Pacific Energy Partners, L.P. Reports Earnings for Second Quarter 2006

Business Wire, August 3, 2006

LONG BEACH, Calif. -- Pacific Energy Partners, L.P. (NYSE:PPX) ("Pacific Energy" or the "Partnership") announced that net income for the three months ended June 30, 2006, was $21.4 million, or $0.54 per limited partner unit, compared to net income of $12.2 million, or $0.40 per limited partner unit, for the three months ended June 30, 2005. Recurring net income for the three months ended June 30, 2006 was $20.3 million, or $0.51 per limited partner unit compared to recurring net income of $12.2 million, or $0.40 per limited partner unit, for the corresponding period in 2005. All per unit amounts in the text of this news release are reported on a diluted basis.

The increase in recurring net income for the quarter ended June 30, 2006, reflects the benefit of the September 30, 2005, acquisition of refined products terminals and a refined products pipeline from Valero L.P., increased margins from the crude oil marketing activities conducted by the Partnership's Pacific Marketing and Transportation subsidiary ("PMT"), higher crude oil pipeline deliveries to Bakersfield, California refineries, lower repair and maintenance costs associated with the California pipelines, and higher margins and increased volumes on the Rangeland pipeline system in Alberta, Canada. Partially offsetting these increases were higher interest expense attributable to the financing of the Valero L.P. acquisition and increased general and administrative costs. In addition, there were approximately 32% more units outstanding compared to the 2005 quarter.

Recurring net income for the second quarter of 2006 excludes $3.4 million of transaction costs related to the recently announced merger with Plains All American Pipeline, L.P. ("Plains"), expected to close later this year and a $4.6 million deferred tax benefit. Due to recent legislation, both federal and Alberta corporate tax rates in Canada are being reduced, and Pacific Energy's deferred tax liability balance is required by accounting rules to be adjusted to the new rates.

For the six months ended June 30, 2006, net income was $33.1 million, or $0.83 per limited partner unit, compared to $15.6 million, or $0.58 per limited partner unit, for the six months ended June 30, 2005. Recurring net income for the six months ended June 30, 2006, was $31.9 million, or $0.80 per limited partner unit, compared with $22.6 million, or $0.74 per limited partner unit, for the six months ended June 30, 2005. Recurring net income for the first six months of 2006 reflects the benefit of six months of operations in 2006 from the assets acquired from Valero L.P., increased margins from crude oil marketing activities, increased volumes and higher margins for the Rangeland pipeline system, higher revenue due to increased Bakersfield refinery deliveries, and lower pipeline repair expenses in California. Partially offsetting these increases were increased interest and general and administrative expenses. In addition, there were approximately 32% more units outstanding in the first half of 2006 versus 2005.

Recurring net income for the six months ended June 30, 2006, excludes the previously mentioned merger costs and deferred tax benefit. Recurring net income for the six months ended June 30, 2005, excludes a $2.0 million expense for the insurance deductible associated with the remediation of the Pyramid Lake oil release, a $3.1 million expense related to the accelerated vesting of restricted units under Pacific Energy's long-term incentive plan as a result of the change in control attributable to the purchase of the Pacific Energy's general partner by LB Pacific, LP ("LB Pacific"), and $1.8 million of expense from this general partner transaction required to be recorded as a partnership expense, with the general partner's payment of it recorded as a capital contribution.

"We are very pleased with our second quarter results. Our core transportation and storage business performed well and continued to grow. In addition the Partnership was able to realize the benefit of favorable marketing margins for both PMT and Rangeland, which enabled us to exceed previously announced guidance," stated Irv Toole, President and CEO of Pacific Energy. "Organic growth projects in each of our two business units continue to progress and remain a primary focus of the Partnership."

On July 17, 2006, Pacific Energy announced a cash distribution of $0.5675 per unit for the second quarter of 2006, or $2.27 per unit annualized. This is unchanged from the first quarter 2006 distribution level but is 10.7% higher than the second quarter 2005 distribution level. The distribution will be paid on August 14, 2006, to holders of record as of July 31, 2006.

Distributable cash flow available to the limited partners' interest for the second quarter of 2006 was $25.1 million after deducting $3.4 million in merger costs. On a diluted, weighted average basis, there were 39,314,000 limited partner units outstanding during the second quarter of 2006.

Earnings before interest, tax, depreciation and amortization expenses ("EBITDA") were $38.8 million in the second quarter of 2006.