El Paso Pipeline Partners Reports $46 Million Net Income In Q1 2009

Published: 08-May-2009

By: Staff Writer Staff Writer Staff Writer

El Paso Pipeline Partners, L.P. (El Paso Pipeline Partners) has reported operating revenues of $39.7 million for the first quarter of 2009, compared with the operating revenues of $33.7 million in the year-ago quarter. It also reported a net income of $46 million, or $0.40 per common unit, for the first quarter of 2009, compared with the net income of $27.6 million, or $0.32 per common unit, in the year-ago quarter.

Financial Results

EBIT rose to $51.1 million for the first quarter of 2009, compared with the EBIT of $33.2 million in the year-ago quarter. The improvement in net income and EBIT is mainly because of raised earnings from equity investments following the acquisition of additional interests in Colorado interstate gas (CIG) and Southern natural gas (SNG) on September 30, 2008, and the completion of expansion projects.

Operating income for the first quarter of 2009 was $21.9 million compared with $18.2 million in the year-ago quarter. The raise is because of higher revenues, mainly from increased demand on the Wyoming Interstate Company (WIC) system as well as the completion of the Medicine Bow expansion project, partly counterbalanced by higher operating expenses.

Distributable cash flow for the first quarter of 2009 was $51.2 million, compared with $27.8 million in the year-ago quarter. Distribution coverage for the first quarter of 2009 was 1.37 times.

Equity Investments

El Paso Pipeline Partners owns 40% and 25% of CIG and SNG, respectively, subsequent to the earlier mentioned 2008 acquisition.

Equity in earnings from CIG for the first quarter of 2009 was $16.5 million, compared with $5.7 million in the year-ago quarter. The partnership's share of CIG's distributable cash flow was $15.9 million for the first quarter of 2009 compared with $4.2 million in the year-ago quarter.

SNG generated equity in earnings of $12.5 million for the first quarter of 2009, compared with $9.4 million in the year-ago quarter. The partnership's share of SNG's distributable cash flow was $12.3 million for the first quarter of 2009 compared with $9.1 million in the year-ago quarter.

The raise in earnings and distributable cash flow from El Paso Pipeline Partners' equity investments in CIG and SNG are due primarily to its higher ownership interests following its September 2008 acquisition. SNG's 2008 results also reflect proceeds received relating to Calpine's approved reorganization plan.

Interest and Debt Expense

For the first quarter of 2009, interest and debt expense was $5.1 million compared with $5.6 million in the year-ago quarter. The decrease is because of a lower average interest rate on credit facility borrowings, partly equalized by a higher average debt balance including the issuance of private placement debt in September 2008 to finance the acquisition of additional ownership interests in CIG and SNG.

Liquidity

El Paso Pipeline Partners maintains a $750 million revolving credit facility, which is underwritten by a diverse group of 25 financial institutions. The facility, which has a November 2012 maturity date, had about $160 million of available capacity as of March 31, 2009. The partnership will utilize this facility, cash distributions from its unconsolidated affiliated pipelines, and a $20 million demand note receivable from El Paso Corporation to fund its on-going growth capital expenditures. The partnership continues to have more than adequate liquidity to accomplish on its project inventory well into 2010.

Capital Projects

During the quarter ended March 31, 2009, WIC invested $8.5 million, mainly for the Piceance lateral development. Maintenance capital expenditures for the same 2009 period were $0.6 million.

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