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: August 6, 2003
(Date of Earliest Event Reported: August 6, 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, ProForma Financial Information
and Exhibits
----------------------------------------------------
(c) Exhibits.
Exhibit
Number Description
-------- ------------
99.1 Press Release dated August 8, 2003.
Item 9. Regulation FD
-------------
On August 6, 2003, we announced our earnings results for
second 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.
GULFTERRA ENERGY PARTNERS, L.P.
By: GulfTerra Energy Company, L.L.C.
Its General Partner
By: /s/ Kathy A. Welch
------------------------
Kathy A. Welch
Vice President and Controller
(Principal Accounting Officer)
Date: August 6, 2003
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
99.1 Press Release dated August 6, 2003.
EXHIBIT 99.1
GULFTERRA ENERGY PARTNERS ANNOUNCES NET INCOME UP 72 PERCENT
TO $49.3 MILLION AND EBITDA UP 53 PERCENT TO $108.6 MILLION;
RAISES 2003 ESTIMATES
HOUSTON, TEXAS, August 5, 2003-GulfTerra Energy Partners,
L.P. (NYSE:GTM) today reported second quarter 2003 net
income of $49.3 million ($0.50 per unit), a 72-percent
increase over second quarter 2002 net income of $28.7
million ($0.33 per unit). Second quarter 2003 cash flow
from operating activities was $59.7 million, compared with
$18.4 million in the 2002 second quarter. Earnings before
interest, taxes, depreciation and amortization (EBITDA) for
the quarter was $108.6 million, an increase of 53 percent
over the $71.0 million reported for the second quarter of
2002. The increases were primarily driven by the assets
acquired in the November 2002 San Juan transaction and
increased activity in the Deepwater Trend of the Gulf of
Mexico.
For the six months ended June 30, 2003, net income was $91.5
million ($0.93 per unit), a 91-percent increase from the
$47.8 million ($0.51 per unit) reported for the first half
of 2002. Cash flow from operating activities for the six
months ended June 30, 2003 was $131.1 million, compared with
$61.6 million for the six months ended June 30, 2002.
EBITDA for the six months ended June 30, 2003 was $214.5
million, an increase of 79 percent from the $119.5 million
reported for the same period of 2002.
Based on GulfTerra's strong performance this year and the
recent closing of the Cameron Highway Oil Pipeline joint
venture for which GulfTerra received $19 million in the
third quarter 2003, the partnership is increasing its 2003
guidance to reflect the following:
* an increase in 2003 EBITDA to $435-445 million compared
with previous expectations of $420 million
* an increase in 2003 net income to $180-190 million
($1.58-$1.74 per unit) compared with earlier projections
of $165 million ($1.41 per unit)
"We had a very successful second quarter due to significant
contributions from our San Juan and Permian Basin assets
onshore and our Viosca Knoll pipeline and recently installed
Falcon Nest platform and pipeline offshore," said
Robert G. Phillips, chairman and chief executive officer of
GulfTerra Energy Partners. "Our performance this quarter
and year to date demonstrates the balance we have achieved
in our portfolio of midstream assets, positioning us to
exceed our previously stated 2003 EBITDA and earnings
guidance."
"During the quarter, we also decreased our debt-to-total
capital ratio to 63 percent, moving us solidly toward our
goal of attaining investment grade credit ratings by year-
end. Additionally, we continued to move forward with our
independence and corporate governance initiatives, including
the introduction of our new name, reconstitution of our
general partner entity, and the expansion of our Board of
Directors to include a fourth independent director.
Finally, based on GulfTerra's strong performance, our Board
of Directors elected to increase our quarterly per-unit
distribution to $0.70 or $2.80 per year," Phillips
concluded.
SEGMENT RESULTS
The Natural Gas Pipelines and Plants segment produced EBITDA
of $78.3 million in the second quarter of 2003, a 66-percent
increase from the $47.1 million generated during the same
period a year ago. Volumes averaged 7,824 thousand
dekatherms per day (Mdth/d) in the second quarter of 2003
compared with 6,254 Mdth/d in the second quarter of 2002.
The increase is primarily attributable to the San Juan Basin
assets acquired in the fourth quarter of 2002 and the strong
performance of the Viosca Knoll pipeline and the Permian
Basin assets. San Juan gathering revenues were strong due
to higher natural gas prices, and San Juan and Permian
processing revenues continue to be favorably influenced by
higher natural gas liquids (NGL) prices, partially offset by
increased fuel costs and imbalance revaluations on the Texas
pipeline.
The Oil and NGL Logistics segment, which includes the
partnership's oil pipelines and NGL assets, generated EBITDA
of $12.9 million for the second quarter of 2003 compared
with $12.1 million in the comparable 2002 period. The
slight increase reflects contributions from NGL facilities
and the Typhoon oil pipeline acquired in 2002, partially
offset by lower volumes on the partnership's south Texas NGL
facilities, which were affected by poor processing
economics, and the 36-percent owned Poseidon oil pipeline,
which experienced some natural declines and producer shut-
ins.
The Natural Gas Storage segment reported $8.1 million of
EBITDA for the second quarter of 2003 compared with $2.1
million in the corresponding 2002 period. The increase
resulted from the expansion of the Petal natural gas storage
facilities.
The Platform Services segment EBITDA for the second quarter
of 2003 was $6.3 million compared with $7.5 million in the
2002 second quarter. The decrease resulted from lower
platform processing volumes and demand charges offset by the
first full quarter contribution by the Falcon Nest platform,
the partnership's newest deepwater project to come on line.
Falcon Nest contributed $3.2 million in EBITDA on volumes of
190 Mdth/d, excluding EBITDA of $1.5 million reported in the
Natural Gas Pipelines and Plants segment.
Other and Eliminations EBITDA includes the partnership's oil
and natural gas production activities, which it is
continuing to de-emphasize. Other non-segment activities
include the $2.25-million quarterly payment from El Paso
Corporation related to the partnership's asset sales in
2001. These payments will continue through the first
quarter of 2004 with a final payment of $2 million. EBITDA
related to Other and Eliminations for the second quarter of
2003 was $3.0 million compared with $2.2 million in the
second quarter of 2002. The increase was primarily due to
higher oil and natural gas prices offset by lower production
volumes.
Total capital at June 30, 2003, was $3.0 billion, consisting
of $1.9 billion of debt and partners' capital of $1.1
billion. Cash and cash equivalents were $17.7 million at
June 30, 2003.
CONFERENCE CALL
GulfTerra has scheduled a conference call to discuss its
financial results on Wednesday, August 6, 2003, at 10:30
a.m. Eastern Daylight Time, 9:30 a.m. Central Daylight Time.
To participate, dial (973) 582-2706 ten minutes prior to the
call, or listen to a replay through August 13, 2003, by
dialing (973) 341-3080 (code 4029376). 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
presentation 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.
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 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 partnership 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, natural 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.
Contacts
Communications and Investor Relations
Government Affairs and MLP Finance
Norma F. Dunn, Andrew Cozby,
Senior Vice President Director
Office: (713) 420-3750 Office: (832) 676-5315
Fax: (713) 420-3632 Fax: (832) 676-1671
GULFTERRA ENERGY PARTNERS, L.P.
PRELIMINARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions; except per unit amounts)
(Unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
----------------- ----------------
2003 2002 2003 2002
Operating revenue $310.1 $120.5 $589.0 $182.1
------ ------ ------- -------
Operating expense
Cost of natural gas, oil and other products 158.5 27.3 298.1 39.5
Operation and maintenance 48.6 29.3 89.2 43.8
Depreciation, depletion and amortization 24.8 18.1 48.5 30.6
(Gain)/loss on sale of long-lived assets 0.4 - 0.3 (0.3)
------ ------ ------- -------
232.3 74.7 436.1 113.6
------ ------ ------- -------
Operating income 77.8 45.8 152.9 68.5
Earnings from unconsolidated affiliates 3.0 4.0 6.3 7.3
Other income 0.4 0.4 0.7 0.9
Interest and debt expense (31.9) (21.5) (66.3) (33.3)
Loss due to write-off of debt issuance cost - - (3.8) -
------ ------ ------- -------
Income from continuing operations 49.3 28.7 89.8 43.4
Discontinued operations - - - 4.4
Cumulative effect of accounting change - - 1.7 -
------ ------ ------- -------
Net income $49.3 $28.7 $91.5 $47.8
======= ======= ======= =======
Net income allocation
Series B unitholders $ 3.9 $ 3.6 $ 7.8 $ 7.2
======= ======= ======= =======
Series C unitholders (a)
Continuing operations $ 5.4 $ - $ 9.7 $ -
Cumulative effect of accounting change - - 0.3 -
------ ------ ------- -------
$ 5.4 $ - $10.0 $ -
======= ======= ======= =======
General partner
Continuing operations $15.8 $10.8 $30.7 $19.5
Cumulative effect of accounting change - - - -
------ ------ ------- -------
$15.8 $10.8 $30.7 $19.5
======= ======= ======= =======
Common unitholders
Continuing operations $24.2 $14.3 $41.6 $16.7
Discontinued operations - - - 4.4
Cumulative effect of accounting change - - 1.4 -
------ ------ ------- -------
$24.2 $14.3 $43.0 $21.1
======= ======= ======= =======
Basic net income per common unit
Income from continuing operations $ 0.50 $ 0.33 $ 0.90 $ 0.40
Discontinued operations - - - 0.11
Cumulative effect of accounting change - - 0.03 -
------ ------ ------- -------
Net income $ 0.50 $ 0.33 $ 0.93 $ 0.51
======= ======= ======= =======
Diluted net income per common unit
Income from continuing operations $ 0.50 $ 0.33 $ 0.90 $ 0.40
Discontinued operations - - - 0.11
Cumulative effect of accounting change - - 0.03 -
------- ------ ------- -------
Net income $ 0.50 $ 0.33 $ 0.93 $ 0.51
======= ======= ======= =======
Basic average number of common units outstanding 48.0 42.8 46.0 41.3
======= ======= ======= =======
Dilued average number of common units outstanding 48.5 42.8 46.3 41.3
======= ======= ======= =======
Distributions declared per common unit $ 0.675 $ 0.650 $ 1.350 $ 1.275
======= ======= ======= =======
(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)
June 30, December 31,
2003 2002
--------- --------
ASSETS
Current assets
Cash and cash equivalents $ 17.7 $ 36.1
Accounts and notes receivable, net 218.0 240.4
Other 5.5 3.5
---------- -----------
Total current assets 241.2 280.0
Property, plant and equipment, net 2,887.7 2,724.9
Investments in unconsolidated affiliates 77.3 78.9
Other noncurrent assets 48.5 47.1
---------- -----------
Total assets $3,254.7 $3,130.9
========== ===========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Accounts payable $194.8 $212.9
Current maturities of long term debt 5.0 5.0
Other 27.4 36.2
---------- -----------
Total current liabilities 227.2 254.1
Credit facilities 727.6 1,043.5
Long-term debt 1,157.6 857.8
Other noncurrent liabilities 28.1 23.7
---------- -----------
Total liabilities 2,140.5 2,179.1
---------- -----------
Minority interest 2.3 1.9
Partners' capital 1,111.9 949.9
---------- -----------
Total liabilities and partners' capital $3,254.7 $3,130.9
========== ===========
GULFTERRA ENERGY PARTNERS, L.P.
PRELIMINARY SUMMARIZED CASH FLOWS INFORMATION
(In millions)
(Unaudited)
Six Months Ended
June 30,
-----------------------
2003 2002
Cash flows from operating activities
Net income $ 91.5 $ 47.8
Cumulative effect of accounting change (1.7) -
Income from discontinued operations - (4.4)
Adjustments to reconcile net income to
net cash provided by operating activities 59.1 33.7
Working capital changes (17.8) (20.5)
-------- --------
Net cash provided by continuing operations 131.1 56.6
Net cash provided by discontinued operations - 5.0
-------- --------
Net cash provided by operating activities 131.1 61.6
-------- --------
Cash flows from investing activities
Net cash used in investing activities of
continuing operations (200.9) (830.2)
Net cash provided by investing activities of
discontinued operations - 186.5
-------- --------
Net cash used in investing activities (200.9) (643.7)
-------- --------
Cash flows from financing activities
Net cash provided by financing activities
of continuing operations 51.4 587.8
Net cash used in financing activities of
discontinued operations - -
-------- --------
Net cash provided by financing activities 51.4 587.8
-------- --------
(Decrease) increase in cash and cash equivalents (18.4) 5.7
Cash and cash equivalents at beginning of period 36.1 13.1
-------- --------
Cash and cash equivalents at end of period $17.7 $18.8
======== ========
GULFTERRA ENERGY PARTNERS, L.P.
RECONCILIATION OF EBITDA TO CASH FLOW FROM OPERATIONS
(In millions)
(Unaudited)
Six Months Ended
June 30,
-----------------
2003 2002
Cash Flow from Operating Activities $ 131.1 $ 61.6
Plus: Interest and debt expense 66.3 33.3
(Loss) gain on sale of long-lived assets (0.3) 0.3
Net cash payment received from
El Paso Corporation 4.1 3.8
EBITDA from discontinued operations
of Prince facilities - 6.5
Net working capital changes 17.8 20.5
Less: Net cash provided by discontinued operations - 5.0
Non-cash items 4.5 1.5
---------- ---------
EBITDA $ 214.5 $ 119.5
========== =========
EL PASO ENERGY PARTNERS, L.P.
RECONCILIATION OF EBITDA TO NET INCOME
(In millions)
(Unaudited)
Quarter Ended June 30, 2003
Natural Gas
Pipelines Natural
and Oil and NGL Gas Platform
Plants Logistics Storage Services Other Total
------------ ----------- ---------- ---------- ------- -------
Net Income $49.3
Plus: Interest and debt expense 31.9
Earnings excluding interest and
debt expense $60.8 $10.6 $5.2 $4.9 $(0.3) 81.2
Plus: Depreciation, Depletion
and Amortization 17.1 2.2 2.9 1.4 1.2 24.8
Cash Distributions from
Unconsolidated Affiliates 1.0 2.5 - - - 3.5
Net cash payment received
from El Paso Corporation - - - - 2.1 2.1
Less: Earnings from Unconsolidated
Affiliates 0.6 2.4 - - - 3.0
-------- --------- --------- ------- ------- ---------
EBITDA $78.3 $12.9 $8.1 $6.3 $3.0 $108.6
======== ========= ========= ======= ======= =========
Quarter Ended June 30, 2002
Natural Gas
Pipelines Natural
and Oil and NGL Gas Platform
Plants Logistics Storage Services Other Total
------------ ----------- ---------- ---------- ------- -------
Net Income $ 28.7
Plus: Interest and debt expense 21.5
Earnings excluding interest and
debt expense $34.9 $ 9.7 $0.7 $6.4 $(1.5) 50.2
Plus: Depreciation, Depletion
and Amortization 12.2 1.7 1.4 1.0 1.8 18.1
Cash Distributions from
Unconsolidated Affiliates - 4.7 - - - 4.7
Net cash payment received
from El Paso Corporation - - - - 1.9 1.9
Discontinued operations of
Prince facilities - - - 0.1 - 0.1
Less: Earnings from Unconsolidated
Affiliates - 4.0 - - - 4.0
-------- --------- --------- ------- ------- ---------
EBITDA $47.1 $12.1 $2.1 $7.5 $2.2 $71.0
======== ========= ========= ======= ======= =========
Six Months Ended June 30, 2003
Natural Gas
Pipelines Natural
and Oil and NGL Gas Platform
Plants Logistics Storage Services Other Total
------------ ----------- ---------- ---------- ------- -------
Net Income $91.5
Plus: Interest and debt expense 66.3
Loss due to write-off of
debt issuance costs 3.8
Less: Cumulative effect of
accounting change (1.7)
Earnings excluding interest
and debt expense $122.0 $18.7 $9.2 $ 7.9 $2.1 159.9
Plus: Depreciation, Depletion
and Amortization 33.6 4.3 5.9 2.6 2.1 48.5
Cash Distributions from
Unconsolidated Affiliates 1.8 6.5 - - - 8.3
Net cash payment received
from El Paso Corporation - - - - 4.1 4.1
Less: Earnings from Unconsolidated
Affiliates 1.3 5.0 - - - 6.3
--------- --------- --------- -------- -------- --------
EBITDA $156.1 $24.5 $15.1 $10.5 $8.3 $214.5
========= ========= ========= ======== ======== ========
Six Months Ended June 30, 2002
Natural Gas
Pipelines Natural
and Oil and NGL Gas Platform
Plants Logistics Storage Services Other Total
------------ ----------- ---------- ---------- ------- -------
Net Income $ 47.8
Plus: Interest and debt expense 33.3
Less: Income from discontinued
operations (4.4)
Earnings excluding interest
and debt expense $ 48.6 $17.8 $ 2.0 $12.5 $(4.2) 76.7
Plus: Depreciation, Depletion
and Amortization 18.7 3.1 2.8 2.1 3.9 30.6
Cash Distributions from
Unconsolidated Affiliates - 9.2 - - - 9.2
Net cash payment received
from El Paso Corporation - - - - 3.8 3.8
Discontinued operations of
Prince facilities - - - 5.7 0.8 6.5
Less: Earnings from Unconsolidated
Affiliates - 7.3 - - - 7.3
--------- --------- ------- -------- ------- -------
EBITDA $ 67.3 $22.8 $4.8 $20.3 $4.3 $119.5
========= ========= ======= ======== ======= =======