Exhibit 99.1
Pacific Energy Partners, L.P. Announces Third
Quarter 2003 Financial Results
LONG BEACH, Calif.--(BUSINESS WIRE)--Oct. 29, 2003--Pacific Energy
Partners, L.P. (NYSE:PPX) announced net income for the three months
ended September 30, 2003, of $6.9 million ($0.30 per limited partner
unit) compared to $8.4 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 third
quarter 2002. The decrease in net income resulted from lower West
Coast volumes, increased general and administrative expense and
increased interest expense. The increase in these expenses was
partially offset by two months of operation of the storage and
terminaling assets of Pacific Terminals, which were acquired from
Southern California Edison Company on July 31, 2003. Our gathering and
blending operations also contributed higher income.
For the nine months ended September 30, 2003, net income was $18.6
million ($0.84 of diluted net income per limited partner unit),
compared with $27.2 million in the corresponding period in 2002. The
decrease in net income was primarily attributable to lower pipeline
throughput, higher interest expense associated with the capital
structure following our initial public offering in July 2002, and
increased general and administrative expenses resulting from the
significant growth of the Partnership and the costs of being a public
company. Partially offsetting these decreases in net income are:
results of two months of operations of the new Pacific Terminals
storage and terminaling assets, acquired July 31, 2003; nine months
versus seven months of results from the Rocky Mountain assets acquired
March 1, 2002; and a decrease in West Coast pipeline operating costs
and Rocky Mountain transition expenses in 2003.
On October 20, 2003, the Partnership declared a quarterly cash
distribution of $0.4875 per unit for the third quarter of 2003. This
is a 5.4% increase in our distribution rate and is primarily the
result of the acquisition of the Pacific Terminals storage and
terminaling assets on July 31, 2003. The distribution will be paid on
November 14, 2003, to record holders as of October 31, 2003.
Distributable cash flow for the third quarter of 2003 was $11.6
million; weighted average units outstanding were 22.5 million.
"The Pacific Terminals assets are a very strategic addition to our
West Coast operations," said Irvin Toole, Jr., President and CEO. "We
have integrated the operations of these new assets with our existing
operations in a prompt and efficient manner. As we communicated
previously, we experienced a soft market for storage of gas oils in
the third quarter, but we have seen considerable strengthening in
demand as evidenced by increased contracting for fourth quarter 2003
and 2004 storage services. We have also started the conversion of one
450,000 barrel tank from gas oil service to a more flexible service,
including crude oil. We are also pleased to have completed a secondary
offering in August 2003, the proceeds of which were used to reduce a
portion of the debt incurred in connection with the acquisition."
Mr. Toole added, "We expect net income in the fourth quarter of
2003 to be in the range of $0.29 to $0.33 per unit, and full year net
income for 2003 to be in the range of $1.15 to $1.20 per unit.
Guidance for 2004 will be provided following finalization of our 2004
operating budget."
OPERATING RESULTS BY SEGMENT
West Coast Operations
Operating income for our West Coast operations was $11.1 million
for the three months ended September 30, 2003 compared to $9.4 million
for the corresponding period in 2002. This 18% increase was primarily
due to the $4.7 million of revenue earned from the new storage and
terminaling assets and improved results from our crude oil gathering
and blending operation. Partially offsetting these higher revenues
were lower revenues from reduced pipeline volumes and greater
expenses, including higher operating costs and higher depreciation
related to the acquisition of the new assets. Third quarter 2003
pipeline volumes were lower as a result of refinery downtime,
maintenance downtime on certain outer continental shelf ("OCS")
production facilities and also expected OCS production decline.
For the nine month period ended September 30, 2003, West Coast
operating income was $31.1 million compared to $29.2 million for the
corresponding period in 2002. The Pacific Terminals storage and
terminaling assets, as well as higher margins in our crude oil
gathering and blending operations, contributed to this increase in
operating income. Volumes on the West Coast pipelines were lower for
the nine month period as a result of refinery downtime, OCS production
disruptions and expected OCS production decline. Also, increased
Bakersfield refinery demand reduced volumes transported to Los
Angeles.
Rocky Mountain Operations
Operating income for the three months ended September 30, 2003,
for Rocky Mountain operations was $3.8 million compared to $3.9
million in the corresponding period in 2002. Lower pipeline volumes
translated into a slight decline in pipeline transportation revenue
that was partially offset by a reduction in total expenses for the
period. The reduced expenses were primarily the result of the
elimination of transition costs incurred following the March 1, 2002
acquisition of the Western Corridor and Salt Lake City Core pipeline
systems.
For the nine months ended September 30, 2003, operating income was
$10.4 million compared to $9.1 million in the corresponding period in
2002. The 2002 period includes only seven months of results for the
pipeline systems acquired March 1, 2002.
Capital Expenditures
Capital expenditures for the Partnership were $2.3 million for the
nine months ended September 30, 2003, of which $1.3 million was for
maintenance projects. We expect maintenance capital expenditures for
the full year of 2003 to be approximately $2.4 million.
We will host a conference call at 4:30 p.m. EDT on Thursday,
October 30, 2003, to discuss the results of the third 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.
Pacific Energy Partners, L.P. is a Delaware limited partnership
headquartered in Long Beach, California. We are engaged principally in
the business of gathering, transporting, storing and distributing
crude oil and other related products in California and the Rocky
Mountain region. We generate revenue primarily by charging tariff
rates for transporting crude oil on our pipelines and by leasing
capacity in our storage facilities. We also buy, blend and sell crude
oil, activities that are complementary to our pipeline transportation
business.
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.
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 and financial performance. Among the
factors that could cause results to differ materially are those risks
discussed in the Partnership's filings with the Securities and
Exchange Commission, including our Annual Report on Form 10-K for the
year ended December 31, 2002 and the Registration Statement on Form
S-3 filed August 1, 2003.
For additional information, please visit the Pacific Energy
Partners, L.P. website at http://www.PacificEnergyPartners.com.
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 Nine
Months Ended Months Ended
September 30, September 30,
2003 2002 2003 2002
Operating revenues:
Pipeline
transportation
revenue, gross $24,282 $26,602 $74,187 $75,411
Storage and
terminaling revenue 4,710 -- 4,710 --
Crude oil sales, net
of purchases 7,126 5,606 18,908 16,978
Net revenues 36,118 32,208 97,805 92,389
Expenses:
Operating 16,630 14,364 43,622 40,639
Transition costs -- 699 397 2,675
General and
administrative 3,305 1,639 10,289 4,524
Depreciation and
amortization 5,049 4,307 13,435 11,711
Total expenses 24,984 21,009 67,743 59,549
Share of net income of
Frontier 414 471 1,141 966
Operating income 11,548 11,670 31,203 33,806
Net interest expense (4,752) (3,445) (12,798) (7,051)
Other income 83 133 228 416
Net income $6,879 $8,358 $18,633 $27,171
Weighted average units
outstanding:
Basic 22,532 20,930 21,470
Diluted 22,725 29,930 21,648
Calculation of unitholders' interest in net income for the three and
nine months ended September 30, 2003 and period from July 26, 2002
through September 30, 2002:
Net income $6,879 $5,413(1) $18,633
Less: General
Partner's interest (138) (108) (373)
Unitholders'
interest in net
income $6,741 $5,305 $18,260
Basic net income per unit $0.30 $0.25 $0.85
Diluted net income per
unit $0.30 $0.25 $0.84
Calculation of Distributable Cash Flow(2) for the three and nine
months ended September 30, 2003:
Net income $6,879 $18,633
Plus: depreciation
and amortization 5,049 13,435
Plus: amortization
of debt issue costs 188 745
Plus: non-cash employee
compensation under
long-term incentive
plan 111 1,954
Less: maintenance
capital expenditures (596) (1,282)
Distributable Cash Flow 11,631 33,485
Less: General
Partner's interest (233) (670)
Unitholders' interest
in Distributable
Cash Flow $11,398 $32,815
(1) Net income for the three months ended September 30, 2002 includes
$5,413 for the period July 26, 2002 to September 30, 2002, subsequent
to the closing of the initial public offering of which $108 relates to
the general partner interest and $5,305 relates to the limited partner
interest. Net income per limited partner unit for the corresponding
period was $0.25 based on weighted average limited partner units
outstanding of 20,930.
(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 October 29, 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 Nine
Months Ended Months Ended
September 30, September 30,
2003 2002 2003 2002
West Coast Operations:
Pipeline transportation
revenue $13,604 $15,281 $43,789 $48,319
Storage and terminaling
revenue 4,710 -- 4,710 --
Crude oil sales, net of
purchases 7,126 5,606 18,908 16,978
Net revenue 25,440 20,887 67,407 65,297
Segment expenses:
Operating expense 10,830 8,622 27,096 27,541
Transition costs -- 10 -- 126
Depreciation and
amortization 3,529 2,894 9,210 8,387
Total expenses 14,359 11,526 36,306 36,054
West Coast operating
income $11,081 $9,361 $31,101 $29,243
Rocky Mountain Operations:
Pipeline transportation
revenue $10,678 $11,321 $30,398 $27,092
Segment expenses:
Operating expense 5,800 5,742 16,526 13,098
Transition costs -- 689 397 2,549
Depreciation and
amortization 1,520 1,413 4,225 3,324
Total expenses 7,320 7,844 21,148 18,971
Share of net
income of
Frontier 414 471 1,141 966
Rocky Mountain operating
income $3,772 $3,948 $10,391 $9,087
Total segment operating
income $14,853 $13,309 $41,492 $38,330
General expenses and other
income/(expense)(1):
General and
administrative
expense (3,305) (1,639) (10,289) (4,524)
Net interest expense (4,752) (3,445) (12,798) (7,051)
Other income 83 133 228 416
Net income $6,879 $8,358 $18,633 $27,171
Operating Data (barrels
per day, in thousands)
West Coast Operations:
Line 2000 and Line 63
pipeline volume 146.4 153.7 154.0 165.2
Rocky Mountain Operations:
Salt Lake City Core system
volume(2) 68.3 74.1 65.9 71.7
Western Corridor system
volume(2) 17.7 13.4 16.2 15.1
AREPI pipeline volume 47.8 46.7 41.6 48.7
Frontier pipeline volume 47.9 46.6 41.5 44.2
(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 seven months from the acquisition date
of March 1, 2002.
PACIFIC ENERGY PARTNERS, L.P.
Successor to Pacific Energy (Predecessor)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
Sept. 30, Dec. 31,
2003 2002
(Unaudited)
Assets
Current assets $68,023 $66,071
Property and equipment, net 561,807 404,842
Investment in Frontier Pipeline Company 8,260 9,175
Other assets 6,603 6,950
Total assets $644,693 $487,038
Liabilities and Partners' Capital
Current liabilities $54,753 $41,643
Long-term debt 284,000 225,000
Other long term liabilities 7,684 5,200
Undistributed employee long-term incentive
plan 1,163 --
Accumulated other comprehensive loss (8,220) (7,375)
Partners' capital 305,313 222,570
Total liabilities and partners'
capital $644,693 $487,038
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
2003 2002 2003 2002
Cash flows from
operating activities:
Net income $6,879 $8,358 $18,633 $27,171
Depreciation,
amortization, non-
cash employee
compensation under
long-term incentive
plan and share of net
income of Frontier 5,544 3,836 15,603 10,962
Working capital
adjustments 1,804 1,025 (835) (9,418)
Net cash provided
by operating
activities 14,227 13,219 33,401 28,715
Cash flows from
investing activities:
Acquisition of
pipeline and
storage assets (159,939) -- (159,939) (95,196)
Net additions to
property and
equipment (1,039) (1,538) (2,183) (3,954)
Net cash used in
investing
activities (160,978) (1,538) (162,122) (99,150)
Cash flows from
financing activities:
Proceeds from
issuance of
common units 138,394 167,700 138,394 167,700
Capital contribution
from the general
partner 1,955 -- 1,955 --
Redemption of
common units (40,780) -- (40,780) --
Common units
issuance and
registration costs (6,678) (17,059) (6,678) (17,059)
Net proceeds
(repayments) of debt 59,000 (43,333) 59,000 43,667
Capital
contributions of
members -- -- -- 8,770
Distributions to
partners and members (9,902) (10,000) (29,657) (16,000)
Distributions to
general partner in
connection with the
initial public offering -- (105,081) -- (105,081)
Due from related party -- -- -- (122)
Net cash provided
by (used in)
financing
activities 141,989 (7,773) 122,234 81,875
Net increase (decrease)
in cash and cash
equivalents (4,762) 3,908 (6,487) 11,440
Cash and cash
equivalents, beginning
of period 22,148 17,043 23,873 9,511
Cash and cash
equivalents, end of
period $17,386 $20,951 $17,386 $20,951
CONTACT: Pacific Energy Partners, L.P.
Thomas L. Lambert, 562-728-2871
562-728-2881 (fax)