Coming off of a year highlighted by milder than normal weather, El Paso Energy Partners LP. reported a 51% increase in 2001 pro forma cash flow, as measured by adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), of $161.4 million compared with $107.0 million in 2000. Pro forma net income, which also excludes non-recurring items, was $61.8 million ($0.58 per unit) for 2001 — more than triple the $20.5 million (loss of $0.03 per unit) in 2000. The company’s net income was $55.1 million ($0.38 per unit) for 2001 and includes non-recurring charges of $6.7 million ($0.19 per unit) primarily related to asset sales in 2001.

The company also posted a sizeable increase in its quarterly results. For the fourth quarter 2001, pro forma cash flow was $49.6 million, up 63% from $30.4 million in the fourth quarter of 2000. Pro forma net income was $18.9 million ($0.18 per unit) compared with $5.4 million (loss of $0.11 per unit) in the fourth quarter of 2000. Reported net income for the 2001 fourth quarter was $18.3 million ($0.17 per unit).

“2001 marks El Paso Energy Partners’ best performance since its formation in 1993,” said Robert G. Phillips, CEO of EPN. “Our stellar results were driven by contributions from investments made in 2000 and 2001 to diversify our fee-based midstream asset portfolio, including natural gas liquids transportation and fractionation assets, natural gas pipelines, oil pipelines, offshore platforms, and natural gas storage services. This record cash flow led to an 11.4% distribution increase to unitholders during 2001 and an additional five-cent increase in January 2002. While attaining these record growth levels, we have maintained a strong balance sheet to ensure the financial flexibility to continue to aggressively grow the partnership’s cash flow and distributions in the future.”

EPN’s Natural Gas Gathering and Transportation contributed adjusted EBITDA of $49.5 million for 2001 compared with $54.7 million in 2000. Fourth quarter 2001 adjusted EBITDA was $11.9 million compared with $12.2 million in the 2000 quarter. The company said the lower 2001 results were primarily attributable to asset sales in 2001. The company’s Liquid Transportation and Handling segment posted adjusted EBITDA of $54.9 million for 2001, nearly double the $28.6 million generated in 2000. Fourth quarter 2001 adjusted EBITDA was $20.9 million, up 76% from $11.9 million in the 2000 fourth quarter. EPN said the improved cash flow reflects the acquisitions of EPN Texas NGL operations and the Chaco cryogenic processing facility, offset by lower oil transportation volumes.

Platform Services adjusted EBITDA was $32.8 million in 2001, up 33% from $24.6 million in 2000. Platform Services 2001 fourth quarter adjusted EBITDA was $12.3 million, more than double the $5.6 million generated in the fourth quarter of 2000. The fourth quarter 2001 was the first full quarter of operation of EPN’s Prince Tension Leg Platform.

“During 2001 we significantly increased our asset base, spending $568 million on acquisitions and organic growth projects,” said Phillips. “Key assets and projects that will drive growth in cash flow for 2002 are a full-year contribution from the Chaco natural gas processing facility, the additional 50% interest in Deepwater Holdings purchased in October 2001, and the expansion of the Petal natural gas storage facility.”

Marking the largest increase for the company was its Storage Services segment, which posted $15.2 million in adjusted EBITDA for 2001, up nearly four-fold from $4 million in 2000. For the 2001 fourth quarter, Storage Services generated adjusted EBITDA of $3.0 million compared with $3.2 million in the 2000 fourth quarter. EPN said that work to complete the expansion of the Petal natural gas storage facilities and the pipeline interconnect to Tennessee Gas Pipeline continued during the fourth quarter of 2001. Service from the expanded facility is anticipated to commence in mid-2002 under a 20-year firm storage contract with Southern Co.

Oil and Natural Gas Production also contributed strong adjusted EBITDA in 2001. The segment rose from $2.7 million during 2000 to $9.9 million in 2001. For the 2001 fourth quarter, adjusted EBITDA for Oil and Natural Gas Production was $0 million compared with a net cash outflow of $1.5 million in the 2000 quarter. The improvement was due to higher realized natural gas prices.

“In addition to accretive acquisitions completed in 2001, we have announced several new organic growth projects,” Phillips added. “While low commodity prices are currently slowing production from the Continental Shelf, development is continuing at a rapid pace in the Deepwater Trend of the Gulf of Mexico, creating numerous opportunities for EPN to provide platform and oil and gas transportation services. During 2001 EPN secured agreements that will connect the Matterhorn, Camden Hills, Aconcagua, and Medusa Deepwater Trend discoveries to EPN’s Viosca Knoll Natural Gas Gathering System. In addition, we will build a deepwater production hub platform and export pipeline for Anadarko Petroleum’s Marco Polo discovery. EPN will also install the oil and natural gas gathering pipelines to transport platform production.”

©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.