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 (Date of earliest event reported): September 18, 2008
SUNOCO LOGISTICS PARTNERS L.P.
(Exact name of registrant as specified in its charter)
| Delaware | 1-31219 | 23-3096839 | ||
| (State or other jurisdiction of incorporation) | (Commission file number) | (IRS employer identification number) |
| 1735 Market Street, Suite LL, Philadelphia, PA | 19103-7583 | |
| (Address of principal executive offices) | (Zip Code) |
(215) 977-3000
(Registrant’s telephone number, including area code)
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 7.01. | Regulation FD Disclosure. |
At the UBS 2008 MLP Conference in Las Vegas, Nevada, held September 18 and 19, 2008, executives of Sunoco Partners LLC, the general partner of Sunoco Logistics Partners L.P. (“Partnership”), made available to certain research analysts, the information about the Partnership described in the slides attached to this report as Exhibit 99.1.
Exhibit 99.1 and the slides thereof are incorporated by reference herein. These slides are also available on the Partnership’s website at www.sunocologistics.com, beginning at 9:00 a.m. EST on Thursday, September 18, 2008.
The information in this report, being furnished pursuant to Item 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 (“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 9.01. | Financial Statements and Exhibits. |
(d) Exhibits
| Exhibit No. |
Exhibit | |
| 99.1 | Presentation made available September 18 and 19, 2008 by executives of Sunoco Partners LLC, the general partner of Sunoco Logistics Partners L.P. | |
Forward-Looking Statements
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.
SIGNATURE
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.
| SUNOCO LOGISTICS PARTNERS L.P. | ||||
| By: | Sunoco Partners LLC, its General Partner | |||
| By: | /s/ MICHAEL D. GALTMAN | |||
| Michael D. Galtman | ||||
| Controller and Chief Accounting Officer | ||||
September 18, 2008
Philadelphia, PA
EXHIBIT INDEX
| Exhibit No. |
Exhibit | |
| 99.1 | Presentation made available September 18 and 19, 2008 by executives of Sunoco Partners LLC, the general partner of Sunoco Logistics Partners L.P. | |
 Sunoco Logistics Partners L.P. UBS 2008 MLP Conference September 2008 Exhibit 99.1 |
 Forward-Looking Statements Statements made in this presentation that are not historical facts are forward-looking statements. We believe the assumptions underlying these statements are reasonable, but caution you that such forward-looking statements involve risks that may affect our prospects and performance, causing actual results to differ from those discussed here. Such risks and uncertainties include: our ability to consummate announced acquisitions and integrate them into existing operations; our ability to complete internal growth projects; the ability of such acquisitions and internal growth projects to be cash-flow accretive; increased competition; changes in demand for crude oil we buy and sell, as well as for crude oil and refined products we store and distribute; the loss of a major customer; changes in our tariff rates; changes in throughput of third-party pipelines connected to our pipelines and terminals; changes in levels 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 terrorists acts and international hostilities. These and other applicable risks and uncertainties are described more fully in our 2008 Form 10-Q (filed with the Securities and Exchange Commission on August 6, 2008). We undertake no obligation to update publicly any forward- looking statements in this presentation, whether as a result of new information or future events. This presentation includes certain non-GAAP financial measures intended to supplement, not substitute for, comparable GAAP measures. Reconciliations of non-GAAP financial measures to GAAP financial measures are provided in the appendix at the end of this presentation. 2 |
 Sunoco
Logistics – Asset Overview 3 -1,700 miles of refined product pipelines
-3,800 miles of crude trunk pipelines -36 refined product terminals -23.4 million barrels of crude oil storage capacity (including 16.5
million barrels at Nederland) -Ownership interest in 6 product and crude oil pipelines
|
 Key
Business Attributes Stable fee based revenue – limited commodity risk – 12.4% LP Distribution CAGR since 2002 IPO – LP distribution increased in 20 of last 21 quarters Geographically diverse assets – expanded asset footprint – Serve key U.S. refining and production centers in U.S. Northeast, Midwest, and Gulf Coast – Provide transportation and storage services to meet growing requirements from foreign crude into the Texas Gulf region – Successful completion and integration of 12 acquisitions since 2002 – MagTex will be the 13 th acquisition Key strategic relationship with Sunoco 4 |
 Key
Business Attributes Strong business fundamentals Refined product and crude oil pipelines Growth driven by: – Demand driven throughput increases – Tariff increases (PPI influenced) – Increased terminal services Crude Oil Marine Terminal Growth driven by: – Shortage of storage infrastructure creates supply demand imbalance – Rising tank construction costs make existing storage assets more valuable – Continuation of capacity expansion plan Long term contracts Flexible capital structure to support growth Strong, stable investment grade credit rating Debt to EBITDA at 2.2x’s among the lowest in the midstream MLP sector 5 |
 Financial Performance |
 Financial & Operational Measures 7 Total EBITDA $239 MM 2002 EBITDA Eastern Pipeline Terminals Western Pipeline $15 MM $ 42 MM $40 MM Total EBITDA $97 MM LTM 6/30/08 EBITDA Eastern Pipeline Terminals Western Pipeline $100 MM $64 MM $75 MM |
 EBITDA
& Free Cash Flow* 50 70 90 110 130 150 170 190 210 230 250 2003 2004 2005 2006 2007 LTM 6/30/08 EBITDA Free Cash Flow 8 CAGR 16% CAGR 22% * For a reconciliation of EBITDA & free cash flow to net income see slide 39. |
 Distribution (per unit) Distribution Summary Current distribution of $3.74 (7.7% yield as of 8/29/08) Latest 12 month distribution growth 11.6% Distribution CAGR Q1 2002 – Q1 2008 – 12.4% 50 / 50 75 / 25 85 / 15 98 / 2 LP/GP Split (%) 9 $1.60 $1.80 $2.00 $2.20 $2.40 $2.60 $2.80 $3.00 $3.20 $3.40 $3.60 $3.80 Over the last 4 years distribution growth has been top quartile among our competitive
group. 108% Distribution Growth |
 Financial Summary 10 Growth Capex & Acquisitions Investment since IPO: $1B Growth Capex/Acquisitions ($MM) 0 50 100 150 200 250 300 350 2002 2003 2004 2005 2006 2007 2008P Organic Acquisitions SXL Asset Base ($MM) 1,000 1,200 1,400 1,600 1,800 2,000 2,200 2,400 2,600 2002 2003 2004 2005 2006 2007 Total Asset Growth: 129% |
 Financial Summary 11 FCF per LP Unit Growth: 129% FCF per LP Unit Growth since 2004: 110% FCF per Limited Partner Unit ($) 2.25 2.75 3.25 3.75 4.25 4.75 5.25 5.75 2002 2003 2004 2005 2006 2007 LTM 6/30/08 |
 Other
Financial Metrics Debt-EBITDA ratio at 6/30/08 2.2 Debt/Total Capital at 6/30/08 45% Unutilized revolver capacity at 6/30/08 $410 MM Distribution coverage -twelve months ended 6/30/08 1.47x Stable investment grade rating BBB/Baa2 (S&P, Moody’s) Year ended 12/31/07 Revenues $7,406 MM 12 |
 Growth Opportunities |
 Growth Opportunities Increased Asset Utilization - Increased terminalling services - Expanded capability of lease acquisition marketing group - Demand driven throughput growth - Acquisition integration 14 |
 Growth Opportunities Increased Asset Utilization Margin Improvement - FERC tariffs, market based tariffs - Crude oil storage infrastructure shortage - Additional terminalling services 15 |
 Growth Opportunities 16 Increased Asset Utilization Margin Improvement Asset Base Expansion - MagTex refined products pipeline & terminals acquisition and integration - Nederland build out - Motiva Pipeline project - Other organic growth |
 Growth Opportunities 17 Estimated Annual Free Cash Flow Growth After Financing 2008 – 2010 $20 MM - $40 MM Increased Asset Utilization Margin Improvement Asset Base Expansion |
 MagTex Pipeline System 18 •472 mile refined product pipeline system in Texas •6 refined product terminals •Connected to ExxonMobil’s Beaumont Refinery and Motiva’s Port Arthur Refinery •Connected to 3 party terminals in Houston MagTex Acquisition from ExxonMobil rd |
 MagTex Strategic Rationale Establishes refined product platform for SXL in the Western Region Connected to expanding refineries on the Gulf Coast Supplies growing Houston market Synergies with existing operations Provides opportunities for organic growth projects 19 |
 MagTex Transaction Purchase price of $200 MM - Support of $5.5 MM from the GP (Sunoco) over 4 years to provide accretion to Limited Partners Acquisition will be debt financed Continuing to work through conditions to closing, with close expected in Q4 2008 20 Immediately Accretive Plus Growth Opportunities |
 Western Pipeline System 21 Post |
 Western Crude Oil System 22 |
  Sunoco
Logistics - Nederland Terminal 23 •Canadian Crude Oil •Offshore domestic pipeline •Strategic Petroleum Reserve •Foreign Crude Oil •Close to refining centers -Houston -Lake Charles -Port Arthur Crude Oil Tank Capacity: 16.5 million barrels |
 Nederland Terminal – Key Drivers of Crude Oil Tank Demand Increased foreign imports into the Gulf – Waterborne and Canadian Refinery Expansions - Increasing regulations governing inspections, repair, modification and construction have led to greater outsourcing, more tanks taken out of service Segregation of increasing number of crude grades Tankage provides a logistics buffer during current period of tight worldwide supply and demand 24 |
 Nederland Terminal Build Out Shell Capacity MM BBLS January 2008 14.7 2008 Construction 1.8 Motiva Project – 2009 - 2010 2.0 Additional Buildout Capability 12.0 Total Potential Capacity 30.5 25 Expect to Increase Capacity by 2 - 3 MM Barrels per year 2008 - 2010 |
 Nederland Terminal – Motiva Port Arthur Project Provide crude oil logistics for Motiva Port Arthur refinery expansion Construct 1.8 million barrels of tankage at Nederland Terminal and 8.1 mile pipeline to refinery - Estimated cost: $90 MM - Completion Date: 2009- 2010 Increases Nederland’s extensive connectivity to Gulf Coast and inland refineries - Additional capacity available on pipeline Immediately accretive upon completion 26 |
 NEDERLAND TERMINAL MOTIVA MILLER TANK FARM NEDERLAND T0 MOTIVA 30” PL Nederland Project • Nederland Terminal - (3) 660 MBBL Tanks - Pump Station @ 8,000 HP - Piping & Manifold Modifications - Delivery Meters • Pipeline - 8.1 Miles of 30” - Delivery Meters Motiva Project Map 27 |
 Summary |
 Sunoco Logistics Forward Guidance Estimated Annual 2008 - 2010 Capital Expenditures Maintenance $26 MM Organic Growth $100-$150 MM Increased Free Cash Flow (after financing) $20-$40 MM 2008 Earnings per LP unit are expected to be comparable to first half level of $2.17 Targeting 2009 distribution growth at 10% or higher 29 |
 Sunoco Logistics Partners Summary Conservative balance sheet, stable & diversified cash flows – Debt/EBITDA at 2.5x as of June 30, 2008 among the lowest in Midstream MLP group Geographically diverse, flexible assets – opportunities for increased utilization / capacity expansion – well positioned for accretive organic growth projects and acquisitions Key relationship with Sunoco, Inc. - largest investor and largest customer Diversified customer base and expanded business platform from recent acquisitions Experienced, growth oriented management team Strong, consistent financial performance 30 |
 Appendix |
 Sunoco Logistics Partners Sunoco Logistics Sunoco Logistics Partners Partners Western Pipeline Western Pipeline System System Terminal Terminal Facilities Facilities Eastern Pipeline Eastern Pipeline System System 32%* 32%* 27%* 27%* 41%* 41%* Sunoco, Inc. Sunoco, Inc. Public Public 43.3% 43.3% 56.7% 56.7% * * EBITDA % for the 12 months ended June 30, 2008 EBITDA % for the 12 months ended June 30, 2008 32 32 |
 SXL NEDERLAND TERMINAL Midland and
Big Springs SXL 10" From Patoka IL. Canadian Crude To
Longview Mid-Valley PL to Ohio, Red River PL to Cushing, McMurry PL to Tyler To Wortham /
Corsicana 1.Sunoco PL to Ringold and Wichita Falls Basin to
Cushing
To
Longview
2.Mid-Valley PL to Ohio Red river
PL to Cushing, McMurry PL to Tyler Citgo 20” 24” Exxon Mobil
Beaumont 5 Ship Docks 3BargeDocks DOE 42” Shell 22” SPR Big Hill ExxonMobil
Baytown Shell 20” OTI
Houston OTI 24” Shell Deer Park Lyondell
Houston Shell PL East Houston Shell 16” BP26” BP Amoco
Texas City NEDERLAND TERMINAL DISTRIBUTION SYSTEM OCS XOM 20” Waterborne Transport SXL 30” Motiva Port Arthur SPR West Hackberry 33 (Under Construction) |
 Completed Transaction History $610mm in acquisitions since IPO Columbus, Ohio product terminal from Certified Oil for $8mm Texas crude oil pipeline from ExxonMobil for $100mm 37% interest in Mesa crude oil pipeline from Sunoco/Chevron for $7mm Texas crude oil pipelines from Black Hills for $41mm Texas crude oil pipelines from Alon for $68mm 55.3% interest in Mid-Valley Pipeline Company from Sunoco for $65 MM 50% undivided interest in Syracuse, New York refined products terminal from Exxon Mobil for $13mm Purchase Agreement to acquire Texas refined product pipelines and terminals from Exxon Mobil for $200mm – anticipated closing July 2008 Nov. 2004 Aug. 2005 Dec. 2005 March 2006 August 2006 June 2007 April 2008 Additional 1/3 interest in Harbor Pipeline from El Paso for $7mm, increasing interest to 2/3 rds June 2004 2 product terminals from ConocoPhillips for $12mm: Baltimore/Manassas April 2004 Logistics assets of Eagle Point refinery from Sunoco, Inc. for $20.0mm March 2004 Additional 3.1% interest in West Shore for $4mm: now own 12.3% Sept. 2003 JV interest from Sunoco/ Unocal in West Texas Gulf for $11mm Nov. 2002 JV interests in 3 product pipelines from Unocal, for $54.0mm - Wolverine (31.5%), West Shore (9.2%), and Yellowstone (14.0%) Nov. 2002 34 |
 Financial Summary 35 Total Unit Price Growth: 108% Unit Price CAGR: 12% Quarterly SXL Earnings per LP Unit ($) 0.00 0.20 0.40 0.60 0.80 1.00 1.20 1.40 2002 2003 2004 2005 2006 2007 2008 Total EPU Growth: 210% EPU CAGR: 17% SXL Unit Price 0 10 20 30 40 50 60 70 2002 2003 2004 2005 2006 2007 2008 |
 Est. 2002 2003 2004 2005 2006 2007 2008 Organic 12 6 18 43 87 82 120 Acquisitions 65 4 47 106 174 13 200 Total
77 10 65 149 261
95 320 Sunoco Logistics –
Growth Capital ($mm) 36 |
 Capitalization ($ millions) As of 6/30/08 Debt 7.25% Notes (matures 2012) 250 fixed 6.125% Senior Notes (matures 2016) 175 fixed $400 MM Revolver (matures 2012) 90 floating $100 MM Revolver (matures 2009) - floating Cash (2) Net Debt 513 Debt / Total Capital 45% Debt / EBITDA 2.2x EBITDA / Interest 7.3x Rating: BBB / Baa2 (S&P, Moody’s) Stable, Investment Grade 37 |
 Historical Financial Results ($millions) 6/30/08 EBITDA 2003 2004 2005 2006 2007 LTM East 48
45 43 54 58 64 Terminals 41
48 51 54 68 75 West 18 16 23 47 67 100 Total EBITDA 107 109 117 155 193 239 Interest Expense (20)
(20) (22) (28)
(35) (33) Maintenance Capex (26)
(24) (23) (24)
(24) (23) Unusual Events - - 10 - - - Free Cash Flow 61 65 82 103 134 183 GP Interest (1) (3) (4) (14) (22) (26) Net to LPs 60 62
78 89 112 157 Yearly Distribution ($/unit)
$1.99 $2.32 $2.56 $3.03 $3.33 $3.45 Coverage Ratio 1.33x 1.14x 1.22x 1.05x 1.15x 1.47x 38 |
 EBITDA Reconciliation Management of the Partnership believes EBITDA and distributable cash flow information
enhances an investor's understanding of a business’ ability to generate cash for payment of distributions and other purposes. In addition, EBITDA is also used as a measure in the Partnership's $400 million and $100 million revolving
credit facilities in determining its compliance with certain
covenants. However, there may be contractual, legal, economic or other reasons which may prevent the Partnership from satisfying principal and interest obligations with respect to
indebtedness and may require the Partnership to allocate funds for other
purposes. EBITDA and distributable cash flow do not represent and should not be considered alternatives to net income, operating income or cash flows from operating
activities as determined under United States generally accepted accounting
principles and may not be comparable to other similarly titled measures of other businesses. (1) Earnings before interest, taxes, depreciation and amortization 39 (1) 2003 2004 2005 2006 2007 LTM 6/30/08 Net Income 60 57 61 90 121 162 Interest Expense 20 20 22 28 35 33 Depreciation and amortization 27 32 34 37 37 44 EBITDA 107 109 117 155 193 239 Interest Expense (20) (20) (22) (28) (35) (33) Maintenance Capex (26) (24) (23) (24) (24) (25) Unusual Events - - 10 - - - Free Cash Flow 61 65 82 103 134 181 |