TEPPCO Partners, L.P. Reports Results for Fourth Quarter and Year 2007

Business Wire, Feb 4, 2008

HOUSTON -- TEPPCO Partners, L.P. (NYSE:TPP) today reported fourth quarter 2007 net income of $45.6 million, or $0.42 per unit, compared with net income of $56.6 million, or $0.53 per unit, for the fourth quarter of 2006. The $11 million decrease in net income was partly attributable to a $6 million gain on the sale of assets in the fourth quarter of 2006, or $0.06 per unit. In addition, net income for the fourth quarter of 2007 was negatively impacted by expenses for environmental reserves of approximately $2.4 million, acceleration of depreciation expense of approximately $1.2 million related to the decommissioning of a pipeline segment, the early retirement of senior notes of approximately $1.1 million, and higher maintenance expenses in the fourth quarter, all of which negatively impacted net income. Partially offsetting these decreases of net income were higher transportation revenues of $10.4 million, or $0.10 per unit. Earnings before interest, taxes, depreciation and amortization (EBITDA), excluding gain on the sales of assets in the fourth quarter of 2006, increased 8 percent to $117.4 million for the fourth quarter of 2007, compared with $108.3 million for the fourth quarter of 2006.

Net income for the year ended December 31, 2007 increased 38 percent to a record $279.2 million, or $2.60 per unit, compared with $202.1 million, or $1.96 per unit for the year 2006. Net income for the year ended December 31, 2007 includes a $59.6 million gain on the sale of TEPPCO's ownership interests in Mont Belvieu Storage Partners, L.P. and Mont Belvieu Venture, LLC (collectively, MBSP), required by the Federal Trade Commission, and an $18.7 million gain on the sales of other assets, all of which occurred during the first quarter of 2007. Net income for the year ended December 31, 2006, included $25.3 million of gains on the sales of assets, which included $17.9 million related to the sale of the Pioneer gas processing plant in March 2006, and also included $1.5 million of income from the Pioneer plant, which was accounted for as discontinued operations prior to the sale. Income from continuing operations increased $96.5 million to $279.2 million, or $2.60 per unit, for the year ended December 31, 2007, compared with $182.7 million, or $1.77 per unit, for 2006. Excluding the gains on the sale of the interests in MBSP and other assets ($78.3 million in 2007 and $7.4 million in 2006), income from continuing operations increased 15 percent to $200.9 million for the year 2007, compared with $175.3 million for the year 2006.

EBITDA from continuing operations increased $125.3 million to a record $538.0 million for the year ended December 31, 2007, compared with $412.7 million for 2006. EBITDA from continuing operations, excluding gains from the sale of MBSP and other assets, was $459.7 million for the year ended December 31, 2007, compared with $406.9 million for 2006. EBITDA, EBITDA from continuing operations and EBITDA from continuing operations excluding gains from asset sales and ownership interests are non-GAAP (Generally Accepted Accounting Principles) financial measures, which are defined and reconciled to their most directly comparable GAAP financial measures later in this news release.

"TEPPCO's businesses delivered a solid fourth quarter for 2007 as each segment reported increased EBITDA and higher volumes over the prior year quarter," said Jerry E. Thompson, president and chief executive officer of the general partner of TEPPCO Partners, L.P. "The growth trend on gas gathering volumes on the Jonah system continued, with a 22 percent increase over the fourth quarter of 2006. Refined products demand remained strong with a 13 percent increase over the prior year and more than offset the negative impact of warmer than normal weather in the Midwest and Northeast regions during the quarter. Crude oil transportation volumes increased 9 percent, benefiting from completed construction projects during 2007."

"We are extremely pleased with our full-year results, with income from continuing operations, excluding gains from the sales of assets, increasing 15 percent over 2006," added Thompson. "We completed several projects in 2007 that will provide incremental cash flow in 2008 and remain committed to utilizing our diversified, fee-based assets to execute on our plan to grow the partnership. The expansion of the Jonah field gathering capacity to 2.35 billion cubic feet per day (Bcfd) will be completed later this quarter and the 5.4 million barrel Motiva products terminal in Port Arthur, Texas, remains on schedule with a completion date in the first quarter of 2010. We ended 2007 with a strong balance sheet and an annualized distribution rate of $2.78 per unit, a 3 percent increase over the annualized rate at the beginning of the year."

OPERATING RESULTS BY BUSINESS SEGMENT

Upstream segment

EBITDA for the Upstream segment, which includes crude oil transportation, storage, gathering and marketing activities, as well as distribution of lubrication oils and specialty chemicals, was $26.0 million for the fourth quarter of 2007, compared with $25.3 million for the fourth quarter of 2006. Increased transportation and marketing volumes and rates led to improved segment performance, partially offset by higher operating and labor expenses. The 2006 period also included a $1.8 million gain on the sale of assets.