UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): AUGUST 3, 2005
NORTHERN BORDER PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
DELAWARE 1-12202 93-1120873
(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Number) Identification No.)
13710 FNB PARKWAY
OMAHA, NEBRASKA 68154-5200
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (402) 492-7300
-------------------------------------
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION AND ITEM 7.01
REGULATION FD DISCLOSURE.
Attached as Exhibit 99.1 is a copy of Northern Border Partners,
L.P.'s press release, dated August 3, 2005, announcing Northern Border Partners,
L.P.'s financial results for the quarter ended June 30, 2005, and updated
earnings guidance for 2005.
ITEM 8.01 OTHER EVENTS.
NORTHERN BORDER PIPELINE TRANSPORTATION CAPACITY
As previously disclosed in Item 2. "Management's Discussion and
Analysis of Financial Condition and Results of Operations-Overview" in our Form
10-Q for the quarter ended March 31, 2005 ("First Quarter 10-Q"), our Form 8-K
filed May 4, 2005, and our Form 8-K filed July 14, 2005, we disclosed that we
had contracts for firm transportation capacity primarily on the Port of Morgan,
Montana to Ventura, Iowa portion of the pipeline expiring during 2005.
We believe that shifting fundamentals may cause the natural gas price
differentials (or so called "basis differentials") for sales in Alberta, Canada
as compared to sales in the Midwest U.S. to narrow annually in the spring and
fall months. Increased withdrawals from storage in Western Canada combined with
winter demand in the Midwest U.S. may, conversely, cause the winter basis
differentials to widen. Summer demand should remain strong due to electric
generation loads. As a result, we believe that Northern Border Pipeline's
revenue may be more seasonal in the future as increased volumes are available
for transport from Canada to Midwest U.S. markets when the basis differentials
widen and some discounting may be required at times to maximize revenue when the
basis differentials narrow.
We believe the greatest impact for 2005 of unsold and discounted
capacity on Northern Border Pipeline occurred during the second quarter due to
relatively high levels of Canadian natural gas storage injections and additional
supply from other sources. Northern Border Pipeline's capacity for July through
September has been contracted at more favorable rates. We expect that throughout
the duration of the 2005/2006 heating season, Northern Border Pipeline will be
fully contracted at or near maximum rates. Consequently, we expect Northern
Border Pipeline's operating revenue for 2005 to be in the range of $15 million
to $18 million ($11 million to $13 million, net to the Partnership) lower than
2004, due to discounted and uncontracted capacity. However, the sale of the
Claims (described below) will add to revenues in 2005, offsetting some of the
revenue decline from Northern Border Pipeline's discounted and uncontracted
capacity.
UPDATE ON THE IMPACT OF ENRON'S CHAPTER 11 FILING ON OUR BUSINESS
Please refer to our Form 10-K for the year ended December 31, 2004
("2004 10-K"), and our Form 10-Q for the quarter ended March 31, 2005 ("First
Quarter 10-Q"), "Management's Discussion and Analysis of Financial Condition and
Results of Operations-Update On The Impact of Enron's Chapter 11 Filing On Our
Business" regarding the bankruptcy claims held by Northern Border Pipeline
Company, Crestone Gas Gathering, and Bear Paw Energy, LLC against Enron Corp.,
and/or Enron North America Corp. ("ENA") (the "Claims"). We reported that
settlement agreements had been entered into and approved by the bankruptcy court
for certain of the Claims.
In June 2005, Northern Border Pipeline Company, Crestone Gathering
Services, a wholly-owned subsidiary of Crestone Energy Ventures, and Bear Paw
Energy, LLC executed term sheets with a third party for the sale of their
unsecured claims held against Enron and Enron North America. Proceeds from the
sale are expected to be $14.6 million. In 2004, we adjusted our allowance for
doubtful accounts to reflect an estimated $3.4 million ($3.0 million, net to the
Partnership) recovery for our Claims. In the second quarter of 2005, we made
favorable adjustments to our allowance for doubtful accounts of approximately
$1.8 million ($1.6 million, net to the Partnership) to reflect the agreements
for the sales. As a result of the sale, we anticipate recognizing additional
income of $9.4 million ($6.6 million, net to the Partnership) later in 2005.
NATURAL GAS GATHERING AND PROCESSING SEGMENT
INTEREST IN FORT UNION GAS GATHERING - In July 2005, Crestone Energy
Ventures executed a purchase and sale agreement to acquire an additional 3.7%
interest, bringing its total interest to approximately 37% of Fort Union Gas
Gathering, L.L.C. for approximately $5.3 million, subject to normal closing
adjustments. We expect to close the transaction in August of 2005.
BIGHORN GAS GATHERING PREFERRED A SETTLEMENT - During third quarter
2005, we anticipate recognizing $5.4 million from a settlement related to a
special income allocation from Bighorn Gas Gathering. The settlement with our
partner in Bighorn eliminates provisions of the joint venture agreement that
provided for cash flow incentives based on well connections. Therefore, in the
future, we will receive its distributions and earnings based on our 49 percent
ownership interest in Bighorn Gas Gathering.
FORWARD-LOOKING STATEMENT
The statements above that are not historical information are forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Although we believe that our
expectations regarding future events are based on reasonable assumptions within
the bounds of our knowledge of our business, we can give no assurance that our
goals will be achieved or that our expectations regarding future developments
will be realized. Important factors that could cause actual results to differ
materially from those in the forward-looking statements herein include:
INTERSTATE PIPELINE SEGMENT:
o the impact of unsold capacity on Northern Border Pipeline being greater
than expected;
o the ability to market pipeline capacity on favorable terms, which is
affected by:
o future demand for and prices of natural gas;
o competitive conditions in the overall natural gas and electricity
markets;
o availability of supplies of Canadian natural gas;
o availability of additional storage capacity; weather conditions; and
o competitive developments by Canadian and U.S. natural gas transmission
peers;
o performance of contractual obligations by the shippers;
o political and regulatory developments that impact Federal Energy Regulatory
Commission, or FERC, proceedings involving interstate pipelines and the
interstate pipelines' success in sustaining their positions in such
proceedings;
o the ability to recover costs of property, plant and equipment and
regulatory assets in our rates;
GENERAL:
o developments in the December 2, 2001, filing by Enron of a voluntary
petition for bankruptcy protection under Chapter 11 of the United States
Bankruptcy Code affecting our settled claims;
o prices of natural gas and natural gas liquids.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
99.1 Northern Border Partners, L.P. press release dated
August 3, 2005.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
NORTHERN BORDER PARTNERS, L.P.
Date: August 3, 2005 By: /s/ Jerry L. Peters
--------------------------------
Name: Jerry L. Peters
Title: Chief Financial and
Accounting Officer
EXHIBIT INDEX
Exhibit 99.1 -- Northern Border Partners, L.P. press release
dated August 3, 2005.