BPL Reports Third Quarter Results and Increases Distribution - Tuesday, October 28, 2008
Breinigsville, PA – October 28, 2008. . . Buckeye Partners, L.P. (NYSE:BPL) (the
“Partnership”) today reported its financial results for the third quarter of 2008. The
Partnership’s net income for the third quarter of 2008 was $46.6 million, or $0.79 per LP
unit, compared with net income of $36.4 million, or $0.71 per LP unit, reported for the third
quarter of 2007. The Partnership’s EBITDA (as defined below) for the third quarter of
2008 was $81.3 million, compared with EBITDA of $60.6 million in the third quarter of
2007. Net income per LP unit in the third quarter of 2008 reflects an increase in the
average number of LP units outstanding during the third quarter to 48.4 million from an
average of 42.7 million LP units outstanding in the third quarter of 2007.
Revenue in the third quarter of 2008 was $496.2 million compared with revenue in
the third quarter of 2007 of $125.7 million. Revenue in the third quarter of 2008 includes
$16.8 million generated by the Partnership’s Natural Gas Storage segment, which consists
of the natural gas storage facilities that were acquired in January 2008, and $344.5 million
generated by the Partnership’s Energy Services segment consisting principally of the
wholesale operations of Farm & Home Oil Company LLC, which were acquired in
February 2008 and merged into the Partnership’s Buckeye Energy Services LLC
subsidiary on August 1, 2008. Operating income in the third quarter of 2008 was $64.5
million compared with operating income of $47.5 million in the third quarter of 2007.
Operating income in the third quarter of 2008 includes $8.9 million from the Natural Gas
Storage segment and $3.8 million from the Energy Services segment.
The Board of Directors of Buckeye GP LLC, the general partner of the Partnership,
declared a regular quarterly partnership cash distribution of $0.875 per LP unit, payable
November 28, 2008 to unitholders of record on November 7, 2008. This cash distribution
represents a quarterly increase in the distribution of $0.0125 per LP unit to an indicated
annualized cash distribution level of $3.50 per LP unit. This is the 87th consecutive
quarterly cash distribution paid by the Partnership.
Separately, the Partnership is pleased to announce that its subsidiary, Lodi Gas
Storage, L.L.C. (“Lodi”), has successfully begun natural gas injection into an expansion of
its natural gas storage reservoir known as Kirby Hills located near Suisun City, California.
When fully operational, the expansion of the Kirby Hills storage facility, known as Kirby
Hills Phase II will add an estimated 11 billion cubic feet (“Bcf”) of natural gas storage
capacity to Lodi’s current storage capacity. With the Kirby Hills Phase II expansion, Lodi\'s
aggregate storage capacity is expected to be approximately 33 Bcf, and its injection and
withdrawal rates are expected to increase to 600 million cubic feet per day (“MMcfd”) and
700 MMcfd, respectively. The Kirby Hills Phase II expansion project is expected to be fully
operational in February 2009.
Forrest E. Wylie, Chairman and CEO, stated, “We are pleased to report solid
financial results for Buckeye in the third quarter and year to date 2008. Buckeye’s
business fundamentals remain strong despite the turmoil in the economy generally and
continued volatility in refined petroleum product prices. In the third quarter, our Pipeline
Operations segment experienced a slight decline in operating income compared to the
same period last year as revenue declines associated with a 4.6 percent reduction in
pipeline volumes in the quarter were not fully offset by the positive impact of tariff rate
increases and good cost control. Our Terminalling and Storage segment continued to
produce favorable year on year results due primarily to increased ethanol blending and
additive injection charges at our product terminals. In addition, we continue to be
extremely pleased with the results of the Natural Gas Storage segment, as our natural gas
storage operations in northern California performed in line with our expectations. We look
forward to increased business opportunities in this segment resulting from our Kirby Hills
Phase II expansion project. Finally, our Energy Services segment has stabilized as the
rapid run-up in refined petroleum product prices and associated volatility abated somewhat in the third quarter of 2008. Based on our overall financial performance in the third
quarter, we are pleased to announce another increase in our quarterly cash distribution to
unitholders.
“In connection with the current credit crisis, I would like to emphasize that Buckeye
is in the favorable position of having a strong balance sheet that allows us to fund our
current slate of internal growth projects with cash flow from operations and debt rather
than equity. We have sufficient borrowing capacity available to us under our $600 million
revolving credit facility. Our conservative approach to risk and credit metrics has put us in
a good position in these times of tightening credit markets.”
The Partnership will host a conference call to discuss the third quarter on
Wednesday, October 29, 2008, at 11:00 a.m. Eastern Time. Investors are invited to listen
to the conference call via the Internet, on either a live or replay basis at:
http://www.videonewswire.com/event.asp?id=52531. Interested parties may participate in
the call by joining the conference at (719) 325-4783 and referencing conference ID
8584701. An audio replay of the conference call also will be available through November
3, 2008 by dialing (719) 457-0820 Code: 8584701.
Buckeye Partners, L.P. (www.buckeye.com) is a publicly traded partnership that
owns and operates one of the largest independent refined petroleum products pipeline
systems in the United States in terms of volumes delivered, with approximately 5,400
miles of pipeline. Buckeye Partners, L.P. also owns 64 refined petroleum products
terminals, operates and maintains approximately 2,200 miles of pipeline under
agreements with major oil and chemical companies, owns a major natural gas storage
facility in northern California, and markets refined petroleum products in certain of the
geographic areas served by its pipeline and terminal operations. The general partner of
Buckeye Partners, L.P. is owned by Buckeye GP Holdings L.P. (NYSE: BGH).
* * * * *
EBITDA, a measure not defined under generally accepted accounting principles (“GAAP”), is defined
by the Partnership as income from continuing operations before interest expense (including
amortization and write-off of deferred debt financing costs), income taxes, depreciation, and
amortization. EBITDA should not be considered an alternative to net income, operating profit, cash
flow from operations, or any other measure of financial performance presented in accordance with GAAP. Because EBITDA excludes some items that affect net income and these items may vary
among other companies, the EBITDA data presented may not be comparable to similarly titled
measures at other companies. Management of the Partnership uses EBITDA as a performance
measure to assist in the analysis and assessment of the Partnership’s operations, to evaluate the
viability of proposed projects, and to determine overall rates of return on alternative investment
opportunities. The Partnership believes that investors benefit from having access to the same
financial measures used by the Partnership’s management. Please see the attached reconciliation
of EBITDA to income from continuing operations, the most directly comparable GAAP measure.
* * * * *
This press release includes forward-looking statements that we believe to be reasonable as of
today’s date. Such statements are identified by use of the words “anticipates”, “estimates”,
“expects”, “intends”, “plans”, “predicts”, “projects”, “should”, and similar expressions. Actual
results may differ significantly because of risks and uncertainties that are difficult to predict and
that may be beyond the control of the Partnership. Among them are (1) changes in laws or
regulations to which we are subject, including those that permit the treatment of us as a
partnership for federal income tax purposes, (2) terrorism, adverse weather conditions,
environmental releases, and natural disasters, (3) changes in the marketplace for our products or
services, such as increased competition, better energy efficiency, or general reductions in
demand, (4) adverse regional or national economic conditions or adverse capital market
conditions, (5) shutdowns or interruptions at the source points for the products we transport,
store, or sell, (6) unanticipated capital expenditures in connection with the construction, repair, or
replacement of our assets, and (7) volatility in the price of refined petroleum products and the
value of natural gas storage services. You should read our Annual Report on Form 10-K and our
most recently filed Quarterly Report on Form 10-Q for a more extensive list of factors that could
affect results. We undertake no obligation to revise our forward-looking statements to reflect
events or circumstances occurring after today’s date.
Buckeye Partners, L.P-Buckeye Partners, L.P-10/28/2008
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