Exhibit 99.1
Pacific Energy Partners, L.P. Announces Second Quarter 2003 Financial
Results
LONG BEACH, Calif.--(BUSINESS WIRE)--July 30, 2003--Pacific Energy
Partners, L.P. (NYSE:PPX) announced net income for the three months
ended June 30, 2003, of $5.6 million ($0.26 per limited partner unit)
compared to $9.6 million in the corresponding period in 2002. The
Partnership completed its initial public offering in July 2002;
therefore there is no comparable per unit calculation for second
quarter 2002. Net income for the three months ended June 30, 2003,
reflects lower revenues, primarily due to lower West Coast pipeline
volumes and gathering and blending margins, increased general and
administrative expense as a result of our significant growth in 2002
and becoming a public company, and increased interest expense related
to the fixed-rate debt in our post-IPO capital structure compared to
floating-rate debt in the prior year quarter. These factors were
partially offset by lower operating and transition costs.
For the six months ended June 30, 2003, net income was $11.8
million ($0.55 per limited partner unit) compared with $18.8 million
in the corresponding period in 2002. This decrease was primarily
attributable to lower West Coast pipeline volumes, increased
depreciation related to our March 1, 2002, acquisition of Rocky
Mountain assets, increased general and administrative expense as
described above and increased interest expense associated with our
post-IPO capital structure. These decreases were partially offset by
increased revenue, primarily due to a full six months of operations
for the Western Corridor system and Salt Lake City Core system assets
acquired on March 1, 2002, and lower West Coast operating expenses and
Rocky Mountain transition costs.
The Partnership announced a quarterly cash distribution on July
18, 2003, of $0.4625 per unit for the second quarter of 2003. The
distribution will be paid on August 14, 2003, to record holders as of
July 31, 2003. Distributable cash flow for the second quarter of 2003
was $10.3 million, or $0.49 per limited partner unit.
As previously announced, on July 10, 2003, the California Public
Utilities Commission approved the acquisition of the black oil storage
and pipeline distribution assets of Edison Pipeline and Terminal
Company ("EPTC") by Pacific Terminals LLC, a wholly owned subsidiary
of Pacific Energy Partners, L.P. "We are pleased to be adding these
strategic assets to our West Coast operations and are working to close
this acquisition quickly," said Irvin Toole, Jr., President and CEO.
"We expect this acquisition to be accretive to both net income and
distributable cash flow per unit. After we close this acquisition, we
will provide further guidance on 2003 net income and cash
distributions."
Mr. Toole added, "During the second quarter of 2003, the
Partnership began a feasibility study for developing a deep-water bulk
liquid petroleum import facility at the Port of Los Angeles. We
recently signed a non-binding memorandum of intent with a base-load
customer for the import facility and have submitted an Application for
Development Projects with the Port. During the second half of the year
we will confirm the economic feasibility of the project and pursue a
program of public and regulatory involvement."
OPERATING RESULTS BY SEGMENT
WEST COAST OPERATIONS
Operating income for our West Coast operations was $9.3 million
for the three months ended June 30, 2003, compared to $10.5 million
for the corresponding period in 2002. Second quarter 2003 pipeline
volumes of 156,500 barrels per day were down 10% from 173,500 barrels
per day in the second quarter of 2002. Offshore California ("OCS")
volumes transported to Los Angeles were lower than in the prior year
period primarily due to maintenance downtime at an on-shore processing
facility as well as the normal production decline. In addition,
refinery maintenance in Los Angeles and increased light crude runs at
Bakersfield refineries reduced volumes shipped via our pipelines to
Los Angeles. We also experienced lower margins on our gathering and
blending operations in the 2003 quarter. Total operating costs for
West Coast operations were $11.1 million for second quarter 2003, 10%
less than the $12.4 million recorded in the 2002 quarter.
For the six month period ended June 30, 2003, West Coast operating
income was $20.0 million compared to $19.9 million for the
corresponding period in 2002. Volumes of 157,900 barrels per day for
the first six months of 2003 were 8% less than in the corresponding
period in 2002. Refinery maintenance in Los Angeles and increased
mid-barrel crude oil ("MBCO") demand in San Francisco reduced MBCO
deliveries to Los Angeles. OCS volumes were lower due to the reasons
described above. Lower operating costs essentially offset the reduced
revenue.
ROCKY MOUNTAIN OPERATIONS
Operating income for the three months ended June 30, 2003, for
Rocky Mountain operations was $3.3 million compared to $2.7 million in
the corresponding period in 2002. Salt Lake City refineries
experienced significant down time and reduced demand in the 2003
period, resulting in lower pipeline volumes. For second quarter 2003,
total expenses were $7.4 million compared to $8.2 million in the
second quarter of 2002, primarily as a result of the elimination of
transition costs incurred following the March 1, 2002 acquisition. For
the six months ended June 30, 2003, operating income was $6.6 million
compared to $5.1 million in the corresponding period in 2002. The 2002
period includes only four months of results for the Western Corridor
and Salt Lake City Core systems acquired March 1, 2002.
CAPITAL EXPENDITURES
Capital expenditures for the Partnership were $1.2 million for the
six months ended June 30, 2003, of which $0.7 million was for
sustaining, or maintenance projects. We expect maintenance capital
expenditures during 2003 to total approximately $2.5 million. Capital
expenditure guidance for Pacific Terminals will also be provided
following the closing of the EPTC acquisition.
Pacific Energy Partners, L.P., a Delaware limited partnership
headquartered in Long Beach, California, owns and operates crude oil
midstream assets located in California and the Rocky Mountain region
with over 3,000 miles of pipelines and 4.6 million barrels of storage
capacity. The Partnership is engaged in gathering, blending,
transporting, storing, marketing and distributing crude oil. The
Partnership generates revenues primarily by charging tariff rates for
transporting crude oil through its pipelines.
We will host a conference call at 4:30 p.m. EDT on Thursday, July
31, 2003, to discuss the results of the second quarter of 2003. Please
join us at www.PacificEnergyPartners.com for the live broadcast. The
call, with questions and answers, will continue to be available on our
web site following the live discussion.
This news release includes "forward-looking" statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. All
statements other than statements of historical fact included or
incorporated herein may constitute forward-looking statements. Words
such as "anticipates," "expects," "estimates," "forecasts," "projects"
and similar expressions, identify these forward-looking statements.
Although the Partnership believes that the expectations reflected in
the forward-looking statements are reasonable, it can give no
assurance that such expectations will prove to be correct. The
forward-looking statements involve risks and uncertainties that affect
the Partnership's operations, financial performance and other factors
discussed in its filings with the Securities and Exchange Commission
("SEC"). Among the factors that could cause results to differ
materially are those risks discussed in the Partnership's SEC filings
including our Annual Report on Form 10-K for the year ended December
31, 2002 filed with the SEC.
PACIFIC ENERGY PARTNERS, L.P.
Successor to Pacific Energy (Predecessor)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND OPERATING HIGHLIGHTS
(Unaudited)
(In thousands)
For the Three For the Six
Months Ended Months Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
------- ------- ------- -------
Operating revenues:
Pipeline transportation revenue $25,644 $27,740 $50,935 $48,809
Crude oil sales, net of purchases 5,093 5,846 10,752 11,372
Net revenues 30,737 33,586 61,687 60,181
Expenses:
Operating 14,344 15,069 26,992 26,275
Transition costs -- 1,144 397 1,976
General and administrative expenses 3,002 1,543 6,984 2,885
Depreciation and amortization 4,205 4,317 8,386 7,404
Total expenses 21,551 22,073 42,759 38,540
Share of net income of Frontier 386 227 727 495
Operating income 9,572 11,740 19,655 22,136
Net interest expense (4,056) (2,274) (8,046) (3,606)
Other income 110 166 145 283
Net income $5,626 $9,632 $11,754 $18,813
Calculation of unitholders' interest
in net income for the three and six months
ended June 30, 2003:
Net income $5,626 $11,754
Less: General Partner's interest (112) (235)
Unitholders' interest
in net income $5,514 $11,519
Basic net income per unit(1) $0.26 $0.55
Diluted net income per unit(1) $0.26 $0.55
Calculation of Distributable Cash Flow(2)
for the three and six months
ended June 30, 2003:
Net income $5,626 $11,754
Plus: depreciation and
amortization 4,205 8,386
Plus: amortization of debt
issue costs 287 557
Plus: non-cash employee
compensation under
long-term incentive plan 810 1,843
Less: maintenance capital
expenditures (368) (692)
Distributable Cash Flow 10,560 21,848
Less: General Partner's interest (211) (437)
Unitholders' interest in
Distributable Cash Flow $10,349 $21,411
Distributable Cash Flow
per Unit(2) $0.49 $1.02
(1) Based on 20,930,000 weighted average units outstanding which
include 1,865,000 common and 10,465,000 subordinated units
held by the General Partner.
(2) Distributable Cash Flow provides additional information for
evaluating our ability to make the minimum quarterly distribution
and is presented solely as a supplemental measure. You should not
consider Distributable Cash Flow as an alternative to net income,
income before taxes, cash flow from operations, or any other
measure of financial performance presented in accordance with
accounting principles generally accepted in the United States. Our
Distributable Cash Flow may not be comparable to similarly titled
measures of other entities. Additional information regarding
distributable cash flow is included in our current report on Form
8-K filed on May 1, 2003.
PACIFIC ENERGY PARTNERS, L.P.
Successor to Pacific Energy (Predecessor)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
AND OPERATING HIGHLIGHTS BY SEGMENT
(Unaudited)
(In thousands)
For the Three For the Six
Months Ended Months Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
------- ------- ------- -------
West Coast Operations:
Pipeline transportation revenue $15,323 $17,058 $31,215 $33,038
Crude oil sales, net of
purchases 5,093 5,846 10,752 11,372
Net revenue 20,416 22,904 41,967 44,410
Segment expenses:
Operating expense 8,260 9,512 16,266 18,919
Transition costs -- 50 -- 116
Depreciation and amortization 2,859 2,794 5,681 5,493
Total expenses 11,119 12,356 21,947 24,528
West Coast operating income $9,297 $10,548 $20,020 $19,882
Rocky Mountain Operations:
Pipeline transportation revenue $10,321 $10,682 $19,720 $15,771
Segment expenses:
Operating expense 6,084 5,557 10,726 7,356
Transition costs -- 1,094 397 1,860
Depreciation and amortization 1,346 1,523 2,705 1,911
Total expenses 7,430 8,174 13,828 11,127
Share of net income of Frontier 386 227 727 495
Rocky Mountain operating income $3,277 $2,735 $6,619 $5,139
Total segment operating income $12,574 $13,283 $26,639 $25,021
General expenses and other
income/(expense):(1)
General and administrative
expense (3,002) (1,543) (6,984) (2,885)
Net interest expense (4,056) (2,274) (8,046) (3,606)
Other income 110 166 145 283
Net income $5,626 $9,632 $11,754 $18,813
Operating Data (barrels per day, in thousands)
West Coast Operations:
Line 2000 and Line 63
pipeline volume 156.5 173.5 157.9 171.1
Rocky Mountain Operations:
Salt Lake City Core
system volume(2) 64.7 71.9 64.7 71.3
Western Corridor system volume(2) 17.6 13.4 15.6 15.4
AREPI pipeline volume 41.4 47.3 38.5 44.6
Frontier pipeline volume 41.0 45.5 38.2 44.7
(1) General and administrative expenses, net interest expense and
other income are not allocated among the West Coast and Rocky
Mountain operations.
(2) Volumes for 2002 represent four months from the acquisition date
of March 1, 2002.
PACIFIC ENERGY PARTNERS, L.P.
Successor to Pacific Energy (Predecessor)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
June 30, Dec. 31,
2003 2002
------- -------
Assets
Current assets $72,729 $66,071
Property and equipment, net 397,920 404,842
Investment in Frontier Pipeline Company 8,383 9,175
Other assets 6,570 6,950
Total assets $485,602 $487,038
Liabilities and Partners' Capital
Current liabilities $46,747 $41,643
Long-term debt 225,000 225,000
Other long term liabilities 9,733 5,200
Accumulated other comprehensive loss (12,363) (7,375)
Partners' capital 216,485 222,570
Total liabilities and
partners' capital $485,602 $487,038
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
For the Three For the Six
Months Ended Months Ended
June 30, June 30, June 30, June 30,
2003 2002 2003 2002
------- ------- ------- -------
Cash flows from operating activities:
Net income $5,626 $9,632 $11,754 $18,813
Depreciation, amortization, non-
cash employee compensation
under long-term incentive
plan and share of net income of
Frontier 4,915 4,090 10,059 6,909
Working capital adjustments 2,739 (1,680) (2,639) (10,166)
Net cash provided by operating
activities 13,280 12,042 19,174 15,556
Cash flows from investing activities:
Acquisition of pipeline assets -- 799 -- (95,256)
Additions to property and
equipment (631) (1,852) (1,191) (2,416)
Disposal of property and
equipment -- -- 47 --
Net cash used in investing
activities (631) (1,053) (1,144) (97,672)
Cash flows from financing activities:
Net proceeds from note payable
to bank -- -- -- 87,000
Capital contributions of members -- 26 -- 8,770
Distributions to partners and
members (9,877) -- (19,755) (6,000)
Due from related party -- -- -- (122)
Net cash provided by (used in)
financing activities (9,877) 26 (19,755) 89,648
Net increase (decrease) in cash
and cash equivalents 2,772 11,015 (1,725) 7,532
Cash and cash equivalents,
beginning of period 19,376 6,028 23,873 9,511
Cash and cash equivalents,
end of period $22,148 $17,043 $22,148 $17,043
CONTACT: Pacific Energy Partners, L.P.
Thomas L. Lambert, 562-728-2871
Fax: 562-728-2881