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: May 6, 2003
(Date of Earliest Event Reported: May 5, 2003)
EL PASO 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) 676-6152
Item 7. Financial Statements, ProForma Financial Information
and Exhibits
----------------------------------------------------
(c) Exhibits.
Exhibit
Number Description
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99.1 Press Release dated May 5, 2003.
Item 9. Regulation FD
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On May 5, 2003, we announced our earnings results for first
quarter 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 9 and 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.
EL PASO ENERGY PARTNERS, L.P.
By: El Paso Energy Partners Company
Its General Partner
By: /s/ Kathy A. Welch
------------------------
Kathy A. Welch
Vice President and Controller
(Principal Accounting Officer)
Date: May 6, 2003
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
99.1 Press Release dated May 5, 2003.
EL PASO ENERGY PARTNERS EXHIBIT 99.1
For Immediate Release
EL PASO ENERGY PARTNERS DOUBLES FIRST QUARTER 2003 NET INCOME
HOUSTON, TEXAS, MAY 5, 2003-El Paso Energy Partners, L.P.
(NYSE:EPN), which recently announced its name change to GulfTerra
Energy Partners, L.P. effective May 15, 2003, (NYSE:GTM), today
reported first quarter 2003 net income of $42.2 million ($0.43
per unit), a 121-percent increase over first quarter 2002 net
income of $19.1 million ($0.17 per unit). First quarter 2003
cash flows from operating activities were $71.4 million, compared
with $43.2 million in the 2002 first quarter. Earnings before
interest, taxes, depreciation, and amortization (EBITDA) were
$105.9 million, more than double the $48.5 million reported for
the first quarter of 2002. The increases were primarily driven
by the more than $1.5 billion of fee-based midstream asset
acquisitions EPN has completed since the first quarter of 2002.
"This is our tenth consecutive quarter of record earnings and
EBITDA. These results clearly show the strength and diversity of
our midstream asset portfolio and position us to meet our
performance objectives for 2003," said Robert G. Phillips,
chairman and chief executive officer of El Paso Energy Partners.
"The acquisitions completed in 2002, coupled with our current
slate of organic growth projects that are coming online this year
and next, will continue to drive higher earnings throughout 2003
and into 2004. During the quarter, we installed and placed into
service our Falcon Nest platform and pipeline system in the
western Gulf of Mexico to process natural gas production from
Pioneer Natural Resources Company's Falcon field. Processing at
the platform began March 15, 2003, approximately one month ahead
of schedule, and the operator has announced a second Deepwater
Trend field discovery in the area that will be connected to
Falcon Nest in the fourth quarter 2003. We continue to make
progress on the construction of our Marco Polo platform which
will process natural gas and oil production from Anadarko
Petroleum Company's Marco Polo field in the south Green Canyon
area of the Gulf of Mexico. The new tension leg platform and
export pipelines are on schedule for installation in the fourth
quarter of 2003, with service commencing in the first quarter of
2004. In addition, EPN's board of directors recently approved a
$43-million, three-year optimization project for the
partnership's San Juan Basin midstream assets. The project is
designed to increase gathering capacity, maximize the utilization
of the Chaco processing facility, and increase market
opportunities for our producers in the San Juan Basin."
"Progress was also made in strengthening our balance sheet with
$103-million raised though a public common unit offering in April
that decreased our debt-to-total capital from 67.6 percent at
March 31, 2003, to the current 64.0 percent, moving us solidly
toward our goal of a debt-to-total capital level of no higher
than 60 percent by year end. In March, we also completed a
successful 144a debt offering of $300 million, 8.5-percent Senior
Subordinated Notes due 2010, which we used to refinance a $238-
million senior secured acquisition term loan and increase the
cash available from our revolving credit facility," continued
Phillips.
"We are taking solid steps to implement our corporate governance
initiatives. Last week we announced we will change our name to
GulfTerra Energy Partners effective May 15, 2003, and today we
are announcing that El Paso Corporation, owner of our General
Partner, has formed a new entity to own the General Partner's
interest in the partnership. We have amended our partnership
agreement to, among other things, eliminate El Paso's voting
rights with respect to certain actions regarding the General
Partner. Additionally, our related party margin from El Paso and
its affiliates declined in the first quarter of 2003 from $61
million in the fourth quarter of 2002 to $15 million in the
current period," Phillips concluded.
CASH DISTRIBUTION
On April 16, 2003, El Paso Energy Partners declared a cash
distribution of $0.675 per common unit for the period from
January 1, 2003 through March 31, 2003. The distribution is
payable May 15, 2003 to unitholders of record at the close of
business on April 30, 2003.
SEGMENT RESULTS
Natural Gas Pipelines and Plants EBITDA was $77.8 million in the
first quarter of 2003, more than triple the $20.2 million
generated in the first quarter of 2002. Volumes averaged 7,599
thousand dekatherms per day (Mdth/d) in 2003 compared with
2,430 Mdth/d in the 2002 quarter. The increases primarily
reflect assets acquired since the first quarter of 2002.
Transportation and processing volumes were strong across all
assets in this segment with higher than anticipated contributions
from percentage-of-proceeds processing plants due to higher
natural gas liquids (NGL) prices during the quarter. These
positive financial results were partially offset by higher fuel
costs and gas imbalance revaluations on the partnership's Texas
Intrastate system due to unusually high natural gas prices.
Oil and NGL Logistics, which includes the partnership's oil
pipeline and NGL assets, generated EBITDA of $11.6 million for
the first quarter of 2003 compared with $10.7 million in the 2002
period. Operating volumes were 256,842 barrels per day (Bbls/d)
compared with 231,740 Bbls/d in the first quarter of 2002.
Increases reflect higher volumes on the partnership's 36-percent
owned Poseidon Oil Pipeline and new volumes from its recently
acquired Typhoon oil pipeline, partially offset by lower
fractionation volumes on its Texas NGL assets.
Natural Gas Storage EBITDA for the first quarter of 2003 was $7
million compared with $2.7 million in the 2002 period. The
increase resulted from the expansion of the Petal natural gas
storage facilities in the second and third quarters of 2002.
Platform Services EBITDA for the first quarter of 2003 was $4.2
million compared with $12.8 million in the 2002 first quarter.
The 2002 period reflected $5.7 million of EBITDA from the Prince
platform, which was sold in the second quarter of 2002, and
results from an inter-segment platform processing agreement that
expired in the third quarter of 2002, partially offset by
approximately 15 days of operations from the partnership's new
Falcon Nest platform in the current quarter. The Marco Polo
platform is on schedule to be placed in service during the fourth
quarter of 2003 with first production in the first quarter of
2004.
Other and Eliminations EBITDA includes the partnership's oil and
gas production activities, which it is continuing to de-
emphasize, and other non-segment related activities including the
$2.25-million quarterly payment from El Paso Corporation related
to EPN asset sales in 2001, which continues through the first
quarter of 2004 with a final payment of $2 million. EBITDA for
the first quarter of 2003 was $5.3 million compared with $2.1
million in the first quarter of 2002 due to higher oil and
natural gas prices offset by lower production volumes.
Total capital at March 31, 2002, was $2.9 billion, consisting of
$1.9 billion of debt (67.6 percent) and partners' capitalization
of $934 million.
CONFERENCE CALL
EPN has scheduled a conference call to discuss its financial
results on Tuesday, May 6, 2003, at 10:30 a.m. Eastern Daylight
Time, 9:30 a.m. Central Daylight Time. To participate, dial
(973) 935-8504 ten minutes prior to the call, or listen to a
replay through May 13, 2003, by dialing (973) 341-3080 (code
3853944). A live webcast and audio replay of the call will be
available online at www.elpasopartners.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
presentation complies with both the letter and spirit of the new
regulations and augments its efforts to continue to provide full
and fair disclosure to investors and the financial community. We
will maintain on our Web site (www.elpasopartners.com) a
reconciliation of all non-GAAP financial information that we
disclose to the most comparable GAAP measures. To access the
information, investors should click on the "Non-GAAP
Reconciliations" link in the "For Investors" section of our Web
site.
We generally calculate EBITDA by adding depreciation,
amortization, and interest expense to net 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 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 "For
Investors" section of the Web site at www.elpasopartners.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.
El Paso Energy Partners, L.P. is one of the largest publicly
traded master limited partnerships with interests in a
diversified set of midstream assets, including onshore and
offshore natural gas and oil pipelines; offshore production
platforms; natural gas storage and processing facilities and
natural gas liquids fractionation, transportation, and storage
and terminal assets. Visit El Paso Energy Partners on the Web at
www.elpasopartners.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 businesses acquired in 2002
and generation of expected revenues from the partnership's recent
expansion projects and greenfield projects 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.
###
Contacts:
Communications &
Government Affairs Investor Relations
Norma F. Dunn Sandra M. Ryan
Senior Vice President Director
Office: (713) 420-3750 Office: (832) 676-5371
Fax: (713) 420-3632 Fax: (832) 676-1195
EL PASO ENERGY PARTNERS, L.P.
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions; except per unit amounts)
(Unaudited)
Quarter Ended
March 31,
---------------
2003 2002
Operating revenue $ 278.9 $ 61.5
-------- -------
Operating expense
Cost of natural gas, oil and other products 139.6 12.2
Operation and maintenance 40.6 14.4
Depreciation, depletion and amortization 23.7 12.5
-------- -------
203.9 39.1
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Operating income 75.0 22.4
Earnings from unconsolidated affiliates 3.3 3.4
Net gain on sale of assets 0.1 0.3
Other income 0.3 0.4
Interest and debt expense (38.2) (11.8)
-------- -------
Income from continuing operations 40.5 14.7
Discontinued operations - 4.4
Cumulative effect of accounting change 1.7 -
-------- -------
Net income $ 42.2 $ 19.1
======== =======
Net income allocation
Series B unitholders $ 3.9 $ 3.6
======== =======
Series C unitholders (a)
Continuing operations $ 4.3 $ -
Discontinued operations - -
Cumulative effect of accounting change 0.3 -
-------- -------
$ 4.6 $ -
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General partner
Continuing operations $ 14.9 $ 8.7
Discontinued operations - -
Cumulative effect of accounting change - -
-------- -------
$ 14.9 $ 8.7
======== =======
Common unitholders
Continuing operations $ 17.5 $ 2.5
Discontinued operations - 4.3
Cumulative effect of accounting change 1.3 -
-------- -------
$ 18.8 $ 6.8
======== =======
Basic and diluted net income per common unit
Income from continuing operations $ 0.40 $ 0.06
Discontinued operations - 0.11
Cumulative effect of accounting change 0.03 -
-------- -------
Net income $ 0.43 $ 0.17
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Weighted average number of common units outstanding 44.1 39.9
========= =======
Distributions declared per common unit $ 0.675 $ 0.625
========= =======
Proforma amounts assuming asset retirement obligations were
recorded prior to the earliest period presented
Income from continuing operations $ 40.5 $ 14.7
======== =======
Basic and diluted income from continuing operations
per common unit $ 0.40 $ 0.06
======== =======
(a) Net income is allocated to the Series C units on an equal basis as the
common units.
EL PASO ENERGY PARTNERS, L.P.
PRELIMINARY SUMMARIZED BALANCE SHEET INFORMATION
(In millions)
(Unaudited)
March 31, December 31,
2003 2002
--------- -----------
ASSETS
Current assets
Cash and cash equivalents $ 12.2 $ 36.1
Accounts and notes receivable, net 237.3 240.4
Other 1.5 3.5
-------- --------
Total current assets 251.0 280.0
Property, plant and equipment, net 2,790.8 2,724.9
Investments in unconsolidated affiliates 77.7 78.9
Other noncurrent assets 48.0 47.1
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Total assets $ 3,167.5 $ 3,130.9
========= =========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Accounts payable $ 202.0 $ 212.9
Current maturities of long term debt 5.0 5.0
Other 52.9 36.2
--------- ---------
Total current liabilities 259.9 254.1
Credit facilities 786.0 1,043.5
Long-term debt 1,157.7 857.8
Other noncurrent liabilities 27.6 23.7
-------- ---------
Total liabilities 2,231.2 2,179.1
Minority interest 2.0 1.9
Partners' capital 934.3 949.9
Total liabilities and --------- ---------
partners' capital $ 3,167.5 $ 3,130.9
========= =========
EL PASO ENERGY PARTNERS, L.P.
PRELIMINARY SUMMARIZED CASH FLOWS INFORMATION
(In millions)
(Unaudited)
Quarter Ended
March 31,
-------------
2003 2002
Cash flows from operating activities
Net income from continuing operations $ 40.5 $ 14.7
Cumulative effect of accounting change 1.7 -
Adjustments to reconcile net income to net cash provided by
operating activities 29.5 14.7
Working capital changes, net of noncash items (0.3) 8.4
--------- -------
Net cash provided by continuing operations
Net cash provided by discontinued operations 71.4 37.8
Net cash provided by operating activities - 5.4
--------- -------
71.4 43.2
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Cash flows from investing activities
Net cash used in investing activities of continuing operations (79.0) (29.7)
Net cash provided by investing activities of discontinued operations - (3.5)
--------- -------
Net cash used in investing activities (79.0) (33.2)
--------- -------
Cash flows from financing activities
Net cash (used in) provided by financing activities of continuing (16.3) 110.3
Net cash used in financing activities of discontinued operations - -
--------- -------
Net cash (used in) provided by financing activities (16.3) 110.3
--------- -------
(Decrease) increase in cash and cash equivalents (23.9) 120.3
Cash and cash equivalents at beginning of period 36.1 13.1
--------- -------
Cash and cash equivalents at end of period $ 12.2 $ 133.4
========= =======
EL PASO ENERGY PARTNERS, L.P.
RECONCILIATION OF EBITDA
(In millions)
(Unaudited)
Quarter Ended
March 31,
------------------
2003 2002
Cash Flow from Operating Activities $ 71.4 $ 43.2
Plus:Interest and debt expense 38.2 11.8
Gain (loss) on sale of assets 0.1 0.3
Net cash payment received from
El Paso Corporation 2.0 1.9
EBITDA from discontinued operations
of Prince facilities - 6.4
Less:Net cash provided by (used in)
discontinued operations - 5.4
Non-cash items 6.1 1.3
Net working capital changes (0.3) 8.4
--------- ---------
EBITDA $ 105.9 $ 48.5
========= =========
