On the backs of its pipeline system and independent petroleum products terminals, Williams Energy Partners LP. announced first-quarter 2003 operating profit of $38.1 million compared with $28.8 million in 2002, representing a 32% increase. The company also noted that net income for the same period increased 38% from $21.1 million in 2002 to $29.1 million in 2003.

The partnership said its Williams Pipe Line generated additional revenues due to higher transportation rates resulting from longer haul shipments, higher ancillary service revenues and increased volumes, while the independent terminals benefited from a contract settlement associated with the early termination of an affiliate’s storage agreement. These increases were partially offset by reduced transportation volumes on the partnership’s ammonia pipeline system resulting from high prices for natural gas, the primary component in the production of ammonia.

Acquired in April 2002 from Williams for $1 billion, the Williams Pipe Line system was treated similarly to a pooling of interest under accounting rules requiring that historical financial statements be restated to include the results from the assets.

Williams Energy Partners said diluted earnings per unit increased to 99 cents for first-quarter 2003 compared with 72 cents for the same period in 2002. According to accounting rules, per unit numbers are not restated to include Williams Pipe Line results prior to the partnership’s ownership.

“Our refined products businesses continue to provide outstanding results and the market conditions affecting our ammonia business are improving,” said Don Wellendorf, CEO. “We remain focused on the key components of our strategy, which are excellent customer service, safe operations and growth in cash flow through organic opportunities and accretive acquisitions.”

On April 21, the partnership announced that Williams had agreed to sell its 54.6% interest in Williams Energy Partners to a new entity formed jointly by private equity firms Madison Dearborn Partners, LLC and Carlyle/Riverstone Global Energy and Power Fund II, LP (see NGI, April 28).

Before consideration of the one-time transition expenses associated with the partnership’s separation from Williams, the partnership’s management said it expects earnings per unit for the second quarter to be between 80 and 85 cents. The company noted that expectations for the second quarter are lower than the same period in 2002 primarily due to a higher weighted average number of units outstanding during 2003. This results from the second-quarter 2002 equity issuances associated with the financing of the Williams Pipe Line system. Including one-time transition costs, which will not impact distributable cash generated per unit, management said it expects earnings per unit between 50 and 55 cents for the second quarter 2003.

Going forward, the partnership said it remains comfortable with the annual guidance previously provided for earnings per unit between $3.25 and $3.35 for the full-year 2003. Current analyst expectations for 2003 average $3.30.

“Our businesses have continued their outstanding record of exceeding earnings expectations,” said John Chandler, CFO. “Because of our strong first-quarter results as well as our expectations for the remainder of the year, our earnings guidance for the year remains unchanged, even after consideration of the one-time expense items associated with the partnership’s separation from Williams.”

©Copyright 2003 Intelligence Press Inc. Allrights reserved. The preceding news report may not be republishedor redistributed, in whole or in part, in any form, without priorwritten consent of Intelligence Press, Inc.