Houston-based TEPPCO Partners LP reported net income of $47.7 million (42 cents/share) for 2Q2008, compared with $47.8 million (44 cents/share) in 2Q2007, and earnings before interest, taxes, depreciation and amortization (EBITDA) of $128.1 million, up 19% from the $107.2 million posted in the same period last year.
Jerry E. Thompson, CEO of TEPPCO's general partner, said the quarterly results demonstrate the strength of TEPPCO's diverse logistics business.
"Given the strong performance of our assets during the second quarter in light of weaker economic conditions, which negatively impact our downstream business, we remain confident in TEPPCO's business strategy and our ability to grow sustainable cash flow for our unit holders," he said.
TEPPCO's midstream segment, which includes gathering of natural gas, fractionation of natural gas liquids (NGL), pipeline transportation of NGL and an ownership interest in Jonah Gas Gathering Co., posted a $49.1 million EBITDA in 2Q2008, up 7% from $46 million in 2Q2007. The upswing was due primarily to a $2.8 million increase in EBITDA from the investment in Jonah and increased NGL transportation revenues attributable to a higher percentage of long-haul volumes on the Chaparral system.
TEPPCO Partners subsidiary TEPPCO Crude Oil LLC addressed its relationship to SemGroup LP, which lost $3.2 billion on crude trades and filed for bankruptcy (see NGI, July 28). SemGroup's problems worsened when it was revealed that the Securities and Exchange Commission and the U.S. Attorney's Office in Oklahoma City are investigating the company's collapse. Last week, Pioneer Natural Resources Co. announced that it has approximately $30 million of unpaid pre-bankruptcy claims for condensate sold to certain subsidiaries of SemGroup (see related story).
Tulsa-based SemGroup provides diversified services for end-users and consumers of crude oil, natural gas, NGLs, refined products and asphalt. Services include purchasing, selling, processing, transporting, terminaling and storage in the United States, Canada, Mexico, Wales, Switzerland and Vietnam. The affiliates in Mexico, the United Kingdom and Asia were not included in the bankruptcy filing.
TEPPCO, which owns and operates a network of assets that facilitate the movement, marketing, gathering and storage of various commodities and energy-related products, has said it does not expect to see any fallout from the bankruptcy proceedings, noting that SemGroup has represented less than 3% of the partnership's current crude oil gathering volumes.
Thompson said buy-sell agreements that TEPPCO Partners had established with SemGroup have been converted into straight transportation agreements for SemGroup's 300-truck fleet to move crude oil to market for TEPPCO. While TEPPCO is dependent on those trucks to get the crude to market, an industrywide dependency -- and the fact that the fleet is an asset of SemGroup Energy Partners MLP, which is not part of the bankruptcy filing -- is likely to keep the fleet in operation, even through bankruptcy proceedings, he said.
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