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: November 3, 2003
(Date of Earliest Event Reported: November 3, 2003)
GULFTERRA ENERGY PARTNERS, L.P.
(Exact name of Registrant as specified in its charter)
Delaware 1-11680 76-00396023
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
4 Greenway Plaza
Houston, Texas 77046
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (832) 676-4853
Item 7. Financial Statements and Exhibits
---------------------------------
(c) Exhibits.
Exhibit
Number Description
------- ------------
99.1 Press Release dated November 3, 2003.
Item 12. Results of Operations and Financial Condition
---------------------------------------------
On November 3, 2003, we announced our earnings results for
the quarter ended September 30, 2003. A copy of our press release
is attached as Exhibit 99.1. The attached Exhibit is not filed,
but is furnished to comply with Item 12 of Form 8-K.
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.
GULFTERRA ENERGY PARTNERS, L.P.
By: /s/ Kathy A. Welch
____________________
Kathy A. Welch
Vice President and Controller
(Principal Accounting Officer)
Date: November 3, 2003
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
99.1 Press Release dated November 3, 2003.
EXHIBIT 99.1
NEWS
For Immediate Release
GULFTERRA ENERGY PARTNERS ANNOUNCES NET INCOME UP 152
PERCENT TO $60.2 MILLION AND CASH FLOW UP 78 PERCENT TO
$122.8 MILLION
--------------------------------------------------------
HOUSTON, TEXAS, November 3, 2003-GulfTerra Energy Partners,
L.P. (NYSE:GTM) today reported third quarter 2003 net income
of $60.2 million ($0.62 per unit), up 152 percent from $23.9
million ($0.21 per unit) in the same period last year.
Third quarter 2003 cash flow from operating activities was
$75.2 million compared with $76.9 million in the 2002 third
quarter. Cash flow as measured by earnings before interest,
taxes, depreciation, and amortization (EBITDA) increased 78
percent to $122.8 million in the 2003 third quarter compared
with $68.9 million in the third quarter of 2002. Third
quarter 2003 net income and cash flow included the
recognition of $19.0 million related to the sale of a 50-
percent interest in Cameron Highway Oil Pipeline.
For the nine months ended September 30, 2003, net income was
$151.7 million ($1.56 per unit), a 112-percent increase as
compared with $71.7 million ($0.72 per unit) for the same
nine months ended 2002. Cash flow from operating activities
for the first three quarters of 2003 was $209.4 million
versus $138.5 million for the same period of 2002. EBITDA
for the nine months ended September 30, 2003 was $337.4
million, an increase of 79 percent from the $188.4 million
reported for the same period of 2002.
On October 21, 2003, GTM declared a cash distribution of
$0.71 per common unit payable November 14, 2003 to
unitholders of record at the close of business on
October 31, 2003. This distribution represents the third
increase in the past five quarters and a 5.2-percent
increase over the $0.675 per unit paid in November 2002.
"We are pleased to report our twelfth consecutive quarter of
record earnings and cash flow, leading to another increase
in cash distributions to our unitholders," said
Robert G. Phillips, chief executive officer of GulfTerra
Energy Partners. "Recently, we completed a number of
significant milestones for the partnership, including the
sale of a 9.9-percent interest in our general partner which
substantially completed our 2003 corporate governance and
independence goals, and we redeemed our Series B preference
units. In addition, we improved the partnership's financial
flexibility by upsizing our revolving credit facility to
$700 million and extending the maturity to September 2006.
We also completed a $186-million public offering of common
equity in October, achieving our goal to reduce the
partnership's debt to total capital ratio to a level below
60 percent. These recent achievements, along with the
continued strong performance of our midstream businesses,
create an excellent platform for future growth," Phillips
concluded.
SEGMENT RESULTS
The Natural Gas Pipelines and Plants segment produced EBITDA
of $80.0 million in the third quarter of 2003, an 80-percent
increase from the $44.5 million generated during the same
period a year ago. Pipeline gathering and transportation
volumes averaged 6,956 thousand dekatherms per day (Mdth/d)
in the third quarter of 2003 compared with 5,225 Mdth/d in
the 2002 third quarter. Processing plant volumes averaged
794 Mdth/d in the third quarter of 2003 compared with 746
Mdth/d in the 2002 third quarter. The increase in pipeline
throughput was attributable to our San Juan Basin gathering
system, acquired in November 2002, and the Falcon Nest
offshore pipeline, which was placed in service in March
2003. Offshore, we experienced additional deepwater volumes
on our Viosca Knoll system from the Canyon Express pipeline
system partially offset by decreased shelf-based volumes on
our HIOS pipeline.
The Oil and NGL Logistics segment, which includes the
partnership's oil pipeline and natural gas liquids (NGL)
assets, generated EBITDA of $26.8 million for the third
quarter of 2003 compared with $11.2 million in the same 2002
period. EBITDA for the third quarter of 2003 included the
recognition of $19.0 million related to the sale of a
50-percent interest in Cameron Highway Oil Pipeline.
Additionally, the increase reflects contributions from the
November 2002 acquisition of the NGL systems in Texas and
the Typhoon oil pipeline. Offsetting these segment
increases, was a reduction in base business performance from
lower volumes on the 36-percent owned Poseidon Oil Pipeline
as well as the partnership's previously existing Texas NGL
fractionation assets, associated with poor processing
economics. Regarding greenfield projects associated with
this segment, the Marco Polo oil pipeline is expected to be
in service in first quarter 2004; Poseidon's Front Runner
oil pipeline project is expected to be in service in mid-
2004; and the Cameron Highway oil pipeline is expected to be
in service in third quarter 2004.
The Natural Gas Storage segment reported $7.5 million of
EBITDA for the third quarter of 2003 compared with $5.4
million in the 2002 period. The 39-percent increase
resulted from the September 2002 expansion of the Petal
natural gas storage facilities located in Mississippi and an
increase in interruptible storage services at our Wilson
storage facility located in Texas.
The Platform Services segment EBITDA for the third quarter
of 2003 was $4.9 million compared with $4.6 million in the
2002 third quarter. The increase was attributed to the
Falcon Nest platform that went into operation in March 2003
to service Pioneer Natural Resources Company's Falcon Field
in the deepwater trend of the western Gulf of Mexico.
Pioneer, the owner and operator of the Falcon Field, has
recently announced additional discoveries in the Falcon
Corridor in the East Breaks area of the deepwater Gulf of
Mexico. This increase was partially offset by lower
revenues from East Cameron 373 resulting from lower demand
fees. Regarding greenfield projects associated with this
segment, the Marco Polo platform is expected to be installed
in fourth quarter 2003 and in service in first quarter 2004.
EBITDA related to non-segment activity includes the
partnership's oil and gas production activities, which we
continue to de-emphasize. Additional non-segment activities
include the $2.3-million quarterly payment from El Paso
Corporation related to the partnership's asset sales in
2001, which continues through the first quarter of 2004 with
a final payment of $2.0 million. EBITDA related to the non-
segment activity for the third quarter of 2003 was
$3.6 million compared with $3.2 million in the third quarter
of 2002 due to lower platform access fee expenses, higher
oil and natural gas prices offset by lower production
volumes, and higher operating expenses associated with an
increase in professional services.
Total capital at September 30, 2003 was $3.0 billion,
consisting of $1.9 billion of debt and $1.1 billion of
partners' capital, resulting in a debt to total
capitalization ratio of 62 percent. Cash and cash
equivalents were $58.9 million at September 30, 2003.
Taking into consideration the recently completed equity
transactions, pro forma debt is approximately $1.7 billion
and pro forma partners' capital is approximately $1.3
billion, resulting in a debt to total capitalization ratio
of approximately 58 percent.
CONFERENCE CALL
GulfTerra has scheduled a conference call to discuss its
financial results on Monday, November 3, 2003 at 10:30 a.m.
Eastern Time, 9:30 a.m. Central Time. To participate, dial
(973) 582-2706 ten minutes prior to the call, or listen to a
replay through November 10, 2003 by dialing (973) 341-3080
(code 4180056). A live webcast and audio replay of the call
will be available online at www.gulfterra.com. Operating
statistics and other data that will be referred to in the
conference call are also available on the Web site.
DISCLOSURE OF NON-GAAP FINANCIAL MEASURES
On March 28, 2003, Regulation G and related amendments to
SEC disclosure rules became effective. The new rules cover
press releases, conference calls, investor presentations,
and one-on-one meetings with members of the financial
community.
As a result of these new rules, we have modified the way we
present certain financial measures, such as EBITDA, in our
SEC filings and other communications. We believe that this
release complies with both the letter and spirit of the new
regulations and augments our efforts to continue to provide
full and fair disclosure to investors and the financial
community. We will maintain on our Web site a
reconciliation of all non-GAAP financial information that we
disclose to the most directly comparable GAAP measures. To
access the information, investors should click on the "Non-
GAAP Reconciliations" link in the Investors section of our
Web site.
EBITDA is calculated using earnings before interest, income
taxes, depreciation, and amortization, and is adjusted for
cash flows from our joint ventures, which we formerly
referred to as "Performance Cash Flows," or an asset's
ability to generate income. EBITDA is not presented in
accordance with generally accepted accounting principles and
is not intended to be used in lieu of GAAP presentations of
results of operations or cash flow provided by operating
activities. EBITDA is presented because management uses it
to evaluate operational efficiency, excluding taxes and
financing costs, and believes EBITDA provides additional
information with respect to both the performance of its
operations and the ability to meet the partnership's future
debt service, capital expenditures, and working capital
requirements. We also believe that debt holders commonly
use EBITDA to analyze our performance. A reconciliation of
EBITDA to cash flows from operating activities for the
periods presented is included in the tables attached to this
release.
EBITDA, as presented in this release, the attached tables,
and the Operating Statistics, which are also available in
the Investors section of the Web site at www.gulfterra.com,
is calculated in the same manner as what we referred to in
the past as adjusted EBITDA to allow a consistent comparison
of the operating performance with that of prior periods.
GulfTerra Energy Partners, L.P. is one of the largest
publicly traded master limited partnerships with interests
in a diversified set of midstream assets located both
offshore and onshore. Offshore, the company operates
natural gas and oil pipelines and platforms and is an
industry leader in the development of midstream
infrastructure in the Deepwater Trend of the Gulf of Mexico.
Onshore, GulfTerra is a leading operator of intrastate
natural gas pipelines, gas gathering and processing
facilities, natural gas liquids transportation and
fractionation assets, and salt dome natural gas and natural
gas liquids storage facilities. Visit GulfTerra Energy
Partners on the Web at www.gulfterra.com.
Cautionary Statement Regarding Forward-Looking Statements
This release includes forward-looking statements and
projections, made in reliance on the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995.
The Partnership has made every reasonable effort to ensure
that the information and assumptions on which these
statements and projections are based are current,
reasonable, and complete. However, a variety of factors,
including the integration of acquired businesses, status of
the Partnership's greenfield projects, successful
negotiation of customer contracts, and general economic and
weather conditions in markets served by GulfTerra Energy
Partners and its affiliates, could cause actual results to
differ materially from the projections, anticipated results
or other expectations expressed in this release. While the
Partnership makes these statements and projections in good
faith, neither the Partnership nor its management can
guarantee that the anticipated future results will be
achieved. Reference should be made to the Partnership's
(and its affiliates') Securities and Exchange Commission
filings for additional important factors that may affect
actual results.
Contact
Investor Relations and MLP Finance
Andrew Cozby, Director
Office: (832) 676-5315
Fax: (832) 676-1671
GULFTERRA ENERGY PARTNERS, L.P.
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions; except per unit amounts)
(Unaudited)
Quarter Nine Months
Ended Ended
September 30, September 30,
--------------- --------------
2003 2002 2003 2002
Operating revenue $283.7 $122.2 $872.7 $ 304.3
------- ------ ------ -------
Operating expense
Cost of natural gas, oil and other products 134.1 27.7 432.2 67.2
Operation and maintenance 51.3 32.8 140.5 76.6
Depreciation, depletion and amortization 25.2 19.3 73.7 49.9
(Gain)/loss on sale of long-lived assets (19.0) 0.4 (18.7) 0.1
------- ------ ------ -------
191.6 80.2 627.7 193.8
Operating income 92.1 42.0 245.0 110.5
Earnings from unconsolidated affiliates 3.2 3.2 9.5 10.5
Minority interest (0.9) - (1.0) -
Other income 0.2 0.3 1.0 1.2
Interest and debt expense (33.2) (22.1) (99.5) (55.4)
Loss due to write-off of debt issuance cost (1.2) - (5.0) -
------- ------ ------ -------
Income from continuing operations 60.2 23.4 150.0 66.8
Discontinued operations - 0.5 - 4.9
Cumulative effect of accounting change - - 1.7 -
-------- -------- -------- --------
Net income $ 60.2 $ 23.9 $ 151.7 $ 71.7
======= ======= ======== ========
Net income allocation
Series B unitholders $ 4.0 $ 3.7 $ 11.8 $ 10.9
======= ======= ======= ========
General partner
Continuing operations $ 18.1 $ 10.8 $ 48.8 $ 30.3
Discontinued operations - - - -
Cumulative effect of accounting change - - - -
-------- ------- ------- --------
$ 18.1 $ 10.8 $ 48.8 $ 30.3
======= ======= ======= ========
Common unitholders
Continuing operations $ 31.3 $ 8.9 $ 72.9 $ 25.7
Discontinued operations - 0.5 - 4.8
Cumulative effect of accounting change - - 1.4 -
-------- ------- ------- --------
$ 31.3 $ 9.4 $ 74.3 $ 30.5
======= ======= ======= ========
Series C unitholders (a)
Continuing operations $ 6.8 $ - $ 16.5 $ -
Discontinued operations - - - -
Cumulative effect of accounting change - - 0.3 -
-------- -------- ------- -------
$ 6.8 $ - $ 16.8 $ -
======= ======= ======= ========
Basic net income per common unit
Income from continuing operations $ 0.63 $ 0.20 $ 1.54 $ 0.61
Discontinued operations - 0.01 - 0.11
Cumulative effect of accounting change - - 0.3 -
-------- ------- ------- ------
Net income $ 0.63 $ 0.21 $ 1.57 $ 0.72
======= ======= ======= ========
Diluted net income per common unit
Income from continuing operations $ 0.62 $ 0.20 $ 1.53 $ 0.61
Discontinued operations - 0.01 - 0.11
Cumulative effect of accounting change - - 0.03 -
-------- ------- ------- --------
Net income $ 0.62 $ 0.21 $ 1.56 $ 0.72
======= ======= ======= ========
Basic average number of common units
outstanding 50.1 44.1 47.4 42.4
======= ======= ======= ========
Diluted average number of common units
outstanding 50.4 44.1 47.7 42.4
======= ======= ======= ========
Distributions declared per common unit $ 0.700 $0.650 $2.050 $1.925
======= ======= ======= ========
(a) Net income is allocated to the Series C units on an equal basis as the common units.
GULFTERRA ENERGY PARTNERS, L.P.
PRELIMINARY SUMMARIZED BALANCE SHEET INFORMATION
(In millions)
(Unaudited)
September 30, December 31,
2003 2002
ASSETS ------------ ------------
Current assets
Cash and cash equivalents $58.9 $ 36.1
Accounts and notes receivable, net 196.9 240.4
Other 20.0 3.5
--------- ---------
Total current assets 275.8 280.0
Property, plant and equipment, net 2,800.1 2,724.9
Investments in unconsolidated affiliates 157.4 78.9
Other noncurrent assets 48.5 47.1
---------- ---------
Total assets $3,281.8 $3,130.9
========= =========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Accounts payable $ 151.2 $ 212.9
Current maturities of long term debt 5.0 5.0
Other 60.3 36.2
-------- --------
Total current liabilities 216.5 254.1
Credit facilities 480.5 1,043.5
Long-term debt 1,405.3 857.8
Other noncurrent liabilities 30.1 23.7
-------- -------
Total liabilities 2,132.4 2,179.1
-------- -------
Minority interest 2.5 1.9
Partners' capital 1,146.9 949.9
Total liabilities and -------- --------
partners' capital $3,281.8 $3,130.9
========= ========
GULFTERRA ENERGY PARTNERS, L.P.
PRELIMINARY SUMMARIZED CASH FLOWS INFORMATION
(In millions)
(Unaudited)
Nine Months Ended
September 30,
----------------------
2003 2002
Cash flows from operating activities
Net income $ 151.7 $71.7
Cumulative effect of accounting change (1.7) -
Income from discontinued operations - (4.9)
Adjustments to reconcile net income to
net cash provided by operating activities 64.0 53.8
Working capital changes (4.6) 12.9
-------- ----------
Net cash provided by continuing operations 209.4 133.5
Net cash provided by discontinued operations - 5.0
-------- ---------
Net cash provided by operating activities 209.4 138.5
-------- ---------
Cash flows from investing activities
Net cash used in investing activities
of continuing operations (201.5) (912.8)
Net cash provided by investing activities
of discontinued operations - 186.5
--------- ---------
Net cash used in investing activities (201.5) (726.3)
--------- ---------
Cash flows from financing activities
Net cash provided by financing activities
of continuing operations 14.9 597.0
Net cash used in financing activities
of discontinued operations - -
--------- --------
Net cash provided by financing activities 14.9 597.0
--------- --------
Increase in cash and cash equivalents 22.8 9.2
Cash and cash equivalents at beginning
of period 36.1 13.1
-------- --------
Cash and cash equivalents at end of period $58.9 $22.3
======== ========
GULFTERRA ENERGY PARTNERS, L.P.
RECONCILIATION OF EBITDA TO CASH FLOW FROM OPERATIONS
(In millions)
(Unaudited)
Nine Months Ended
September 30,
------------------------
2003 2002
Cash Flow from Operating Activities $ 209.4 $138.5
Adjustments: -
Interest and Debt Expense 99.5 55.4
Gain (Loss) on Sale of
Long-lived Assets 18.7 (0.1)
Net Cash Payment Received
from El Paso Corporation 6.2 5.7
EBITDA from Discontinued Operations
of Prince Facilities - 7.0
Non-cash Hedge (Gain)/Loss - 1.0
Minority Interest Expense 1.0 -
Net Cash Provided by (Used in)
Discontinued Operations - (5.0)
Non-cash Items (2.0) (1.2)
Net Working Capital Changes 4.6 (12.9)
--------- ---------
EBITDA $337.4 $188.4
=========== ==========
EL PASO ENERGY PARTNERS, L.P.
RECONCILIATION OF EBITDA TO NET INCOME
(In millions)
(Unaudited)
Quarter Ended September 30, 2003
Natural
Gas Oil and Natural
Pipelines NGL Gas Platform
and Plants Logistics Storage Services Other Total
---------- --------- ------- --------- ----- -----
Net Income $ 60.2
Plus: Interest and debt expense 33.2
Loss due to write-off of
debt issuance costs 1.2
Earnings excluding interest and
debt expense $ 62.3 $ 23.9 $ 4.6 $ 3.5 $0.3 94.6
Plus: Depreciation, Depletion
and Amortization 17.2 2.5 2.9 1.4 1.2 25.2
Cash Distributions in Excess
of Earnings from
Unconsolidated Affiliates 0.5 0.4 (0.9) - - -
Minority interest expense - - 0.9 - - 0.9
Net cash payment received
from El Paso Corporation - - - - 2.1 2.1
-------- --------- -------- ------- ------ -------
EBITDA $ 80.0 $ 26.8 $ 7.5 $4.9 $3.6 $122.8
======== ========= ======= ======= ====== =======
Quarter Ended September 30, 2002
Natural
Gas Oil and Natural
Pipelines NGL Gas Platform
and Plants Logistics Storage Services Other Total
---------- --------- ------- --------- ----- -----
Net Income $ 23.9
Plus: Interest and debt expense 22.1
Less: Income from discontinued
operations (0.5)
Earnings excluding interest and
debt expense $ 31.2 $ 9.1 $ 2.6 $3.1 $(0.5) 45.5
Plus: Depreciation, Depletion
and Amortization 12.3 1.4 2.8 1.0 1.8 19.3
Cash Distributions in
Excess of Earnings from
Unconsolidated Affiliates - 0.7 - - - 0.7
Net cash payment received
from El Paso Corporation - - - - 1.9 1.9
Discontinued operations
of Prince facilities - - - 0.5 - 0.5
Non-cash hedge (gain)/loss 1.0 - - - - 1.0
-------- --------- -------- ------- ------ -------
EBITDA $ 44.5 $ 11.2 $ 5.4 $4.6 $3.2 $68.9
======== ========= ======= ====== ====== =======
Nine Months Ended September 30, 2003
Natural
Gas Oil and Natural
Pipelines NGL Gas Platform
and Plants Logistics Storage Services Other Total
---------- --------- ------- --------- ----- -----
Net Income $151.7
Plus: Interest and debt expense 99.5
Loss due to write-off of
debt issuance costs 5.0
Less: Cumulative effect of
accounting change (1.7)
Earnings excluding interest and
debt expense $184.2 $ 42.6 $13.8 $11.4 $2.5 254.5
Plus: Depreciation, Depletion and
Amortization 50.8 6.9 8.8 4.0 3.2 73.7
Cash Distributions in Excess
of Earnings from
Unconsolidated Affiliates 1.1 1.8 (0.9) - - 2.0
Minority interest expense 0.1 - 0.9 - - 1.0
Net cash payment received
from El Paso Corporation - - - - 6.2 6.2
-------- --------- -------- ------- ------ -------
EBITDA $236.2 $ 51.3 $22.6 $15.4 $11.9 $337.4
======== ========= ======= ====== ====== =======
Nine Months Ended September 30, 2002
Natural
Gas Oil and Natural
Pipelines NGL Gas Platform
and Plants Logistics Storage Services Other Total
---------- --------- ------- --------- ----- -----
Net Income $71.7
Plus: Interest and debt expense 55.4
Less: Income from discontinued
operations (4.9)
Earnings excluding interest and
debt expense $79.8 $ 26.9 $ 4.6 $15.6 $(4.7) 122.2
Plus: Depreciation, Depletion
and Amortization 31.0 4.5 5.6 3.1 5.7 49.9
Cash Distributions in Excess
of Earnings from
Unconsolidated Affiliates - 2.6 - - - 2.6
Net cash payment received
from El Paso Corporation - - - - 5.7 5.7
Discontinued operations of
Prince facilities - - - 6.2 0.8 7.0
Non-cash hedge (gain)/loss 1.0 - - - - 1.0
-------- --------- -------- ------- ------ -------
EBITDA $111.8 $ 34.0 $10.2 $24.9 $7.5 $188.4
======== ========= ======= ====== ====== =======