Boardwalk Announces Second Quarter 2009 Results

HOUSTON--(BUSINESS WIRE)--Jul. 27, 2009-- Boardwalk Pipeline Partners, LP, (NYSE:BWP) announced today its results for the second quarter ended June 30, 2009, which included the following:

• Operating revenues of $201.4 million for the quarter and $424.8 million for the six months ended June 30, 2009, a 6% and 10% increase from $190.3 million and $387.6 million in the comparable 2008 periods;
• Net income of $20.3 million for the quarter and $72.3 for the six months ended June 30, 2009, a 69% and 53% decrease from $64.7 million and $152.8 million in the comparable 2008 periods; and
• Earnings before interest, taxes, depreciation and amortization (EBITDA) of $104.8 million for the quarter and $230.0 million for the six months ended June 30, 2009, a 7% decrease from $112.6 million and $246.4 million in the comparable 2008 periods.

The higher revenues for the second quarter and six months ended June 30, 2009, were driven by transportation revenues from the expansion projects and higher storage and parking and lending revenues. However, transportation revenues, excluding fuel, from expansion projects were approximately $58 million lower than anticipated for the quarter and $70 million lower than anticipated for the six months ended June 30, 2009 (based on projected demand charges under firm contracts) due to operating those pipelines at reduced pressures and temporary shut downs relating to the discovery and remediation of anomalies in certain joints of pipe.

The higher revenues were more than offset by higher expenses related to the operation of the expansion pipelines, primarily depreciation and property taxes, higher operation and maintenance expenses and higher interest expense, which reduced net income and EBITDA for the second quarter and six months ended June 30, 2009 as compared to 2008. Net income and EBITDA for the first six months of 2008 were favorably impacted by gains of $21.9 million ($18.8 million for the second quarter 2008) from gas sales and mark-to-market activity related to certain derivatives associated with the expansion projects and an $11.2 million contract settlement gain.

Capital Program

Expansion and growth capital expenditures were $477.5 million for the six months ended June 30, 2009. This includes the following for the Partnership’s expansion pipeline projects and pipe anomaly remediation efforts, including remediation efforts for the East Texas pipeline (in millions):

Maintenance capital expenditures were $19.7 million for the six months ended June 30, 2009.

Net Income Per Unit

In the first quarter 2009, the Partnership began applying the provisions of EITF Issue No. 07-4, Application of the Two-Class Method under FASB Statement No. 128, Earnings per Share, to Master Limited Partnerships, which provides that net income for the current period be reduced by the amount of available cash that will be distributed with respect to that period for purposes of calculating net income per unit. Any residual amount representing undistributed net income (or loss) is assumed to be allocated to the various ownership interests in accordance with the contractual provisions of the partnership agreement.

Under the Partnership’s partnership agreement, for any quarterly period, the incentive distribution rights (IDRs) participate in net income only to the extent of the amount of cash distributions actually declared, thereby excluding the IDRs from participating in undistributed net income or losses. Accordingly, undistributed net income is assumed to be allocated to the other ownership interests on a pro rata basis, except the class B units for which participation in net income is limited to $0.30 per unit per quarter.

The following table provides a reconciliation of net income and the assumed allocation of net income to the common and class B units for purposes of computing net income per unit for the three months ended June 30, 2009 (in millions, except per unit data):

The following table provides a reconciliation of net income and the assumed allocation of net income to the common and class B units for purposes of computing net income per unit for the six months ended June 30, 2009 (in millions, except per unit data):

As a result of applying the provisions of EITF No. 07-04, net income per unit for the second quarter and six months ended June 30, 2008, has been adjusted from $0.49 and $1.09 per common and subordinated unit, as originally reported using the provisions of EITF Issue No. 03-06, Participating Securities and the Two-Class Method under FASB Statement No. 128, to $0.50 and $1.18 per common unit and $0.46 and $1.14 per subordinated unit. The following table provides a reconciliation of net income and the assumed allocation of net income to the common and subordinated units for purposes of computing net income per unit for the three months ended June 30, 2008 (in millions, except per unit data):

The following table provides a reconciliation of net income and the assumed allocation of net income to the common and subordinated units for purposes of computing net income per unit for the six months ended June 30, 2008 (in millions, except per unit data):

Conference Call

The Partnership has scheduled a conference call for July 27, 2009, at 9:00 a.m. EDT, to review the second quarter results. The earnings call may be accessed via the Boardwalk website at rextag