e8vk
 

 
 
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 (July 24, 2007): July 25, 2007
SUNOCO LOGISTICS PARTNERS L.P.
(Exact name of registrant as specified in its charter)
         
Delaware   1-31219   23-3096839
(State or other jurisdiction   (Commission   (IRS employer
of incorporation)   file number)   identification no.)
     
1735 Market Street, Philadelphia, PA   19103-7583
(Address of principal executive offices)   (Zip Code)
866-248-4344
Registrant’s telephone number, including area code
NOT APPLICABLE
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
 

 


 

Item 2.02. Results of Operations and Financial Condition.
The press release announcing the financial results for Sunoco Logistics Partners L.P.’s (the “Partnership”) 2007 second quarter is attached as Exhibit 99.1 and is incorporated herein by reference.
The information in this report, being furnished pursuant to Item 2.02 and 7.01 of Form 8-K, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section, and is not incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
Item 7.01. Regulation FD Disclosure.
On July 24, 2007, the Partnership issued a press release announcing its financial results for the second quarter 2007. Additional information concerning the Partnership’s second quarter earnings was presented to investors in a teleconference call July 25, 2007. A copy of the slide presentation is attached as Exhibit 99.2 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
    (c) Exhibit
99.1 Press release dated July 24, 2007.
99.2 Slide presentation given July 25, 2007 during investor teleconference.
Forward-Looking Statement
Statements contained in the exhibits to this report that state the Partnership’s or its management’s expectations or predictions of the future are forward-looking statements. The Partnership’s actual results could differ materially from those projected in such forward-looking statements. Factors that could affect those results include those mentioned in the documents that the Partnership has filed with the Securities and Exchange Commission.
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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 hereunto duly authorized.
     
 
  SUNOCO LOGISTICS PARTNERS L.P.
 
   
 
  By: Sunoco Partners LLC, its General Partner
 
             (Registrant)
 
   
Date July 25, 2007
   
         
     
  /s/ Neal E. Murphy    
  Neal E. Murphy   
  Vice President and Chief Financial Officer   
 
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EXHIBIT INDEX
     
Exhibit    
Number   Exhibit
 
   
Exhibit 99.1
  Press Release dated July 24, 2007
 
   
Exhibit 99.2
  Slide presentation given July 25, 2007 during investor teleconference.
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exv99w1
 

(SUNOCO LOGISTICS LOGO)
News Release
Sunoco Logistics Partners L.P.
1735 Market Street
Philadelphia, Pa. 19103-7583

     
For further information contact:
  For release: 5:00 p.m. July 24, 2007
Jerry Davis (media) 215-977-6298
   
Neal Murphy (investors) 866-248-4344
   
No. 12
SUNOCO LOGISTICS PARTNERS L.P. REPORTS SECOND QUARTER 2007 RESULTS AND
DECLARES SECOND QUARTER DISTRIBUTION
     PHILADELPHIA, July 24, 2007 – Sunoco Logistics Partners L.P. (NYSE: SXL) today announced quarterly net income for the second quarter ended June 30, 2007 of $25.3 million, or $0.76 per limited partner unit on a diluted basis, compared with $26.3 million, or $0.81 per limited partner unit on a diluted basis, for the second quarter ended June 30, 2006. Operating income for the second quarter ended June 30, 2007 increased to $34.8 million compared to $33.0 million for the second quarter ended June 30, 2006. The primary drivers of the increase were strong performance in our Terminal Facilities segment and the August 2006 acquisition of a 55.3% equity interest in the Mid-Valley Pipeline Company, partially offset by lower margins in our lease acquisition business. Interest expense increased by $2.9 million due to the Partnership’s organic growth program, 2006 acquisitions, investments in inventory for the lease acquisition business and the 2007 acquisition of a 50% interest in a refined products terminal in Syracuse, New York.
     For the six months ended June 30, 2007, net income increased by $2.8 million to $47.5 million compared to $44.7 million for the six months ended June 30, 2006. Operating income for the first half of 2007 increased 14.1 percent to $65.7 million compared to $57.6 million for the prior year period. The primary drivers of the increase were strong performance in our Terminal Facilities segment, the August 2006 acquisition of an equity interest in the Mid-Valley Pipeline Company, and the March 2006 acquisitions of the Kilgore and Millennium pipelines, partially offset by lower margins in our lease acquisition business. Net income increased $2.8 million on the strength of higher operating income partially offset by higher interest expense related to the Partnership’s organic growth program, 2006 acquisitions, investments in inventory for the lease acquisition business and the 2007 Syracuse, New York terminal acquisition.
     Sunoco Partners LLC, the general partner of Sunoco Logistics Partners L.P., declared a cash distribution for the second quarter of 2007 of $0.8375 per common partnership unit ($3.35 annualized) payable August 14, 2007 to unit holders of record on August 7, 2007.
     “Our pipeline and terminal businesses continue to produce ratable cash flow,” said Deborah M. Fretz, President and Chief Executive Officer “and we are focused on growing our investment platforms. The acquisition of an interest in the Syracuse refined products terminal is consistent with our goal of building out our refined product terminals platform. The continued strength in our overall business has resulted in an increase in our distribution to our unit holders from $3.30 to $3.35 annually and represents

 


 

the sixteenth distribution increase in the past seventeen quarters, an 8.1 percent increase over the second quarter of 2006.”
Segmented Second Quarter Results
Eastern Pipeline System
     Operating income for the Eastern Pipeline System decreased $0.5 million to $10.8 million for the second quarter ended June 30, 2007 compared to $11.3 million for the second quarter ended June 30, 2006. Sales and other operating revenue increased from $25.2 million for the second quarter of 2006 to $27.9 million for the second quarter of 2007 due to an increase in total shipments on the Marysville, Michigan to Toledo, Ohio crude pipeline which was expanded in the fourth quarter of 2006 and, in the aggregate, higher revenues across our refined products pipelines. Other income increased $0.9 million compared to the prior year’s quarter due primarily to an increase in equity income associated with the Partnership’s joint venture interests. Operating expenses increased from $9.6 million in the second quarter of 2006 to $13.6 million in the second quarter of 2007 due mainly to the timing of maintenance activity, additional utility expense resulting from higher volumes, environmental charges related to third party contractor pipeline damage, and a reduction in product operating gains. Selling, general and administrative expenses increased from $4.6 million during the second quarter of 2006 to $5.0 million in the second quarter of 2007 due mainly to decreased capitalization of certain engineering costs. Depreciation and amortization expense decreased $0.3 million in the second quarter of 2007 to $2.2 million as certain assets reached the end of their depreciable life during the third quarter of 2006.
Terminal Facilities
     Operating income for the Terminal Facilities segment increased by $5.6 million to $15.5 million for the second quarter ended June 30, 2007 compared to $9.9 million for the second quarter ended June 30, 2006. Total revenues increased $4.9 million from the prior year’s second quarter to $35.3 million due to increased revenues at the Partnership’s Nederland Terminal as well as increased revenue at the Partnership’s refined products terminals from higher ethanol blending, product additives and increased volumes. Selling, general and administrative expenses decreased $0.7 million for the second quarter of 2007 to $3.1 million primarily due to an insurance recovery related to the 2005 hurricane loss.
Western Pipeline System
     Operating income for the Western Pipeline System decreased $3.4 million to $8.4 million for the second quarter of 2007 compared to $11.8 million for the prior year quarter. The decrease was related to lower lease acquisition margins, partially offset by an increase in other income of $2.9 million associated with the August 2006 acquisition of an interest in the Mid-Valley Pipeline Company. Higher volumes were a key factor resulting in the increase in total revenues, cost of products sold and operating expenses from the prior year’s quarter. A decrease in crude prices partially offset the volume impact on revenue with the average price of West Texas Intermediate crude oil at Cushing, Oklahoma, moving to $65.02 per barrel from $70.70 per barrel for the second quarter of 2006. Depreciation and amortization expense increased $0.6 million to $3.3 million in the second quarter of 2007 as a result of 2006 acquisitions.

 


 

Segmented Six Month Results
Eastern Pipeline System
     Operating income for the Eastern Pipeline System decreased $0.7 million to $20.5 million for the six months ended June 30, 2007 compared to $21.2 million for the six months ended June 30, 2006. Sales and other operating revenue increased from $50.5 million for the first half of 2006 to $54.9 million for the first half of 2007 due to increased shipments on the expanded Marysville crude line, and in the aggregate, higher revenue across our refined products pipelines. A $1.5 million increase in other income was related to an increase in equity income associated with the Partnership’s joint venture interests. Operating expenses increased by $5.4 million due to the timing of maintenance activity, additional utility expense related to higher throughput, environmental charges due to third party contractor pipeline damage, and a reduction in product operating gains. A $1.9 million increase in selling, general and administrative expenses was largely associated with a decrease in capitalized engineering costs. Depreciation and amortization expense decreased $0.7 million in the first half of 2007 to $4.6 million as certain assets reached the end of their depreciable life during the third quarter of 2006.
Terminal Facilities
     Operating income for the Terminal Facilities segment increased by $8.5 million to $27.8 million for the six months ended June 30, 2007 compared to $19.3 million for the six months ended June 30, 2006. Total revenues increased $8.7 million to $68.2 million in the first half of 2007 due primarily to increased revenues at the Partnership’s Nederland Terminal and increased revenue at the Partnership’s refined products terminals from higher ethanol blending, product additives and increased volumes. These increases were partially offset by a decrease in volumes at the Partnership’s refinery terminals resulting from refinery maintenance turnarounds.
Western Pipeline System
     Operating income for the Western Pipeline System increased $0.3 million to $17.4 million for the six months ended June 30, 2007 compared to $17.1 million for the six months ended June 30, 2006. The increase resulted from higher crude oil pipeline volumes associated with the March 2006 acquisition of the Millennium and Kilgore pipelines and an increase in other income of $5.0 million due largely to the acquired equity interest in the Mid-Valley Pipeline Company. These increases were partially offset by lower lease acquisition margins. Total revenues and cost of products sold and operating expenses increased compared with the first half of 2006 due principally to higher bulk purchase and sale activity. A decrease in crude prices partially offset the volume impact on revenue with the average price of West Texas Intermediate crude oil at Cushing, Oklahoma, decreasing to $61.64 per barrel for the first six months of 2007 from $67.13 per barrel for the first six months of 2006. Operating expenses were higher as a result of increased costs associated with operating the assets acquired in 2006. Selling, general and administrative expenses decreased $1.7 million due primarily to the Western Area office relocation which was completed during the first quarter of 2006, partially offset by higher employee costs. Depreciation and amortization expense increased $0.9 million in the first six months of 2007 to $6.3 million as a result of 2006 acquisitions.

 


 

Other Analysis
Financing Costs
     Net interest expense increased $5.3 million for the six months ended June 30, 2007, compared to the prior year period. The increase was due primarily to financing the Partnership’s organic growth program as well as the previously mentioned acquisitions and inventory investments. At June 30, 2007, the Partnership had total debt outstanding of $563.9 million, which consisted of $424.0 million of Senior Notes and $139.9 million of borrowings under the Partnership’s credit facility.
Capital Expenditures
     Maintenance capital expenditures for the six months ended June 30, 2007 were $7.5 million compared to $10.3 million for the six months ended June 30, 2006. The decrease in maintenance capital was attributable to the Western area office relocation completed in the first quarter of 2006. Management anticipates maintenance capital expenditures of approximately $25.0 million for the year ended December 31, 2007, which is in line with spending for 2006.
     Expansion capital expenditures decreased by $93.9 million to $56.3 million for the six months ended June 30, 2007 due primarily to the March 2006 acquisitions of the Millennium and Kilgore pipelines and the Amdel pipeline for $108.9 million. Excluding these acquisitions, expansion capital expenditures for the six months ended June 30, 2007 increased $15.0 million from the six months ended June 30, 2006. This increase was due primarily to the construction in progress of three crude oil storage tanks and a crude oil pipeline from the Nederland Terminal to Motiva’s Port Arthur, Texas refinery. Expansion capital also increased due to continued construction at Nederland of six new crude oil storage tanks with a total capacity of approximately 3.6 million shell barrels, additional pipeline connections in the Western Pipeline System, and the second quarter of 2007 acquisition of a 50 percent interest in the Syracuse, New York refined products terminal.

 


 

Sunoco Logistics Partners L.P.
Financial Highlights
(in thousands, except units and per unit amounts)
(unaudited)
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
Income Statement   2007     2006     2007     2006  
Sales and other operating revenue
  $ 1,630,280     $ 1,491,496     $ 3,179,850     $ 2,752,467  
Other income
    7,698       3,872       12,737       6,263  
 
                       
Total Revenues
    1,637,978       1,495,368       3,192,587       2,758,730  
 
                       
Cost of products sold and operating expenses
    1,580,330       1,439,674       3,079,588       2,654,460  
Depreciation and amortization
    9,407       9,211       18,311       18,157  
Selling, general and administrative expenses
    13,487       13,522       29,006       28,525  
 
                       
Total costs and expenses
    1,603,224       1,462,407       3,126,905       2,701,142  
 
                       
Operating income
    34,754       32,961       65,682       57,588  
Interest cost and debt expense, net
    10,445       7,830       19,619       14,589  
Capitalized interest
    (945 )     (1,189 )     (1,498 )     (1,745 )
 
                       
Net Income
  $ 25,254     $ 26,320     $ 47,561     $ 44,744  
 
                       
 
                               
Calculation of Limited Partners’ interest:
                               
Net Income
  $ 25,254     $ 26,320     $ 47,561     $ 44,744  
Less: General Partner’s interest
    (3,552 )     (4,101 )     (5,631 )     (5,445 )
 
                       
Limited Partners’ interest in Net Income
  $ 21,702     $ 22,219     $ 41,930     $ 39,299  
 
                       
 
                               
Net Income per Limited Partner unit
                               
Basic
  $ 0.76     $ 0.81     $ 1.47     $ 1.48  
 
                       
 
Diluted
  $ 0.76     $ 0.81     $ 1.46     $ 1.48  
 
                       
 
                               
Weighted average Limited Partners’ units outstanding:
                               
Basic
    28,586,280       27,466,092       28,575,697       26,499,007  
 
                       
 
Diluted
    28,723,884       27,589,644       28,713,365       26,623,554  
 
                       
 
                               
Capital Expenditure Data:
                               
Maintenance capital expenditures
  $ 4,905     $ 3,858     $ 7,541     $ 10,297  
Expansion capital expenditures
    41,029       33,256       56,274       150,169  
 
                       
Total
  $ 45,934     $ 37,114     $ 63,815     $ 160,466  
 
                       
                 
    June 30,    
    2007   Dec. 31, 2006
Balance Sheet Data (at period end):
               
Cash and cash equivalents
  $ 9,035     $ 9,412  
Total Debt
    563,907       491,910  
Total Partners’ Capital
    575,846       582,911  

 


 

Sunoco Logistics Partners L.P.
Earnings Contribution by Business Segment
(in thousands, unaudited)
                                 
    Three Months Ended     Six Months Ended  
    June 30,     June 30,  
    2007     2006     2007     2006  
Eastern Pipeline System:
                               
Sales and other operating revenue
  $ 27,916     $ 25,223     $ 54,890     $ 50,499  
Other income
    3,796       2,859       6,332       4,831  
 
                       
Total Revenues
    31,712       28,082       61,222       55,330  
 
                       
Operating expenses
    13,627       9,583       25,583       20,232  
Depreciation and amortization
    2,249       2,568       4,556       5,218  
Selling, general and administrative expenses
    5,021       4,604       10,580       8,672  
 
                       
Operating Income
  $ 10,815     $ 11,327     $ 20,503     $ 21,208  
 
                       
 
                               
Terminal Facilities:
                               
Total Revenues
  $ 35,279     $ 30,377     $ 68,159     $ 59,497  
 
                       
Operating expenses
    12,797       12,739       25,278       25,296  
Depreciation and amortization
    3,815       3,880       7,490       7,580  
Selling, general and administrative expenses
    3,139       3,883       7,608       7,356  
 
                       
Operating Income
  $ 15,528     $ 9,875     $ 27,783     $ 19,265  
 
                       
 
                               
Western Pipeline System:
                               
Sales and other operating revenue
  $ 1,567,078     $ 1,435,896     $ 3,056,786     $ 2,642,478  
Other income
    3,909       1,013       6,420       1,425  
 
                       
Total Revenues
    1,570,987       1,436,909       3,063,206       2,643,903  
 
                       
Cost of products sold and operating expenses
    1,553,906       1,417,352       3,028,727       2,608,932  
Depreciation and amortization
    3,343       2,763       6,265       5,359  
Selling, general and administrative expenses
    5,327       5,035       10,818       12,497  
 
                       
Operating Income
  $ 8,411     $ 11,759     $ 17,396     $ 17,115  
 
                       

 


 

Sunoco Logistics Partners L.P.
Operating Highlights
(unaudited)
                                 
    Three Months Ended   Six Months Ended
    June 30,   June 30,
    2007   2006   2007   2006
Eastern Pipeline System: (1)
                               
Total shipments (barrel miles per day) (2)
    63,253,888       58,451,104       63,372,001       59,713,014  
Revenue per barrel mile (cents)
    0.485       0.474       0.479       0.467  
 
                               
Terminal Facilities:
                               
Terminal throughput (bpd):
                               
Refined product terminals
    440,152       390,341       427,923       386,807  
Nederland terminal
    529,462       449,176       536,840       469,309  
Refinery terminals (3)
    715,462       713,407       664,768       703,597  
 
                               
Western Pipeline System: (1)(4)
                               
Crude oil pipeline throughput (bpd)
    535,715       519,808       534,816       502,503  
Crude oil purchases at wellhead (bpd)
    180,390       201,975       182,757       191,751  
Gross margin per barrel of pipeline throughput (cents) (5)
    20.2       33.4       22.5       31.0  
 
(1)   Excludes amounts attributable to equity ownership interests in corporate joint ventures.
 
(2)   Represents total average daily pipeline throughput multiplied by the number of miles of pipeline through which each barrel has been shipped.
 
(3)   Consists of the Partnership’s Fort Mifflin Terminal Complex, the Marcus Hook Tank Farm and the Eagle Point Dock.
 
(4)   Includes results from the Partnership’s purchases of an undivided joint interest in the Mesa Pipe Line system, the Corsicana to Wichita Falls, Texas pipeline system, the Millennium and Kilgore pipeline system and the Amdel pipeline system from acquisition dates.
 
(5)   Represents total segment sales and other operating revenue minus cost of products sold and operating expenses and depreciation and amortization divided by crude oil pipeline throughput.
     An investor call with management regarding our second-quarter results is scheduled for Wednesday morning, July 25 at 9:00 am EDT. Those wishing to listen can access the call by dialing (USA toll free) 1-877-297-3442; International (USA toll) 1-706-643-1335 and request “Sunoco Logistics Partners Earnings Call, Conference Code 6833846”. This event may also be accessed by a webcast, which will be available at www.sunocologistics.com. A number of presentation slides will accompany the audio portion of the call and will be available to be viewed and printed shortly before the call begins. Individuals wishing to listen to the call on the Partnership’s web site will need Windows Media Player, which can be downloaded free of charge from Microsoft or from Sunoco Logistics Partners’ conference call page. Please allow at least fifteen minutes to complete the download.
     Audio replays of the conference call will be available for two weeks after the conference call beginning approximately two hours following the completion of the call. To access the replay, dial 1-800-642-1687. International callers should dial 1-706-645-9291. Please enter Conference ID #6833846.

 


 

     Sunoco Logistics Partners L.P. (NYSE: SXL), headquartered in Philadelphia, is a master limited partnership which owns, operates and acquires refined product and crude oil pipelines and terminal facilities. The Eastern Pipeline System consists of approximately 1,800 miles of primarily refined product pipelines and interests in four refined products pipelines, consisting of a 9.4 percent interest in Explorer Pipeline Company, a 31.5 percent interest in Wolverine Pipe Line Company, a 12.3 percent interest in West Shore Pipe Line Company and a 14.0 percent interest in Yellowstone Pipe Line Company. The Terminal Facilities consist of 9.2 million barrels of refined product terminal capacity and 20.4 million barrels of crude oil terminal capacity (including 13.5 million barrels of capacity at the Texas Gulf Coast Nederland Terminal). The Western Pipeline System consists of approximately 3,700 miles of crude oil pipelines, located principally in Oklahoma and Texas, a 55.3 percent interest in the Mid-Valley Pipeline Company and a 43.8 percent interest in the West Texas Gulf Pipe Line Company. For additional information visit Sunoco Logistics’ web site at www.sunocologistics.com.
     Although Sunoco Logistics Partners L.P. (the “Partnership”) believes that the assumptions underlying these statements are reasonable, investors are cautioned that such forward-looking statements are inherently uncertain and necessarily involve risks that may affect the Partnership’s business prospects and performance causing actual results to differ from those discussed in the foregoing release. Such risks and uncertainties include, by way of example and not of limitation: whether or not the transactions described in the foregoing news release will be cash flow accretive; increased competition; changes in demand for crude oil and refined products that we store and distribute; changes in operating conditions and costs; changes in the level of environmental remediation spending; potential equipment malfunction; potential labor issues; the legislative or regulatory environment; plant construction/repair delays; nonperformance by major customers or suppliers; and political and economic conditions, including the impact of potential terrorist acts and international hostilities. These and other applicable risks and uncertainties have been described more fully in the Partnership’s Form 10-Q filed with the Securities and Exchange Commission on May 2, 2007. The Partnership undertakes no obligation to update any forward-looking statements in this release, whether as a result of new information or future events.
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exv99w2
 

Second Quarter 2007 Earnings Conference Call July 25, 2007 Sunoco Logistics Partners L.P.


 

Forward-Looking Statement You should review this slide presentation in conjunction with the second quarter 2007 earnings conference call for Sunoco Logistics Partners L.P., held on July 25 at 9:00 a.m. EDT. You may listen to the audio portion of the conference call on our website at www.sunocologistics.com or by dialing (USA toll-free) 1-877-297-3442. International callers should dial 1-706-643-1335. Please enter Conference ID #6833846. Audio replays of the conference call will be available for two weeks after the conference call beginning approximately two hours following the completion of the call. To access the replay, dial 1-800-642-1687. International callers should dial 1-706-645-9291. Please enter Conference ID #6833846. During the call, those statements we make that are not historical facts are forward-looking statements. Although we believe the assumptions underlying these statements are reasonable, investors are cautioned that such forward-looking statements involve risks that may affect our business prospects and performance, causing actual results to differ from those discussed during the conference call. Such risks and uncertainties include, among other things: our ability to successfully consummate announced acquisitions and integrate them into existing business operations; the ability of announced acquisitions to be cash-flow accretive; increased competition; changes in the demand both for crude oil that we buy and sell, as well as for crude oil and refined products that we store and distribute; the loss of a major customer; changes in our tariff rates; changes in throughput of third-party pipelines that connect to our pipelines and terminals; changes in operating conditions and costs; changes in the level of environmental remediation spending; potential equipment malfunction; potential labor relations problems; the legislative or regulatory environment; plant construction/repair delays; and political and economic conditions, including the impact of potential terrorist acts and international hostilities. These and other applicable risks and uncertainties are described more fully in our Form 10-Q, filed with the Securities and Exchange Commission on May 2, 2007. We undertake no obligation to update publicly any forward-looking statements whether as a result of new information or future events. 2


 

Q2 2007 Assessment Quarterly net income in the second quarter 2007 of $25.3 million as compared to $26.3 million in the prior year's quarter Earnings per L.P. unit were $0.76 per L.P. unit compared to $0.81 per L.P. unit in the prior year's quarter Increased total distribution to $0.8375 ($3.35 annualized) per unit, a 8.1 percent increase over the prior year's distribution Represents the sixteen distribution increase in the past seventeen quarters. Completed acquisition of a 50% interest in a refined products terminal in Syracuse, New York. 3


 

Lease Acquisition Financial Results 4 YTD Q1 Q2 Q3 Q4 Total 2003 2.5 1.3 1.1 (0.1) 4.8 2004 (0.1) 2.5 0.5 1.9 4.8 2005 (1.4) 1.3 1.0 0.1 0.8 2006 2.2 5.5 (2.6) 5.8 10.9 2007 0.4 0.6 __ __ 1.0 Operating Income ($ in millions, unaudited) Lease Acquisition is expected to generate $6-7 mm/year in any market structure.


 

Q2 2007 Financial Highlights ($ in millions, unaudited) 5 Three Months Ended June 30, Three Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30, Six Months Ended June 30, Six Months Ended June 30, 2007 2006 2007 2006 Sales and other operating revenue Other income $ 1,630.3 7.7 $1,491.5 3.9 $ 3,179.9 12.7 $ 2,752.4 6.3 Total revenues 1,638.0 1,495.4 3,192.6 2,758.7 Cost of products sold and operating expenses Depreciation and amortization Selling, general and administrative expenses Total costs and expenses 1,580.3 9.4 13.5 1,603.2 1,439.7 9.2 13.5 1,462.4 3,079.6 18.3 29.0 3,126.9 2,654.4 18.2 28.5 2,701.1 Operating income Interest cost and debt expense, net 34.8 10.4 33.0 7.9 65.7 19.6 57.6 14.6 Capitalized Interest Net Income (0.9) $ 25.3 (1.2) $ 26.3 (1.5) $ 47.6 (1.7) $ 44.7


 

Q2 2007 Financial Highlights 6 (amounts in millions, except unit and per unit amounts, unaudited) Three Months Ended June 30, Three Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30, Six Months Ended June 30, Six Months Ended June 30, 2007 2006 2007 2006 Calculation of Limited Partners' interest: Net Income Less: General Partner's interest $ 25.3 (3.6) $ 26.3 (4.1) $ 47.5 (5.6) $ 44.7 (5.4) Limited Partners' interest in Net Income $ 21.7 $ 22.2 $ 41.9 $ 39.3 Net Income per Limited Partner unit: Basic $ 0.76 $ 0.81 $ 1.47 $ 1.48 Diluted $ 0.76 $ 0.81 $ 1.46 $ 1.48 Weighted average Limited Partners' units outstanding (in thousands): Basic 28,586 27,466 28,576 26,499 Diluted 28,724 27,590 28,713 26,624


 

Eastern Pipeline System (amounts in millions, unless otherwise noted, unaudited) 7 59.7 0.467 58.5 0.474 63.3 0.485 Total shipments (mm barrel miles per day) (2) Revenue per barrel mile (cents) Operating Highlights(1) 20.2 5.2 8.7 $ 21.2 25.6 4.5 10.6 $20.5 9.6 2.6 4.6 $11.3 13.6 2.3 5.0 $ 10.8 Operating expenses Depreciation and amortization Selling, general and administrative expenses Operating income $ 50.5 4.8 55.3 $ 54.9 6.3 61.2 $ 25.2 2.9 28.1 $ 27.9 3.8 31.7 Sales and other operating revenue Other income Total revenues Financial Highlights 2006 2007 2006 2007 Six Months Ended June 30, Three Months Ended June 30, (1) Excludes amounts attributable to equity ownership interests in the corporate joint ventures. (2) Represents total average daily pipeline throughput multiplied by the number of miles of pipeline through which each barrel has been shipped. 63.4 0.479


 

Terminal Facilities (amounts in millions, unless otherwise noted, unaudited) 8 Three Months Ended June 30, Three Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30, Six Months Ended June 30, Six Months Ended June 30, 2007 2006 2007 2006 Financial Highlights Total revenues $ 35.3 $ 30.4 $ 68.2 $ 59.5 Operating expenses Depreciation and amortization Selling, general and administrative expenses 12.8 3.9 3.1 12.7 3.9 3.9 25.3 7.5 7.6 25.3 7.6 7.3 Operating income $ 15.5 $ 9.9 $ 27.8 $ 19.3 Operating Highlights Terminal throughput (000's bpd) Refined product terminals (2) Nederland terminal Refinery terminals (1) 440.1 529.5 715.5 390.3 449.2 713.4 427.9 536.8 664.8 386.8 469.3 703.6 Consists of the Partnership's Fort Mifflin Terminal Complex, the Marcus Hook Tank Farm and the Eagle Point Dock. Includes results from the Partnership's purchase of a 50% interest in a refined products terminal in Syracuse, New York from the acquisition date.


 

Western Pipeline System 9 (1) Excludes amounts attributable to equity ownership interests in the corporate joint venture. (2) Represents total segment sales and other operating revenue minus cost of products sold and operating expenses and depreciation and amortization divided by crude oil pipeline throughput. (amounts in millions, unless otherwise noted, unaudited) Three Months Ended June 30, Three Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30, Six Months Ended June 30, Six Months Ended June 30, 2007 2006 2007 2006 Financial Highlights Sales and other operating revenue Other income $1,567.1 3.9 $1,435.9 1.1 $3,056.8 6.4 $2,642.5 1.4 Total revenues 1,571.0 1,437.0 3,063.2 2,643.9 Cost of products sold and operating expenses 1,553.9 1,417.4 3,028.7 2,608.9 Depreciation and amortization 3.4 2.8 6.3 5.4 Selling, general and administrative expenses 5.3 5.0 10.8 12.5 Operating income $ 8.4 $ 11.8 $ 17.4 $ 17.1 Operating Highlights(1)(3) Crude oil pipeline throughput (000's bpd) Crude oil purchases at wellhead (000's bpd) Gross margin per barrel of pipeline throughput (cents)(2) 535.7 180.4 20.2 519.8 202.0 33.4 534.8 182.8 22.5 502.5 191.8 31.0 (3) Includes results from the Partnership's purchases of an undivided joint interest in the Mesa Pipe Line system, the Corsicana to Wichita Falls, Texas pipeline system, the Amdel pipeline system and the Millennium and Kilgore pipeline system from acquisition dates.


 

Q2 2007 Financial Highlights 10 ($ in millions, unaudited) Three Months Ended June 30, Three Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30, Six Months Ended June 30, Six Months Ended June 30, 2007 2006 2007 2006 Capital Expenditure Data: Maintenance capital expenditures $ 4.9 $ 3.9 $ 7.5 $ 10.3 Expansion capital expenditures 41.0 33.2 56.3 150.2 Total $ 45.9 $ 37.1 $ 63.8 $ 160.5 Reimbursement Under Agreements with Sunoco, Inc. $ 0.1 $ 0.7 $ 0.8 $ 0.7 June 30, 2007 December 31, 2006 Balance Sheet Data (at period end): Cash and cash equivalents $ 9.0 $ 9.4 Total debt 563.9 491.9 Total Partners' Capital 575.8 582.9