customer base. | ||
• | Pursue Internal Organic Growth by Attracting New Customers and Expanding Services Provided to Existing Customers. We seek to identify and pursue opportunities to expand our customer base across all of our business segments. We generally begin a relationship with a customer by transporting or marketing a limited range of products and services. We believe expanding our customer base and our service and product offerings to existing customers is the most efficient and cost effective method of achieving organic growth in revenues and cash flow. We believe significant opportunities exist to expand our customer base and provide additional services and products to existing customers. |
• | Pursue Strategic Acquisitions. We monitor the marketplace to identify and pursue accretive acquisitions that expand the services and products we offer or that expand our geographic presence. After acquiring other businesses, we will attempt to utilize our industry knowledge, network of customers and suppliers and strategic asset base to operate the acquired businesses more efficiently and competitively, thereby increasing revenues and cash flow. |
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We believe that our diversified base of operations provides multiple platforms for strategic growth through acquisitions. While we continue to monitor the marketplace for potential acquisitions, we anticipate that our activities in this area will be limited in 2009 due to general economic conditions and capital constraints. | |||
• | Pursue Strategic Alliances. Many of our larger customers are establishing strategic alliances with midstream service providers such as us to address logistical and transportation problems or achieve operational synergies. These strategic alliances are typically structured differently than our regular commercial relationships, with the goal that such alliances would expand our business relationships with our customers and suppliers. We intend to pursue strategic alliances with customers in the future. | ||
• | Expand Geographically. We work to identify and assess other attractive geographic markets for our services and products based on the market dynamics and the cost associated with penetration of such markets. We typically enter a new market through an acquisition or by securing at least one major customer or supplier and then dedicating or purchasing assets for operation in the new market. Once in a new territory, we seek to expand our operations within this new territory both by targeting new customers and by selling additional services and products to our original customers in the territory. |
• | Asset Base and Integrated Distribution Network. We operate a diversified asset base that, together with the services provided by Martin Resource Management, enables us to offer our customers an integrated distribution network consisting of transportation, terminalling and midstream logistical services while minimizing our dependence on the availability and pricing of services provided by third parties. Our integrated distribution network enables us to provide customers a complementary portfolio of transportation, terminalling, distribution and other midstream services for petroleum products and by-products. | ||
• | Strategically Located Assets. We believe we are one of the largest providers of shore bases and one of the largest lubricant distributors and marketers in the United States Gulf Coast region. In addition, we are one of the largest operators of marine service terminals in the United States Gulf Coast region providing broad geographic coverage and distribution capability of our products and services to our customers. Our natural gas gathering and processing assets are focused in areas that have continued to experience high levels of drilling activity and natural gas production. | ||
• | Specialized Transportation Equipment and Storage Facilities. We have the assets and expertise to handle and transport certain petroleum products and by-products with unique requirements for transportation and storage, such as molten sulfur and asphalt. For example, we own facilities and resources to transport molten sulfur and asphalt, which must be maintained at temperatures between approximately 275 and 350 degrees Fahrenheit to remain in liquid form. We believe these capabilities help us enhance relationships with our customers by offering them services to handle their unique product requirements. | ||
• | Ability to Grow Our Natural Gas Gathering and Processing Services. We believe that, with our Prism Gas assets, we have opportunities for organic growth in our natural gas gathering and processing operations through increasing fractionation capacity, pipeline expansions, new pipeline construction and bolt-on acquisitions. We believe Prism’s assets are well situated in the Haynesville Shale which is one of the four largest U.S. shale deposits. Chesapeake Energy, the largest lease holder in the Haynesville Shale, estimates that the Haynesville Shale will ultimately produce over 500 TCF of natural gas and that this field will be among the top 10 natural gas fields in the world. As the development of the Haynesville Shale is in its early stages, it is too early to estimate the ultimate impact on Prism. | ||
• | Experienced Management Team and Operational Expertise. Members of our executive management team and the heads of our principal business lines have, on average, more than 29 years of experience in the industries in which we operate. Further, these individuals have been employed by Martin Resource Management, on average, for more than 17 years. Our management team has a successful track record of creating internal growth and completing acquisitions. We believe our management team’s experience and familiarity with our industry and businesses are important assets that assist us in implementing our business strategies. |
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• | Strong Industry Reputation and Established Relationships with Suppliers and Customers. We believe we have established a reputation in our industry as a reliable and cost-effective supplier of services to our customers and have a track record of safe, efficient operation of our facilities. Our management has also established long-term relationships with many of our suppliers and customers. We believe we benefit from our management’s reputation and track record, and from these long-term relationships. |
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Terminal | Location | Acres | Tanks | Aggregate Capacity | ||||||||
Pelican Island | Galveston, Texas | 51.3 | 16 | 87,200 Bbls. | ||||||||
Harbor Island(1) | Harbor Island, Texas | 25.5 | 12 | 32,500 Bbls. | ||||||||
Freeport | Freeport, Texas | 17.8 | 1 | 8,300 Bbls. | ||||||||
Port O’Connor(2) | Port O’Connor, Texas | 22.8 | 8 | 7,000 Bbls. | ||||||||
Sabine Pass(3) | Sabine Pass, Texas | 23.1 | 11 | 17,000 Bbls. | ||||||||
Cameron “East”(4) | Cameron, Louisiana | 34.3 | 12 | 34,000 Bbls. | ||||||||
Cameron “West”(5) | Cameron, Louisiana | 16.9 | 5 | 16,500 Bbls. | ||||||||
Venice (6) | Venice, Louisiana | 2.8 | 2 | 15,000 Bbls. |
(1) | A portion of this terminal is located on land owned by a third party and leased under a lease that expires in January 2010 and can be extended by us through January 2015. | |
(2) | This terminal is located on land owned by a third party and leased under a lease that expires in March 2014. | |
(3) | A portion of this terminal is located on land owned by a third party and leased under a lease that expires in September 2036. | |
(4) | This terminal is located on land owned by third parties and leased under a lease that expires in March 2012 and can be extended by us through March 2022. | |
(5) | This terminal is located on land owned by a third party and leased under a lease that expires in February 2013. | |
(6) | This terminal is located on land owned by a third party and leased under a sublease agreement that expires in August 2009 and can be extended by us through August 2024. |
Terminal | Location | Tanks | Aggregate Capacity | |||||
Amelia | Amelia, Louisiana | 17 | 14,900 Bbls. | |||||
Berwick(1) | Berwick, Louisiana | 2 | 25,000 Bbls. | |||||
Intracoastal City(2)(3) | Intracoastal City, Louisiana | 16 | 39,000 Bbls. | |||||
Fourchon(4) | Fourchon, Louisiana | 11 | 80,000 Bbls. |
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(1) | This terminal is located on land owned by third parties and leased under a lease that expires in September 2012 and can be extended by us through September 2017. | |
(2) | A portion of this terminal is located on land owned by a third party at which we throughput fuel oil pursuant to an agreement that expires in January 2010. | |
(3) | A portion of this terminal is located on land owned by third parties and leased under a lease that expires in April 2014. | |
(4) | This terminal is located on land owned by a third party at which we throughput lubricants and fuel oil pursuant to an agreement that expires in January 2017. |
Aggregate | ||||||||||||
Terminal | Location | Tanks | Capacity | Products | Description | |||||||
Tampa(1) | Tampa, Florida | 8 | 779,000 Bbls. | Asphalt, sulfur and fuel oil | Marine terminal, loading/unloading for vessels, barges and trucks | |||||||
Stanolind | Beaumont, Texas | 8 | 555,000 Bbls. | Asphalt, crude oil, sulfur, sulfuric acid and fuel oil | Marine terminal, marine dock for loading/unloading of vessels, barges, railcars and trucks | |||||||
Neches | Beaumont, Texas | 7 | 500,400 Bbls. | Ammonia, asphalt, fuel oil, crude oil and sulfur-based fertilizer | Marine terminal, loading/unloading for vessels, barges, railcars and trucks | |||||||
Ouachita County | Ouachita County, Arkansas | 2 | 77,500 Bbls. | Crude oil | Marine terminal, loading/unloading for barges and trucks | |||||||
Corpus Christi | Corpus Christi, Texas | 4 | 330,000 Bbls. | Fuel oil and diesel | Marine Terminal, loading/unloading barges and vessels and unloading trucks |
(1) | This terminal is located on land owned by the Tampa Port Authority that was leased to us under a 10-year lease that expires in December 2016 with two five year extension options. |
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Terminal | Location | Aggregate Capacity | Products | Description | ||||
Channelview | Houston, Texas | 34,000 sq. ft. Warehouse/29,000 Bbls | Lubricants | Lubricants blending and truck loading/unloading | ||||
Mont Belvieu | Mont Belvieu, Texas | 20 rail car spaces | Propane-propylene mix | Rail car unloading | ||||
South Houston Asphalt | Houston, Texas | 71,000 Bbls | Asphalt | Asphalt Processing and storage | ||||
Port Neches Asphalt | Port Neches, Texas | 31,250 Bbls | Asphalt | Asphalt Processing and storage | ||||
Omaha Asphalt | Omaha, Nebraska | 114,225 Bbls | Asphalt | Asphalt Processing and storage | ||||
Spindletop | Beaumont, Texas | 90,000 Bbls | Natural Gasoline | Pipeline receipts and shipments |
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• | storage of NGLs purchased in off-peak months; | ||
• | efficient use of the transportation fleet of vehicles owned by Martin Resource Management; and | ||
• | product management expertise to obtain supplies when needed. |
NGL Facility | Location | Capacity | Description | |||
Wholesale terminals | Arcadia, Louisiana(1) | 2,000,000 barrels | Underground storage | |||
Hattiesburg, Mississippi(2) | 100,000 barrels | Underground storage | ||||
Mt. Belvieu, Texas(3)(2) | 40,000 barrels | Underground storage | ||||
Retail terminals | Kilgore, Texas | 90,000 gallons | Retail propane distribution | |||
Longview, Texas | 30,000 gallons | Retail propane distribution | ||||
Henderson, Texas | 12,000 gallons | Retail propane distribution |
(1) | We lease our underground storage at Arcadia, Louisiana from Martin Resource Management under a three-year product storage agreement, which is renewable on a yearly basis thereafter subject to a re-determination of the lease rate for each subsequent year. | |
(2) | We lease our underground storage at Hattiesburg, Mississippi and Mont Belvieu, Texas from third parties under one-year lease agreements, which have been renewed annually for more than 20 years. | |
(3) | In addition, under a throughput agreement, we are entitled to the sole access to and use of a truck loading and unloading and pipeline distribution terminal owned by Martin Resource Management and located at Mont Belvieu, Texas. Effective each January 1, this agreement automatically renews for consecutive one-year periods unless either party terminates the agreement by giving written notice to the other party at least 30 days prior to the expiration of the then-applicable term. This terminal facility has a storage capacity of 8,000 barrels. |
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• | Waskom Processing Plant — The Waskom Processing Plant, located in Harrison County in East Texas, currently has 265 MMcfd of processing capacity with full fractionation facilities. Expansions to the processing plant were completed in March and June of 2007, and July of 2008 increasing the capacity from 150 MMcfd to 265 MMcfd. In January 2007, the Waskom fractionator was expanded to a capacity of 12,500 barrels per day (“bpd”). In addition, an increase in the processing capacity of the plant to 285 MMcfd and fractionation capacity to 14,500 bpd is expected to be completed by the end of the second quarter of 2009. For the years ended December 31, 2008 and 2007, inlet throughput and NGL fractionation averaged approximately 257 and 229 MMcfd and 10,542 and 8,725 bpd, respectively. Prism Gas owns an unconsolidated 50% operating interest in the Waskom Processing Plant with CenterPoint Energy Gas Processing, Inc. owning the remaining 50% non-operating interest. We reflect the results of operations from this facility using the equity method of accounting | ||
• | Woodlawn Plant and Gathering System — On May 2, 2007, we, through our subsidiary Prism Gas acquired 100% of the outstanding stock of Woodlawn. The results of Woodlawn’s operations have been included in our consolidated financial statements beginning May 2, 2007. Woodlawn is a natural gas gathering and processing company which owns integrated gathering and processing assets in East Texas. Woodlawn’s system consists of approximately 135 miles of natural gas gathering pipe, approximately 36 miles of condensate transport pipe and a 30 MMcfd processing plant. Prism Gas acquired a nine-mile pipeline, from a Woodlawn related party, that delivers residue gas from the Woodlawn plant to the Texas Eastern Transmission pipeline system. |
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• | McLeod Gathering System — The McLeod Gathering System, located in East Texas and Northwest Louisiana, is a low pressure gathering system connected to the Waskom Processing Plant, providing processing and blending services for natural gas with high nitrogen and high liquids content gathered by the system. For both years ended December 31, 2008 and 2007, the McLeod Gathering System gathered approximately 5 MMcfd of natural gas. Prism Gas owns a consolidated 100% interest in this system. | ||
• | Hallsville Gathering System — The Hallsville Gathering System, which Prism Gas constructed in 2006 in Harrison County, Texas, provides gathering and centralized compression for producers in the Oak Hill Field of East Texas. The system operates at low pressure and redelivers gas to two interstate and three intrastate markets via the Oakhill Gathering System. For the years ended December 31, 2008 and 2007, the Hallsville Gathering System gathered approximately 21 and 17 MMcfd of natural gas, respectively. Prism Gas owns a consolidated 100% interest in this system. | ||
• | The Marshall Line — The Marshall Line is a 10” gathering line that Prism Gas began leasing from Kinder Morgan Texas in 2006. It is located in Harrison County, Texas. The Marshall Line gathers gas at intermediate pressure and feeds the Waskom Processing Plant. Prism Gas owns a consolidated 100% interest in the lease. | ||
• | Bosque County Pipeline — The Bosque County Pipeline, gathers gas in four North Central Texas counties centered around Bosque County. Prism Gas owns an unconsolidated 20% non-operating interest in a partnership that owns the lease rights to the assets of the Bosque County Pipeline, with Panther Pipeline Ltd. owning a 42.5% operating interest and two unrelated parties owning the remaining 37.5% interest. The lease contract provides for termination in June 2009 and an extension of the lease is not currently contemplated. | ||
• | East Texas Gathering System — The East Texas Gathering System, located in Panola County, Texas, is comprised of gathering systems built to gather gas produced in this area to market outlets. Prism Gas owns a consolidated 100% interest in these systems. |
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• | Fishhook Gathering System — The Fishhook Gathering System, located in Jefferson County, Texas and offshore federal waters, gathers and transports gas in both offshore and onshore areas. For the year ended December 31, 2007, the Fishhook Gathering System gathered and transported approximately 32 MMcfd of natural gas. In September 2008, Hurricane Ike caused extensive damage to an offshore platform on the system. Repairs were completed in February 2009. Prior to the hurricane damage approximately 15 MMcfd of natural gas was gathered and transported for the year ended December 31, 2008. Prism Gas owns an unconsolidated 50% non-operating interest in Panther Interstate Pipeline Energy, LLC (“PIPE”), the owner of the Fishhook Gathering System, with Panther Pipeline Ltd owning the remaining 50% operating interest. We reflect the results of operations from this system using the equity method of accounting. | ||
• | Matagorda Offshore Gathering System — The Matagorda Offshore Gathering System, located in Matagorda County, Texas and offshore Texas State waters, gathers gas in both the offshore and onshore areas. For the years ended December 31, 2008 and 2007, the Matagorda Offshore Gathering System gathered approximately 15 and 7 MMcfd of natural gas, respectively. Prism Gas owns an unconsolidated 50% non-operating interest in the Matagorda Offshore Gathering System, with Panther Pipeline Ltd. owning the remaining 50% operating interest. We reflect the results of operations from this system using the equity method of accounting. |
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Class of Equipment | Number in Class | Capacity/Horsepower | Description of Products Carried | |||||
Inland tank barges | 14 | 20,000 bbl and under | Asphalt, crude oil, fuel oil, gasoline and sulfur(1) | |||||
Inland tank barges | 26 | 20,000 — 30,000 bbl | Asphalt, crude oil, fuel oil and gasoline(1) | |||||
Inland push boats | 17 | 800 — 3,800 horsepower | N/A | |||||
Offshore tank barges | 4 | 40,000 bbl and 95,000 bbl | Asphalt, fuel oil and NGLs | |||||
Offshore tugboats | 4 | 3,200 — 7,200 horsepower | N/A |
(1) | One of our 14 inland tank barges with capacity of up to 20,000 bbl, and 13 of our 26 inland tank barges with capacity of 20,000 to 30,000 bbl, are specialized and equipped to transport asphalt. |
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• | the increasing age of the domestic tank barge fleet, resulting in retirements; | ||
• | a reduction in tax incentives, which previously encouraged speculative construction of new equipment; | ||
• | stringent operating standards to adequately address safety and environmental risks; | ||
• | the elimination of government programs supporting small refineries; | ||
• | an increase in environmental regulations mandating expensive equipment modification; and | ||
• | more restrictive and expensive insurance. |
• | significant start-up capital requirements; | ||
• | the costs and operational difficulties of complying with stringent safety and environmental regulations; | ||
• | the cost and difficulty in obtaining insurance; and | ||
• | the number and expertise of personnel required to support marine fleet operations. |
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• | Plant nutrient sulfur products.We produce plant nutrient and agricultural ground sulfur products at our two facilities in Odessa, Texas. We also produce plant nutrient sulfur at our facility in Seneca, Illinois. Our plant nutrient sulfur product is a 90% degradable sulfur product marketed under the Disper-Sul® trade name and sold throughout the United States to direct application agricultural markets. Our agricultural ground sulfur products are used primarily in the western United States on grapes and vegetable crops. | ||
• | Ammonium sulfate products, NPK products and related blended products.We produce various grades of ammonium sulfate including coarse and standard grades, a 40% ammonium sulfate solution and a Kosher-approved food grade material. We also produce nitrogen-phosphorus-potassium products (commonly referred to as NPK products). Our NPK products are an ammoniated phosphate fertilizer containing nitrogen, phosphorus and potash that we manufacture so all particles have a uniform composition. These products primarily serve direct application agricultural markets within a 400-mile radius of our manufacturing plant in Plainview, Texas. We blend our ammonium sulfate to make custom grades of lawn and garden fertilizer at our facility in Salt Lake City, Utah. We package these custom grade products under both proprietary and private labels and sell them to major retail distributors, and other retail customers, of these products. | ||
• | Industrial sulfur products.We produce industrial sulfur products such as emulsified sulfur, elemental pastille sulfur, and industrial ground sulfur products. We produce emulsified sulfur at our Texarkana, Texas facility. Emulsified sulfur is primarily used to control the sulfur content in the pulp and paper manufacturing processes. We produce elemental pastille sulfur at our two Odessa, Texas facilities and at our Seneca, Illinois facility. Elemental pastille sulfur is used to increase the efficiency of the coal-fired precipitators in the power industry. These industrial ground sulfur products are also used in a variety of dusting and wettable sulfur applications such as rubber manufacturing, fungicides, sugar and animal feeds. | ||
• | Liquid sulfur products.We produce ammonium thiosulfate at our Neches terminal location in Beaumont, Texas. This agricultural sulfur product is a clear liquid containing 12% nitrogen and 26% sulfur. This product serves as a liquid plant nutrient used directly through spray rigs or irrigation systems. It is also blended with other NPK liquids or suspensions as well. Our market is predominantly the Mid South and Coastal Bend area of Texas. |
Asset | Class of Equipment | Capacity/Horsepower | Products Transported | |||
Margaret Sue | Offshore tank barge | 10,450 long tons | Molten sulfur | |||
M/V Martin Explorer | Offshore tugboat | 7,200 horsepower | N/A | |||
M/V Martin Express | Inland push boat | 1,200 horsepower | N/A | |||
MGM 101 | Inland tank barge | 2,450 long tons | Molten sulfur | |||
MGM 102 | Inland tank barge | 2,450 long tons | Molten sulfur |
Terminal | Location | Daily Production Capacity | Products Stored | |||||
Stockton | Stockton, California | 1,000 metric tons per day | Molten and prilled sulfur | |||||
Neches | Beaumont, Texas | 4,000 metric tons per day | Molten and prilled sulfur |
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Facility | Location | Capacity | Description | |||
Fertilizer plants (two) | Odessa, Texas | 70,000 tons/year | Dry sulfur fertilizer production | |||
Fertilizer plant | Seneca, Illinois | 36,000 tons/year | Dry sulfur fertilizer production | |||
Fertilizer plant | Plainview Texas | 180,000 tons/year | Fertilizer production | |||
Fertilizer plant | Salt Lake City, Utah | 25,000 tons/year | Blending and packaging | |||
Fertilizer plant | Beaumont, Texas | 70,000 tons/year | Liquid sulfur fertilizer production | |||
Industrial sulfur plant | Texarkana, Texas | 18,000 tons/year | Emulsified sulfur production | |||
Sulfuric acid plant | Plainview Texas | 150,000 tons/year | Sulfuric acid production |
• | providing land transportation of various liquids using a fleet of trucks and road vehicles and road trailers; | ||
• | distributing fuel oil, asphalt, sulfuric acid, marine fuel and other liquids; | ||
• | providing marine bunkering and other shore-based marine services in Alabama, Louisiana, Mississippi and Texas; | ||
• | operating a small crude oil gathering business in Stephens, Arkansas; | ||
• | operating a lube oil processing facility in Smackover, Arkansas; | ||
• | operating an underground NGL storage facility in Arcadia, Louisiana | ||
• | building and marketing sulfur prillers; | ||
• | developing an underground natural gas storage facility in Arcadia, Louisiana; | ||
• | supplying employees and services for the operation of our business; | ||
• | operating, for its account and our account, the docks, roads, loading and unloading facilities and other common use facilities or access routes at our Stanolind terminal; | ||
• | operating, solely for our account, an NGL truck loading and unloading and pipeline distribution terminal in Mont Belvieu, Texas; and | ||
• | operating, solely for our account, the asphalt facilities in Omaha, Nebraska. |
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• | perform ongoing assessments of pipeline integrity; | ||
• | identify and characterize applicable threats to pipeline segments that could impact a high consequence area; | ||
• | improve data collection, integration and analysis; | ||
• | repair and remediate the pipeline as necessary; and | ||
• | implement preventive and mitigating actions. |
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• | the costs of acquisitions, if any; | ||
• | the prices of petroleum products and by-products; | ||
• | fluctuations in our working capital; | ||
• | the level of capital expenditures we make; | ||
• | restrictions contained in our debt instruments and our debt service requirements; | ||
• | our ability to make working capital borrowings under our credit facility; and | ||
• | the amount, if any, of cash reserves established by our general partner in its discretion. |
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• | post-closing discovery of material undisclosed liabilities of the acquired business or assets; | ||
• | the unexpected loss of key employees or customers from the acquired businesses; | ||
• | difficulties resulting from our integration of the operations, systems and management of the acquired business; and | ||
• | an unexpected diversion of our management’s attention from other operations. |
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• | accidents on rivers or at sea and other hazards that could result in releases, spills and other environmental damages, personal injuries, loss of life and suspension of operations; | ||
• | leakage of NGLs and other petroleum products and by-products; | ||
• | fires and explosions; | ||
• | damage to transportation, terminalling and storage facilities, and surrounding properties caused by natural disasters; and | ||
• | terrorist attacks or sabotage. |
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• | prevailing oil and natural gas prices and expectations about future prices and price volatility; | ||
• | the cost of offshore exploration for, and production and transportation of, oil and natural gas; | ||
• | worldwide demand for oil and natural gas; | ||
• | consolidation of oil and gas and oil service companies operating offshore; | ||
• | availability and rate of discovery of new oil and natural gas reserves in offshore areas; | ||
• | local and international political and economic conditions and policies; | ||
• | technological advances affecting energy production and consumption; | ||
• | weather conditions; | ||
• | environmental regulation; and | ||
• | the ability of oil and gas companies to generate or otherwise obtain funds for exploration and production. |
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• | catastrophic events, including hurricanes; | ||
• | environmental remediation; | ||
• | labor difficulties; and | ||
• | disruptions in the supply of our products to our facilities or means of transportation. |
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• | the impact of weather on the demand for oil and natural gas; | ||
• | the level of domestic oil and natural gas production; | ||
• | the level of domestic industrial and manufacturing activity; | ||
• | the availability of imported oil and natural gas; | ||
• | actions taken by foreign oil and gas producing nations; | ||
• | the availability of local, intrastate and interstate transportation systems; | ||
• | the availability and marketing of competitive fuels; | ||
• | the impact of energy conservation efforts; and |
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• | the extent of governmental regulation and taxation. |
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• | perform ongoing assessments of pipeline integrity; | ||
• | identify and characterize applicable threats to pipeline segments that could impact a high consequence area; | ||
• | improve data collection, integration and analysis; | ||
• | repair and remediate the pipeline as necessary; and | ||
• | implement preventive and mitigating actions. |
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• | the issuance of common units in additional public offerings or in connection with acquisitions that increase cash flow from operations on a pro forma, per unit basis; | ||
• | the conversion of subordinated units into common units; | ||
• | the conversion of units of equal rank with the common units into common units under some circumstances; or | ||
• | the conversion of our general partner’s general partner interest in us and its incentive distribution rights into common units as a result of the withdrawal of our general partner. |
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• | we had been conducting business in any state without compliance with the applicable limited partnership statute; or | ||
• | the right or the exercise of the right by our unitholders as a group to remove or replace our general partner, to approve some amendments to our partnership agreement, or to take other action under our partnership agreement constituted participation in the “control” of our business. |
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• | permits our general partner to make a number of decisions in its “sole discretion.” This entitles our general partner to consider only the interests and factors that it desires, and it has no duty or obligation to give any consideration to any interest of, or factors affecting, us, our affiliates or any limited partner; | ||
• | provides that our general partner is entitled to make other decisions in its “reasonable discretion” which may reduce the obligations to which our general partner would otherwise be held; | ||
• | generally provides that affiliated transactions and resolutions of conflicts of interest not involving a required vote of unitholders must be “fair and reasonable” to us and that, in determining whether a transaction or resolution is “fair and reasonable,” our general partner may consider the interests of all parties involved, including its own; and | ||
• | provides that our general partner and its officers and directors will not be liable for monetary damages to us, our limited partners or assignees for errors of judgment or for any acts or omissions if our general partner and those other persons acted in good faith. |
• | the issuance of common units in additional public offerings or in connection with acquisitions that increase cash flow from operations on a pro forma, per unit basis; | ||
• | the conversion of subordinated units into common units; | ||
• | the conversion of units of equal rank with the common units into common units under some circumstances; or | ||
• | the conversion of our general partner’s general partner interest in us and its incentive distribution rights into common units as a result of the withdrawal of our general partner. |
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• | our unitholders’ proportionate ownership interest in us will decrease; | ||
• | the amount of cash available for distribution on a per unit basis may decrease; | ||
• | because a lower percentage of total outstanding units will be subordinated units, the risk that a shortfall in the payment of the minimum quarterly distribution will be borne by our common unitholders will increase; | ||
• | the relative voting strength of each previously outstanding unit will diminish; | ||
• | the market price of the common units may decline; and | ||
• | the ratio of taxable income to distributions may increase. |
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• | Officers of Martin Resource Management who provide services to us also devote significant time to the businesses of Martin Resource Management and are compensated by Martin Resource Management for that time. | ||
• | Neither our partnership agreement nor any other agreement requires Martin Resource Management to pursue a business strategy that favors us or utilizes our assets or services. Martin Resource Management’s directors and officers have a fiduciary duty to make these decisions in the best interests of the shareholders of Martin Resource Management without regard to the best interests of the unitholders. | ||
• | Martin Resource Management may engage in limited competition with us. | ||
• | Our general partner is allowed to take into account the interests of parties other than us, such as Martin Resource Management, in resolving conflicts of interest, which has the effect of reducing its fiduciary duty to our unitholders. | ||
• | Under our partnership agreement, our general partner may limit its liability and reduce its fiduciary duties, while also restricting the remedies available to our unitholders for actions that, without the limitations and reductions, might constitute breaches of fiduciary duty. As a result of purchasing units, our unitholders will be treated as having consented to some actions and conflicts of interest that, without such consent, might otherwise constitute a breach of fiduciary or other duties under applicable state law. | ||
• | Our general partner determines which costs incurred by Martin Resource Management are reimbursable by us. | ||
• | Our partnership agreement does not restrict our general partner from causing us to pay it or its affiliates for any services rendered on terms that are fair and reasonable to us or from entering into additional contractual arrangements with any of these entities on our behalf. | ||
• | Our general partner controls the enforcement of obligations owed to us by Martin Resource Management. | ||
• | Our general partner decides whether to retain separate counsel, accountants or others to perform services for us. |
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• | The audit committee of our general partner retains our independent auditors. | ||
• | In some instances, our general partner may cause us to borrow funds to permit us to pay cash distributions, even if the purpose or effect of the borrowing is to make a distribution on the subordinated units, to make incentive distributions or to accelerate the expiration of the subordination period. | ||
• | Our general partner has broad discretion to establish financial reserves for the proper conduct of our business. These reserves also will affect the amount of cash available for distribution. Our general partner may establish reserves for distribution on the subordinated units, but only if those reserves will not prevent us from distributing the full minimum quarterly distribution, plus any arrearages, on the common units for the following four quarters. |
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Common Units | Distributions Declared per Unit | |||||||||||||||
Quarters Ended | High | Low | Common | Subordinated | ||||||||||||
March 31, 2008 | $ | 37.20 | $ | 30.50 | $ | 0.720 | $ | 0.720 | ||||||||
June 30, 2008 | $ | 36.24 | $ | 31.50 | $ | 0.740 | $ | 0.740 | ||||||||
September 30, 2008 | $ | 32.76 | $ | 19.23 | $ | 0.750 | $ | 0.750 | ||||||||
December 31, 2008 | $ | 26.99 | $ | 13.60 | $ | 0.750 | $ | 0.750 |
Common Units | Distributions Declared per Unit | |||||||||||||||
Quarters Ended | High | Low | Common | Subordinated | ||||||||||||
March 31, 2007 | $ | 39.17 | $ | 32.96 | $ | 0.640 | $ | 0.640 | ||||||||
June 30, 2007 | $ | 42.66 | $ | 39.48 | $ | 0.660 | $ | 0.660 | ||||||||
September 30, 2007 | $ | 42.65 | $ | 34.62 | $ | 0.680 | $ | 0.680 | ||||||||
December 31, 2007 | $ | 38.61 | $ | 35.33 | $ | 0.700 | $ | 0.700 |
• | provide for the proper conduct of our business; |
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• | comply with applicable law, any of our debt instruments, or other agreements; or | ||
• | provide funds for distributions to our unitholders and to our general partner for any one or more of the next four quarters; |
• | distributions of available cash from operating surplus on each of the outstanding common units and subordinated units equaled or exceeded the minimum quarterly distribution for each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date; | ||
• | the “adjusted operating surplus” as defined in the partnership agreement generated during each of the three consecutive, non-overlapping four-quarter periods immediately preceding that date equaled or exceeded the sum of the minimum quarterly distributions on all of the outstanding common units and subordinated units during those periods on a fully diluted basis and the related distribution on the 2% general partner interest during those periods; and | ||
• | there are no arrearages in payment of the minimum quarterly distribution on the common units. |
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2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
Income Statement Data: | ||||||||||||||||||||
Revenues | $ | 1,213,958 | $ | 765,822 | $ | 576,384 | $ | 438,443 | $ | 294,144 | ||||||||||
Cost of product sold | 1,013,525 | 618,689 | 459,170 | 351,820 | 229,976 | |||||||||||||||
Operating expenses | 102,894 | 83,533 | 65,387 | 46,888 | 34,475 | |||||||||||||||
Selling, general, and administrative | 16,939 | 11,985 | 10,977 | 8,133 | 6,198 | |||||||||||||||
Depreciation and amortization | 31,218 | 23,442 | 17,597 | 12,642 | 8,766 | |||||||||||||||
Total costs and expenses | 1,164,576 | 737,649 | 553,131 | 419,483 | 279,415 | |||||||||||||||
Other operating income | 209 | 703 | 3,356 | — | — | |||||||||||||||
Operating Income | 49,591 | 28,876 | 26,609 | 18,960 | 14,729 | |||||||||||||||
Equity in earnings of unconsolidated entities | 13,224 | 10,941 | 8,547 | 1,591 | 912 | |||||||||||||||
Interest expense | (19,777 | ) | (14,533 | ) | (12,466 | ) | (6,909 | ) | (3,326 | ) | ||||||||||
Debt prepayment premium | — | — | (1,160 | ) | — | — | ||||||||||||||
Other, net | 483 | 299 | 713 | 238 | 11 | |||||||||||||||
Income before income taxes | 43,521 | 25,583 | 22,243 | 13,880 | 12,326 | |||||||||||||||
Income taxes | 711 | 644 | — | — | — | |||||||||||||||
Net Income | $ | 42,810 | $ | 24,939 | $ | 22,243 | $ | 13,880 | $ | 12,326 | ||||||||||
Net income per limited partner unit | $ | 2.72 | $ | 1.67 | $ | 1.69 | $ | 1.58 | $ | 1.45 | ||||||||||
Weighted average limited partner units | 14,529,826 | 14,018,799 | 12,602,000 | 8,583,634 | 8,349,551 | |||||||||||||||
Balance Sheet Data (at Period End): | ||||||||||||||||||||
Total assets | $ | 668,916 | $ | 623,577 | $ | 457,461 | $ | 389,044 | $ | 188,332 | ||||||||||
Due to affiliates | 13,420 | 7,543 | 10,474 | 3,492 | 429 | |||||||||||||||
Long-term debt | 295,000 | 225,000 | 174,021 | 192,200 | 73,000 | |||||||||||||||
Partner’s capital (owner’s equity) | 234,714 | 235,848 | 198,525 | 95,565 | 75,534 | |||||||||||||||
Cash Flow Data: | ||||||||||||||||||||
Net cash flow provided by (used in): | ||||||||||||||||||||
Operating activities | 79,903 | 58,017 | 39,317 | 32,334 | 12,812 | |||||||||||||||
Investing activities | (100,184 | ) | (127,103 | ) | (95,098 | ) | (138,742 | ) | (34,322 | ) | ||||||||||
Financing activities | 24,151 | 69,896 | 52,991 | 109,689 | 22,424 | |||||||||||||||
Other Financial Data: | ||||||||||||||||||||
Maintenance capital expenditures | 16,528 | 10,342 | 12,391 | 5,100 | 5,182 | |||||||||||||||
Expansion capital expenditures | 84,424 | 107,892 | 78,267 | 74,110 | 30,234 | |||||||||||||||
Total capital expenditures | $ | 100,952 | $ | 118,234 | $ | 90,658 | $ | 79,210 | $ | 35,416 | ||||||||||
Cash dividends per common unit (in dollars) | $ | 2.91 | $ | 2.60 | $ | 2.44 | $ | 2.19 | $ | 2.10 | ||||||||||
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• | Terminalling and storage services for petroleum products and by-products; | ||
• | Natural gas services; | ||
• | Marine transportation services for petroleum products and by-products; and | ||
• | Sulfur and sulfur-based products processing, manufacturing, marketing and distribution. |
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(In Thousands)
Terminalling | ||||||||||||||||||||
and Storage | NGL | Marine | Sulfur | Total | ||||||||||||||||
Cost of products sold (as previously reported) | $ | 6,775 | $ | 197,859 | $ | — | $ | 25,207 | $ | 229,841 | ||||||||||
Cost of products sold (as reclassified) | 6,775 | 197,859 | — | 25,342 | 229,976 | |||||||||||||||
Operating expenses (as previously reported) | 6,699 | 928 | 24,796 | — | 32,423 | |||||||||||||||
Operating expenses (as reclassified) | 8,494 | 1,185 | 24,796 | — | 34,475 | |||||||||||||||
Selling, general and administrative (as previously reported) | 2,194 | 1,457 | 175 | 4,599 | 8,425 | |||||||||||||||
Selling, general and administrative (as reclassified) | 399 | 1,200 | 175 | 4,424 | 6,198 |
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Operating | Operating | Operating | ||||||||||||||||||||||
Revenues | Revenues | Operating | Income | Income (loss) | ||||||||||||||||||||
Operating | Intersegment | after | Income | Intersegment | after | |||||||||||||||||||
Revenues | Eliminations | Eliminations | (loss) | Eliminations | Eliminations | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
Year ended December 31, 2008: | ||||||||||||||||||||||||
Terminalling and storage | $ | 90,474 | $ | (4,189 | ) | $ | 86,285 | $ | 12,261 | $ | (3,635 | ) | $ | 8,626 | ||||||||||
Natural gas services | 679,375 | — | 679,375 | 2,780 | 945 | 3,725 | ||||||||||||||||||
Marine transportation | 80,059 | (3,710 | ) | 76,349 | 8,104 | (2,534 | ) | 5,570 | ||||||||||||||||
Sulfur services | 372,987 | (1,038 | ) | 371,949 | 31,956 | 5,224 | 37,180 | |||||||||||||||||
Indirect selling, general and administrative | — | — | — | (5,510 | ) | — | (5,510 | ) | ||||||||||||||||
Total | $ | 1,222,895 | $ | (8,937 | ) | $ | 1,213,958 | $ | 49,591 | $ | — | $ | 49,591 | |||||||||||
Year ended December 31, 2007: | ||||||||||||||||||||||||
Terminalling and storage | $ | 59,790 | $ | (865 | ) | $ | 58,925 | $ | 10,745 | $ | (472 | ) | $ | 10,273 | ||||||||||
Natural gas services | 515,992 | — | 515,992 | 4,159 | 333 | 4,492 | ||||||||||||||||||
Marine transportation | 63,533 | (3,954 | ) | 59,579 | 7,949 | (3,679 | ) | 4,270 | ||||||||||||||||
Sulfur services | 131,602 | (276 | ) | 131,326 | 9,222 | 3,818 | 13,040 | |||||||||||||||||
Indirect selling, general and administrative | — | — | — | (3,199 | ) | — | (3,199 | ) | ||||||||||||||||
Total | $ | 770,917 | $ | (5,095 | ) | $ | 765,822 | $ | 28,876 | $ | — | $ | 28,876 | |||||||||||
Year ended December 31, 2006: | ||||||||||||||||||||||||
Terminalling and storage | $ | 36,606 | $ | (389 | ) | $ | 36,217 | $ | 12,646 | $ | (142 | ) | $ | 12,504 | ||||||||||
Natural gas services | 389,735 | — | 389,735 | 4,239 | — | 4,239 | ||||||||||||||||||
Marine transportation | 50,174 | (2,339 | ) | 47,835 | 8,258 | (1,847 | ) | 6,411 | ||||||||||||||||
Sulfur services | 102,646 | (49 | ) | 102,597 | 4,719 | 1,989 | 6,708 | |||||||||||||||||
Indirect selling, general and administrative | — | — | — | (3,253 | ) | — | (3,253 | ) | ||||||||||||||||
Total | $ | 579,161 | $ | (2,777 | ) | $ | 576,384 | $ | 26,609 | $ | — | $ | 26,609 | |||||||||||
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Years Ended December 31, | ||||||||
2008 | 2007 | |||||||
(In thousands) | ||||||||
Revenues: | ||||||||
Services | $ | 40,118 | $ | 29,400 | ||||
Products | 50,356 | 30,390 | ||||||
Total Revenues | 90,474 | 59,790 | ||||||
Cost of products sold | 42,721 | 26,298 | ||||||
Operating expenses | 26,086 | 16,238 | ||||||
Selling, general and administrative expenses | 120 | 139 | ||||||
Depreciation and amortization | 9,272 | 6,358 | ||||||
12,275 | 10,757 | |||||||
Other operating income (loss) | (14 | ) | (12 | ) | ||||
Operating income | $ | 12,261 | $ | 10,745 | ||||
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Years Ended December 31, | ||||||||
2008 | 2007 | |||||||
(In thousands) | ||||||||
Revenues: | ||||||||
NGLs | $ | 615,966 | $ | 481,018 | ||||
Natural gas | 59,346 | 35,983 | ||||||
Non-cash mark to market and impairment adjustments of commodity derivatives | 4,930 | (3,104 | ) | |||||
Loss on cash settlements of commodity derivatives | (3,932 | ) | (611 | ) | ||||
Other operating fees | 3,065 | 2,706 | ||||||
Total revenues | 679,375 | 515,992 | ||||||
Cost of products sold: | ||||||||
NGLs | 599,835 | 461,489 | ||||||
Natural gas | 58,771 | 34,485 | ||||||
Total cost of products sold | 658,606 | 495,974 | ||||||
Operating expenses | 8,633 | 7,082 | ||||||
Selling, general and administrative expenses | 5,292 | 5,524 | ||||||
Depreciation and amortization | 4,067 | 3,252 | ||||||
2,777 | 4,160 | |||||||
Other operating income | 3 | (1 | ) | |||||
Operating income | $ | 2,780 | $ | 4,159 | ||||
NGLs Volumes (Bbls) | 8,794 | 8,266 | ||||||
Natural Gas Volumes (Mmbtu) | 7,267 | 5,550 | ||||||
* | Information above does not include activities relating to Waskom, PIPE, Matagorda and BCP investments |
Equity in Earnings of Unconsolidated Entities | $ | 13,224 | $ | 10,941 | ||||
Waskom: | ||||||||
Plant Inlet Volumes (Mmcf/d) | 257 | 229 | ||||||
Frac Volumes (Bbls/d) | 10,542 | 8,725 | ||||||
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Years Ended December 31, | ||||||||
2008 | 2007 | |||||||
(In thousands) | ||||||||
Revenues | $ | 80,059 | $ | 63,533 | ||||
Operating expenses | 57,346 | 46,946 | ||||||
Selling, general and administrative expenses | 2,635 | 535 | ||||||
Depreciation and amortization | 12,128 | 8,819 | ||||||
7,950 | 7,233 | |||||||
Other operating income | 154 | 716 | ||||||
Operating income | $ | 8,104 | $ | 7,949 | ||||
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Years Ended December 31, | ||||||||
2008 | 2007 | |||||||
(In thousands) | ||||||||
Revenues | $ | 372,987 | $ | 131,602 | ||||
Cost of products sold | 314,001 | 97,747 | ||||||
Operating expenses | 17,963 | 17,033 | ||||||
Selling, general and administrative expenses | 3,382 | 2,587 | ||||||
Depreciation and amortization | 5,751 | 5,013 | ||||||
31,890 | 9,222 | |||||||
Other operating income | 66 | — | ||||||
Operating income | $ | 31,956 | $ | 9,222 | ||||
Sulfur (long tons) | 1,094.3 | 1,169.8 | ||||||
Fertilizer (long tons) | 227.6 | 251.1 | ||||||
Sulfur Services Volumes (long tons) | 1,321.9 | 1,420.9 | ||||||
Years Ended December 31, | ||||||||
2008 | 2007 | |||||||
(In thousands) | ||||||||
Revenues | 100 | % | 100 | % | ||||
Cost of products sold | 83 | % | 81 | % | ||||
Operating expenses | 8 | % | 11 | % | ||||
Selling, general and administrative expenses | 1 | % | 2 | % | ||||
Depreciation and amortization | 3 | % | 3 | % |
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Years Ended December 31, | ||||||||
2007 | 2006 | |||||||
(In thousands) | ||||||||
Revenues: | ||||||||
Services | $ | 29,400 | $ | 24,182 | ||||
Products | 30,390 | 12,424 | ||||||
Total Revenues | 59,790 | 36,606 | ||||||
Cost of products sold | 26,298 | 9,999 | ||||||
Operating expenses | 16,238 | 12,276 | ||||||
Selling, general and administrative expenses | 139 | 112 | ||||||
Depreciation and amortization | 6,358 | 4,700 | ||||||
10,757 | 9,519 | |||||||
Other operating income (loss) | (12 | ) | 3,127 | |||||
Operating income | $ | 10,745 | $ | 12,646 | ||||
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Years Ended December 31, | ||||||||
2007 | 2006 | |||||||
(In thousands) | ||||||||
Revenues: | ||||||||
NGLs | $ | 481,018 | $ | 372,997 | ||||
Natural gas | 35,983 | 13,773 | ||||||
Non-cash mark to market adjustment of commodity derivatives | (3,104 | ) | 221 | |||||
Gain (loss) on cash settlements of commodity derivatives | (611 | ) | 894 | |||||
Other operating fees | 2,706 | 1,850 | ||||||
Total revenues | 515,992 | 389,735 | ||||||
Cost of products sold: | ||||||||
NGLs | 461,489 | 361,941 | ||||||
Natural gas | 34,485 | 12,277 | ||||||
Total cost of products sold | 495,974 | 374,218 | ||||||
Operating expenses | 7,082 | 5,240 | ||||||
Selling, general and administrative expenses | 5,524 | 4,373 | ||||||
Depreciation and amortization | 3,252 | 1,667 | ||||||
4,160 | 4,237 | |||||||
Other operating income | (1 | ) | 2 | |||||
Operating income | $ | 4,159 | $ | 4,239 | ||||
NGLs Volumes (Bbls) | 8,266 | 7,688 | ||||||
Natural Gas Volumes (Mmbtu) | 5,550 | 2,107 | ||||||
* | Information above does not include activities relating to Waskom, PIPE, Matagorda and BCP investments which are reflected in Equity in Earnings of Unconsolidated Entities detailed below. |
Equity in Earnings of Unconsolidated Entities | $ | 10,941 | $ | 8,547 | ||||
Waskom: | ||||||||
Plant Inlet Volumes (Mmcf/d) | 229 | 183 | ||||||
Frac Volumes (Bbls/d) | 8,725 | 7,677 | ||||||
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Years Ended December 31, | ||||||||
2007 | 2006 | |||||||
(In thousands) | ||||||||
Revenues | $ | 63,533 | $ | 50,174 | ||||
Operating expenses | 46,946 | 34,946 | ||||||
Selling, general and administrative expenses | 535 | 587 | ||||||
Depreciation and amortization | 8,819 | 6,609 | ||||||
7,233 | 8,032 | |||||||
Other operating income | 716 | 226 | ||||||
Operating income | $ | 7,949 | $ | 8,258 | ||||
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Years Ended December 31, | ||||||||
2007 | 2006 | |||||||
(In thousands) | ||||||||
Revenues | $ | 131,602 | $ | 102,646 | ||||
Cost of products sold | 97,747 | 76,372 | ||||||
Operating expenses | 17,033 | 14,283 | ||||||
Selling, general and administrative expenses | 2,587 | 2,651 | ||||||
Depreciation and amortization | 5,013 | 4,621 | ||||||
Operating income | $ | 9,222 | $ | 4,719 | ||||
Sulfur (long tons) | 1,169.8 | 836.3 | ||||||
Fertilizer (long tons) | 251.1 | 188.9 | ||||||
Sulfur Services Volumes (long tons) | 1,420.9 | 1,025.2 | ||||||
Years Ended December 31, | ||||||||
2007 | 2006 | |||||||
(In thousands) | ||||||||
Revenues | 100 | % | 100 | % | ||||
Cost of products sold | 81 | % | 80 | % | ||||
Operating expenses | 11 | % | 11 | % | ||||
Selling, general and administrative expenses | 2 | % | 2 | % | ||||
Depreciation and amortization | 3 | % | 3 | % |
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• | In 2008, we spent $84.4 million for expansion and $16.5 million for maintenance (including $6.6 million for maintenance in the fourth quarter of 2008). Our expansion capital expenditures were made in connection with marine vessel purchases and conversions, construction projects associated with our terminalling business. Our maintenance capital expenditures were primarily made in our marine transportation segment for routine dry dockings of our vessels pursuant to the United States Coast Guard requirements and in our terminalling and sulfur services at our Neches facility, where $1.5 million in maintenance capital expenditures was spent in connection with restoration of assets destroyed in Hurricanes Gustav and Ike. | ||
• | In 2007, we spent $107.9 million for expansion and $10.3 million for maintenance (including $3.7 million for maintenance in the fourth quarter of 2007). Our expansion capital expenditures were made in connection with the Woodlawn and Mega Lube acquisitions, marine vessel purchases and conversions, construction projects associated with our terminalling business, and the sulfuric acid plant construction project at our facility in Plainview, Texas. Our maintenance capital expenditures were primarily made in our marine transportation segment for routine dry dockings of our vessels pursuant to the United States Coast Guard requirements and include $0.3 million spent in connection with the restoration of assets destroyed in hurricanes Rita and Katrina. | ||
• | In 2006, we spent $78.3 million for expansion and $12.4 million for maintenance. Our expansion capital expenditures were made in connection with our marine vessel purchases, acquiring assets relating to the South Houston and Prime Asphalt terminal acquisitions, the Corpus Christi barge terminal, the sulfur priller construction project at our Neches facility in Beaumont, Texas, and the sulfuric acid plant construction project at our facility in Plainview, Texas. Our maintenance capital expenditures were primarily made in our marine transportation segment for routine dry dockings of our vessels pursuant to the United States Coast Guard requirements and in our terminal segment for terminal facilities where $4.7 million in maintenance capital expenditures was spent in connection with restoration of assets destroyed in Hurricanes Rita and Katrina. |
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Payment due by period | ||||||||||||||||||||
Total | Less than | 1-3 | 3-5 | |||||||||||||||||
Type of Obligation | Obligation | One Year | Years | Years | Due Thereafter | |||||||||||||||
Long-Term Debt | ||||||||||||||||||||
Revolving credit facility | $ | 165,000 | $ | — | $ | 165,000 | $ | — | $ | — | ||||||||||
Term loan facility | 130,000 | — | 130,000 | — | — | |||||||||||||||
Other | — | — | — | — | — | |||||||||||||||
Non-competition agreements | 500 | 250 | 100 | 100 | 50 | |||||||||||||||
Operating leases | 26,361 | 3,814 | 10,297 | 4,782 | 7,468 | |||||||||||||||
Interest expense(1) | ||||||||||||||||||||
Revolving Credit Facility | 17,096 | 9,145 | 7,951 | — | — | |||||||||||||||
Term loan facility | 15,898 | 8,504 | 7,394 | — | — | |||||||||||||||
Other | — | — | — | — | — | |||||||||||||||
Total contractual cash obligations | $ | 354,855 | $ | 21,713 | $ | 320,742 | $ | 4,882 | $ | 7,518 | ||||||||||
(1) | Interest commitments are estimated using our current interest rates for the respective credit agreements over their remaining terms. |
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As of December 31, 2008
Year | Commodity Hedged | Volume | Type of Derivative | Basis Reference | ||||
2009 | Natural Gas | 30,000 MMBTU/Month | Natural Gas Swap ($9.025) | Columbia Gulf | ||||
2009 | Condensate & Natural Gasoline | 3,000 BBL/Month | Crude Oil Swap ($69.08) | NYMEX | ||||
2009 | Natural Gasoline | 3,000 BBL/Month | Crude Oil Swap ($70.90) | NYMEX | ||||
2009 | Condensate | 1,000 BBL/Month | Crude Oil Swap ($70.45) | NYMEX | ||||
2009 | Natural Gasoline | 2,000 BBL/Month | Natural Gasoline Swap ($86.42) | Mt. Belvieu (Non-TET) | ||||
2010 | Condensate | 2,000 BBL/Month | Crude Oil Swap ($69.15) | NYMEX | ||||
2010 | Natural Gasoline | 3,000 BBL/Month | Crude Oil Swap ($72.25) | NYMEX | ||||
2010 | Condensate | 1,000 BBL/Month | Crude Oil Swap ($104.80) | NYMEX | ||||
2010 | Natural Gasoline | 1,000 BBL/Month | Natural Gasoline Swap ($94.14) | Mt. Belvieu (Non-TET) |
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Martin Midstream GP LLC:
March 4, 2009
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Martin Midstream GP LLC:
March 4, 2009
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December 31, | ||||||||
2008 | 2007 | |||||||
(Dollars in thousands) | ||||||||
Assets | ||||||||
Cash | $ | 7,983 | $ | 4,113 | ||||
Accounts and other receivables, less allowance for doubtful accounts of $481 and $394 | 68,117 | 88,039 | ||||||
Product exchange receivables | 6,924 | 10,912 | ||||||
Inventories | 42,461 | 51,798 | ||||||
Due from affiliates | 555 | 2,325 | ||||||
Fair value of derivatives | 3,623 | 235 | ||||||
Other current assets | 1,079 | 584 | ||||||
Total current assets | 130,742 | 158,006 | ||||||
Property, plant, and equipment, at cost | 537,381 | 441,117 | ||||||
Accumulated depreciation | (125,256 | ) | (98,080 | ) | ||||
Property, plant and equipment, net | 412,125 | 343,037 | ||||||
Goodwill | 37,405 | 37,405 | ||||||
Investment in unconsolidated entities | 79,843 | 75,690 | ||||||
Fair value of derivatives | 1,469 | — | ||||||
Other assets, net | 7,332 | 9,439 | ||||||
$ | 668,916 | $ | 623,577 | |||||
Liabilities and Capital | ||||||||
Current installments of long-term debt | $ | — | $ | 21 | ||||
Trade and other accounts payable | 87,382 | 104,598 | ||||||
Product exchange payables | 10,924 | 24,554 | ||||||
Due to affiliates | 13,420 | 7,543 | ||||||
Income taxes payable | 414 | 602 | ||||||
Fair value of derivatives | 6,478 | 4,502 | ||||||
Other accrued liabilities | 6,077 | 4,752 | ||||||
Total current liabilities | 124,695 | 146,572 | ||||||
Long-term debt | 295,000 | 225,000 | ||||||
Deferred income taxes | 8,538 | 8,815 | ||||||
Fair value of derivatives | 4,302 | 5,576 | ||||||
Other long-term obligations | 1,667 | 1,766 | ||||||
Total liabilities | 434,202 | 387,729 | ||||||
Partners’ capital | 239,649 | 242,610 | ||||||
Accumulated other comprehensive income (loss) | (4,935 | ) | (6,762 | ) | ||||
Total partners’ capital | 234,714 | 235,848 | ||||||
Commitments and contingencies | $ | 668,916 | $ | 623,577 | ||||
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Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(Dollars in thousands, except per unit | ||||||||||||
amounts) | ||||||||||||
Revenues: | ||||||||||||
Terminalling and storage | $ | 36,067 | $ | 29,400 | $ | 24,182 | ||||||
Marine transportation | 76,349 | 59,579 | 47,835 | |||||||||
Product sales: | ||||||||||||
Natural gas services | 679,375 | 515,992 | 389,735 | |||||||||
Sulfur services | 371,949 | 131,326 | 102,597 | |||||||||
Terminalling and storage | 50,218 | 29,525 | 12,035 | |||||||||
1,101,542 | 676,843 | 504,367 | ||||||||||
Total revenues | 1,213,958 | 765,822 | 576,384 | |||||||||
Costs and expenses: | ||||||||||||
Cost of products sold: | ||||||||||||
Natural gas services | 657,662 | 495,641 | 374,218 | |||||||||
Sulfur services | 313,142 | 97,577 | 75,165 | |||||||||
Terminalling and storage | 42,721 | 25,471 | 9,787 | |||||||||
1,013,525 | 618,689 | 459,170 | ||||||||||
Expenses: | ||||||||||||
Operating expenses | 102,894 | 83,533 | 65,387 | |||||||||
Selling, general and administrative | 16,939 | 11,985 | 10,977 | |||||||||
Depreciation and amortization | 31,218 | 23,442 | 17,597 | |||||||||
Total costs and expenses | 1,164,576 | 737,649 | 553,131 | |||||||||
Other operating income | 209 | 703 | 3,356 | |||||||||
Operating income | 49,591 | 28,876 | 26,609 | |||||||||
Other income (expense): | ||||||||||||
Equity in earnings of unconsolidated entities | 13,224 | 10,941 | 8,547 | |||||||||
Interest expense | (19,777 | ) | (14,533 | ) | (12,466 | ) | ||||||
Debt prepayment premium | — | — | (1,160 | ) | ||||||||
Other, net | 483 | 299 | 713 | |||||||||
Total other income (expense) | (6,070 | ) | (3,293 | ) | (4,366 | ) | ||||||
Net income before taxes | 43,521 | 25,583 | 22,243 | |||||||||
Income taxes | 711 | 644 | — | |||||||||
Net income | $ | 42,810 | $ | 24,939 | $ | 22,243 | ||||||
General partner’s interest in net income | $ | 3,301 | $ | 1,564 | $ | 949 | ||||||
Limited partners’ interest in net income | $ | 39,509 | $ | 23,375 | $ | 21,294 | ||||||
Net income per limited partner unit — basic and diluted | $ | 2.72 | $ | 1.67 | $ | 1.69 | ||||||
Weighted average limited partner units — basic | 14,529,826 | 14,018,799 | 12,602,000 | |||||||||
Weighted average limited partner units — diluted | 14,534,722 | 14,022,545 | 12,604,425 |
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Partners’ Capital | Accumulated | |||||||||||||||||||||||||||
Limited Partners | General | Comprehensive | ||||||||||||||||||||||||||
Common | Subordinated | Partner | Income | |||||||||||||||||||||||||
Units | Amount | Units | Amount | Amount | Amount | Total | ||||||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||||||||
Balances – December 31, 2005 | 5,829,652 | $ | 100,206 | 3,402,690 | $ | (5,642 | ) | $ | 1,001 | — | $ | 95,565 | ||||||||||||||||
Net income | — | 16,069 | — | 5,225 | 949 | — | 22,243 | |||||||||||||||||||||
Follow-on public offering | 3,450,000 | 95,272 | — | — | — | — | 95,272 | |||||||||||||||||||||
Issuance of common units | 470,484 | 15,000 | — | — | — | — | 15,000 | |||||||||||||||||||||
General partner contribution | — | — | — | — | 2,358 | — | 2,358 | |||||||||||||||||||||
Conversion of subordinated units to common units | 850,672 | (2,495 | ) | (850,672 | ) | 2,495 | — | — | — | |||||||||||||||||||
Unit-based compensation | 3,000 | 24 | — | — | — | — | 24 | |||||||||||||||||||||
Cash distributions ($2.44 per unit) | — | (22,650 | ) | — | (8,302 | ) | (1,107 | ) | — | (32,059 | ) | |||||||||||||||||
Commodity hedging gains reclassified to earnings | — | — | — | — | — | 2 | 2 | |||||||||||||||||||||
Adjustment in fair value of derivatives | — | — | — | — | — | 120 | 120 | |||||||||||||||||||||
Balances – December 31, 2006 | 10,603,808 | $ | 201,426 | 2,552,018 | $ | (6,224 | ) | $ | 3,201 | $ | 122 | $ | 198,525 | |||||||||||||||
Net Income | — | 19,781 | — | 3,594 | 1,564 | — | 24,939 | |||||||||||||||||||||
Follow-on public offering | 1,380,000 | 55,933 | — | — | — | — | 55,933 | |||||||||||||||||||||
General partner contribution | — | — | — | — | 1,192 | — | 1,192 | |||||||||||||||||||||
Conversion of subordinated units to common units | 850,672 | (3,243 | ) | (850,672 | ) | 3,243 | — | — | — | |||||||||||||||||||
Unit-based compensation | 3,000 | 46 | — | — | — | — | 46 | |||||||||||||||||||||
Cash distributions ($2.60 per unit) | — | (29,423 | ) | — | (6,635 | ) | (1,845 | ) | — | (37,903 | ) | |||||||||||||||||
Commodity hedging gains reclassified to earnings | — | — | — | — | — | 478 | 478 | |||||||||||||||||||||
Adjustment in fair value of derivatives | — | — | — | — | — | (7,362 | ) | (7,362 | ) | |||||||||||||||||||
Balances – December 31, 2007 | 12,837,480 | $ | 244,520 | 1,701,346 | $ | (6,022 | ) | $ | 4,112 | $ | (6,762 | ) | $ | 235,848 | ||||||||||||||
Net Income | — | 34,978 | — | 4,531 | 3,301 | — | 42,810 | |||||||||||||||||||||
Cash distributions ($2.91 per unit) | — | (37,357 | ) | — | (4,951 | ) | (3,409 | ) | — | (45,717 | ) | |||||||||||||||||
Conversion of subordinated units to common units | 850,672 | (2,754 | ) | (850,672 | ) | 2,754 | — | — | — | |||||||||||||||||||
Unit-based compensation | 3,000 | 39 | — | — | — | — | 39 | |||||||||||||||||||||
Purchase of treasury units | (3,000 | ) | (93 | ) | — | — | — | — | (93 | ) | ||||||||||||||||||
Adjustment in fair value of derivatives | — | — | — | — | — | 1,827 | 1,827 | |||||||||||||||||||||
Balances – December 31, 2008 | 13,688,152 | $ | 239,333 | 850,674 | $ | (3,688 | ) | $ | 4,004 | $ | (4,935 | ) | $ | 234,714 | ||||||||||||||
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Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(Dollars in thousands) | ||||||||||||
Net income | $ | 42,810 | $ | 24,939 | $ | 22,243 | ||||||
Changes in fair values of commodity cash flow hedges | 4,219 | (3,569 | ) | 370 | ||||||||
Cash flow hedging gains reclassified to earnings | 3,043 | 478 | 2 | |||||||||
Changes in fair value of interest rate cash flow hedges | (5,435 | ) | (3,793 | ) | (250 | ) | ||||||
Comprehensive income | $ | 44,637 | $ | 18,055 | $ | 22,365 | ||||||
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Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(Dollars in thousands) | ||||||||||||
Cash flows from operating activities: | ||||||||||||
Net income | $ | 42,810 | $ | 24,939 | $ | 22,243 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 31,218 | 23,442 | 17,597 | |||||||||
Amortization of deferred debt issue costs | 1,120 | 1,233 | 1,040 | |||||||||
Deferred income taxes | (277 | ) | (149 | ) | — | |||||||
Gain on disposition or sale of property, plant, and equipment | (144 | ) | (703 | ) | (231 | ) | ||||||
Gain on involuntary conversion of property, plant, and equipment | (65 | ) | — | (3,125 | ) | |||||||
Equity in earnings of unconsolidated entities | (13,224 | ) | (10,941 | ) | (8,547 | ) | ||||||
Distributions from unconsolidated entities | 500 | 1,523 | 541 | |||||||||
Distribution in-kind from unconsolidated entities | 9,725 | 9,337 | 8,311 | |||||||||
Non-cash mark-to-market on derivatives | (2,328 | ) | 3,904 | (389 | ) | |||||||
Other | 39 | 46 | 24 | |||||||||
Change in current assets and liabilities, excluding effects of acquisitions and dispositions: | ||||||||||||
Accounts and other receivables | 19,754 | (27,066 | ) | 13,763 | ||||||||
Product exchange receivables | 3,988 | (3,836 | ) | (4,935 | ) | |||||||
Inventories | 9,337 | (18,297 | ) | 890 | ||||||||
Due from affiliates | 1,770 | (995 | ) | 145 | ||||||||
Other current assets | (495 | ) | 198 | 115 | ||||||||
Trade and other accounts payable | (17,216 | ) | 47,535 | (13,937 | ) | |||||||
Product exchange payables | (13,630 | ) | 9,817 | 5,113 | ||||||||
Due to affiliates | 5,877 | (2,931 | ) | 6,982 | ||||||||
Income taxes payable | (188 | ) | 245 | — | ||||||||
Other accrued liabilities | 1,325 | 870 | (5,912 | ) | ||||||||
Change in other non-current assets and liabilities | 7 | (154 | ) | (386 | ) | |||||||
Net cash provided by operating activities | 79,903 | 58,017 | 39,302 | |||||||||
Cash flows from investing activities: | ||||||||||||
Payments for property, plant, and equipment | (94,969 | ) | (82,164 | ) | (66,352 | ) | ||||||
Acquisitions, net of cash acquired | (5,983 | ) | (41,271 | ) | (24,306 | ) | ||||||
Proceeds from sale of property, plant, and equipment | 419 | 1,290 | 1,825 | |||||||||
Insurance proceeds from involuntary conversion of property, plant and equipment | 1,503 | — | 4,812 | |||||||||
Return of investments from unconsolidated entities | 1,225 | 1,952 | 433 | |||||||||
Distributions from (contributions to) unconsolidated entities for operations | (2,379 | ) | (6,910 | ) | (11,510 | ) | ||||||
Net cash used in investing activities | (100,184 | ) | (127,103 | ) | (95,098 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Payments of long-term debt | (257,191 | ) | (169,024 | ) | (163,010 | ) | ||||||
Proceeds from long-term debt | 327,170 | 219,950 | 135,801 | |||||||||
Net proceeds from follow on public offering | — | 55,933 | 95,272 | |||||||||
General partner contribution | — | 1,192 | 2,358 | |||||||||
Purchase of treasury units | (93 | ) | — | — | ||||||||
Proceeds from issuance of common units | — | — | 15,000 | |||||||||
Payments of debt issuance costs | (18 | ) | (252 | ) | (371 | ) | ||||||
Cash distributions paid | (45,717 | ) | (37,903 | ) | (32,059 | ) | ||||||
Net cash provided by financing activities | 24,151 | 69,896 | 52,991 | |||||||||
Net increase(decrease) in cash | 3,870 | 810 | (2,805 | ) | ||||||||
Cash at beginning of period | 4,113 | 3,303 | 6,108 | |||||||||
Cash at end of period | $ | 7,983 | $ | 4,113 | $ | 3,303 | ||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Current assets | $ | 446 | ||
Property, plant and equipment, net | 3,042 | |||
Goodwill | 1,020 | |||
Other assets | 530 | |||
Other liabilities | (300 | ) | ||
Total | $ | 4,738 | ||
Current assets | $ | 4,297 | ||
Property, plant and equipment, net | 29,101 | |||
Goodwill | 8,785 | |||
Other assets | 3,339 | |||
Current liabilities | (3,889 | ) | ||
Deferred income taxes | (8,964 | ) | ||
Other long-term obligations | (63 | ) | ||
Total | $ | 32,606 | ||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Proceeds received: | ||||
Sale of common units | $ | 58,305 | ||
General partner contribution | 1,190 | |||
Total proceeds received | $ | 59,495 | ||
Use of Proceeds: | ||||
Underwriter’s fees | $ | 2,107 | ||
Professional fees and other costs | 265 | |||
Repayment of debt under revolving credit facility | 55,850 | |||
Working capital | 1,273 | |||
Total use of proceeds | $ | 59,495 | ||
Proceeds received: | ||||
Sale of common units | $ | 100,464 | ||
General partner contribution | 2,050 | |||
Total proceeds received | $ | 102,514 | ||
Use of Proceeds: | ||||
Underwriter’s fees | $ | 4,521 | ||
Professional fees and other costs | 671 | |||
Repayment of debt under revolving credit facility | 62,000 | |||
Working capital | 35,322 | |||
Total use of proceeds | $ | 102,514 | ||
2008 | 2007 | |||||||
Natural gas liquids | $ | 10,530 | $ | 31,283 | ||||
Sulfur | 6,522 | 7,490 | ||||||
Sulfur Based Products | 14,879 | 6,626 | ||||||
Lubricants | 8,110 | 5,345 | ||||||
Other | 2,420 | 1,054 | ||||||
$ | 42,461 | $ | 51,798 | |||||
Depreciable Lives | 2008 | 2007 | ||||||||||
Land | — | $ | 15,647 | $ | 14,515 | |||||||
Improvements to land and buildings | 10-25 years | 43,092 | 34,585 | |||||||||
Transportation equipment | 3-7 years | 1,768 | 616 | |||||||||
Storage equipment | 5-20 years | 45,196 | 38,652 |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Depreciable Lives | 2008 | 2007 | ||||||||||
Marine vessels | 4-25 years | 200,473 | 147,627 | |||||||||
Operating equipment | 3-20 years | 192,434 | 172,282 | |||||||||
Furniture, fixtures and other equipment | 3-20 years | 1,548 | 1,542 | |||||||||
Construction in progress | 37,223 | 31,298 | ||||||||||
$ | 537,381 | $ | 441,117 | |||||||||
2008 | 2007 | |||||||
Carrying amount of goodwill: | ||||||||
Terminalling and storage | $ | 1,020 | $ | 1,020 | ||||
Natural gas services | 29,010 | 29,010 | ||||||
Marine transportation | 2,026 | 2,026 | ||||||
Sulfur services | 5,349 | 5,349 | ||||||
$ | 37,405 | $ | 37,405 | |||||
2008 | 2007 | |||||||
Covenants not-to-compete: | ||||||||
Terminalling and storage | $ | 1,928 | $ | 1,928 | ||||
Natural gas services 6 | 40 | 640 | ||||||
Sulfur services | 790 | 790 | ||||||
2,758 | 3,358 | |||||||
Less accumulated amortization | 1,539 | 1,610 | ||||||
$ | 1,219 | $ | 1,748 | |||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Waskom | PIPE | Matagorda | BCP | Total | ||||||||||||||||
Investment in unconsolidated entities, December 31, 2006 | $ | 64,937 | $ | 1,718 | $ | 3,786 | $ | 210 | $ | 70,651 | ||||||||||
Distributions in kind | (9,337 | ) | — | — | — | (9,337 | ) | |||||||||||||
Return on investments | (884 | ) | (517 | ) | (122 | ) | — | (1,523 | ) | |||||||||||
Contributions to (distributions from) unconsolidated entities for operations | 6,803 | — | — | 107 | 6,910 | |||||||||||||||
Return of investments | (1,741 | ) | (118 | ) | (93 | ) | — | (1,952 | ) | |||||||||||
Equity in earnings: | ||||||||||||||||||||
Equity in earnings from operations | 11,009 | 514 | 151 | (139 | ) | 11,535 | ||||||||||||||
Amortization of excess investment | (550 | ) | (15 | ) | (29 | ) | — | (594 | ) | |||||||||||
Investment in unconsolidated entities, December 31, 2007 | $ | 70,237 | $ | 1,582 | $ | 3,693 | $ | 178 | $ | 75,690 | ||||||||||
Distributions in kind | (9,725 | ) | — | — | — | (9,725 | ) | |||||||||||||
Return on investments | (500 | ) | — | — | — | (500 | ) | |||||||||||||
Contributions to (distributions from) unconsolidated entities: | ||||||||||||||||||||
Cash contributions | 1,250 | 129 | — | 80 | 1,459 | |||||||||||||||
Contributions to (distributions from) unconsolidated entities for operations | 920 | — | — | — | 920 | |||||||||||||||
Return of investments | (300 | ) | (180 | ) | (745 | ) | — | (1,225 | ) | |||||||||||
Equity in earnings: | ||||||||||||||||||||
Equity in earnings from operations | 13,646 | (302 | ) | 640 | (166 | ) | 13,818 | |||||||||||||
Amortization of excess investment | (550 | ) | (15 | ) | (29 | ) | — | (594 | ) | |||||||||||
Investment in unconsolidated entities, December 31, 2008 | $ | 74,978 | $ | 1,214 | $ | 3,559 | $ | 92 | $ | 79,843 | ||||||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Total | Long- | Partners’ | ||||||||||||||||||
Assets | Term Debt | Capital | Revenues | Net Income | ||||||||||||||||
2008 | ||||||||||||||||||||
Waskom | $ | 78,661 | $ | — | $ | 67,730 | $ | 115,031 | $ | 27,292 | ||||||||||
2007 | ||||||||||||||||||||
Waskom | $ | 66,772 | $ | — | $ | 57,149 | $ | 81,797 | $ | 22,019 | ||||||||||
2006 | ||||||||||||||||||||
Waskom | $ | 53,260 | $ | — | $ | 45,450 | $ | 65,600 | $ | 17,246 | ||||||||||
December 31, | December 31, | |||||||
2008 | 2007 | |||||||
**$195,000 Revolving loan facility at variable interest rate (6.04%* weighted average at December 31, 2008), due November 2010 secured by substantially all of our assets, including, without limitation, inventory, accounts receivable, vessels, equipment, fixed assets and the interests in our operating subsidiaries and equity method investees | $ | 165,000 | $ | 95,000 | ||||
***$130,000 Term loan facility at variable interest rate (7.04%* at December 31, 2008), due November 2010, secured by substantially all of our assets, including, without limitation, inventory, accounts receivable, vessels, equipment, fixed assets and the interests in our operating subsidiaries | 130,000 | 130,000 | ||||||
Other secured debt maturing in 2008, 7.25% | — | 21 | ||||||
Total long-term debt | 295,000 | 225,021 | ||||||
Less current installments | — | 21 | ||||||
Long-term debt, net of current installments | $ | 295,000 | $ | 225,000 | ||||
* | Interest rate fluctuates based on the LIBOR rate plus an applicable margin set on the date of each advance. The margin above LIBOR is set every three months. Indebtedness under the credit facility bears interest at either LIBOR plus an applicable margin or the base prime rate plus an applicable margin. The applicable margin for revolving loans that are LIBOR loans ranges from 1.50% to 3.00% and the applicable margin for revolving loans that are base prime rate loans ranges from 0.50% to 2.00%. The applicable margin for term loans that are LIBOR loans ranges from 2.00% to 3.00% and the applicable margin for term loans that are base prime rate loans ranges from 1.00% to 2.00%. The applicable margin for existing LIBOR borrowings is 2.50%. Effective January 1, 2009, the applicable margin for existing LIBOR borrowings will decrease to 2.00%. As a result of our leverage ratio test as of December 31, 2008, effective April 1, 2009, the applicable margin for existing LIBOR borrowings will remain at 2.00%. The Partnership incurs a commitment fee on the unused portions of the credit facility. | |
** | Effective October, 2008, the Partnership entered into a cash flow hedge that swaps $40,000 of floating rate to fixed rate. The fixed rate cost is 2.820% plus the Partnership’s applicable LIBOR borrowing spread. The cash flow hedge matures in October, 2010. | |
** | Effective January, 2008, the Partnership entered into a cash flow hedge that swaps $25,000 of floating rate to fixed rate. The fixed rate cost is 3.400% plus the Partnership’s applicable LIBOR borrowing spread. The cash flow hedge matures in January, 2010. | |
** | Effective September, 2007, the Partnership entered into a cash flow hedge that swaps $25,000 of floating rate to fixed rate. The fixed rate cost is 4.605% plus the Partnership’s applicable LIBOR borrowing spread. The cash flow hedge matures in September, 2010. | |
** | Effective November, 2006, the Partnership entered into a cash flow hedge that swaps $40,000 of floating rate to fixed rate. The fixed rate cost is 4.82% plus the Partnership’s applicable LIBOR borrowing spread. The cash flow hedge matures in December, 2009. |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
*** | The $130,000 term loan has $105,000 hedged. Effective March, 2006, the Partnership entered into a cash flow hedge that swaps $75,000 of floating rate to fixed rate. The fixed rate cost is 5.25% plus the Partnership’s applicable LIBOR borrowing spread. The cash flow hedge matures in November, 2010. Effective November 2006, the Partnership entered into an additional interest rate swap that swaps $30,000 of floating rate to fixed rate. The fixed rate cost is 4.765% plus the Partnership’s applicable LIBOR borrowing spread. This cash flow hedge matures in March, 2010. |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Date of Hedge | Notional Amount | Fixed Rate | Maturity Date | |||||||
October 2008 | $ | 40,000 | 2.820 | % | October 2010 | |||||
January 2008 | $ | 25,000 | 3.400 | % | January 2010 | |||||
September 2007 | $ | 25,000 | 4.605 | % | September 2010 | |||||
November 2006 | $ | 40,000 | 4.820 | % | December 2009 | |||||
March 2006 | $ | 75,000 | 5.250 | % | November 2010 |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
December 31, | December 31, | |||||||
2008 | 2007 | |||||||
Fair value of derivative liabilities — current | $ | (6,478 | ) | $ | (1,241 | ) | ||
Fair value of derivative liabilities — long term | (4,302 | ) | (3,436 | ) | ||||
Net fair value of derivatives | $ | (10,780 | ) | $ | (4,677 | ) | ||
2008 | 2007 | 2006 | ||||||||||
Revenues: | ||||||||||||
Terminalling and storage | $ | 18,362 | $ | 11,816 | $ | 8,926 | ||||||
Marine transportation | 24,956 | 23,729 | 15,319 | |||||||||
Product sales: | ||||||||||||
Natural gas services | 4,024 | 3,206 | 1,303 | |||||||||
Sulfur services | 22,631 | 4,326 | 24 | |||||||||
Terminalling and storage | 49 | 45 | 59 | |||||||||
26,704 | 7,577 | 1,386 | ||||||||||
$ | 70,022 | $ | 43,122 | $ | 25,631 | |||||||
Costs and expenses: | ||||||||||||
Cost of products sold: | ||||||||||||
Natural gas services | $ | 92,322 | $ | 62,686 | $ | 52,030 | ||||||
Sulfur services | 13,282 | 13,992 | 11,913 | |||||||||
Terminalling and storage | 533 | — | 1 | |||||||||
$ | 106,137 | $ | 76,678 | $ | 63,944 | |||||||
Expenses: | ||||||||||||
Operating expenses | ||||||||||||
Marine transportation | $ | 22,586 | $ | 20,891 | $ | 20,051 | ||||||
Natural gas services | 1,625 | 1,538 | 1,560 | |||||||||
Sulfur services | 3,737 | 1,234 | 928 | |||||||||
Terminalling and storage | 9,713 | 5,328 | 3,931 | |||||||||
$ | 37,661 | $ | 28,991 | $ | 26,470 | |||||||
Selling, general and administrative: | ||||||||||||
Natural gas services | 880 | 927 | 773 | |||||||||
Sulfur services | 2,508 | 1,770 | 1,714 | |||||||||
Terminalling and storage | — | 41 | 74 | |||||||||
Indirect overhead allocation, net of reimbursement | 2,896 | 1,351 | 1,305 | |||||||||
$ | 6,284 | $ | 4,089 | $ | 3,866 | |||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
• | Accounts and other receivables, trade and other accounts payable, other accrued liabilities, income taxes payable and due from/to affiliates — The carrying amounts approximate fair value because of the short maturity of these instruments. | ||
• | Long-term debt including current installments — The carrying amount of the revolving and term loan facilities approximates fair value due to the debt having a variable interest rate. |
December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Change in fair value of derivatives that do not qualify for hedge accounting and settlements of maturing hedges | $ | 1,222 | $ | (3,129 | ) | $ | 1,117 | |||||
Ineffective portion of derivatives qualifying for hedge accounting | (224 | ) | (586 | ) | (2 | ) | ||||||
Gain (loss) of derivatives in the Consolidated Statement of Operations | $ | 998 | $ | (3,715 | ) | $ | 1,115 | |||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
December 31, | ||||||||
2008 | 2007 | |||||||
Fair value of derivative assets — current | $ | 3,623 | $ | 235 | ||||
Fair value of derivative assets — long term | 1,469 | — | ||||||
Fair value of derivative liabilities — current | — | (3,261 | ) | |||||
Fair value of derivative liabilities — long term | — | (2,140 | ) | |||||
Net fair value of derivatives | $ | 5,092 | $ | (5,166 | ) | |||
December 31, 2008 | ||||||||||
Total | ||||||||||
Volume | Remaining Terms | |||||||||
Transaction Type | Per Month | Pricing Terms | of Contracts | Fair Value | ||||||
Mark to Market Derivatives:: | ||||||||||
Crude Oil Swap | 3,000 BBL | Fixed price of $69.08 settled against WTI NYMEX average monthly closings | January 2009 to December 2009 | 565 | ||||||
Crude Oil Swap | 3,000 BBL | Fixed price of $70.90 settled against WTI NYMEX average monthly closings | January 2009 to December 2009 | 628 | ||||||
Crude Oil Swap | 3,000 BBL | Fixed price of $72.25 settled against WTI NYMEX average monthly closings | January 2010 to December 2010 | 300 | ||||||
Crude Oil Swap | 1,000 BBL | Fixed price of $104.80 settled against WTI NYMEX average monthly closings | January 2010 to December 2010 | 453 | ||||||
Total swaps not designated as cash flow hedges | $ | 1,946 | ||||||||
Cash Flow Hedges: | ||||||||||
Natural Gas swap | 30,000 MMBTU | Fixed price of $9.025 settled against Inside Ferc Columbia Gulf daily average | January 2009 to December 2009 | 1,033 | ||||||
Crude Oil Swap | 1,000 BBL | Fixed price of $70.45 settled against WTI NYMEX average monthly closings | January 2009 to December 2009 | 204 | ||||||
Natural Gasoline Swap | 2,000 BBL | Fixed price of $86.42 settled against Mt. Belvieu Non-TET natural gasoline average monthly postings. | January 2009 to December 2009 | 1,193 | ||||||
Crude Oil Swap | 2,000 BBL | Fixed price of $69.15 settled against WTI NYMEX average monthly closings | January 2010 to December 2010 | 132 | ||||||
Natural Gasoline Swap | 1,000 BBL | Fixed price of $94.14 settled against Mt. Belvieu Non-TET natural gasoline average monthly postings | January 2010 to December 2010 | 584 | ||||||
Total swaps designated as cash flow hedges | $ | 3,146 | ||||||||
Total net fair value of derivatives | $ | 5,092 | ||||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
As of December 31, 2008
Year | Commodity Hedged | Volume | Type of Derivative | Basis Reference | ||||
2009 | Natural Gas | 30,000 MMBTU/Month | Natural Gas Swap ($9.025) | Columbia Gulf | ||||
2009 | Condensate & Natural Gasoline | 3,000 BBL/Month | Crude Oil Swap ($69.08) | NYMEX | ||||
2009 | Natural Gasoline | 3,000 BBL/Month | Crude Oil Swap ($70.90) | NYMEX | ||||
2009 | Condensate | 1,000 BBL/Month | Crude Oil Swap ($70.45) | NYMEX | ||||
2009 | Natural Gasoline | 2,000 BBL/Month | Natural Gasoline Swap ($86.42) | Mt. Belvieu (Non-TET) | ||||
2010 | Condensate | 2,000 BBL/Month | Crude Oil Swap ($69.15) | NYMEX | ||||
2010 | Natural Gasoline | 3,000 BBL/Month | Crude Oil Swap ($72.25) | NYMEX | ||||
2010 | Condensate | 1,000 BBL/Month | Crude Oil Swap ($104.80) | NYMEX | ||||
2010 | Natural Gasoline | 1,000 BBL/Month | Natural Gasoline Swap ($94.14) | Mt. Belvieu (Non-TET) |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
• | September 30, 2005 with respect to 20% of the subordinated units; | ||
• | September 30, 2006 with respect to 20% of the subordinated units; | ||
• | September 30, 2007 with respect to 20% of the subordinated units; | ||
• | September 30, 2008 with respect to 20% of the subordinated units; |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
2008 | 2007 | |||||||
Current: | ||||||||
Federal | $ | 239 | $ | 274 | ||||
State | 749 | 519 | ||||||
988 | 793 | |||||||
Deferred: | ||||||||
Federal | (277 | ) | (149 | ) | ||||
$ | 711 | $ | 644 | |||||
Operating | Operating | |||||||||||||||||||||||
Revenues | Depreciation | Income | ||||||||||||||||||||||
Operating | Intersegment | After | and | (Loss) after | Capital | |||||||||||||||||||
Revenues | Eliminations | Eliminations | Amortization | Eliminations | Expenditures | |||||||||||||||||||
Year ended December 31, 2008: | ||||||||||||||||||||||||
Terminalling and storage | $ | 90,474 | $ | (4,189 | ) | $ | 86,285 | $ | 9,272 | $ | 8,626 | $ | 24,958 | |||||||||||
Natural gas services | 679,375 | — | 679,375 | 4,067 | 3,725 | 9,565 | ||||||||||||||||||
Marine transportation | 80,059 | (3,710 | ) | 76,349 | 12,128 | 5,570 | 53,562 | |||||||||||||||||
Sulfur services | 372,987 | (1,038 | ) | 371,949 | 5,751 | 37,180 | 6,884 | |||||||||||||||||
Indirect selling, general, and administrative | — | — | — | — | (5,510 | ) | — | |||||||||||||||||
Total | $ | 1,222,895 | $ | (8,937 | ) | $ | 1,213,958 | $ | 31,218 | $ | 49,591 | $ | 94,969 | |||||||||||
Year ended December 31, 2007: | ||||||||||||||||||||||||
Terminalling and storage | $ | 59,790 | $ | (865 | ) | $ | 58,925 | $ | 6,358 | $ | 10,273 | $ | 26,023 | |||||||||||
Natural gas services | 515,992 | — | 515,992 | 3,252 | 4,492 | 4,090 | ||||||||||||||||||
Marine transportation | 63,533 | (3,954 | ) | 59,579 | 8,819 | 4,270 | 37,562 | |||||||||||||||||
Sulfur services | 131,602 | (276 | ) | 131,326 | 5,013 | 13,040 | 14,489 | |||||||||||||||||
Indirect selling, general, and administrative | — | — | — | — | (3,199 | ) | — | |||||||||||||||||
Total | $ | 770,917 | $ | (5,095 | ) | $ | 765,822 | $ | 23,442 | $ | 28,876 | $ | 82,164 | |||||||||||
Year ended December 31, 2006: | ||||||||||||||||||||||||
Terminalling and storage | $ | 36,606 | $ | (389 | ) | $ | 36,217 | $ | 4,700 | $ | 12,504 | $ | 13,371 | |||||||||||
Natural gas services | 389,735 | — | 389,735 | 1,667 | 4,239 | 5,552 | ||||||||||||||||||
Marine transportation | 50,174 | (2,339 | ) | 47,835 | 6,609 | 6,411 | 18,840 | |||||||||||||||||
Sulfur services | 102,646 | (49 | ) | 102,597 | 4,621 | 6,708 | 28,589 | |||||||||||||||||
Indirect selling, general, and administrative | — | — | — | — | (3,253 | ) | — | |||||||||||||||||
Total | $ | 579,161 | $ | (2,777 | ) | $ | 576,384 | $ | 17,597 | $ | 26,609 | $ | 66,352 | |||||||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
Year Ended December 31, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Operating income | $ | 49,591 | $ | 28,876 | $ | 26,609 | ||||||
Equity in earnings of unconsolidated entities | 13,224 | 10,941 | 8,547 | |||||||||
Interest expense | (19,777 | ) | (14,533 | ) | (12,466 | ) | ||||||
Debt prepayment premium | — | — | (1,160 | ) | ||||||||
Other, net | 483 | 299 | 713 | |||||||||
Income taxes | (711 | ) | (644 | ) | — | |||||||
Net incomes | $ | 42,810 | $ | 24,939 | $ | 22,243 | ||||||
2008 | 2007 | 2006 | ||||||||||
Total assets: | ||||||||||||
Terminalling and storage | $ | 157,598 | $ | 126,575 | $ | 89,354 | ||||||
Natural gas services | 232,161 | 268,230 | 184,464 | |||||||||
Marine transportation | 150,733 | 107,081 | 77,668 | |||||||||
Sulfur services | 128,424 | 121,691 | 105,975 | |||||||||
Total assets | $ | 668,916 | $ | 623,577 | $ | 457,461 | ||||||
(Unaudited) | ||||||||||||||||
First | Second | Third | Fourth | |||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||
(Dollar in thousands, except per unit amounts) | ||||||||||||||||
2008 | ||||||||||||||||
Revenues | $ | 313,016 | $ | 308,143 | $ | 364,386 | $ | 228,413 | (1) | |||||||
Operating Income | 9,008 | 4,295 | 15,420 | 20,868 | (2) | |||||||||||
Equity in earnings of unconsolidated entities | 3,510 | 4,372 | 3,503 | 1,839 | (3) | |||||||||||
Net income | 8,017 | 4,317 | 13,747 | 16,729 | (2) | |||||||||||
Net income per limited partner unit | $ | 0.51 | $ | 0.25 | $ | 0.88 | $ | 1.08 |
First | Second | Third | Fourth | |||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||
(Dollar in thousands, except per unit amounts) | ||||||||||||||||
2007 | ||||||||||||||||
Revenues | $ | 155,796 | $ | 162,314 | $ | 184,850 | $ | 262,862 | (4) | |||||||
Operating Income | 7,600 | 6,167 | 6,565 | 8,544 | ||||||||||||
Equity in earnings of unconsolidated entities | 2,050 | 2,418 | 2,736 | 3,737 | ||||||||||||
Net income | 5,803 | 5,927 | 5,503 | 7,706 | ||||||||||||
Net income per limited partner unit | $ | 0.42 | $ | 0.41 | $ | 0.35 | $ | 0.49 |
First | Second | Third | Fourth | |||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||
(Dollar in thousands, except per unit amounts) | ||||||||||||||||
2006 | ||||||||||||||||
Revenues | $ | 146,822 | $ | 133,052 | $ | 147,505 | $ | 149,005 | ||||||||
Operating Income | 5,884 | 5,874 | 4,720 | 10,131 | (5) | |||||||||||
Equity in earnings of unconsolidated entities | 2,412 | 2,310 | 2,720 | 1,105 | (6) | |||||||||||
Net income | 4,287 | 5,248 | 4,329 | 8,378 | (5) | |||||||||||
Net income per limited partner unit | $ | 0.33 | $ | 0.40 | $ | 0.32 | $ | 0.64 |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
(1) | Decreased revenues were primarily related to NGL and Sulfur Services. NGL revenues decreased because of a $1.09 decrease in average sales price. Sulfur Services decreased because of a $465.50 L/T price decrease on molten sulfur. | |
(2) | Relates to Sulfur Services segment due to certain Sulfur contract pricing provisions which allowed for increased margins during a falling price environment. | |
(3) | Decrease in equity in earnings of unconsolidated entities due to falling commodity prices. | |
(4) | Increased total revenues of $78,012 were due primarily to a 35% increase in NGL sales volumes in the fourth quarter and an increase in the NGL average sales price. | |
(5) | Includes recognition of gain on involuntary conversion of assets of $2,272 due to Hurricanes Katrina and Rita. | |
(6) | Decrease in equity in earnings of unconsolidated entities due a shutdown of the Waskom plant in the fourth quarter. |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands)
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Name | Age | Position with the General Partner | ||||
Ruben S. Martin | 57 | President, Chief Executive Officer and Director | ||||
Robert D. Bondurant | 50 | Executive Vice President and Chief Financial Officer | ||||
Donald R. Neumeyer | 61 | Executive Vice President and Chief Operating Officer | ||||
Wesley M. Skelton | 61 | Executive Vice President, Chief Administrative Officer and Controller | ||||
Randy Tauscher | 43 | Executive Vice President | ||||
Scott D. Martin | 43 | Executive Vice President | ||||
Chris Booth | 39 | Vice President, General Counsel and Secretary | ||||
John P. Gaylord | 48 | Director | ||||
C. Scott Massey | 56 | Director | ||||
Howard Hackney | 69 | Director |
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• | Annual base salary; | ||
• | Discretionary annual cash awards; | ||
• | Awards pursuant to Martin Resource Management employee benefit plans; and | ||
• | Other compensation, including limited perquisites. |
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• | an equivalent number of shares of Martin Resource Management or | ||
• | cash based on the latest valuation of the shares of common stock of Martin Resource Management held by the ESOP. |
Name and | ||||||||||||||||
Principal Position | Year | Salary ($) | Bonus ($) | Total Compensation | ||||||||||||
Ruben S. Martin | 2008 | $ | 73,500 | $ | — | $ | 73,500 | |||||||||
President and Chief Executive Officer | 2007 | $ | 134,271 | $ | — | $ | 134,271 | |||||||||
2006 | $ | 137,718 | $ | — | $ | 137,718 | ||||||||||
Robert D. Bondurant | 2008 | $ | 38,040 | $ | — | $ | 38,040 | |||||||||
Executive Vice President and Chief Financial Officer | 2007 | $ | 116,234 | $ | — | $ | 116,234 | |||||||||
2006 | $ | 105,565 | $ | — | $ | 105,565 |
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Name and | ||||||||||||||||
Principal Position | Year | Salary ($) | Bonus ($) | Total Compensation | ||||||||||||
Donald R. Neumeyer | 2008 | $ | 37,283 | $ | — | $ | 37,283 | |||||||||
Executive Vice President and Chief Operating Officer | 2007 | $ | 116,170 | $ | — | $ | 116,170 | |||||||||
2006 | $ | 108,065 | $ | — | $ | 108,065 | ||||||||||
Wesley M. Skelton | 2008 | $ | 108,358 | $ | — | $ | 108,358 | |||||||||
Executive Vice President, Controller and Chief Administrative Officer | 2007 | $ | 151,936 | $ | — | $ | 151,936 | |||||||||
2006 | $ | 117,780 | $ | — | $ | 117,780 | ||||||||||
Randall L. Tauscher | 2008 | $ | 300,000 | $ | 300,000 | $ | 600,000 | |||||||||
Executive Vice President | 2007 | $ | — | $ | — | $ | — | |||||||||
2006 | $ | — | $ | — | $ | — | ||||||||||
Chris H. Booth | 2008 | $ | 77,625 | $ | — | $ | 77,625 | |||||||||
Vice President, General Counsel and Secretary | 2007 | $ | 120,938 | $ | — | $ | 120,938 | |||||||||
2006 | $ | 98,585 | $ | — | $ | 98,585 |
Fees Earned Paid in | Stock | |||||||||||
Name | Cash ($) | Awards ($)(1) | Total ($) | |||||||||
Ruben S. Martin | N/A | N/A | N/A | |||||||||
John P. Gaylord | $ | 35,000 | $ | 34,750 | $ | 69,750 | ||||||
C. Scott Massey | $ | 35,000 | $ | 34,750 | $ | 69,750 | ||||||
Howard Hackney | $ | 35,000 | $ | 34,750 | $ | 69,750 |
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(1) | On May 5, 2008, we issued 1,000 restricted common units to each of our three independent, non-employee, directors under our long-term incentive plan. These restricted common units vest in equal installments of 250 units on January 24, 2009, 2010, 2011 and 2012, respectively. In calculating the fair value of the award, we multiplied the closing price of our common units on the NASDAQ on the date of grant, May 5, 2008, by the number of restricted common units granted to each director. |
/s/ Howard Hackney | ||
/s/ John P. Gaylord | ||
John P. Gaylord | ||
/s/ C. Scott Massey | ||
C. Scott Massey |
Percentage | Percentage of | Percentage | ||||||||||||||||||
Common | of Common | Subordinated | Subordinated | of Total | ||||||||||||||||
Units | Units | Units | Units | Units | ||||||||||||||||
Beneficially | Beneficially | Beneficially | Beneficially | Beneficially | ||||||||||||||||
Name of Beneficial Owner(1) | Owned | Owned(2) | Owned | Owned | Owned(2) | |||||||||||||||
Martin Resource Management Corporation(3) | 4,334,143 | 31.7 | % | 850,674 | 100 | % | 35.7 | % | ||||||||||||
Martin Resource LLC(3) | 4,334,143 | 31.7 | % | 850,674 | 100 | % | 35.7 | % | ||||||||||||
Ruben S. Martin(4) | 4,363,543 | 31.9 | % | 850,674 | 100 | % | 35.9 | % | ||||||||||||
Scott D. Martin(5) | 4,346,931 | 31.8 | % | 850,674 | 100 | % | 35.7 | % | ||||||||||||
Donald R. Neumeyer | 3,999 | — | — | — | — | |||||||||||||||
Wesley M. Skelton | 3,062 | — | — | — | — | |||||||||||||||
Robert D. Bondurant | 10,787 | — | — | — | — | |||||||||||||||
Chris Booth | 1,586 | — | — | — | — | |||||||||||||||
Randall Tauscher | 6,890 | — | — | — | — | |||||||||||||||
John P. Gaylord(6) | 33,000 | — | — | — | — | |||||||||||||||
C. Scott Massey(6)(7) | 7,250 | — | — | — | — | |||||||||||||||
Howard Hackney(6) | 3,000 | — | — | — | — | |||||||||||||||
Kayne Anderson Capital Advisors, L.P.(8) | 1,499,705 | 11.0 | % | — | — | 10.3 | % | |||||||||||||
All directors and executive officers as a group (10 persons)(9) | 4,445,905 | 32.5 | % | 850,674 | 100 | % | 36.4 | % |
(1) | The address for Martin Resource Management Corporation and all of the individuals listed in this table, unless otherwise indicated, is c/o Martin Midstream Partners L.P., 4200 Stone Road, Kilgore, Texas 75662. |
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(2) | The percent of class shown is less than one percent unless otherwise noted. | |
(3) | Martin Resource Management Corporation is the owner of Martin Resource LLC, and as such may be deemed to beneficially own the common and subordinated units held by Martin Resource LLC. The 4,334,143 common units and 850,674 subordinated units beneficially owned by Martin Resource Management Corporation through its ownership of Martin Resource LLC have been pledged as security to a third party to secure payment for a loan made by such third party. | |
(4) | Includes 4,334,143 common units and 850,674 subordinated units beneficially owned by Martin Resource Management Corporation through its ownership of Martin Resource LLC. Ruben S. Martin beneficially owns securities in Martin Resource Management Corporation representing approximately 42.5% of the voting power thereof and serves as its Chairman of the Board and President. As a result, Ruben S. Martin may be deemed to be the beneficial owner of the common units and the subordinated units owned by Martin Resource Management Corporation. | |
(5) | Includes 4,334,143 common units and 850,674 subordinated units beneficially owned by Martin Resource Management Corporation through its ownership of Martin Resource LLC. Scott D. Martin beneficially owns securities in Martin Resource Management Corporation representing approximately 48.5% of the voting power thereof and serves on its Board of Directors. As a result, Scott D. Martin may be deemed to be the beneficial owner of the common units and the subordinated units owned by Martin Resource Management Corporation. | |
(6) | On May 5, 2008, we issued 1,000 restricted common units to each of our three independent directors. These restricted common units vest in equal installments of 250 units on January 24, 2009, 2010, 2011 and 2012, respectively. On May 3, 2007, we issued 1,000 restricted common units to each of our three independent directors. These restricted common units vest in equal installments of 250 units on January 24, 2008, 2009, 2010 and 2011, respectively. On January 24, 2006, we issued 1,000 restricted common units to each of our three independent directors. These restricted common units vest in equal installments of 250 units on each of the four anniversaries following the grant date. | |
(7) | Mr. Massey may be deemed to be the beneficial owner of 250 common units held by his wife. | |
(8) | Based on a Schedule 13G (Amendment No. 4), dated February 11, 2009 filed by Kayne Anderson Capital Advisors, L.P. with the United States Securities and Exchange Commission. The filing is made jointly with Richard A. Kayne. The filers report that they have shared voting power with respect to the 1,499,705 common units. The address of Kayne Anderson Capital Advisors, L.P. is 1800 Avenue of the Stars, Second Floor, Los Angeles, California 90067. | |
(9) | The total for all directors and executive officers as a group includes the common units directly owned by such directors and executive officers as well as the common units and subordinated units beneficially owned by Martin Resource Management Corporation as both Ruben S. Martin and Scott D. Martin may be deemed to be the beneficial owners thereof. |
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Beneficial Ownership of | ||||||||
Common Stock | ||||||||
Number of | Percent of | |||||||
Name of Beneficial Owner(1) | Shares | Outstanding | ||||||
R.S. Martin Jr. Children’s Trust No. One f/b/o Angela Santi Jones (2) | 1,278.00 | 12.0 | % | |||||
Martin Resource Management Corporation Employee Stock Ownership Trust (3) | 1,922.00 | 18.1 | % | |||||
CNRT LLC (4) | 2,266.67 | 21.3 | % | |||||
Ruben S. Martin III Dynasty Trust (5) | 635.00 | 6.0 | % | |||||
SKM Partnership, Ltd. (6) | 2,560.00 | 24.1 | % | |||||
Martin Transport, Inc. (7) | 40.00 | * | ||||||
Ruben S. Martin (3) (4) (7) (8) | 4,523.00 | 42.5 | % | |||||
Scott D. Martin (3) (6) (7) (9) | 5,156.00 | 48.5 | % | |||||
Donald R. Neumeyer (10) (11) (12) | 116.00 | 1.1 | % | |||||
Wesley M. Skelton (3) (10) (11) (12) | 2,030.00 | 19.0 | % | |||||
Robert D. Bondurant (10) (11) (12) | 200.00 | 1.8 | % | |||||
Executive officers and directors as a group (5 individuals) | 8,131.00 | 76.5 | % |
* | Represents less than 1.0% | |
(1) | The business address of each shareholder, director and executive officer of Martin Resource Management Corporation is c/o Martin Resource Management Corporation, 4200 Stone Road, Kilgore, Texas 75662. | |
(2) | Karen Yost is the sole investment trustee and the sole dispositive trustee of the R.S. Martin Jr. Children’s Trust No. One f/b/o Angela Santi Jones and exercises control over the voting of the securities owned by this trust and exercises sole control over the disposition of the securities owned by this trust. As a result, this person may be deemed to be the beneficial owners of the securities held by such trust. Karen Yost is an officer of Martin Resource Management. | |
(3) | Ruben S. Martin, Scott D. Martin and Wesley M. Skelton are the co-trustees of the Martin Resource Management Corporation Employee Stock Ownership Trust and exercise shared control over the voting and disposition of the securities owned by this trust. As a result, these persons may be deemed to be the beneficial owners of the securities held by such trust; thus, the number of shares of common stock reported herein as beneficially owned by such individuals includes the 1,922 shares owned by such trust. Mr. Skelton disclaims beneficial ownership of these 1,922 shares. | |
(4) | Ruben S. Martin is the beneficial owner of the general partner of CNRT LLC and exercises control over the voting and disposition of the securities owned by this entity. As a result, he may be deemed to be the beneficial owner of the securities held by such entity; thus, the number of shares of common stock reported herein as beneficially owned by such individual includes the 2,266.67 shares owned by such entity. | |
(5) | Bill Bankston is the trustee of the Ruben S. Martin III Dynasty Trust and exercises control over the voting and disposition of the securities owned by the trust. As a result, he may be deemed to be the beneficial owner of the securities held by the trust. Scott D. Martin was the trustee of this trust until he resigned effective February 16, 2009 and was previously shown as the beneficial owner of the securities held by this trust. These 635 shares have been pledged as security to a third party to secure payment for a loan made by such third party. | |
(6) | Scott D. Martin is the beneficial owner of the general partner of SKM Partnership, Ltd. and exercises control over the voting and disposition of the securities owned by this entity. As a result, he may be deemed to be the beneficial owner of the securities held by such entity; thus, the number of shares of common stock reported herein as beneficially owned by such individual includes the 2,560 shares owned by such entity. |
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(7) | Ruben S. Martin beneficially owns securities in Martin Resource Management Corporation representing approximately 42.5% of the voting power thereof and serves as its Chairman of the Board and President. Scott D. Martin beneficially owns securities in Martin Resource Management Corporation representing approximately 48.5% of the voting power thereof and serves as an executive officer thereof and as a member of its Board of Directors. Martin Transport, Inc. is a wholly owned subsidiary of Martin Resource Management Corporation. As a result, each of Ruben S. Martin and Scott D. Martin may be deemed to be the beneficial owner of the securities held by Martin Transport, Inc.; thus, the number of shares of common stock reported herein as beneficially owned by such individuals includes the 40 shares owned by Martin Transport, Inc. | |
(8) | Ruben S. Martin directly owns 294.33 shares of common stock. | |
(9) | Scott D. Martin directly owns 634 shares of common stock. | |
(10) | Messrs. Neumeyer, Skelton and Bondurant have the right to acquire 50, 48 and 140 shares, respectively, by virtue of options issued under Martin Resource Management Corporation’s nonqualified stock option plan. | |
(11) | Messrs. Neumeyer, Skelton and Bondurant own securities in Martin Resource Martin Corporation of 16, 10 and 10 shares of common stock, respectively, obtained by the exercise of options issued under Martin Resource Management Corporation’s nonqualified stock option plan. | |
(12) | Messrs. Neumeyer, Skelton and Bondurant each own securities in Martin Resource Martin Corporation of 50 restricted common shares representing shares by virtue of restricted stock issued under Martin Resource Management Corporation’s 2007 Long-Term Incentive Plan. |
Number of securities | ||||||||||||
Number of | remaining available for | |||||||||||
securities to be | future issuance under | |||||||||||
issued upon exercise | Weighted-average | equity compensation | ||||||||||
of outstanding | exercise price of | plans (excluding | ||||||||||
options, Warrants | outstanding options, | securities reflected in | ||||||||||
and rights | warrants and rights | column (a)) | ||||||||||
Plan Category | (a) | (b) | (c) | |||||||||
Equity compensation plans approved by security holders | N/A | N/A | N/A | |||||||||
Equity compensation plans not approved by security holders (1) | 0 | $ | 0 | 716,000 | ||||||||
Total | 0 | $ | 0 | 716,000 |
(1) | Our general partner has adopted and maintains the Martin Midstream Partners L.P. Long-Term Incentive Plan. For a description of the material features of this plan, please see “Item 11. Executive Compensation — Employee Benefit Plans — Martin Midstream Partners L.P. Long-Term Incentive Plan”. |
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Formation Stage | ||
The consideration received by our general partner and Martin Resource Management for the transfer of assets to us | • 4,253,362 subordinated units; (A total 3,402,688 of the original subordinated units issued to Martin Resource Management have been converted into common units on a one-for-one basis since the formation of the Partnership. (850,672 subordinated units were converted on each of November 14, 2005, 2006, 2007 and 2008, respectively). | |
• 2% general partner interest; and | ||
• the incentive distribution rights. | ||
Operational Stage | ||
Distributions of available cash to our general partner | We will generally make cash distributions 98% to our unitholders, including Martin Resource Management as holder of all of the subordinated units, and 2% to our general partner. In addition, if distributions exceed the minimum quarterly distribution and other higher target levels, our general partner will be entitled to increasing percentages of the distributions, up to 50% of the distributions above the highest target level as a result of its incentive distribution rights. | |
Assuming we have sufficient available cash to pay the full minimum quarterly distribution on all of our outstanding units for four quarters, our general partner would receive distributions of approximately $0.6 million on its 2.0% general partner interest and Martin Resource Management would receive an aggregate annual distribution of approximately $1.7 million on its subordinated units. | ||
Payments to our general partner and its affiliates | Martin Resource Management is entitled to reimbursement for all direct expenses it or our general partner incurs on our behalf. The direct expenses include the salaries and benefit costs employees of Martin Resource Management who provide services to us. Our general partner has sole discretion in determining the amount of these expenses. In addition to the direct expenses, Martin Resource Management is entitled to reimbursement for a portion of indirect general and administrative and corporate overhead expenses. Under the omnibus agreement, we are required to reimburse Martin Resource Management for indirect general and administrative and corporate overhead expenses. The amount of this reimbursement was capped at $2.0 million through November 1, 2007 when the cap expired. For the years ended December 31, 2008, 2007 and 2006, the Conflicts Committee of our general partner approved reimbursement amounts of $2.9, $1.5 and $1.5 million, respectively, reflecting our allocable share of such expenses. The Conflicts Committee will review and approve future adjustments in the reimbursement amount for indirect expenses, if any, annually. Please read “Agreements — Omnibus Agreement” below. |
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Withdrawal or removal of our general partner | If our general partner withdraws or is removed, its general partner interest and its incentive distribution rights will either be sold to the new general partner for cash or converted into common units, in each case for an amount equal to the fair market value of those interests. | |
Liquidation Stage | ||
Liquidation | Upon our liquidation, the partners, including our general partner, will be entitled to receive liquidating distributions according to their particular capital account balances. |
• | providing terminalling and storage services for hydrocarbon products and by-products; | ||
• | providing marine transportation of hydrocarbon products and by-products; | ||
• | distributing NGLs; and | ||
• | manufacturing and selling sulfur-based fertilizer products and other sulfur-related products. |
• | the operation on our behalf of any asset or group of assets owned by us or our affiliates; | ||
• | any business operated by Martin Resource Management, including the following: | ||
• | providing land transportation of various liquids, | ||
• | distributing fuel oil, asphalt, sulfuric acid, marine fuel and other liquids, | ||
• | providing marine bunkering and other shore-based marine services in Alabama, Louisiana, Mississippi and Texas, | ||
• | operating a small crude oil gathering business in Stephens, Arkansas, | ||
• | operating a small lube oil processing business in Smackover, Arkansas, | ||
• | operating an underground NGL storage facility in Arcadia, Louisiana, | ||
• | building and marketing sulfur prillers, | ||
• | developing an underground natural gas storage facility in Arcadia, Louisiana, |
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• | operating, solely for our account, an NGL truck loading and unloading and pipeline distribution terminal in Mont Belvieu, Texas. | ||
• | any business that Martin Resource Management acquires or constructs that has a fair market value of less than $5.0 million; | ||
• | any business that Martin Resource Management acquires or constructs that has a fair market value of $5.0 million or more if we have been offered the opportunity to purchase the business for fair market value, and we decline to do so with the concurrence of our conflicts committee; and | ||
• | any business that Martin Resource Management acquires or constructs where a portion of such business includes a restricted business and the fair market value of the restricted business is $5.0 million or more and represents less than 20% of the aggregate value of the entire business to be acquired or constructed; provided that, following completion of the acquisition or construction, we are provided the opportunity to purchase the restricted business. |
• | certain potential environmental liabilities associated with the operation of the assets contributed to us, and assets retained, by Martin Resource Management that relate to events or conditions occurring or existing before November 1, 2002; and | ||
• | any payments we were required to make, as a successor in interest to affiliates of Martin Resource Management, under environmental indemnity provisions contained in the contribution agreement associated with the contribution of assets by Martin Resource Management to CF Martin Sulphur in November 2000. |
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• | we unload, transfer and store products received from vessels or trucks at the terminal; and | ||
• | we transfer products stored at the terminal to vessels or trucks. |
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2008 | 2007 | |||||||
Audit fees | $ | 837,500 | (1) | $ | 850,000 | (2) | ||
Audit related fees | 12,800 | (3) | 15,175 | (3) | ||||
Audit and audit related fees | 850,300 | 865,175 | ||||||
Tax fees | 80,725 | (4) | 101,483 | (4) | ||||
All other fees | — | — | ||||||
Total fees | $ | 931,025 | $ | 966,658 | ||||
(1) | 2008 audit fees include fees for the annual integrated audit, the audit of Waskom Gas Processing Company, the audit of Martin Midstream GP LLC and fees related to services in connection with transactions. | |
(2) | 2007 audit fees include fees for the annual integrated audit, the audit of Waskom Gas Processing Company, the audit of Martin Midstream GP LLC, issuance of the comfort letter related to the May 2007 equity offering and the review of registration statements and issuing related consents. | |
(3) | Audit related fees include fees for accounting consultations on various transactions occurring in 2008 and 2007. | |
(4) | Tax fees are for services related to the review of our partnership K-1’s returns, and research and consultations on other tax related matters. |
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(a) | Financial Statements and Schedules | ||
(1) | The following financial statements of Martin Midstream Partners L.P. and are included in Part II, Item 8: | ||
Reports of Independent Registered Public Accounting Firm | |||
Consolidated Balance Sheets as of December 31, 2008 and 2007 | |||
Consolidated Statements of Operations for the years ended December 31, 2008, 2007 and 2006 | |||
Consolidated Statements of Changes in Capital for the years ended December 31, 2008, 2007 and 2006 | |||
Consolidated Statements of Comprehensive Income for the years ended December 31, 2008 and 2007. | |||
Consolidated Statements of Cash Flows for the years ended December 31, 2008, 2007 and 2006 | |||
Notes to the Consolidated Financial Statements | |||
(2) | Financial Statements of Waskom Gas Processing Company for the year ended December 31, 2008, an affiliate accounted for by the equity method, which constituted a significant subsidiary. | ||
(b) | Exhibits | ||
Reference is made to the Index to Exhibits beginning on page 129 for a list of all exhibits filed as part of this report. |
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Martin Midstream Partners L.P. | ||||||||
(Registrant) | ||||||||
By: | Martin Midstream GP LLC | |||||||
It’s General Partner | ||||||||
Date: March 4, 2009 | By: | /s/ Ruben S. Martin | ||||||
President and Chief Executive Officer |
Signature | Title | |
/s/ Ruben S. Martin | President, Chief Executive Officer and Director of Martin Midstream GP LLC (Principal Executive Officer) | |
/s/ Robert D. Bondurant | Executive Vice President and Chief Financial Officer of Martin Midstream GP LLC (Principal Financial Officer) | |
/s/ Wesley M. Skelton | Executive Vice President, Chief Administrative Officer, Secretary and Controller of Martin Midstream GP LLC (Principal Accounting Officer) | |
/s/ John P. Gaylord | Director of Martin Midstream GP LLC | |
/s/ C. Scott Massey | Director of Martin Midstream GP LLC | |
/s/ Howard Hackney | Director of Martin Midstream GP LLC |
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Exhibit | ||
Number | Exhibit Name | |
3.1 | Certificate of Limited Partnership of Martin Midstream Partners L.P. (the “Partnership”), dated June 21, 2002 (filed as Exhibit 3.1 to the Partnership’s Registration Statement on Form S-1 (Reg. No. 333-91706), filed July 1, 2002, and incorporated herein by reference). | |
3.2 | First Amended and Restated Agreement of Limited Partnership of the Partnership, dated November 6, 2002 (filed as Exhibit 3.1 to the Partnership’s Current Report on Form 8-K, filed November 19, 2002, and incorporated herein by reference). | |
3.3 | Amendment No. 1 to First Amended and Restated Agreement of Limited Partnership of Martin Midstream Partners L.P., dated November 1, 2007 (filed as Exhibit 3.1 to the Partnership’s Current Report on Form 8-K, filed November 2, 2007, and incorporated herein by reference). | |
3.4 | Amendment No. 2 to First Amended and Restated Agreement of Limited Partnership of the Partnership, dated effective January 1, 2007 (filed as Exhibit 3.1 to the Partnership’s Current Report on Form 8-K, filed April 7, 2008, and incorporated herein by reference). | |
3.5 | Certificate of Limited Partnership of Martin Operating Partnership L.P. (the “Operating Partnership”), dated June 21, 2002 (filed as Exhibit 3.3 to the Partnership’s Registration Statement on Form S-1 (Reg. No. 333-91706), filed July 1, 2002, and incorporated herein by reference). | |
3.6 | Amended and Restated Agreement of Limited Partnership of the Operating Partnership, dated November 6, 2002 (filed as Exhibit 3.2 to the Partnership’s Current Report on Form 8-K, filed November 19, 2002, and incorporated herein by reference). | |
3.7 | Certificate of Formation of Martin Midstream GP LLC (the “General Partner”), dated June 21, 2002 (filed as Exhibit 3.5 to the Partnership’s Registration Statement on Form S-1 (Reg. No. 333-91706), filed July 1, 2002, and incorporated herein by reference). | |
3.8 | Limited Liability Company Agreement of the General Partner, dated June 21, 2002 (filed as Exhibit 3.6 to the Partnership’s Registration Statement on Form S-1 (Red. No. 33-91706), filed July 1, 2002, and incorporated herein by reference). | |
3.9 | Certificate of Formation of Martin Operating GP LLC (the “Operating General Partner”), dated June 21, 2002 (filed as Exhibit 3.7 to the Partnership’s Registration Statement on Form S-1 (Reg. No. 333-91706), filed July 1, 2002, and incorporated herein by reference). | |
3.10 | Limited Liability Company Agreement of the Operating General Partner, dated June 21, 2002 (filed as Exhibit 3.8 to the Partnership’s Registration Statement on Form S-1 (Reg. No. 333-91706), filed July 1, 2002, and incorporated herein by reference). | |
4.1 | Specimen Unit Certificate for Common Units (contained in Exhibit 3.2). | |
4.2 | Specimen Unit Certificate for Subordinated Units (filed as Exhibit 4.2 to Amendment No. 4 to the Partnership’s Registration Statement on Form S-1 (Reg. No. 333-91706), filed October 25, 2002, and incorporated herein by reference). | |
10.1 | Amended and Restated Credit Agreement, dated October 29, 2004, among the Partnership, the Operating Partnership, Royal Bank of Canada and the other Lenders set forth therein (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K, filed November 11, 2004, and incorporated herein by reference). | |
10.2 | First Amendment to Credit Agreement, dated May 3, 2005, among the Partnership, the Operating Partnership, Royal Bank of Canada and the other Lenders set forth therein (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K, filed May 4, 2005, and incorporated herein by reference). | |
10.3 | Second Amendment to Second Amended and Restated Credit Agreement, dated as of December 28, 2007, among the Operating Partnership, the Partnership, the Operating General Partner, Prism Gas Systems I, L.P., Prism Gas Systems GP, L.L.C., Prism Gulf Coast Systems, L.L.C., McLeod Gas Gathering and Processing Company, L.L.C., Woodlawn Pipeline Co., Inc., the financial institution parties to the Credit Agreement and Royal Bank of Canada, as administrative agent and collateral agent (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K, filed January 2, 2008, and incorporated herein by reference). | |
10.4 | Second Amended and Restated Credit Agreement, dated November 10, 2005, among the Partnership, the Operating Partnership, Royal Bank of Canada and the other Lenders set forth therein (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K, filed November 14, 2005, and incorporated herein by reference). |
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Exhibit | ||
Number | Exhibit Name | |
10.5 | Omnibus Agreement dated November 1, 2002, by and among Martin Resource Management, the General Partner, the Partnership and the Operating Partnership (filed as Exhibit 10.3 to the Partnership’s Current Report on Form 8-K, filed November 19, 2002, and incorporated herein by reference). | |
10.6 | Motor Carrier Agreement dated November 1, 2002, by and between the Operating Partnership and Transport (filed as Exhibit 10.4 to the Partnership’s Current Report on Form 8-K, filed November 19, 2002, and incorporated herein by reference). | |
10.7 | Terminal Services Agreement dated November 1, 2002, by and between the Operating Partnership and Martin gas Sales LLC (“MGSLLC”) (filed as Exhibit 10.5 to the Partnership’s Current Report on Form 8-K, filed November 19, 2002, and incorporated herein by reference). | |
10.8 | Throughput Agreement dated November 1, 2002, by and between MGSLLC and the Operating Partnership (filed as Exhibit 10.6 to the Partnership’s Current Report on Form 8-K, filed November 19, 2002, and incorporated herein by reference). | |
10.9 | Contract for Marine Transportation dated November 1, 2002, by and between the Operating Partnership and Martin Resource Management (filed as Exhibit 10.7 to the Partnership’s Current Report on Form 8-K, filed November 19, 2002, and incorporated herein by reference). | |
10.10 | Product Storage Agreement dated November 1, 2002, by and between Martin Underground Storage, Inc. and the Operating Partnership (filed as Exhibit 10.8 to the Partnership’s Current Report on Form 8-K, filed November 19, 2002, and incorporated herein by reference). | |
10.11 | Marine Fuel Agreement dated November 1, 2002, by and between Martin Fuel Service LLC and the Operating Partnership (filed as Exhibit 10.9 to the Partnership’s Current Report on Form 8-K, filed November 19, 2002, and incorporated herein by reference). | |
10.12 | Product Supply Agreement dated November 1, 2002, by and between MGSLLC and the Operating Partnership (filed as Exhibit 10.10 to the Partnership’s Current Report on Form 8-K, filed November 19, 2002, and incorporated herein by reference). | |
10.13† | Martin Midstream Partners L.P. Long-Term Incentive Plan (filed as Exhibit 10.11 to the Partnership’s Current Report on Form 8-K, filed November 19, 2002, and incorporated herein by reference). | |
10.14† | Martin Midstream Partners L.P. Amended and Restated Long-Term Incentive Plan (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K, filed January 26, 2006, and incorporated herein by reference). | |
10.15† | Form of Restricted Common Unit Award Notice (filed as Exhibit 10.2 to the Partnership’s Current Report on Form 8-K, filed January 26, 2006, and incorporated herein by reference). | |
10.16 | Assignment and Assumption of Lease and Sublease dated November 1, 2002, by and between the Operating Partnership and MGSLLC (filed as Exhibit 10.12 to the Partnership’s Current Report on Form 8-K, filed November 19, 2002, and incorporated herein by reference). | |
10.17 | Purchaser Use Easement, Ingress-Egress Easement, and Utility Facilities Easement dated November 1, 2002, by and between MGSLLC and the Operating Partnership (filed as Exhibit 10.13 to the Partnership’s Current Report on Form 8-K, filed November 19, 2002, and incorporated herein by reference). | |
10.18 | Marine Transportation Agreement, by and between the Operating Partnership and Cross Oil Refining & Marketing, Inc., dated October 27, 2003 (filed as Exhibit 10.14 to the Partnership’s Quarterly Report of Form 10-Q, filed November 10, 2003, and incorporated herein by reference). | |
10.19 | Terminalling Agreement, by and between the Operating Partnership and Cross Oil Refining & Marketing, Inc., dated October 27, 2003 (filed as Exhibit 10.15 to the Partnership’s Quarterly Report of Form 10-Q, filed November 10, 2003, and incorporated herein by reference). | |
10.20 | Asset Purchase Agreement by and among the Partnership, the Operating Partnership and Tesoro Marine Services, L.L.C., dated October 27, 2003 (filed as Exhibit 10.1 to the Partnership’s Amendment No. 1 to Current Report on Form 8-K, filed January 23, 2004, and incorporated herein by reference). | |
10.21 | Purchase Agreement by and among the Operating Partnership, Prism Gas Systems I, L.P., Natural Gas Partners V, L.P., Robert E. Dunn, William J. Diehnelt, Gene A. Adams, Philip D. Gettig, Sharon C. Taylor and Scott A. Southard, dated September 6, 2005 (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K, filed September 6, 2005, and incorporated herein by reference). | |
10.22 | Amended and Restated Terminal Services Agreement by and between the Operating Partnership and MFSLLC, dated October 27, 2004 (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K, filed October 28, 2004, and incorporated herein by reference). | |
10.23 | Transportation Services Agreement by and between the Operating Partnership and MFSLLC, dated December 23, 2003 (filed as Exhibit 10.3 to the Partnership’s Amendment No. 1 to Current Report on Form 8-K, filed January 23, 2004, and incorporated herein by reference). |
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Exhibit | ||
Number | Exhibit Name | |
10.24 | Lubricants and Drilling Fluids Terminal Services Agreement by and between the Operating Partnership and MFSLLC, dated December 23, 2003 (filed as Exhibit 10.4 to the Partnership’s Amendment No. 1 to Current Report on Form 8-K, filed January 23, 2004, and incorporated herein by reference). | |
10.25† | Martin Resource Management Corporation Purchase Plan for Units of Martin Midstream Partners L.P. (filed as Exhibit 10.1 to the Partnership’s registration statement on Form S-8 (Reg. No. 333-140152), filed January 23, 2007, and incorporated herein by reference). | |
10.26 | Stock Purchase Agreement, dated April 27, 2007, by and among Woodlawn Pipeline Co., Inc., Lantern Resources, L.P., David P. Deison and Prism Gas Systems I, L.P. (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K, filed May 2, 2007, and incorporated herein by reference). | |
10.27 | Asset Purchase Agreement, dated April 27, 2007, by and among Peak Gas Gathering L.P. and Prism Gas Systems I, L.P. (filed as Exhibit 10.2 to the Partnership’s Current Report on Form 8-K, filed May 2, 2007, and incorporated herein by reference). | |
10.28 | Form of Indemnification Agreement (filed as Exhibit 10.1 to the Partnership’s Quarterly Report of Form 10-Q, filed November 6, 2008, and incorporated herein by reference). | |
10.29 | Third Amendment to Second Amended and Restated Credit Agreement, effective as of September 24, 2008, among the Operating Partnership, the Partnership, the Operating General Partner, Prism Gas Systems I, L.P., Prism Gas Systems GP, L.L.C., Prism Gulf Coast Systems, L.L.C., McLeod Gas Gathering and Processing Company, L.L.C., Woodlawn Pipeline Co., Inc., the financial institution parties to the Credit Agreement and Royal Bank of Canada, as administrative agent and collateral agent (filed as Exhibit 10.1 to the Partnership’s Current Report on Form 8-K filed September 30, 2008, and incorporated herein by reference). | |
21.1* | List of Subsidiaries. | |
23.1* | Consent of KPMG LLP. | |
23.2* | Consent of KPMG LLP. | |
23.3* | Consent of KPMG LLP. | |
31.1* | Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
31.2* | Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
32.1* | Certification of Chief Executive Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 9.06 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551, this Exhibit is furnished to the SEC and shall not be deemed to be “filed.” | |
32.2* | Certification of Chief Financial Officer pursuant to 18 U.S.C., Section 1350, as adopted pursuant to Section 9.06 of the Sarbanes-Oxley Act of 2002. Pursuant to SEC Release 34-47551, this Exhibit is furnished to the SEC and shall not be deemed to be “filed.” | |
99.1* | Balance Sheets as of December 31, 2008 and 2007 (audited) of Martin Midstream GP LLC. |
* | Filed or furnished herewith. | |
† | As required by Item 15(a)(3) of Form 10-K, this exhibit is identified as a compensatory plan or arrangement. |
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Financial Statement Schedule | ||||
Pursuant to Item 15(a)(2) |
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Processing Company
2008 and 2007 and for each of the years in the three-
year period ended December 31, 2008, (with
Independent Auditors’ Report Thereon)
Table of Contents
March 4, 2009
Table of Contents
AS OF DECEMBER 31, 2008 AND 2007
2008 | 2007 | |||||||
ASSETS | ||||||||
CURRENT ASSETS: | ||||||||
Cash | $ | 1,388,434 | $ | 265,786 | ||||
Accounts receivable | 236,207 | 613,648 | ||||||
Accounts receivable—partners | 10,356,710 | 9,775,681 | ||||||
Accounts receivable—state grant | 1,114,314 | — | ||||||
Inventories | 463,575 | 433,273 | ||||||
Prepaid expenses | 3,989 | — | ||||||
Total current assets | 13,563,229 | 11,088,388 | ||||||
PROPERTY AND EQUIPMENT: | ||||||||
Gas plant asset and gas gathering equipment | 80,210,281 | 67,931,309 | ||||||
Other fixed assets | 734,871 | 584,747 | ||||||
Accumulated depreciation and amortization | (15,847,301 | ) | (12,832,563 | ) | ||||
Net property and equipment | 65,097,851 | 55,683,493 | ||||||
TOTAL | $ | 78,661,080 | $ | 66,771,881 | ||||
LIABILITIES AND PARTNERS’ EQUITY | ||||||||
CURRENT LIABILITIES: | ||||||||
Accounts payable and accrued liabilities | $ | 6,813,545 | $ | 6,939,543 | ||||
Accounts payable—partners | 3,776,855 | 2,485,286 | ||||||
Total current liabilities | 10,590,400 | 9,424,829 | ||||||
LONG-TERM LIABILITIES—Asset retirement obligation | 340,893 | 197,740 | ||||||
COMMITMENTS AND CONTINGENCIES | ||||||||
PARTNERS’ CAPITAL | 67,729,787 | 57,149,312 | ||||||
TOTAL | $ | 78,661,080 | $ | 66,771,881 | ||||
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FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 and 2006
2008 | 2007 | 2006 | ||||||||||
OPERATING REVENUES: | ||||||||||||
Natural gas processing and other revenues | $ | 35,868,029 | $ | 27,832,704 | $ | 21,844,945 | ||||||
Natural gas liquid sales | 79,225,191 | 54,123,606 | 43,755,076 | |||||||||
Gain/(Loss) on disposal of assets | (61,891 | ) | (159,724 | ) | 500 | |||||||
Total operating revenues | 115,031,329 | 81,796,586 | 65,600,521 | |||||||||
OPERATING COSTS AND EXPENSES: | ||||||||||||
Cost of sales — natural gas liquids | 78,008,310 | 53,014,173 | 42,505,653 | |||||||||
Operating costs | 6,414,677 | 4,595,878 | 4,355,646 | |||||||||
Depreciation and amortization | 3,129,246 | 1,925,840 | 1,493,499 | |||||||||
Total operating costs and expenses | 87,552,233 | 59,535,891 | 48,354,798 | |||||||||
OPERATING INCOME BEFORE TAXES | 27,479,096 | 22,260,695 | 17,245,723 | |||||||||
Income tax expense | 186,722 | 241,864 | — | |||||||||
NET INCOME | $ | 27,292,374 | $ | 22,018,831 | $ | 17,245,723 | ||||||
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FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
Total | ||||
Partners’ | ||||
Capital | ||||
BALANCE—December 31, 2005 | $ | 22,649,871 | ||
Cash contributions for capital expenditures | 19,980,733 | |||
Cash contributions for working capital | 2,494,939 | |||
Cash distributions | (300,000 | ) | ||
Distributions in-kind | (16,621,349 | ) | ||
Net income | 17,245,723 | |||
BALANCE—December 31, 2006 | $ | 45,449,916 | ||
Cash contributions for capital expenditures | 17,733,619 | |||
Cash distributions in excess of working capital | (4,128,057 | ) | ||
Cash distributions | (5,250,000 | ) | ||
Distributions in-kind | (18,674,997 | ) | ||
Net income | 22,018,831 | |||
BALANCE—December 31, 2007 | 57,149,312 | |||
Cash contributions for capital expenditures | 12,921,736 | |||
Cash distributions in excess of working capital | (8,583,683 | ) | ||
Cash distributions | (1,600,000 | ) | ||
Distributions in-kind | (19,449,952 | ) | ||
Net income | 27,292,374 | |||
BALANCE—December 31, 2008 | $ | 67,729,787 | ||
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FOR THE YEARS ENDED DECEMBER 31, 2008, 2007 AND 2006
2008 | 2007 | 2006 | ||||||||||
OPERATING ACTIVITIES: | ||||||||||||
Net income | $ | 27,292,374 | $ | 22,018,831 | $ | 17,245,723 | ||||||
Adjustments to reconcile net income to cash used in operating activities: | ||||||||||||
Depreciation and amortization | 3,129,246 | 1,925,840 | 1,493,499 | |||||||||
Distributions in-kind to partners | (19,449,952 | ) | (18,674,997 | ) | (16,621,349 | ) | ||||||
Loss/(Gain) on sale of asset | 61,891 | 159,724 | (500 | ) | ||||||||
Changes in operating assets and liabilities: | ||||||||||||
Accounts receivable | 377,441 | (286,895 | ) | (391,548 | ) | |||||||
Accounts receivable — partners | (581,029 | ) | 1,452,006 | (5,560,870 | ) | |||||||
Inventory | (30,302 | ) | 3,146 | (412,779 | ) | |||||||
Prepaid expenses | (3,989 | ) | — | — | ||||||||
Accounts payable and accrued liabilities | (125,998 | ) | 1,023,403 | 805,279 | ||||||||
Accounts payable — partners | 1,291,569 | 778,741 | 1,275,364 | |||||||||
Net cash provided by (used in) operating activities | 11,961,251 | 8,399,799 | (2,167,181 | ) | ||||||||
INVESTING ACTIVITIES: | ||||||||||||
Additions to property and equipment | (13,592,311 | ) | (16,829,754 | ) | (20,834,411 | ) | ||||||
Proceeds from sale of an asset | 15,655 | 15,200 | 500 | |||||||||
Net cash used in investing activities | (13,576,656 | ) | (16,814,554 | ) | (20,833,911 | ) | ||||||
FINANCING ACTIVITIES: | ||||||||||||
Contributions from partners | 12,921,736 | 17,733,619 | 22,475,672 | |||||||||
Distributions to partners | (10,183,683 | ) | (9,378,057 | ) | (300,000 | ) | ||||||
Net cash provided by financing activities | 2,738,053 | 8,355,562 | 22,175,672 | |||||||||
NET INCREASE (DECREASE) IN CASH | 1,122,648 | (59,193 | ) | (825,420 | ) | |||||||
CASH—Beginning of year | 265,786 | 324,979 | 1,150,399 | |||||||||
CASH—End of year | $ | 1,388,434 | $ | 265,786 | $ | 324,979 | ||||||
SUPPLEMENTAL CASH FLOW DISCLOSURES: | ||||||||||||
Interest paid | $ | — | $ | — | $ | — | ||||||
Taxes paid | $ | 206,911 | $ | — | $ | — | ||||||
NON-CASH: | ||||||||||||
State grant receivable | $ | 1,114,314 | $ | — | $ | — | ||||||
Addition to asset retirement obligation | $ | 130,367 | $ | — | $ | — | ||||||
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1. | NATURE OF BUSINESS |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Years | ||||
Gas gathering equipment | 10 | |||
Gas plant | 20 | |||
Furniture and fixtures | 1 | |||
Computer equipment | 3 | |||
Computer software | 3 |
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3. | RELATED-PARTY TRANSACTIONS |
4. | STATE GRANT |
5. | COMMITMENTS AND CONTINGENCIES |
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