CornerStone Propane Partners LP said a significant number of parties have expressed interest in buying or merging with the company, but it is formulating a parallel plan in the event a sale or merger is not realized to manage its debt obligations. The company said it shut down its wholesale natural gas marketing operations, which were conducted by Coast Energy Group (CEG). It reported a quarterly loss of $9.7 million or 40 cents per unit compared with net income of $11.6 million or 48 cents per unit in the same quarter in 2000.

“While we cannot control the weather, we can respond by operating in the field with a focus on maximizing margins and controlling costs to mitigate some of the effects of lower sales volume resulting from warm weather,” said CEO Keith G. Baxter. “Our retail division reduced cash operating expenses by $2.7 million or 10% from the same period last year and increased gross profit per gallon to 69.5 cents per gallon from 66.8 cents per gallon, while setting more than 7,000 net new propane tanks.”

Earnings before interest, taxes, depreciation, amortization (EBITDA) and non-recurring charges were $21.4 million for its fiscal second quarter ended Dec. 31, 2001, compared with $32.7 million in the same period in 2000. Results for the period were adversely affected by unprecedented mild winter weather. According to the National Oceanic and Atmospheric Administration, heating degree days were down 26% and 35% in November and December of 2001 respectively, compared to the year before.

Quarterly results included a non-recurring charge of $10.9 million related to the sale of West Texas crude pipeline operations, the exit of natural gas businesses within CEG, and the disposition of certain customer service centers. Once the restructuring is completed at CEG, the remaining business will be the supply function for CornerStone’s retail operations and a wholesale, marketing and logistics business for natural gas liquids (consisting primarily of propane).

Revenues for the quarter decreased to $390.1 million from $1.8 billion primarily because of the sale and exit of certain businesses of Coast Energy Group as it focused on its natural gas liquids business. Retail revenues for the second quarter were $88.4 million, compared with $137.8 million for the same quarter last year. The reduction in retail revenues stemmed from lower propane prices and fewer gallons sold due to warmer weather compared with last year’s quarter. Fiscal second quarter 2002 retail sales volumes were 66.8 million gallons, representing a decrease of 25.4 million gallons or 27% from the record 92.1 million gallons reported for the same period a year earlier.

©Copyright 2002 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.