K-Sea Transportation Partners L.P

Business Wire, April 27, 2007

* ANNOUNCES OPERATING RESULTS FOR THIRD QUARTER OF FISCAL 2007;

* OPERATING EARNINGS, NET INCOME UP;

* INCREASES QUARTERLY CASH DISTRIBUTION BY $0.02 TO $0.68 PER UNIT

NEW YORK -- K-Sea Transportation Partners L.P. (NYSE: KSP) today announced operating results for the third fiscal quarter ended March 31, 2007. The Company also announced that its distribution to unitholders for the third quarter will increase by $0.02, or 3.0%, to $0.68 per unit, or $2.72 per unit annualized. This is the eighth consecutive quarter of increased distributions, and the tenth such increase since the Company's IPO in January 2004. The distribution will be payable on May 15, 2007 to unitholders of record on May 8, 2007.

The Company's distributable cash flow for the third quarter of fiscal 2007 was $8.6 million, or 1.20 times the amount needed to cover the increased cash distribution of $7.2 million declared in respect of the period. Distributable cash flow is a non-GAAP financial measure that is reconciled to net income, the most directly comparable GAAP measure, in the table below.

Three Months Ended March 31, 2007

For the three months ended March 31, 2007, the Company reported operating income of $7.6 million, an increase of $3.5 million, or 86%, compared to $4.1 million of operating income for the three months ended March 31, 2006. This year-over-year increase resulted from the continuing expansion of the Company's fleet barrel-carrying capacity, including the addition of six new tank barges since January 2006. These results were also positively impacted by continued strong rates and vessel utilization, partially offset by increases of $1.3 million in depreciation and amortization due to the expanded fleet, and $0.9 million in general and administrative expenses in support of the Company's growth. Earnings before interest, taxes, depreciation, amortization, and loss on reduction of debt (EBITDA) increased by $4.8 million, or 43%, to $16.0 million for the three months ended March 31, 2007, compared to $11.2 million for the three months ended March 31, 2006. EBITDA is a non-GAAP financial measure that is reconciled to net income, the most directly comparable GAAP measure, in the table below.

Net income for the three months ended March 31, 2007 was $4.0 million, or $0.39 per fully diluted limited partner unit, compared to net income of $1.2 million, or $0.12 per fully diluted limited partner unit, for the three months ended March 31, 2006, an increase of $2.8 million. The fiscal 2007 third quarter benefited from the $3.5 million increase in operating income, offset by a $0.7 million increase in interest expense resulting from higher debt balances incurred to finance vessel acquisitions in connection with the Company's fleet expansion program over the past year, and higher interest rates.

Nine Months Ended March 31, 2007

For the nine months ended March 31, 2007, the Company reported operating income of $22.9 million, an increase of $6.0 million, or 35%, compared to $16.9 million of operating income for the nine months ended March 31, 2006. Similar to the increase for the third fiscal quarter, this increase resulted primarily from the expansion of the Company's barrel-carrying capacity, including the acquisition of Sea Coast Transportation LLC in October 2005 and the addition of six newbuild tank barges since January 2006, partially offset by increases of $5.1 million in depreciation and amortization and $2.7 million in general and administrative expenses in support of the Company's growth. Of the $2.7 million increase in general and administrative expenses, $1.4 million related to the acquisition of Sea Coast and another small operation in Philadelphia in the fall of 2006. EBITDA increased by $11.0 million, or 31%, to $47.1 million for the nine months ended March 31, 2007, compared to $36.1 million for the nine months ended March 31, 2006.

Net income was $12.0 million for the nine months ended March 31, 2007, or $1.18 per fully diluted limited partner unit, compared to net income of $2.8 million, or $0.29 per fully diluted limited partner unit, for the nine months ended March 31, 2006. The $6.0 million of increased operating income for the nine months ended March 31, 2007 was offset by $3.3 million of higher interest expense, resulting from higher debt balances incurred to finance the fleet expansion over the past year. Additionally, the prior year period was adversely affected by a $6.9 million loss on reduction of debt related to retirement of the Company's Title XI bonds in November 2005, and net income was therefore abnormally low.

President and CEO Timothy J. Casey said "Our operating results for the fiscal 2007 third quarter were strong, with operating income, EBITDA, and net income per unit all significantly higher than last year. We expect our results to be strengthened further by our ongoing fleet expansion. We took delivery of another new 28,000 barrel tank barge in January, and a 100,000 barrel tank barge in March. In April, we purchased two additional tugboats, bringing the total to five acquired tugs this fiscal year, as part of a program to reduce operating costs and improve efficiency. We have seven additional tank barges under construction which are scheduled for delivery at intervals of every few months between now and the end of calendar 2008. In light of our results and expectations, our Board of Directors, as reported above, approved a two cent per unit increase in our quarterly distribution. At our current annualized rate of $2.72 per unit, K-Sea's distribution is over 13% higher than at this time last year. We remain optimistic about continuing our growth for the balance of this year and in fiscal 2008."