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: November 18, 2008
(Date of earliest event reported): November 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 |
On November 18, 2008, executives of Sunoco Partners LLC, the general partner of Sunoco Logistics Partners L.P. (the “Partnership”), presented information about the Partnership described in the slides attached to this report as Exhibit 99.1 at an analyst conference hosted by the Partnership in New York, NY.
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.
The information in this report, being furnished pursuant to Items 7.01 and 9.01 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 9.01 | Financial Statements and Exhibits |
| (c) | Exhibits. |
| 99.1 | Slide presentation given on November 18, 2008 by executives of Sunoco Partners LLC, the general partner of Sunoco Logistics Partners L.P. |
Forward-Looking Statements
Statements contained in the exhibit 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 such 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 LP. | ||||
| By: | Sunoco Partners LLC, | |||
| its General Partner | ||||
| By: | /s/ Michael D. Galtman | |||
| Michael D. Galtman | ||||
| Controller and Chief Accounting Officer | ||||
November 18, 2008
Philadelphia, PA
EXHIBIT INDEX
| Exhibit No. |
Exhibit | |
| 99.1 |
Slide presentation given on November 18, 2008 by executives of Sunoco Partners LLC, the general partner of Sunoco Logistics Partners L.P. |
 Sunoco Logistics Partners L.P. NYSE: SXL Management Presentation November 18, 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 November 5, 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. |
 Agenda Overview Deborah M. Fretz President & Chief Executive Officer Managing Capital Projects David A. Justin VP Operations Growth Opportunities Christopher W. Keene VP Business Development Lease Crude Acquisition & Marketing Scott W. McCord VP Lease Acquisition & Marketing Financial Performance Neal E. Murphy VP & Chief Financial Officer Closing Deborah M. Fretz President & Chief Executive Officer |
 Overview Deborah M. Fretz President & CEO |
 Sunoco
Logistics – Asset Overview 1 -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 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 acquisition Key strategic relationship with Sunoco – Sunoco owns 43%, including 2% GP 2 th |
 Key
Business Attributes Strong business fundamentals – Demand driven throughput increases – Tariff increases (PPI influenced) – Increased terminal services – Market volatility provides opportunity – Shortage of storage infrastructure creates supply demand imbalance – Long term contracts Well experienced management team with excellent safety record Flexible capital structure to support growth Strong, stable investment grade credit rating Debt to EBITDA at 2.1x’s among the lowest in the midstream MLP sector 3 |
 Financial Growth 4 Total EBITDA $252 MM Total EBITDA $97 MM Western System (Pipeline and Lease Acquisition) has grown from 16% to 43% of EBITDA 2002 EBITDA Eastern Pipeline Terminals Western Pipeline $15 MM 16% $ 42 MM 43% $40 MM 41% LTM 9/30/08 EBITDA Eastern Pipeline Terminals Western Pipeline $108 MM 43% $67 MM 26% $77 MM 31% |
 Average Annual Distribution (per unit) Distribution Summary LP/GP Split (%) 5 Current distribution of $3.86 (8.5% yield as of 11/7/08) Latest 12 month distribution growth 13.5% CAGR Q1 2002 – Q3 2008 12.0% LP Distribution increased in 20 of last 21 quarters $1.70 $1.90 $2.10 $2.30 $2.50 $2.70 $2.90 $3.10 $3.30 $3.50 $3.70 $3.90 2002 2003 2004 2005 2006 2007 2008 50 / 50 75 / 25 85 / 15 98 / 2 |
 Summary – Current Business Business Growth - Over 60% EBITDA growth in last two years with no acquisitions - Growth in all segments Distribution Growth - Near the top of our peer group in distribution growth - Lowest debt/EBITDA in the peer group in 2008 6 |
 Future Growth Opportunities 7 Increased Asset Utilization - Increased terminalling services - Expanded capability of lease acquisition marketing group - Demand driven throughput growth Margin Improvement - FERC tariffs, market based tariffs - Crude oil storage infrastructure shortage - Additional terminalling services Asset Base Expansion - MagTex acquisition and integration - Nederland build out - Motiva Pipeline project - Other organic & acquisition growth |
 Business Summary 8 2008 is expected to be a record year with estimated free cash flow from $205 to $210MM - 2008 Distribution Coverage is projected at 1.5x - Approximately 90% of 2008 Free Cash Flow is ratable Our investment platforms provide optionality with multiple growth opportunities – across all our businesses |
 Managing Capital Project Risks David A. Justin VP Operations |
 Capital Construction Projects From concept to actual construction, many factors impact a multi-year project: Customers require early estimates to determine their interest Scope of project generally expands as project becomes better defined Detailed engineering estimates to get to +/- 10% accuracy are expensive and later in process Project economics require a good understanding of the estimate ranges Contractual agreement (Throughput & Deficiency Agreement) with customers initiates permitting and contracting activities before actual start of construction 1 |
 Capital Construction Projects Key concerns once customer contract signed: Escalation of: Materials – primarily steel (45% of pipeline and 55% of tank costs) Construction costs – in a market with heavy industry competition for resources Project timeline 2 |
 Steel
Pipe and Tube 2005-2006 +6.0% 2006-2007 - 2.3% 2008 YTD +39.5% September - 1.2% US Bureau of Labor Statistics (PCU3312103312100 ) 3 |
 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 4 |
 Motiva Port Arthur Crude Oil Project Contract signed with customer December 2006 Original Estimate Projected Project completion date January 2010 Q3 2009 Project cost * $90MM $90MM 5 * Excludes Capitalized interest |
 How
Was This Accomplished? Established a project management structure to ensure
accountability & control Name a dedicated Project Manager – Monthly review with Executive Management Assessed global market to source steel and lock in price Ordered long lead time items (pump & motor) early Established early contractor relationships Utilized incentives to attract and retain work force Ratable tank program 6 |
 Growth Opportunities Christopher W. Keene VP Business Development |
 Growth Opportunities Growth is platform focused to optimize investments with additional organic opportunities - Refined product pipelines and terminals - Crude oil pipelines and terminals Focus is placed on getting the most out of the current asset base with increased utilization Expansion of the asset base has occurred by - Networking from existing assets - Acquiring assets which are complimentary 1 |
 Investment: Growth Capex and Acquisitions 2 Growth Capex & Acquisitions Investment since IPO: $1B 0 50 100 150 200 250 300 350 2002 2003 2004 2005 2006 2007 2008P Organic Acquisitions ($MM) |
 Growth Opportunities Refined product platform - MagTex Acquisition from Exxon Mobil - Increased terminalling services - Eastern System Optimization Crude Oil Platform - Lease Acquisition & Marketing - Nederland Terminal Build-out/Motiva Port Arthur - Canadian Crude Oil 3 |
 Refined Products Platform |
 MagTex Pipeline System 5 •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 in the Western Region • Connects to expanding refineries on the Gulf Coast • Synergies with existing operations between Beaumont – Houston – Hearne • Provides opportunities for organic growth projects – Construction of a Houston area terminal – Long term T&D with major oil refiner – Conversion of a crude oil pipeline to refined product service to supply to Longview 6 |
 MagTex Transaction Purchase price of $184 MM * 10 year Pipeline & Terminal T&D with Exxon Mobil - Support of $5.5 MM from the GP (Sunoco) over 4 years to enhance accretion to Limited Partners Acquisition will be debt financed Closing expected Q4 2008 * Potential adjustments to purchase price, tariffs and
Exxon Mobil’s throughput commitment based upon actual volume levels 7 Immediately Accretive Plus Growth Opportunities |
 Western Pipeline System (Crude Oil & Refined Products) 8 |
 Eastern Refined Products System 9 |
 Refined Products Platform Delivers refined products from Sunoco refineries to Northeast and Midwest terminals - 85% of pipeline volume is associated with Sunoco refineries Eastern Pipeline has high utilization and is bottlenecked in certain locations - Capacity exists in MidWest segments - Growth in terminals is a result of added services - Ethanol blending Opportunities Debottleneck system to increase pipeline capacity Enhance connections to Sunoco and third-party refiners to increase pipeline throughput Optimize terminal tankage in response to increased demand 10 |
 Eastern Area Connectivity Increase pipeline capacity to Western PA Enhance third-party connectivity & flexibility Increase Sunoco throughput to Newark Increase Shipments from Midwest to Pittsburgh 11 |
 Crude Oil Platform |
 Crude
Oil Platform A flexible network of pipelines and terminals that optimizes
crude oil movements in order to capture transportation fees as well as
margin Nederland Terminal hub strategy provides connectivity for sourcing
and delivery of crude oil to geographically diverse customer base Extensive Texas and Oklahoma pipeline network Opportunities - Flexible pipeline network - Lease Acquisition Marketing and Supply growth - Nederland Terminal expansion/build-out - Canadian pipeline solutions 13 |
 Western Crude Oil System 14 |
 Sunoco Logistics- Nederland Terminal • 16.5 MMB Working Capacity -Additional 2.0 MMB in-service 2009 • Five Ship Docks – Three Barge Docks • Two Ship Anchorages 15 |
 SUNOCO Logistics (SXL) Midland and
Big Springs SXL 10" Patoka IL Canadian Crude Longview,
TX Mid-Valley PL To Wortham / Corsicana / Longview, TX Citgo 20” Lake Charles 24” Exxon Mobil
Beaumont 5 Ship Docks 3BargeDocks DOE 42” Shell 22” SPR Big Hill Valero
Port Arthur Lucas ExxonMobil
Baytown Shell 20” OTI
Houston OTI 24” Shell Deer Park Lyondell
Houston Shell PL East Houston Shell 16” BP26” BP Amoco
Texas City Deepwater Gulf of Mexico XOM 20” Waterborne Transport SXL 30” Motiva Port Arthur SPR West Hackberry 26” Nederland Terminal Hub Cushing, OK Canadian Crude 16 Other Area Refineries Key: Existing Pipelines Potential Pipelines |
 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 Provides a logistics buffer during current period of tight worldwide supply and demand 17 |
 Nederland Terminal Build Out Shell Capacity MM BBLS January 2008 14.7 2008 Construction 1.8 Motiva Project – 2009 2.0 Other Tanks 1.2 Additional Buildout Capability 10.8 Total Potential Capacity 30.5 18 Expect to Increase Capacity by 2-3 MM Barrels per year 2009 - 2011 |
 Nederland Terminal – Motiva Port Arthur Project Provide crude oil logistics for Motiva Port Arthur refinery expansion Construct 2.0 million barrels of tankage at Nederland Terminal and 8.1 mile pipeline to refinery - Estimated cost: $90 MM - Completion Date: 2009 Increases Nederland’s extensive connectivity to Gulf Coast and inland refineries - Additional capacity available on pipeline Immediately accretive upon completion 19 |
 Canadian Crude Oil Opportunities 20 SXL Potential projects |
 Canadian Crude Oil Supply With significant future growth of Canadian crude production, pipeline systems are evolving to move crude oil to new markets – Timing of pipeline requirements is unclear Sunoco Logistics’ Potential Projects Expand Marysville to Toledo crude line to supply more Canadian heavy – Increase from 30 MBD to 45 MBD of heavy crude oil Develop pipeline system from Cushing, OK to USGC Gulf Coast – Transport 300 MBD of Canadian heavy to the Gulf Coast – Possible cost advantage of using existing assets Utilize Nederland Terminal as hub/distribution point – Existing pipeline connectivity and terminal expansion capability – Currently handling Canadian crude oil Develop Buffalo, NY to Philadelphia, PA pipeline system for syncrude to East Coast refineries – Existing right-of-way – Large market (over 1 MMBD of refining capacity) 21 |
 Break |
 Lease Crude Acquisition & Marketing Scott W. McCord VP Lease Acquisitions & Marketing |
 Lease
Acquisition Acquire crude oil to fill SXL’s Western Area Pipeline
system Develop asset growth opportunities Identify potential opportunities associated with pipeline acquisitions Execute contango positions, quality optimization and arbitrage opportunities 1 Roles |
 Purchase Crude Oil @ Wellhead Transported via: -SXL Truck or Gathering Line -3 rd Party Truck or Gathering Line Transported via: -SXL Pipeline -3 rd Party Pipeline Sell Crude Oil to Market Gathering Pipeline Trunk Line Terminal Refinery Trunk Line Buy Sell SXL Transport (or Exchange) Lease Acquisition And Marketing Business Model 2 |
 3 Lease Acquisition Markets |
 Business Philosophy Balanced Book Before new barrels can be purchased, it is verified that there is a sales contract in place for the new barrels All term purchases are sold on a corresponding term basis All month-to-month purchase contracts are renegotiated as market conditions change Volatility is inherent in the crude oil marketing business and our philosophy
is to maximize margins while carefully managing risk 4 |
 Major
EBITDA Components Gross Margin Difference between sales price and cost of crude oil Contango Prompt crude cost is less than future crude cost Quality Optimization Maximize value of crudes of different quality 5 |
 $/BBL Purchase barrel at lease Sunoco Logistics
posting $70.00 Bonus paid to producer 1.60 Truck costs 0.85 Pipeline full tariff cost 0.55 Total cost $73.00 Sales price $73.25 Margin $ 0.25 Gross Margin Example 6 |
 2002-2008 Spot
Market Structure (2.5) (2.0) (1.5) (1.0) (0.5) 0.0 0.5 1.0 1.5 2.0 7 ($/bbl) Prompt month: More Valuable – Lease Margins Expand Prompt month: Less Valuable – Lease Margins Contract |
 Month 1 (January) $/BBL Purchase barrels and store $70.00 Tank
Rental $ 0.30 Time value of money (5%X$70.00) $ 0.29 Total cost $70.59 Month 2 (February) Sell barrels to end user $71.50 Contango profit/barrel $ .91 Contango Example 8 Tankage available for contango positions - 1.0 MMB |
 WTI
vs. WTS: Spot Market Price Differential (9) (8) (7) (6) (5) (4) (3) (2) (1) 0 9 ($/bbl) |
 Income Component Actions Taken to Capture Value for SXL Results Gross Margin Transport to Market Sell Crude Gross Margin Profit Buy Crude = Contango Buy Crude Store Crude (SXL Tankage) Transport to Market Sell Crude = Contango Profit EBITDA Quality Optimization Buy Various Qualities of Crude Transport to SXL Facility Optimize Quality Sell Crude = Quality Optimization Profit + + 10 |
 Opportunity / Challenge • Volatility creates opportunities – Basis differentials (WTI vs LLS) – Sweet/Sour differentials (WTI vs WTS) – Contango vs backwardation market structure • The challenge is for Lease Acquisition to protect / grow EBITDA by capturing opportunities when presented Our Response • Expand the Footprint – Clarkson, Kentucky truck station – Bay City Fractionator • Integrate pipeline and terminal assets to capture basis differentials (WTI vs LLS)
– Nederland / E.TX 10” • Expand crude optimization operations – Midland optimization – Additional tankage at Nederland • Market Structure – Contango storage Market Volatility / Dynamics 11 |
 LLS
vs. WTI: Spot Market Price Differential (1.0) (0.5) 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0 12 ($/bbl) |
 Growth Opportunities Nederland Hub Midland via Amdel Bay City Fractionator Kentucky Kansas New pipeline systems Barnett Shale extensions 13 Excellent EBITDA Growth with Modest Capital |
 Lease
Acquisition Growth Opportunities 14 |
 Nederland Utilization by Lease Acquisition Daily volume has increased from 35 MBD in 2006 to 63 MBD in 2008 Currently delivering Gulf Coast, East Texas, South Texas and WTI crude oils to Nederland Volumes to be expanded by barged-in crude oil from South Texas/Louisiana coast and foreign sweet/sour oil Market crude oil to diverse group of refiners Goal is to add sweet/sour crude oil streams and new inland markets Currently lease 0.7 MMB of storage capacity which will grow up to 1.3 MMB in 2009 15 |
 Gather 3 MBD of Texas Gulf Coast crude and condensate into Bay City Terminal Barge crude to Nederland for sale Barge up to 5 MBD of Gulf Coast condensate to Bay City fractionator Utilize same barge that moves crude to Nederland Increase segregated Gulf Coast condensate volume Expansion opportunities exist with additional Lease gathering/barge- out facilities and fractionator locations Bay City Fractionator 16 |
 Midland Optimization Transport crude oil from the Texas Gulf Coast and Hearne/Southbend area, and market in the West Texas Area Economic driver is arbitrage between GC A and West Texas Provides SXL Amdel tariff revenue Hearne/Southbend marketing flexibility Critical mass to initiate foreign cargo purchasing Opportunity to market foreign crude to West Texas refiners 17 |
 Lease
Acquisition Growth Opportunities 18 |
 Financial Performance Neal E. Murphy VP & CFO |
 EBITDA & Free Cash Flow* 50 70 90 110 130 150 170 190 210 230 250 2002 2003 2004 2005 2006 2007 LTM 9/30/08 EBITDA Free Cash Flow 1 CAGR 18% CAGR 25% * For a
reconciliation of EBITDA & free cash flow to net income see Appendix Slide 5. |
 Competitive Assessment 2 10/31/2008 2008 E YTD 3 Years TTM 9/30/08 2008 E Peer Group Kinder Morgan 7.5% 4.9 7% 29% 16% 1.0 Oneok 7.8% 4.1 -3% 48% 7% 1.2 Magellan 7.8% 3.4 -13% 8% 9% 1.3 Sunoco Logistics 8.5% 2.5 -4% 40% 14% 1.4 Enterprise Products 8.6% 4.5 -18% 11% 7% 1.3 Buckeye 8.7% 5.1 -14% 1% 6% 1.0 Plains 8.9% 5.5 -17% 2% 6% 1.1 Energy Transfer 9.2% 4.1 -23% 25% 8% 1.1 NuStar 9.2% 4.0 -8% -1% 7% 1.3 Enbridge 10.2% 5.7 -19% -20% 4% 1.2 TEPPCO 10.2% 5.8 -19% -19% 4% 1.0 Holly 10.6% 5.9 -31% -35% 6% 1.1 Crosstex 19.6% 7.2 -56% -72% -15% 0.9 Average 9.8% 4.8 -17% 1% 6% 1.1 Median 8.9% 4.9 -17% 2% 7% 1.1 Source: Wachovia Capital Markets LLC Equity Research Distribution Coverage Debt/ EBITDA Yield Distribution Growth Total Unitholder Return |
 Financial Summary Forward Guidance - 2008 is expected to be a record year for free cash flow even after excluding $15MM of non ratable cash flow due to commodity pricing and Lease Acquisition volatility - Business has significant organic growth opportunities - Projects are largely under our control - 2009 Target distribution growth at 10% - minimum - 2010 – 2011 - Expect to spend $100MM - $150MM annually on organic projects - Generating approximately $20MM - $30 MM in EBITDA 3 |
 Organic Projects (On Line 2008) Investment Refined Products System 10 -Eastern System Optimization -Manassas Tank Construction Crude Oil System 40 -New Tanks -Western System Optimization Growth in Annualized Cash Flow (pre-financing) 10 to 12 4 ($MM) |
 Organic Projects (On Line 2009) Investment Refined Products System 200 -MagTex (Closing Q4 2008) -Eastern System Optimization Crude Oil System 130 -New Tanks - Nederland -Bay City Fractionator -Motiva Project Growth in Annualized Cash Flow (pre-financing) 40 to 50 5 ($MM) |
 2009
Free Cash Flow Before Financing Investment Forecasted FCF 2008 (before financing) 235 - 240 Non-ratable 2008 Earnings (Commodity Prices, Lease Volatility) (15) Normalized 2008 FCF (before financing)* 220-225 Capital Projects (partial year impact) 40 - 45 Margin Expansion 5 - 10 Forecasted 2009 FCF 2009 (before financing) 265 - 280 * Adjusted 2008 distribution coverage – 1.4 6 ($MM) |
 Financing Plan - 2009 Revolving credit facility sufficient to finance all 2008 and 2009 planned capex and MagTex acquisition Possible bond offering in 2009 to finance additional 2009 and 2010 growth opportunities Capital Expenditures 2009-2011 Maintenance Capital $27 MM Organic Growth Projects $100 - $150 MM 7 |
 Other
Financial Metrics Debt-EBITDA ratio at 9/30/08 2.1 Debt/Total Capital at 9/30/08 45% Unutilized revolver capacity at 9/30/08 $394 MM Distribution coverage -twelve months ended 9/30/08 1.48x Stable investment grade rating BBB/Baa2 (S&P, Moody’s) Year ended 12/31/07 Revenues $7.4 B 8 |
 Sunoco Logistics Debt Maturity Schedule Debt Maturity Schedule ($MM) $0 $100 $200 $300 $400 $500 $600 $700 2009 2012 2016 Undrawn Drawn Borrowings: $250MM Senior Notes – 7.25%, due February 2012 $175MM Senior Notes – 6.125%, due May 2016 $400MM Credit Facility, due November 2012 -<$200MM – LIBOR + 40bps ->$200MM – LIBOR + 45bps $100MM Credit Facility – LIBOR + 65bps, due May 2009 9 $394MM unutilized at 9/30/08 |
 Appendix |
 Refined Products System 1,650 miles of refined product pipelines located in the Northeast & Midwestern U.S. 36 refined product terminals located in 8 states 6.2 MMB capacity Refinery Terminals 5.5 MMB capacity Service Sunoco, Inc. Philadelphia area refineries 1.0 MMB of underground LPG storage located in Inkster, MI Equity interest in five product pipelines Explorer (9.4%) Wolverine (31.5%) West Shore (12.3%) Yellowstone (14.0%) Harbor (67%) 1 |
 Crude
Oil System 3,310 miles of crude oil trunk lines in Oklahoma, Texas and
Michigan Approximately 500 miles of gathering lines 14 MMB of working crude oil tankage in Nederland, Texas One of the largest on shore crude oil facilities in US Additional 2.8 MMB of tankage currently under construction Maximum build-out capacity is 30 MMB Equity interest in three crude pipelines West Texas Gulf (43.8%) Mid-Valley (55.3%) Mesa (37%) 2 |
 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 $185mm – anticipated closing Q4 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 $54.0mm - Wolverine (31.5%), West Shore (9.2%), and Yellowstone (14.0%) Nov. 2002 3 |
 Historical Financial Results ($millions) 9/30/08 EBITDA 2003 2004 2005 2006 2007 LTM East 48
45 43 54 58 67 Terminals 41
48 51 54 68 77 West 18 16 23 47 67 108 Total EBITDA 107 109 117 155 193 252 Interest Expense (20)
(20) (22) (28)
(35) (32) Maintenance Capex (26)
(24) (23) (24)
(24) (26) Unusual Events - - 10 - - - Free Cash Flow 61 65 82 103 134 194 GP Interest (1) (3) (4) (14) (22) (29) Net to LPs 60 62
78 89 112 165 Yearly LP Distribution ($/unit)
$1.99 $2.32 $2.56 $3.03 $3.33 $3.55 Coverage Ratio 1.33x 1.14x 1.22x 1.05x 1.15x 1.48x 4 |
 Non
GAAP Reconciliation Management of the Partnership believes EBITDA and free 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 free cash flow do not represent and should not be considered alternatives to net 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 5 2003 2004 2005 2006 2007 LTM 9/30/08 Net Income 60 57 61 90 121 175 Interest Expense 20 20 22 28 35 32 Depreciation and amortization 27 32 34 37 37 45 EBITDA 107 109 117 155 193 252 Interest Expense (20) (20) (22) (28) (35) (32) Maintenance Capex (26) (24) (23) (24) (24) (26) Unusual Events - - 10 - - - Free Cash Flow 61 65 82 103 134 194 (1) |