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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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): October 31, 2003
GENESIS ENERGY, L.P.
(Exact name of registrant as specified in its charter)
Delaware 1-12295 76-0513049
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
500 Dallas, Suite 2500, Houston, Texas 77002
(Address of principal executive offices) (Zip Code)
(713) 860-2500
(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets
On October 14, 2003, subsidiaries of Genesis Energy, L.P. ("GELP") entered
into a Pipeline Sale and Purchase Agreement ("PSA") with TEPPCO Crude Pipeline,
L.P. ("TEPPCO"), pursuant to which TEPPCO agreed to purchase parts of GELP's
Texas crude oil pipeline system and associated gathering and marketing
operations (the "Texas Operations"). The parts of the Texas crude oil pipeline
system being sold by GELP include the segments of pipeline from Hearne to Bryan,
Texas, Conroe to Satsuma in northwest Houston, Texas, and Hillje and Withers to
West Columbia, Texas. The gathering and marketing operations in a 40-county area
surrounding the pipeline are also being sold, and TEPPCO is being assigned
GELP's crude oil purchase and sale contracts in that area. The transaction was
completed on October 31, 2003 (the "Closing Date") and is effective November 1,
2003. TEPPCO paid GELP $21.6 million for the Texas Operations. Additionally
TEPPCO will purchase the crude oil inventory of GELP in the 40-county area
during November 2003.
TEPPCO assumed the responsibilities for unpaid royalties related to the
crude oil purchase and sale contracts it assumed and GELP transferred $0.6
million to TEPPCO for those liabilities.
On the Closing Date, GELP entered into various agreements with TEPPCO
pursuant to the PSA, including (a) a transitional services agreement whereby
GELP will provide the use of certain assets that TEPPCO did not acquire and
pipeline monitoring services for a minimum period of six months, and (b) a joint
tariff agreement whereby TEPPCO will invoice and collect and share with GELP the
tariffs for transportation on the pipeline being sold and the segments of
pipeline being retained by GELP for a one-year period. Additionally the PSA
contains provisions prohibiting competition by GELP in the 40-county area for a
five year period.
GELP retained responsibility for environmental matters related to the Texas
Operations for the period prior to the Closing Date, subject to certain
conditions. TEPPCO will pay the first $25,000 for any environmental claim up to
an aggregate total of $100,000. GELP would be responsible for any environmental
claims in excess of these amounts up to an aggregate total of $2 million. TEPPCO
has purchased an environmental insurance policy for amounts in excess of GELP's
$2 million responsibility and GELP reimbursed TEPPCO for one-half of the policy
premium. GELP's responsibility to indemnify TEPPCO will cease ten years from the
Closing Date.
GELP has signed a letter of intent with Denbury Resources Inc. to acquire a
Carbon Dioxide (CO2) volumetric production payment and certain wholesale sales
contracts ("CO2 Assets") for $25 million. Genesis Energy, Inc., the general
partner of GELP will acquire 688,811 newly issued GELP common units for $4.9
million, and these proceeds with the proceeds from the sale to TEPPCO will be
used to purchase the CO2 assets.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired. Not Applicable.
(b) Pro Forma Financial Information
The following unaudited pro forma condensed financial statements are filed
with this report:
Page
Pro Forma Condensed Consolidated Balance ----
Sheet as at June 30, 2003 4
Pro Forma Condensed Consolidated Income
Statement of Operations:
Year Ended December 31, 2002 5
Six Months Ended June 30, 2003 6
The Pro Forma Condensed Consolidated Balance Sheet of GELP as at June 30,
2003, reflects the financial position of GELP after giving effect to the
disposition of the Texas Operations and assumption of the liabilities
discussed in Item 2 and assumes the disposition took place on June 30,
2003. The Pro Forma condensed
<page>2
Consolidated Statements of Operations for the year ended December 31, 2002
and the six months ended June 30, 2003, assume that the disposition
occurred on January 1, 2002, and are based on the operations of GELP for
the year ended December 31, 2002 and the six months ended June 30, 2003.
The unaudited pro forma condensed consolidated financial statements have
been prepared by GELP based upon assumptions deemed proper by it. The
unaudited pro forma condensed consolidated financial statements presented
herein are shown for illustrative purposes only and are not necessarily
indicative of the future financial position or results of operations of
GELP that would have actually occurred had the transaction been in effect
as of the date or for the periods presented. In addition, it should be
noted that GELP's financial statements will reflect the disposition only
from September 30, 2003, the Closing Date.
The unaudited pro forma condensed consolidated financial statements should
be read in conjunction with the historical financial statements and related
notes of GELP.
(c) Exhibits
The following materials are filed as exhibits to this Current Report
on Form 8-K.
Exhibit.
10.1 Pipeline Sale and Purchase Agreement Between TEPPCO Crude
Pipeline, L.P. and Genesis Crude Oil, L.P. and Genesis
Pipeline Texas, L.P.
10.2 Purchase and Sale Agreement Between TEPPCO Crude Pipeline,
L.P. and Genesis Crude Oil, L.P.
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 thereunto duly authorized.
GENESIS ENERGY, L.P.
(A Delaware Limited Partnership)
By: GENESIS ENERGY, Inc., as
General Partner
Date: November 4, 2003 By: /s/ ROSS A. BENAVIDES
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Ross A. Benavides
Chief Financial Officer
3
GENESIS ENERGY, L.P.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 30, 2003
(In thousands)
(Unaudited)
Pro Forma Adjustments
Texas (a)
Historical Operations Other Pro Forma
------------ ------------ ------------ ------------
<c>
ASSETS
CURRENT ASSETS
Cash and cash equivalents......................... $ 2,863 $ - $ 20,920(b) $ 23,783
Accounts receivable-trade......................... 76,795 23,603 - 53,192
Inventories....................................... 1,490 200 - 1,290
Other ............................................ 4,269 - - 4,269
------------ ----------- ------------ ----------
Total current assets........................... 85,417 23,803 20,920 82,534
FIXED ASSETS, at cost:............................... 119,906 21,829 - 98,077
Less accumulated depreciation..................... (74,220) (13,333) - (60,887)
------------ ----------- ------------ ----------
Net fixed assets............................... 45,686 8,496 - 37,190
OTHER ASSETS, net of amortization.................... 1,028 - - 1,028
------------ ----------- ------------ ----------
TOTAL ASSETS......................................... $ 132,131 $ 32,299 $ 20,920 $ 120,752
============ =========== ============ ==========
LIABILITIES AND PARTNERS' CAPITAL
CURRENT LIABILITIES
Accounts payable.................................. $ 80,028 $ 23,552 $ $ 56,476
Accrued liabilities............................... 7,918 - 214(c) 8,132
------------ ----------- ------------ ----------
Total current liabilities...................... 87,946 23,552 214 64,608
LONG-TERM DEBT....................................... 6,000 - - 6,000
MINORITY INTERESTS................................... 515 - - 515
PARTNERS' CAPITAL.................................... 37,670 8,747 20,706 49,629
------------ ----------- ------------ ----------
TOTAL LIABILITIES AND PARTNERS' CAPITAL.............. $ 132,131 32,299 $ 20,920 $ 120,752
============ =========== ============ ==========
<FN>
(a) To eliminate the assets and liabilities included in the balance sheet
related to the Texas Operations.
(b) To reflect the $20.7 million net proceeds
from the sale of the Texas Operations to TEPPCO and $0.2 million from the sale
of inventory. $20 million of this amount will be used for the purchase of
the CO2 Assets.
(c) To reflect transaction costs.
</FN>
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GENESIS ENERGY, L.P.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2002
(In thousands, except per unit amounts)
(Unaudited)
Pro Forma Adjustments
Texas (a)
Historical Operations Pro Forma
REVENUES:
Gathering and marketing revenues..................... $ 891,595 $ 253,081 $ 638,514
Pipeline revenues.................................... 20,211 6,808 13,403
------------ ----------- ------------
Total revenues................................. 911,806 259,889 651,917
COST OF SALES:
Crude costs.......................................... 859,312 243,414 615,898
Field operating costs................................ 16,451 4,536 11,915
Pipeline operating costs............................. 12,928 4,807 8,121
------------ ----------- ------------
Total cost of sales............................... 888,691 252,757 635,934
------------ ----------- ------------
GROSS MARGIN............................................ 23,115 7,132 15,983
EXPENSES:
General and administrative........................... 8,289 425 7,864
Depreciation and amortization........................ 5,813 1,134 4,679
Other operating charges.............................. 1,500 - 1,500
------------ ----------- ------------
OPERATING INCOME........................................ 7,513 5,573 1,940
OTHER INCOME (EXPENSE):
Interest expense, net................................ (1,035) - (1,035)
Change in fair value of derivatives.................. (2,094) (815) (1,279)
Net gain on disposal of surplus assets............... 708 - 708
------------ ----------- ------------
NET INCOME.............................................. $ 5,092 $ 4,758 $ 334
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NET INCOME PER COMMON UNIT - BASIC AND DILUTED.......... $ 0.58 0.04
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WEIGHTED AVERAGE NUMBER OF COMMON UNITS OUTSTANDING..... 8,625 8,625
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<FN>
(a) To eliminate the revenues and expenses of the Texas Operations for the
entire period.
</FN>
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GENESIS ENERGY, L.P.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2003
(In thousands, except per unit amounts)
(Unaudited)
Pro Forma Adjustments
Texas (a)
Historical Operations Pro Forma
------------ ----------- ------------
REVENUES:
Gathering and marketing revenues..................... $ 470,496 $ 155,656 $ 314,840
Pipeline revenues.................................... 11,335 3,366 7,969
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Total revenues................................. 481,831 159,022 322,809
COST OF SALES:
Crude costs.......................................... 454,604 151,178 303,426
Field operating costs................................ 8,167 2,607 5,560
Pipeline operating costs............................. 7,946 3,134 4,812
------------ ----------- ------------
Total cost of sales............................... 470,717 156,919 313,798
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GROSS MARGIN............................................ 11,114 2,103 9,011
EXPENSES:
General and administrative........................... 4,808 172 4,636
Depreciation and amortization........................ 2,884 710 2,174
Other ............................................... (47) - (47)
------------ ----------- ------------
OPERATING INCOME........................................ 3,469 1,221 2,248
INTEREST EXPENSE, NET................................... (700) - (700)
------------ ----------- ------------
NET INCOME.............................................. $ 2,769 $ 1,221 $ 1,548
============ =========== ============
NET INCOME PER COMMON UNIT - BASIC AND DILUTED.......... $ 0.31 $ 0.18
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WEIGHTED AVERAGE NUMBER OF COMMON UNITS OUTSTANDING..... 8,625 8,625
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<FN>
(a) To eliminate the revenues and expenses of the Texas Operations.
</FN>