24/7 Wall St. » TPP

When Two Partners Quit, Will the Third One Sue? (EPD, EPE, TPP)

247wallst — Wed, 22 Apr 2009 14:19:24 +0000

Master limited partnership Enterprise Products Partners L.P. (NYSE:EPD) has announced that it will pull out of a partnership with an affiliate of Oiltanking Holdings America, Inc., a subsidiary of privately-held German firm Marquard & Bahls AG. Enterprise’s general partner, Enterprise GP Holdings L.P. (NYSE:EPE) also owns the general partner of TEPPCO Partners, L.P. (NYSE:TPP), the third partner in this joint venture. The reason for the split is only stated as a “disagreement” with Oiltanking.

The joint venture is/was an offshore crude oil port and pipeline system along the Gulf Coast of Texas that would have included 5.1 million barrels of storage capacity and a crude oil pipeline system with capacity of up to 1.8 million barrels/day. The project was slated to cost approximately $1.8 billion.

Enterprise will take a non-cash charge of about $34 million against second quarter 2009 earnings. Oiltanking has taken the position that the dissociation by Enterprise and TEPPCO is “wrongful and in breach” of the partnership agreement. Enterprise believes its actions are allowed by the agreement, and “should the need arise, intends to vigorously defend such actions.”

TEPPCO common units are up slightly this morning, while Enterprise and Enterprise GP are both down slightly.

Paul Ausick
April 22, 2009

Posted in Dividend, Law, Mergers and Buy Outs, Oil & Gas Tagged: EPD, EPE, TPP

TEPPCO Piping Earnings (TPP)

247wallst — Tue, 28 Oct 2008 08:23:51 +0000

TEPPCO Partners (NYSE:TPP), a pipeline master limited partnership, reported third quarter earnings of $0.40/common unit on revenues of $4.2 billion. Analysts were expecting $0.43/common unit and revenues of $3.36 billion. Net income totaled $47 million, down slightly from third quarter 2007 income of $47.6 million. The company estimated that Hurricanes Gustav and Ike reduced EBITDA by about $3.7 million. For the first nine months of the year, TEPPCO’s net income is off $74.7 million from a year ago.

The largest single contributor to TEPPCO’s results is the sale ofpetroleum products, which generated $4.03 billion in revenues. Unlikemost other pipeline companies, TEPPCO buys most of the crude oil ittransports and resells it at the downstream end of the pipe. Petroleumpurchases accounted for $3.99 billion of the company’s expenses.

The company reported total debt of $2.3 billion, and $600 million onits revolving credit facility. TEPPCO expects capex to reach $425-$450million for all of 2008, and $350-$400 million in 2009.

Earlier this month, TEPPCO announced a cash distribution of$0.725/common unit for the third quarter. At that time, the company’spresident noted that TEPPCO "continues to benefit from a diverse set ofbusinesses that emphasize fee-based cash flows." That’s the very shortstory of pipeline MLPs. It also happens to be true.

Paul Ausick
October 28, 2008

Posted in Earnings, Oil & Gas Tagged: TPP

Updated Energy Production Outages From Hurricane Ike (XOM, CVX, COP, KMP, TPP, EPD, DO)

247wallst — Mon, 15 Sep 2008 09:33:38 +0000

The effects of Hurricane Ike on the Gulf Coast are still being sorted out, but, so far reported infrastructure damage is light. That may change as producers, refiners, and pipeline operators begin more detailed examinations today. But this is part of why oil prices have sold off so much despite the outages and interruptions. Below you can see an update on which major oil and gas companies have released date regarding their facilities which were in Ike’s path.

Exxon Mobil (NYSE:XOM) began assessing damage to its productionfacilities yesterday, and has not yet reported any results. The Baytownrefinery does have electrical power, but the Beaumont refinery doesnot. The company is installing portable generators in the Houston areato maintain distribution to emergency crews. Retail operations will bebrought back online as soon as conditions are safe and electricity isavailable.

Chevron (NYSE:CVX) reports that all its Gulf production platforms areshut-in, and its Galena Park terminal near Houston is also shutdown.The Pascagoula refinery is operating at full capacity, but the PortArthur lubricant plant is shut down. Like Exxon, Chevron is installingportable generators at key locations around Houston to try to maintainfuel availability.

The ConocoPhillips (NYSE:COP) refineries in Sweeny, Texas, has noelectricity. The Belle Chasse, Louisiana, refinery is preparing torestart following a shut down from Hurricane Gustav, and the LakeCharles refinery is operating at reduced rates as it comes back onlinefrom Gustav. The Mt. Belvieu plant is shut down. All Conoco’s onshoreand offshore production is shut down.

Pipeline operators are experiencing few problems with onshorepipelines, but so far there are few reports on damage to underwaterpipeline systems. Kinder Morgan (NYSE:KMP) experienced no shutdowns onany of its pipelines, but is experiencing reduced volumes due toreduced shipments from area refineries. Kinder Morgan’s liquidsterminal on the Houston Ship Channel experienced no major damage andexpects to resume shipments today.

Enterprise Products (NYSE:EPD) resumed operations Sunday at theIndependence Hub and Trail pipeline in the eastern Gulf of Mexico andexpects to return personnel to other offshore platforms today. Lack ofelectricity remains an issue for Enterprise and for Teppco (NYSE:TPP),which owns refined products terminals near Exxon’s Baytown and Beaumontrefineries. Neither Enterprise nor Teppco reports significant damage tofacilities.

Diamond Offshore (NYSE:DO) reports that its jack-up rig, Ocean Tower,lost its entire drilling package, including the derrick. Another unit,Ocean Drake, was in a Galveston shipyard and no damage assessment hasbeen done yet. Diamond’s other ten rigs are scheduled to be inspectedfor damage beginning today.

Reduced flows of refined products due to lack of electricity areexpected to cause prices for gasoline to jump. Some governors havethreatened to enact price-gouging penalties as gasoline prices rise.That, of course, will only make the supply problem worse.

Paul Ausick
September 15, 2008

TEPPCO’s Multi-Year Lows on Increased Offering (TPP)

247wallst — Thu, 04 Sep 2008 08:32:39 +0000

TEPPCO Partners, L.P. (NYSE:TPP) is under a bit of pressure after the energy logistics company has priced a secondary offering of 8,000,000 units. Last night this was listed as a pricing of 7.1 million units, but that number has been increased this morning. As far as a use of funds, TEPPCO intends to use the net proceeds from these sales of units to reduce debt under its revolving credit facility, and it expects to use some of the increased availability under the facility to finance capital expenditures and other growth projects.

TEPPCO also agreed to sell approximately 240,000 additional units atthe same public offering price to TEPPCO Unit L.P., an affiliate ofEPCO, Inc. EPCO, Inc., along with TEPPCO, is under the common controlof Dan L. Duncan.

Lehman Brothers, UBS, and Wachovia are listed as the joint book-runningmanagers for the offering. TEPPCO has granted the underwriters anoption to purchase up to an additional 1,200,000 units to coverover-allotments.

Shares are down 3.8% at $28.88 right before the open. Its 52-week trading range was $29.89 to $40.81.

Jon C. Ogg
September 4, 2008