Delaware
|
76-0513049
|
|
(State
or other jurisdictions of incorporation or
organization)
|
(I.R.S.
Employer Identification No.)
|
|
919
Milam, Suite 2100, Houston, TX
|
77002
|
|
(Address
of principal executive offices)
|
(Zip
code)
|
Registrant's
telephone number, including area code:
|
(713)
860-2500
|
Large
accelerated filer £
|
Accelerated
filer þ
|
Non-accelerated
filer £
|
Smaller
reporting company £
|
Item
1.
|
Financial
Statements
|
Page
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3
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4
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5
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6
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7
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Item
2.
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32
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Item
3.
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49
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Item
4.
|
51
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|
|
||
PART
II. OTHER INFORMATION
|
||
Item
1.
|
51
|
|
Item
1A.
|
51
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|
Item
2.
|
52
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|
Item
3.
|
53
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|
Item
4.
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53
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Item
5.
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53
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Item
6.
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53
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54
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September 30,
2008
|
December 31,
2007
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
and cash equivalents
|
$ | 22,371 | $ | 11,851 | ||||
Accounts
receivable - trade
|
194,637 | 178,658 | ||||||
Accounts
receivable - related party
|
7,494 | 1,441 | ||||||
Inventories
|
23,144 | 15,988 | ||||||
Net
investment in direct financing leases, net of unearned income - current
portion - related party
|
3,699 | 609 | ||||||
Other
|
9,841 | 5,693 | ||||||
Total
current assets
|
261,186 | 214,240 | ||||||
FIXED
ASSETS, at cost
|
339,837 | 150,413 | ||||||
Less: Accumulated
depreciation
|
(60,194 | ) | (48,413 | ) | ||||
Net
fixed assets
|
279,643 | 102,000 | ||||||
NET
INVESTMENT IN DIRECT FINANCING LEASES, net of unearned income - related
party
|
178,169 | 4,764 | ||||||
CO2
ASSETS, net of amortization
|
25,479 | 28,916 | ||||||
EQUITY
INVESTEES AND OTHER INVESTMENTS
|
19,376 | 18,448 | ||||||
INTANGIBLE
ASSETS, net of amortization
|
178,510 | 211,050 | ||||||
GOODWILL
|
325,046 | 320,708 | ||||||
OTHER
ASSETS, net of amortization
|
14,055 | 8,397 | ||||||
TOTAL
ASSETS
|
$ | 1,281,464 | $ | 908,523 | ||||
LIABILITIES
AND PARTNERS' CAPITAL
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Current
Maturities of long - term debt
|
$ | 48,200 | ||||||
Accounts
payable - trade
|
169,073 | $ | 154,614 | |||||
Accounts
payable - related party
|
3,200 | 2,647 | ||||||
Accrued
liabilities
|
34,558 | 17,537 | ||||||
Total
current liabilities
|
255,031 | 174,798 | ||||||
LONG-TERM
DEBT
|
343,200 | 80,000 | ||||||
DEFERRED
TAX LIABILITIES
|
15,767 | 20,087 | ||||||
OTHER
LONG-TERM LIABILITIES
|
1,527 | 1,264 | ||||||
MINORITY
INTERESTS
|
25,817 | 570 | ||||||
COMMITMENTS
AND CONTINGENCIES (Note 16)
|
||||||||
PARTNERS'
CAPITAL:
|
||||||||
Common
unitholders, 39,452 and 38,253 units, respectively, issued and
outstanding
|
623,432 | 615,265 | ||||||
General
partner
|
16,796 | 16,539 | ||||||
Accumulated
other comprehensive loss
|
(106 | ) | - | |||||
Total
partners' capital
|
640,122 | 631,804 | ||||||
TOTAL
LIABILITIES AND PARTNERS' CAPITAL
|
$ | 1,281,464 | $ | 908,523 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
REVENUES:
|
||||||||||||||||
Supply
and logistics:
|
||||||||||||||||
Unrelated
parties
|
$ | 554,838 | $ | 317,244 | $ | 1,552,559 | $ | 680,380 | ||||||||
Related
parties
|
1,558 | 409 | 3,432 | 1,287 | ||||||||||||
Refinery
services
|
61,306 | 25,349 | 160,945 | 25,349 | ||||||||||||
Pipeline
transportation, including natural gas sales:
|
||||||||||||||||
Transportation
services - unrelated parties
|
5,062 | 4,596 | 16,139 | 12,519 | ||||||||||||
Transportation
services - related parties
|
8,205 | 1,499 | 13,372 | 4,225 | ||||||||||||
Natural
gas sales revenues
|
1,158 | 800 | 4,085 | 3,274 | ||||||||||||
CO2
marketing revenues:
|
||||||||||||||||
Unrelated
parties
|
4,039 | 3,610 | 10,895 | 9,772 | ||||||||||||
Related
parties
|
753 | 763 | 2,217 | 2,044 | ||||||||||||
Total
revenues
|
636,919 | 354,270 | 1,763,644 | 738,850 | ||||||||||||
COSTS
AND EXPENSES:
|
||||||||||||||||
Supply
and logistics costs:
|
||||||||||||||||
Product
costs - unrelated parties
|
521,779 | 304,089 | 1,471,254 | 656,317 | ||||||||||||
Product
costs - related parties
|
- | 40 | - | 69 | ||||||||||||
Operating
costs
|
20,927 | 8,564 | 55,294 | 17,295 | ||||||||||||
Refinery
services operating costs
|
48,265 | 16,804 | 116,700 | 16,804 | ||||||||||||
Pipeline
transportation costs:
|
||||||||||||||||
Pipeline
transportation operating costs
|
2,647 | 2,315 | 7,493 | 7,996 | ||||||||||||
Natural
gas purchases
|
1,136 | 817 | 3,990 | 3,164 | ||||||||||||
CO2
marketing costs:
|
||||||||||||||||
Transportation
costs - related party
|
1,488 | 1,462 | 4,121 | 3,796 | ||||||||||||
Other
costs
|
15 | 40 | 45 | 131 | ||||||||||||
General
and administrative
|
9,239 | 4,724 | 26,929 | 13,652 | ||||||||||||
Depreciation
and amortization
|
18,100 | 8,372 | 51,610 | 12,346 | ||||||||||||
Net
(gain) loss on disposal of surplus assets
|
(58 | ) | - | 36 | (24 | ) | ||||||||||
Total
costs and expenses
|
623,538 | 347,227 | 1,737,472 | 731,546 | ||||||||||||
OPERATING
INCOME
|
13,381 | 7,043 | 26,172 | 7,304 | ||||||||||||
Equity
in earnings of joint ventures
|
216 | 361 | 378 | 915 | ||||||||||||
Interest
income
|
118 | 141 | 352 | 219 | ||||||||||||
Interest
expense
|
(4,601 | ) | (4,842 | ) | (8,543 | ) | (5,467 | ) | ||||||||
INCOME
BEFORE INCOME TAXES AND MINORITY INTEREST
|
9,114 | 2,703 | 18,359 | 2,971 | ||||||||||||
Income
tax benefit (expense)
|
1,504 | (1,004 | ) | 1,233 | (1,059 | ) | ||||||||||
Income
before minority interest
|
10,618 | 1,699 | 19,592 | 1,912 | ||||||||||||
Minority
interest
|
145 | - | 144 | - | ||||||||||||
NET
INCOME
|
$ | 10,763 | $ | 1,699 | $ | 19,736 | $ | 1,912 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
NET
INCOME PER COMMON UNIT:
|
||||||||||||||||
BASIC
|
$ | 0.25 | $ | 0.07 | $ | 0.47 | $ | 0.11 | ||||||||
DILUTED
|
$ | 0.25 | $ | 0.07 | $ | 0.46 | $ | 0.11 | ||||||||
WEIGHTED
AVERAGE COMMON UNITS OUTSTANDING:
|
||||||||||||||||
BASIC
|
39,452 | 24,527 | 38,796 | 17,405 | ||||||||||||
DILUTED
|
39,524 | 24,527 | 38,853 | 17,405 |
Partners'
Capital
|
||||||||||||||||||||
Number of Common Units
|
Common Unitholders
|
General Partner
|
Accumulated Other
Comprehensive Loss
|
Total
|
||||||||||||||||
Partners'
capital, January 1, 2008
|
38,253 | $ | 615,265 | $ | 16,539 | $ | - | $ | 631,804 | |||||||||||
Net
income
|
- | 17,972 | 1,764 | - | 19,736 | |||||||||||||||
Cash
contributions
|
- | - | 510 | - | 510 | |||||||||||||||
Cash
distributions
|
- | (34,805 | ) | (2,017 | ) | - | (36,822 | ) | ||||||||||||
Issuance
of units
|
2,037 | 41,667 | - | - | 41,667 | |||||||||||||||
Redemption
of units
|
(838 | ) | (16,667 | ) | - | - | (16,667 | ) | ||||||||||||
Interest
rate swap hedges
|
- | - | - | (106 | ) | (106 | ) | |||||||||||||
Partners'
capital, September 30, 2008
|
39,452 | $ | 623,432 | $ | 16,796 | $ | (106 | ) | $ | 640,122 |
Nine
Months Ended September 30,
|
||||||||
2008
|
2007
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
income
|
$ | 19,736 | $ | 1,912 | ||||
Adjustments
to reconcile net income to net cash provided by operating activities
-
|
||||||||
Depreciation
and amortization
|
51,610 | 12,346 | ||||||
Amortization
of credit facility issuance costs
|
962 | 509 | ||||||
Amortization
of unearned income and initial direct costs on direct financing
leases
|
(6,342 | ) | (468 | ) | ||||
Payments
received under direct financing leases
|
6,056 | 890 | ||||||
Equity
in earnings of investments in joint ventures
|
(378 | ) | (915 | ) | ||||
Distributions
from joint ventures - return on investment
|
971 | 1,276 | ||||||
Non-cash
effects of unit-based compensation plans
|
(1,342 | ) | 1,696 | |||||
Deferred
and other tax liabilities
|
(3,388 | ) | - | |||||
Other
non-cash items
|
(1,175 | ) | 643 | |||||
Changes
in components of operating assets and liabilities -
|
||||||||
Accounts
receivable
|
(23,670 | ) | (9,749 | ) | ||||
Inventories
|
(6,481 | ) | 3,810 | |||||
Other
current assets
|
(3,214 | ) | (515 | ) | ||||
Accounts
payable
|
17,076 | 10,819 | ||||||
Accrued
liabilities
|
5,809 | 3,399 | ||||||
Net
cash provided by operating activities
|
56,230 | 25,653 | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Payments
to acquire fixed assets
|
(29,890 | ) | (3,292 | ) | ||||
CO2
pipeline transactions and related costs
|
(228,891 | ) | - | |||||
Distributions
from joint ventures - return of investment
|
886 | 389 | ||||||
Investment
in joint ventures and other investments
|
(2,210 | ) | (552 | ) | ||||
Proceeds
from disposal of assets
|
573 | 195 | ||||||
Acquisition
of Grifco assets
|
(65,693 | ) | - | |||||
Acquisition
of Davison assets, net of cash acquired
|
(993 | ) | (301,360 | ) | ||||
Acquisition
of Port Hudson assets
|
- | (8,103 | ) | |||||
Other,
net
|
207 | (1,300 | ) | |||||
Net
cash used in investing activities
|
(326,011 | ) | (314,023 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Bank
borrowings
|
490,900 | 355,800 | ||||||
Bank
repayments
|
(179,500 | ) | (78,800 | ) | ||||
Credit
facility issuance fees
|
(2,255 | ) | (2,297 | ) | ||||
Issuance
of common units for cash
|
- | 22,361 | ||||||
Redemption
of common units for cash
|
(16,667 | ) | - | |||||
General
partner contributions
|
510 | 6,171 | ||||||
Minority
interest contributions, net of distributions
|
25,501 | 30 | ||||||
Distributions
to common unitholders
|
(34,805 | ) | (9,097 | ) | ||||
Distributions
to general partner interest
|
(2,017 | ) | (186 | ) | ||||
Other,
net
|
(1,366 | ) | (163 | ) | ||||
Net
cash provided by financing activities
|
280,301 | 293,819 | ||||||
Net
increase in cash and cash equivalents
|
10,520 | 5,449 | ||||||
Cash
and cash equivalents at beginning of period
|
11,851 | 2,318 | ||||||
Cash
and cash equivalents at end of period
|
$ | 22,371 | $ | 7,767 |
|
·
|
Pipeline
transportation of crude oil, carbon dioxide (or CO2)
and, to a lesser degree, natural
gas;
|
|
·
|
Refinery
services involving processing of high sulfur (or “sour”) gas streams for
refineries to remove the sulfur, and sale of the related by-product,
sodium hydrosulfide (or NaHS, commonly pronounced
nash);
|
|
·
|
Industrial
gas activities, including wholesale marketing of CO2 and
processing of syngas through a joint venture;
and
|
|
·
|
Supply
and logistics services, which includes terminaling, blending, storing,
marketing, and transporting by trucks and barge of crude oil and petroleum
products as well as dry goods.
|
Fuel
inventory in vessels
|
$ | 676 | ||
Property
and equipment
|
91,096 | |||
Amortizable
intangible assets:
|
||||
Customer
relationships
|
800 | |||
Trade
name
|
900 | |||
Non-compete
agreements
|
600 | |||
Total
allocated cost
|
$ | 94,072 |
September
30, 2008
|
December
31, 2007
|
|||||||
Crude
oil
|
$ | 2,018 | $ | 3,710 | ||||
Petroleum
products
|
13,150 | 6,527 | ||||||
Caustic
soda
|
1,827 | 1,998 | ||||||
NaHS
|
6,013 | 3,557 | ||||||
Other
|
136 | 196 | ||||||
Total
inventories
|
$ | 23,144 | $ | 15,988 |
September
30, 2008
|
December
31, 2007
|
|||||||
Land,
buildings and improvements
|
$ | 13,522 | $ | 11,978 | ||||
Pipelines
and related assets
|
139,177 | 63,169 | ||||||
Machinery
and equipment
|
22,568 | 25,097 | ||||||
Transportation
equipment
|
32,960 | 32,906 | ||||||
Barges
and push boats
|
95,751 | - | ||||||
Office
equipment, furniture and fixtures
|
4,098 | 2,759 | ||||||
Construction
in progress
|
20,124 | 7,102 | ||||||
Other
|
11,637 | 7,402 | ||||||
Subtotal
|
339,837 | 150,413 | ||||||
Accumulated
depreciation
|
(60,194 | ) | (48,413 | ) | ||||
Total
|
$ | 279,643 | $ | 102,000 |
Asset
retirement obligations as of December 31, 2007
|
$ | 1,173 | ||
Accretion
expense
|
67 | |||
Asset
retirement obligations as of September 30, 2008
|
$ | 1,240 |
September
30, 2008
|
December
31, 2007
|
|||||||
Total
minimum lease payments to be received
|
$ | 412,850 | $ | 7,039 | ||||
Estimated
residual values of leased property (unguaranteed)
|
1,286 | 1,287 | ||||||
Unamortized
initial direct costs
|
2,631 | - | ||||||
Less
unearned income
|
(234,899 | ) | (2,953 | ) | ||||
Net
investment in direct financing leases
|
$ | 181,868 | $ | 5,373 |
September
30, 2008
|
December
31, 2007
|
||||||||||||||||||||||||||
Weighted
Amortization Period in Years
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
Carrying
Value
|
Gross
Carrying Amount
|
Accumulated
Amortization
|
Carrying
Value
|
|||||||||||||||||||||
Refinery
services customer relationships
|
3
|
$ | 94,654 | $ | 21,858 | $ | 72,796 | $ | 94,654 | $ | 9,380 | $ | 85,274 | ||||||||||||||
Supply
and logistics customer relationships
|
5
|
35,430 | 8,293 | 27,137 | 34,630 | 3,287 | 31,343 | ||||||||||||||||||||
Refinery
services supplier relationships
|
2
|
36,469 | 20,682 | 15,787 | 36,469 | 9,241 | 27,228 | ||||||||||||||||||||
Refinery
services licensing agreements
|
6
|
38,678 | 5,936 | 32,742 | 38,678 | 2,218 | 36,460 | ||||||||||||||||||||
Supply
and logistics trade names-Davison and Grifco
|
7
|
18,888 | 2,581 | 16,307 | 17,988 | 930 | 17,058 | ||||||||||||||||||||
Supply
and logistics favorable lease
|
15
|
13,260 | 552 | 12,708 | 13,260 | 197 | 13,063 | ||||||||||||||||||||
Other
|
5
|
1,322 | 289 | 1,033 | 721 | 97 | 624 | ||||||||||||||||||||
Total
|
5
|
$ | 238,701 | $ | 60,191 | $ | 178,510 | $ | 236,400 | $ | 25,350 | $ | 211,050 |
Year Ended December 31
|
Amortization Expense to be
Recorded
|
|||
Remainder
of 2008
|
$ | 11,674 | ||
2009
|
$ | 32,600 | ||
2010
|
$ | 25,931 | ||
2011
|
$ | 21,253 | ||
2012
|
$ | 17,612 | ||
2013
|
$ | 14,208 |
September
30, 2008
|
December
31, 2007
|
|||||||
Genesis
Credit Facility
|
$ | 343,200 | $ | 80,000 | ||||
DG
Marine Credit Facility (non-recourse to Genesis) - current portion of
long-term debt
|
48,200 | - | ||||||
Total
Debt
|
$ | 391,400 | $ | 80,000 |
|
·
|
The
interest rate on borrowings may be based on the prime rate or the LIBOR
rate, at our option. The interest rate on prime rate loans can
range from the prime rate plus 0.50% to the prime rate plus
1.875%. The interest rate for LIBOR-based loans can range from
the LIBOR rate plus 1.50% to the LIBOR rate plus 2.875%. The
rate is based on our leverage ratio as computed under the credit
facility. Our leverage ratio is recalculated quarterly and in
connection with each material acquisition. At September
30, 2008, our borrowing rates were the prime rate plus 0.50% or the LIBOR
rate plus 1.50%.
|
|
·
|
Letter
of credit fees will range from 1.50% to 2.875% based on our leverage ratio
as computed under the credit facility. The rate can fluctuate
quarterly. At September 30, 2008, our letter of credit rate was
1.50%.
|
|
·
|
We
pay a commitment fee on the unused portion of the $500 million maximum
facility amount. The commitment fee will range from 0.30% to
0.50% based on our leverage ratio as computed under the credit
facility. The rate can fluctuate quarterly. At
September 30, 2008, the commitment fee rate was
0.30%.
|
Financial
Covenant
|
Requirement
|
Required
Ratio through September 30, 2008
|
Actual
Ratio as of September 30, 2008
|
|||
Debt
Service Coverage Ratio
|
Minimum
|
2.75
to 1.0
|
6.71
to 1.0
|
|||
Leverage
Ratio
|
Maximum
|
6.0
to 1.0
|
2.97
to 1.0
|
|||
Funded
Indebtedness Ratio
|
Maximum
|
0.80
to 1.0
|
0.40
to
1.0
|
|
·
|
The
interest rate on borrowings may be based on the prime rate or the LIBOR
rate, at our option. The interest rate on prime rate loans can
range from the prime rate plus 1.50% to the prime rate plus
3.00%. The interest rate for LIBOR-based loans can range from
the LIBOR rate plus 2.50% to the LIBOR rate plus 4.00%. The
rate is based on DG Marine’s leverage ratio as computed under the credit
facility. Under the terms of DG Marine’s credit facility, the rates will
be the prime rate plus 3.00% and the LIBOR rate plus 4.00% for the period
from July 18, 2008 until October 31, 2008, after which time the rates will
fluctuate monthly based on the leverage
ratio.
|
|
·
|
Letter
of credit fees will range from 2.50% to 4.00% based on DG Marine’s
leverage ratio as computed under the credit facility. The rate
can fluctuate monthly. At September 30, 2008, there were no
letters of credit outstanding under the DG Marine credit
facility.
|
|
·
|
DG
Marine pays a commitment fee on the unused portion of the $90 million
facility amount. The commitment fee will range from 0.25% to
0.50% based on its leverage ratio as computed under the credit
facility. Under the terms of the DG Marine credit facility, the
commitment fee rate was 0.50% for the period from July 18, 2008 until
October 31, 2008, after which time the rate will fluctuate monthly based
on the leverage ratio.
|
Unitholders
|
General
Partner
|
||
Quarterly
Cash Distribution per Common Unit:
|
|||
Up
to and including $0.25 per Unit
|
98.00%
|
2.00%
|
|
First
Target - $0.251 per Unit up to and including $0.28 per
Unit
|
84.74%
|
15.26%
|
|
Second
Target - $0.281 per Unit up to and including $0.33 per
Unit
|
74.26%
|
25.74%
|
|
Over
Second Target - Cash distributions greater than $0.33 per
Unit
|
49.02%
|
50.98%
|
Distribution For
|
Date Paid
|
Per Unit Amount
|
Limited Partner Interests
Amount
|
General Partner Interest
Amount
|
General Partner Incentive Distribution
Amount
|
Total Amount
|
||||||||||||||||
Second
quarter 2007
|
August
2007
|
$ | 0.2300 | $ | 3,170 |
(1)
|
$ | 65 | $ | - | $ | 3,235 |
(1)
|
|||||||||
Third
quarter 2007
|
November
2007
|
$ | 0.2700 | $ | 7,646 | $ | 156 | $ | 90 | $ | 7,892 | |||||||||||
Fourth
quarter 2007
|
February
2008
|
$ | 0.2850 | $ | 10,903 | $ | 222 | $ | 245 | $ | 11,370 | |||||||||||
First
quarter 2008
|
May
2008
|
$ | 0.3000 | $ | 11,476 | $ | 234 | $ | 429 | $ | 12,139 | |||||||||||
Second
quarter 2008
|
August
2008
|
$ | 0.3150 | $ | 12,427 | $ | 254 | $ | 633 | $ | 13,314 | |||||||||||
Third
quarter 2008
|
November
2008(2)
|
$ | 0.3225 | $ | 12,723 | $ | 260 | $ | 728 | $ | 13,711 |
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Numerators
for basic and diluted net income per common unit:
|
||||||||||||||||
Net
income
|
$ | 10,763 | $ | 1,699 | $ | 19,736 | $ | 1,912 | ||||||||
Less: General
partner's incentive distribution paid
|
(633 | ) | - | (1,307 | ) | - | ||||||||||
Subtotal
|
10,130 | 1,699 | 18,429 | 1,912 | ||||||||||||
Less
general partner 2% ownership
|
(203 | ) | (34 | ) | (369 | ) | (38 | ) | ||||||||
Net
income available for common unitholders
|
$ | 9,927 | $ | 1,665 | $ | 18,060 | $ | 1,874 | ||||||||
Denominator
for basic per common unit:
|
||||||||||||||||
Common
Units
|
39,452 | 24,527 | 38,796 | 17,405 | ||||||||||||
Denominator
for diluted per common unit:
|
||||||||||||||||
Common
Units
|
39,452 | 24,527 | 38,796 | 17,405 | ||||||||||||
Phantom
Units
|
72 | - | 57 | - | ||||||||||||
39,524 | 24,527 | 38,853 | 17,405 | |||||||||||||
Basic
net income per common unit
|
$ | 0.25 | $ | 0.07 | $ | 0.47 | $ | 0.11 | ||||||||
Diluted
net income per common unit
|
$ | 0.25 | $ | 0.07 | $ | 0.46 | $ | 0.11 |
Pipeline
Transportation
|
Refinery
Services
|
Industrial
Gases (a)
|
Supply &
Logistics
|
Total
|
||||||||||||||||
Three
Months Ended September 30, 2008
|
||||||||||||||||||||
Segment
margin excluding depreciation and amortization (b)
|
$ | 10,642 | $ | 13,041 | $ | 3,505 | $ | 13,690 | $ | 40,878 | ||||||||||
Capital
expenditures
|
$ | 2,299 | $ | 992 | $ | - | $ | 107,075 | $ | 110,366 | ||||||||||
Maintenance
capital expenditures
|
$ | 261 | $ | 351 | $ | - | $ | 1,371 | $ | 1,983 | ||||||||||
Revenues:
|
||||||||||||||||||||
External
customers
|
$ | 11,836 | $ | 61,306 | $ | 4,792 | $ | 556,396 | $ | 634,330 | ||||||||||
Intersegment
(d)
|
2,589 | - | - | - | 2,589 | |||||||||||||||
Total
revenues of reportable segments
|
$ | 14,425 | $ | 61,306 | $ | 4,792 | $ | 556,396 | $ | 636,919 | ||||||||||
Three
Months Ended September 30, 2007
|
||||||||||||||||||||
Segment
margin excluding depreciation and amortization (b)
|
$ | 3,763 | $ | 8,545 | $ | 3,232 | $ | 4,960 | $ | 20,500 | ||||||||||
Capital
expenditures
|
$ | 1,812 | $ | 553 | $ | 552 | $ | 441 | $ | 3,358 | ||||||||||
Maintenance
capital expenditures
|
$ | 1,624 | $ | 269 | $ | - | $ | 255 | $ | 2,148 | ||||||||||
Revenues:
|
||||||||||||||||||||
External
customers
|
$ | 5,949 | $ | 25,349 | $ | 4,373 | $ | 317,653 | $ | 353,324 | ||||||||||
Intersegment
(d)
|
946 | - | - | - | 946 | |||||||||||||||
Total
revenues of reportable segments
|
$ | 6,895 | $ | 25,349 | $ | 4,373 | $ | 317,653 | $ | 354,270 |
Pipeline
Transportation
|
Refinery
Services
|
Industrial
Gases (a)
|
Supply &
Logistics
|
Total
|
||||||||||||||||
Nine
Months Ended September 30, 2008
|
||||||||||||||||||||
Segment
margin excluding depreciation and amortization (b)
|
$ | 22,113 | $ | 44,245 | $ | 9,324 | $ | 29,443 | $ | 105,125 | ||||||||||
Capital
expenditures
|
$ | 80,926 | $ | 2,700 | $ | 2,210 | $ | 111,575 | $ | 197,411 | ||||||||||
Maintenance
capital expenditures
|
$ | 463 | $ | 856 | $ | - | $ | 1,648 | $ | 2,967 | ||||||||||
Net
fixed and other long-term assets (c)
|
$ | 284,926 | $ | 441,110 | $ | 44,855 | $ | 249,387 | $ | 1,020,278 | ||||||||||
Revenues:
|
||||||||||||||||||||
External
customers
|
$ | 27,509 | $ | 160,945 | $ | 13,112 | $ | 1,555,991 | $ | 1,757,557 | ||||||||||
Intersegment
(d)
|
6,087 | - | - | - | 6,087 | |||||||||||||||
Total
revenues of reportable segments
|
$ | 33,596 | $ | 160,945 | $ | 13,112 | $ | 1,555,991 | $ | 1,763,644 | ||||||||||
Nine
Months Ended September 30, 2007
|
||||||||||||||||||||
Segment
margin excluding depreciation and amortization (b)
|
$ | 8,858 | $ | 8,545 | $ | 8,804 | $ | 7,986 | $ | 34,193 | ||||||||||
Capital
expenditures
|
$ | 2,365 | $ | 553 | $ | 552 | $ | 582 | $ | 4,052 | ||||||||||
Maintenance
capital expenditures
|
$ | 2,177 | $ | 269 | $ | - | $ | 396 | $ | 2,842 | ||||||||||
Net
fixed and other long-term assets (c)
|
$ | 31,558 | $ | 409,510 | $ | 48,188 | $ | 226,791 | $ | 716,047 | ||||||||||
Revenues:
|
||||||||||||||||||||
External
customers
|
$ | 16,956 | $ | 25,349 | $ | 11,816 | $ | 681,667 | $ | 735,788 | ||||||||||
Intersegment
(d)
|
3,062 | - | - | - | 3,062 | |||||||||||||||
Total
revenues of reportable segments
|
$ | 20,018 | 25,349 | $ | 11,816 | $ | 681,667 | $ | 738,850 |
|
a)
|
Industrial
gases includes our CO2
marketing operations and our equity income from our investments in T&P
Syngas and Sandhill.
|
|
b)
|
Segment
margin was calculated as revenues less cost of sales and operating
expenses, excluding depreciation and amortization. It includes
our share of the operating income of equity joint ventures. A
reconciliation of segment margin to income before income taxes and
minority interest for the periods presented is as
follows:
|
Three
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Segment
margin excluding depreciation and amortization
|
$ | 40,878 | $ | 20,500 | $ | 105,125 | $ | 34,193 | ||||||||
General
and administrative expenses
|
(9,239 | ) | (4,724 | ) | (26,929 | ) | (13,652 | ) | ||||||||
Depreciation
and amortization expense
|
(18,100 | ) | (8,372 | ) | (51,610 | ) | (12,346 | ) | ||||||||
Net
gain (loss) on disposal of surplus assets
|
58 | - | (36 | ) | 24 | |||||||||||
Interest
expense, net
|
(4,483 | ) | (4,701 | ) | (8,191 | ) | (5,248 | ) | ||||||||
Income
before income taxes and minority interest
|
$ | 9,114 | $ | 2,703 | $ | 18,359 | $ | 2,971 |
|
c)
|
Net
fixed and other long-term assets are the measure used by management in
evaluating performance on a segment basis. Current assets are
not allocated to segments as the amounts are shared by the segments or are
not meaningful in evaluating the success of the segment’s
operations.
|
|
d)
|
Intersegment
sales were conducted on an arm’s length
basis.
|
Nine
Months Ended September 30,
|
||||||||
2008
|
2007
|
|||||||
Truck
transportation services provided to Denbury
|
$ | 2,343 | $ | 1,287 | ||||
Pipeline
transportation services provided to Denbury
|
$ | 6,899 | $ | 3,878 | ||||
Payments
received under direct financing leases from Denbury
|
$ | 6,056 | $ | 890 | ||||
Pipeline
transportation income portion of direct financing lease fees with
Denbury
|
$ | 6,450 | $ | 479 | ||||
Pipeline
monitoring services provided to Denbury
|
$ | 80 | $ | 90 | ||||
CO2
transportation services provided by Denbury
|
$ | 4,120 | $ | 3,796 | ||||
Crude
oil purchases from Denbury
|
$ | - | $ | 69 | ||||
Directors'
fees paid to Denbury
|
$ | 147 | $ | 112 | ||||
Operations,
general and administrative services provided by our general
partner
|
$ | 38,669 | $ | 15,966 | ||||
Distributions
to our general partner on its limited partner units and general partner
interest
|
$ | 4,563 | $ | 1,111 | ||||
Sales
of CO2 to
Sandhill
|
$ | 2,217 | $ | 2,040 | ||||
Petroleum
products sales to Davison family businesses
|
$ | 1,089 | $ | - |
Stock
Appreciation Rights
|
Rights
|
Weighted
Average Exercise Price
|
Weighted
Average Contractual Remaining Term (Yrs)
|
Aggregate
Intrinsic Value
|
||||||||||||
Outstanding
at January 1, 2008
|
593,458 | $ | 15.45 | |||||||||||||
Granted
|
536,308 | $ | 20.83 | |||||||||||||
Exercised
|
(38,759 | ) | $ | 19.56 | ||||||||||||
Forfeited
or expired
|
(62,269 | ) | $ | 17.40 | ||||||||||||
Outstanding
at September 30, 2008
|
1,028,738 | $ | 18.14 | 8.2 | $ | 1,072 | ||||||||||
Exercisable
at September 30, 2008
|
307,760 | $ | 14.89 | 6.4 | $ | 758 |
Assumptions
Used for Fair Value of Rights
Granted
in 2008
|
|
Expected
life of rights (in years)
|
5.50
- 6.25
|
Risk-free
interest rate
|
2.97% -
3.11%
|
Expected
unit price volatility
|
36.02%
|
Expected
future distribution yield
|
6.00%
|
Non-vested Phantom Unit
Grants
|
Number of Units
|
Weighted Average Grant-Date Fair
Value
|
||||||
Non-vested
at January 1, 2008
|
39,362 | $ | 21.92 | |||||
Granted
|
32,166 | $ | 19.48 | |||||
Non-vested
at September 30, 2008
|
71,528 | $ | 20.82 |
|
Level
1:
|
Quoted
prices in active markets for identical, unrestricted assets or
liabilities.
|
|
Level
2:
|
Observable
market-based inputs or unobservable inputs that are corroborated by market
data.
|
|
Level
3:
|
Unobservable
inputs that are not corroborated by market data, which require us to
develop our own assumptions. These inputs include certain
pricing models, discounted cash flow methodologies and similar techniques
that use significant unobservable
inputs.
|
Carrying
Amount
|
Quoted
Prices in Active Markets for Identical Assets
(Level
1)
|
Significant
Other Observable Inputs
(Level
2)
|
Significant
Unobservable Inputs
(Level
3)
|
|||||||||||||
Crude
oil and petroleum products derivative instruments (based on quoted market
prices on NYMEX)
|
$ | (12,320 | ) | $ | (12,320 | ) | $ | - | $ | - | ||||||
Interest
rate swaps
|
$ | - | $ | - | $ | - | $ | (216 | ) |
|
·
|
Overview
|
|
·
|
Available
Cash before Reserves
|
|
·
|
Results
of Operations
|
|
·
|
Acquisitions
in 2008
|
|
·
|
Liquidity
and Capital Resources
|
|
·
|
Commitments
and Off-Balance Sheet Arrangements
|
|
·
|
New
Accounting Pronouncements
|
Three
Months
Ended
September
30, 2008
|
Nine
Months
Ended
September
30, 2008
|
|||||||
Net
income
|
$ | 10,763 | $ | 19,736 | ||||
Depreciation
and amortization
|
18,100 | 51,610 | ||||||
Cash
received from direct financing leases not included in
income
|
893 | 1,437 | ||||||
Cash
effects of sales of certain assets
|
147 | 573 | ||||||
Effects
of available cash generated by investments in joint ventures not included
in income
|
401 | 1,467 | ||||||
Cash
effects of stock appreciation rights plan
|
(113 | ) | (384 | ) | ||||
Loss
on asset disposals
|
(58 | ) | 36 | |||||
Non-cash
tax expense (benefits)
|
(2,462 | ) | (3,388 | ) | ||||
Other
non-cash credits
|
(2,136 | ) | (2,596 | ) | ||||
Maintenance
capital expenditures
|
(1,983 | ) | (2,967 | ) | ||||
Available
Cash before Reserves
|
$ | 23,552 | $ | 65,524 |
Three Months
Ended
September 30, 2008
|
Nine Months
Ended
September 30, 2008
|
|||||||
Cash
flows from operating activities
|
$ | 33,534 | $ | 56,230 | ||||
Adjustments
to reconcile operating cash flows to Available Cash:
|
||||||||
Maintenance
capital expenditures
|
(1,983 | ) | (2,967 | ) | ||||
Proceeds
from sales of certain assets
|
147 | 573 | ||||||
Amortization
of credit facility issuance fees
|
(427 | ) | (962 | ) | ||||
Effects
of available cash generated by investments in joint ventures not included
in cash flows from operating activities
|
35 | 447 | ||||||
Available
cash from NEJD pipeline not yet received and included in cash flows from
operating activities
|
- | 1,723 | ||||||
Net
effect of changes in operating accounts not included in calculation of
Available Cash
|
(7,754 | ) | 10,480 | |||||
Available
Cash before Reserves
|
$ | 23,552 | $ | 65,524 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
(in
thousands)
|
(in
thousands)
|
|||||||||||||||
Pipeline
transportation
|
$ | 10,642 | $ | 3,763 | $ | 22,113 | $ | 8,858 | ||||||||
Refinery
services
|
13,041 | 8,545 | 44,245 | 8,545 | ||||||||||||
Industrial
gases
|
3,505 | 3,232 | 9,324 | 8,804 | ||||||||||||
Supply
and logistics
|
13,690 | 4,960 | 29,443 | 7,986 | ||||||||||||
Total
segment margin
|
$ | 40,878 | $ | 20,500 | $ | 105,125 | $ | 34,193 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
(in
thousands)
|
(in
thousands)
|
|||||||||||||||
Crude
oil tariffs and revenues from direct financing leases of crude oil
pipelines
|
$ | 4,228 | $ | 3,912 | $ | 12,333 | $ | 10,907 | ||||||||
Sales
of crude oil pipeline loss allowance volumes
|
2,333 | 1,845 | 7,659 | 4,985 | ||||||||||||
CO2
tariffs and revenues from direct financing leases of CO2
pipelines
|
6,647 | 79 | 8,971 | 241 | ||||||||||||
Tank
rental reimbursements and other miscellaneous revenues
|
35 | 164 | 468 | 491 | ||||||||||||
Total
revenues from crude oil and CO2
tariffs, including revenues from direct financing leases
|
13,243 | 6,000 | 29,431 | 16,624 | ||||||||||||
Revenues
from natural gas tariffs and sales
|
1,182 | 895 | 4,165 | 3,394 | ||||||||||||
Natural
gas purchases
|
(1,136 | ) | (817 | ) | (3,990 | ) | (3,164 | ) | ||||||||
Pipeline
operating costs
|
(2,647 | ) | (2,315 | ) | (7,493 | ) | (7,996 | ) | ||||||||
Segment
margin
|
$ | 10,642 | $ | 3,763 | $ | 22,113 | $ | 8,858 | ||||||||
Barrels
per day on crude oil pipelines:
|
||||||||||||||||
Total
|
64,676 | 60,311 | 66,043 | 58,531 | ||||||||||||
Mississippi
System
|
25,232 | 22,818 | 24,323 | 20,938 | ||||||||||||
Jay
System
|
13,817 | 14,596 | 13,422 | 13,027 | ||||||||||||
Texas
System
|
25,627 | 22,897 | 28,298 | 24,566 |
Three
Months Ended
|
Nine
Months Ended
|
|||||||||||||||
March
31, 2008
|
June
30, 2008
|
September
30, 2008
|
September
30, 2008
|
|||||||||||||
NaHS
Sales
|
||||||||||||||||
Dry
Short Tons (DST)
|
41,742 | 46,655 | 38,319 | 126,716 | ||||||||||||
Net
Sales
|
$ | 27,530 | $ | 37,664 | $ | 37,515 | $ | 102,709 | ||||||||
Contribution
Margin per DST
|
$ | 260 | $ | 342 | $ | 289 | $ | 299 |
Sales
Mcf per Day
|
||||
Third
Quarter 2007
|
85,705 | |||
Fourth
Quarter 2007
|
80,667 | |||
First
Quarter 2008
|
73,062 | |||
Second
Quarter 2008
|
79,968 | |||
Third
Quarter 2008
|
83,816 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
(in
thousands)
|
(in
thousands)
|
|||||||||||||||
Revenues
from CO2
sales
|
$ | 4,792 | $ | 4,373 | $ | 13,112 | $ | 11,816 | ||||||||
CO2
transportation and other costs
|
(1,503 | ) | (1,502 | ) | (4,166 | ) | (3,927 | ) | ||||||||
Equity
in (losses) earnings of joint ventures
|
216 | 361 | 378 | 915 | ||||||||||||
Segment
margin
|
$ | 3,505 | $ | 3,232 | $ | 9,324 | $ | 8,804 | ||||||||
Volumes
per day:
|
||||||||||||||||
CO2
sales - Mcf
|
83,816 | 85,705 | 78,967 | 76,035 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
(in
thousands)
|
(in
thousands)
|
|||||||||||||||
Supply
and logistics revenue
|
$ | 556,396 | $ | 317,653 | $ | 1,555,991 | $ | 691,220 | ||||||||
Crude
oil and products costs
|
(521,779 | ) | (304,129 | ) | (1,471,254 | ) | (665,939 | ) | ||||||||
Operating
costs
|
(20,927 | ) | (8,564 | ) | (55,294 | ) | (17,295 | ) | ||||||||
Segment
margin
|
$ | 13,690 | $ | 4,960 | $ | 29,443 | $ | 7,986 |
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
(in
thousands)
|
(in
thousands)
|
|||||||||||||||
Expenses
excluding bonus expense and effects of stock appreciation rights
plan
|
$ | 8,422 | $ | 5,212 | $ | 24,151 | $ | 10,401 | ||||||||
Bonus
plan expense
|
1,416 | 315 | 3,863 | 1,194 | ||||||||||||
Stock
appreciation rights plan (credit) expense
|
(599 | ) | (803 | ) | (1,085 | ) | 2,057 | |||||||||
Total
general and administrative expenses
|
$ | 9,239 | $ | 4,724 | $ | 26,929 | $ | 13,652 |
|
-
|
We
acquired the Davison business at the end of July in 2007. As a
result, the third quarter of 2007 only included two months of expense
related to the administrative personnel at the Davison
locations. This difference resulted in an increase in 2008
third quarter expense as compared to 2007 of $1.3 million, however average
monthly expense was consistent between the two
periods.
|
|
-
|
We
acquired DG Marine in July 2008. The general and administrative
expense related to this operation was $0.5 million in the third quarter of
2008.
|
|
-
|
Professional
services fees increased $0.9 million between the two periods as a result
of more complex legal, financial accounting and tax matters to be
addressed.
|
|
-
|
Bonus
plan expense increase $1.0 million between the two quarters as a result of
the additional personnel covered by the plan and improved performance of
the partnership.
|
|
-
|
The
credit to expense in the third quarter related to our stock appreciation
rights plan was $0.2 million less in the 2008
period.
|
|
-
|
The
remaining $0.6 million increase in expense was related to several items
including increased personnel costs at the corporate offices, increased
travel costs and costs related to moving to new corporate
offices.
|
Three Months Ended
September 30,
|
Nine Months Ended
September 30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
(in
thousands)
|
(in
thousands)
|
|||||||||||||||
Interest
expense, including commitment fees
|
$ | 3,516 | $ | 4,728 | $ | 7,229 | $ | 5,226 | ||||||||
Capitalized
interest
|
(47 | ) | (27 | ) | (148 | ) | (33 | ) | ||||||||
Amortization
of facility fees
|
167 | 141 | 497 | 274 | ||||||||||||
Interest
expense, facility fees and commitment fees - DG Marine
|
965 | - | 965 | - | ||||||||||||
Interest
income
|
(118 | ) | (141 | ) | (352 | ) | (219 | ) | ||||||||
Net
interest expense
|
$ | 4,483 | $ | 4,701 | $ | 8,191 | $ | 5,248 |
Nine
Months Ended September 30,
|
||||||||
2008
|
2007
|
|||||||
(in
thousands)
|
||||||||
Capital
expenditures for asset purchases:
|
||||||||
DG
Marine acquisition
|
91,096 | |||||||
Free
State Pipeline acquisition
|
75,000 | - | ||||||
Total
asset purchases
|
166,096 | - | ||||||
Capital
expenditures for property, plant and equipment:
|
||||||||
Maintenance
capital expenditures:
|
||||||||
Pipeline
transportation assets
|
463 | 2,177 | ||||||
Supply
and logistics assets
|
571 | 348 | ||||||
Refinery
services assets
|
856 | 269 | ||||||
Administrative
and other assets
|
1,077 | 48 | ||||||
Total
maintenance capital expenditures
|
2,967 | 2,842 | ||||||
Growth
capital expenditures:
|
||||||||
Pipeline
transportation assets
|
5,463 | 188 | ||||||
Supply
and logistics assets
|
18,831 | 186 | ||||||
Refinery
services assets
|
1,844 | 284 | ||||||
Total
growth capital expenditures
|
26,138 | 658 | ||||||
Total
|
29,105 | 3,500 | ||||||
Capital
expenditures attributable to unconsolidated affiliates:
|
||||||||
Faustina
project
|
2,210 | 552 | ||||||
Total
|
2,210 | 552 | ||||||
Total
capital expenditures
|
$ | 197,411 | $ | 4,052 |
Distribution For
|
Date Paid
|
Per
Unit Amount
|
Limited
Partner Interests Amount
|
General
Partner Interest Amount
|
General
Partner Incentive Distribution Amount
|
Total
Amount
|
|||||||||||||||
Second
quarter 2007
|
August
2007
|
$ | 0.2300 | $ | 3,170 | (1) | $ | 65 | $ | - | $ | 3,235 | (1) | ||||||||
Third
quarter 2007
|
November
2007
|
$ | 0.2700 | $ | 7,646 | $ | 156 | $ | 90 | $ | 7,892 | ||||||||||
Fourth
quarter 2007
|
February
2008
|
$ | 0.2850 | $ | 10,903 | $ | 222 | $ | 245 | $ | 11,370 | ||||||||||
First
quarter 2008
|
May
2008
|
$ | 0.3000 | $ | 11,476 | $ | 234 | $ | 429 | $ | 12,139 | ||||||||||
Second
quarter 2008
|
August
2008
|
$ | 0.3150 | $ | 12,427 | $ | 254 | $ | 633 | $ | 13,314 | ||||||||||
Third
quarter 2008
|
November
2008(2)
|
$ | 0.3225 | $ | 12,723 | $ | 260 | $ | 728 | $ | 13,711 |
Payments
Due by Period
|
||||||||||||||||||||
Commercial
Cash Obligations and Commitments
|
Less
than one year
|
1 -
3 years
|
3 -
5 Years
|
More
than 5 years
|
Total
|
|||||||||||||||
Contractual
Obligations:
|
||||||||||||||||||||
Long-term
debt (1)
|
$ | 48,200 | $ | - | $ | 343,200 | $ | - | $ | 391,400 | ||||||||||
Estimated
interest payable on long-term debt (2)
|
21,164 | 42,475 | 2,327 | - | 65,966 | |||||||||||||||
Operating
lease obligations
|
5,725 | 8,217 | 4,618 | 11,061 | 29,621 | |||||||||||||||
Capital
expansion projects (3)
|
17,727 | - | - | - | 17,727 | |||||||||||||||
Unconditional
purchase obligations (4)
|
137,421 | 32,800 | 2,571 | - | 172,792 | |||||||||||||||
Remaining
purchase obligation to Grifco(5)
|
6,000 | 6,000 | 12,000 | |||||||||||||||||
Other
Cash Commitments:
|
||||||||||||||||||||
Asset
retirement obligations (6)
|
100 | 3,656 | 3,756 | |||||||||||||||||
FIN
48 tax liabilities (7)
|
1,680 | - | - | - | 1,680 | |||||||||||||||
Total
|
$ | 238,017 | $ | 89,492 | $ | 352,716 | $ | 14,717 | $ | 694,942 |
|
(1)
|
Our
credit facility allows us to repay and re-borrow funds at any time through
the maturity date in 2011. DG Marine’s credit facility is reflected in the
Less than one year column due to the covenant non-compliance discussed in
Note 9 to the Unaudited Consolidated Financial
Statements.
|
|
(2)
|
Interest
on portions of our long-term debt is at market-based rates. A portion of
the DG Marine debt has been hedged such that rates are fixed through July
2011. The amount shown for interest payments represents the
amount that would be paid if the debt outstanding at September 30, 2008
remained outstanding through the final maturity date of the credit
facility, and interest rates remained at the September 30, 2008 market
levels through November 15, 2011 for debt with floating
rates. Interest rates that have been fixed are applied to that
portion of the debt through the maturity of the interest rate
swaps.
|
|
(3)
|
We
have signed commitments to expand our Jay pipeline system and to construct
four new barges. See “Capital Expenditures”
above.
|
|
(4)
|
Unconditional
purchase obligations include agreements to purchase goods and services
that are enforceable and legally binding and specify all significant
terms. Contracts to purchase crude oil and petroleum products
are generally at market-based prices. For purposes of this
table, estimated volumes and market prices at September 30, 2008, were
used to value those obligations. The actual physical volumes
and settlement prices may vary from the assumptions used in the
table. Uncertainties involved in these estimates include levels
of production at the wellhead, changes in market prices and other
conditions beyond our control.
|
|
(5)
|
DG
Marine will pay Grifco $12 million after delivery of new barges and
boats. See Note 3 to the Unaudited Consolidated Financial
Statements.
|
|
(6)
|
Represents
the estimated future asset retirement obligations on an undiscounted
basis. The present discounted asset retirement obligation is
$1.2 million, as determined under FIN 47 and SFAS
143.
|
|
(7)
|
The
estimated FIN 48 tax liabilities will be settled as a result of expiring
statutes or audit activity. The timing of any particular
settlement will depend on the length of the tax audit and related appeals
process, if any, or an expiration of statute. If a liability is
settled due to a stature expiring or a favorable audit result, the
settlement of the FIN 48 tax liability would not result in a cash
payment.
|
|
·
|
demand for, the supply of,
changes in forecast data for, and price trends related to crude oil,
liquid petroleum, natural gas and natural gas liquids or “NGLs,” sodium
hydrosulfide and caustic soda in the United States, all of which may be
affected by economic activity, capital expenditures by energy producers,
weather, alternative energy sources, international events, conservation
and technological advances;
|
|
·
|
throughput levels and
rates;
|
|
·
|
changes in, or challenges to,
our tariff rates;
|
|
·
|
our ability to successfully
identify and consummate strategic acquisitions, make cost saving changes
in operations and integrate acquired assets or businesses into our
existing operations;
|
|
·
|
service interruptions in our
liquids transportation systems, natural gas transportation systems or
natural gas gathering and processing
operations;
|
|
·
|
shutdowns or cutbacks at
refineries, petrochemical plants, utilities or other businesses for which
we transport crude oil, natural gas, or other products or to whom we sell
such products;
|
|
·
|
changes in laws or regulations
to which we are subject;
|
|
·
|
our inability to borrow or
otherwise access funds needed for operations, expansions, or capital
expenditures as a result of existing debt agreements that contain
restrictive financial
covenants;
|
|
·
|
loss of key
personnel;
|
|
·
|
the effects of competition, in
particular, by other pipeline
systems;
|
|
·
|
hazards and operating risks
that may not be covered fully by
insurance;
|
|
·
|
risks and changes in the barge
transportation industry;
|
|
·
|
the condition of the capital
markets in the United
States;
|
|
·
|
loss of key
customers;
|
|
·
|
the political and economic
stability of the oil producing nations of the world;
and
|
|
·
|
general economic conditions,
including rates of inflation and interest
rates.
|
Sell (Short)
Contracts
|
Buy (Long)
Contracts
|
|||||||
Futures
Contracts:
|
||||||||
Crude
Oil:
|
||||||||
Contract
volumes (1,000 bbls)
|
140 | 40 | ||||||
Weighted
average price per bbl
|
$ | 103.89 | $ | 102.06 | ||||
Contract
value (in thousands)
|
$ | 14,545 | 4,083 | |||||
Mark-to-market
change (in thousands)
|
(455 | ) | (57 | ) | ||||
Market
settlement value (in thousands)
|
$ | 14,090 | $ | 4,026 | ||||
Heating
Oil:
|
||||||||
Contract
volumes (1,000 bbls)
|
20 | - | ||||||
Weighted
average price per gal
|
$ | 3.01 | $ | - | ||||
Contract
value (in thousands)
|
$ | 2,531 | - | |||||
Mark-to-market
change (in thousands)
|
(99 | ) | - | |||||
Market
settlement value (in thousands)
|
$ | 2,432 | $ | - | ||||
Natural
Gas:
|
||||||||
Contract
volumes (10,000 mmBtus)
|
5 | |||||||
Weighted
average price per mmBtu
|
$ | - | $ | 7.86 | ||||
Contract
value (in thousands)
|
$ | - | 393 | |||||
Mark-to-market
change (in thousands)
|
- | (21 | ) | |||||
Market
settlement value (in thousands)
|
$ | - | $ | 372 | ||||
NYMEX
Option Contracts:
|
||||||||
Crude
Oil- Written Calls
|
||||||||
Contract
volumes (1,000 bbls)
|
10 | |||||||
Weighted
average premium received
|
$ | 2.72 | ||||||
Contract
value (in thousands)
|
$ | 27 | ||||||
Mark-to-market
change (in thousands)
|
(7 | ) | ||||||
Market
settlement value (in thousands)
|
$ | 20 | ||||||
Heating
Oil-Written Calls
|
||||||||
Contract
volumes (1,000 bbls)
|
50 | |||||||
Weighted
average premium received
|
$ | 10.14 | ||||||
Contract
value (in thousands)
|
$ | 213 | ||||||
Mark-to-market
change (in thousands)
|
(37 | ) | ||||||
Market
settlement value (in thousands)
|
$ | 176 |
|
-
|
being
subject to the Jones Act and other federal laws that restrict U.S.
maritime transportation to vessels built and registered in the U.S. and
owned and manned by U.S. citizens, with any failure to comply with such
laws potentially resulting in severe penalties, including permanent loss
of U.S. coastwise trading rights, fines or forfeiture of
vessels;
|
|
-
|
relying
on a limited number of customers;
|
|
-
|
having
primarily short-term charters which DG Marine may be unable to renew as
they expire; and
|
|
-
|
competing
against businesses with greater financial resources and larger operating
crews than DG Marine.
|
|
(a)
|
Exhibits.
|
3.1
|
Certificate
of Limited Partnership of Genesis Energy, L.P. (“Genesis”) (incorporated
by reference to Exhibit 3.1 to Registration Statement, File No.
333-11545)
|
|
3.2
|
Fourth
Amended and Restated Agreement of Limited Partnership of Genesis
(incorporated by reference to Exhibit 4.1 to Form 8-K dated June 15,
2005)
|
|
3.3
|
Amendment
No. 1 to Fourth Amended and Restated Agreement of Limited Partnership of
Genesis (incorporated by reference to Exhibit 3.3 to Form 10-K for the
year ended December 31, 2007.)
|
|
3.4
|
Certificate
of Limited Partnership of Genesis Crude Oil, L.P. (“the Operating
Partnership”) (incorporated by reference to Exhibit 3.3 to Form 10-K for
the year ended December 31, 1996)
|
|
3.5
|
Fourth
Amended and Restated Agreement of Limited Partnership of the Operating
Partnership (incorporated by reference to Exhibit 4.2 to Form 8-K dated
June 15, 2005)
|
|
3.6
|
Certificate
of Incorporation of Genesis Energy, Inc. (incorporated by reference to
Exhibit 3.6 to Form 10-K for the year ended December 31,
2007.)
|
|
3.7
|
Certificate
of Amendment of Certificate of Incorporation of Genesis Energy, Inc.
(incorporated by reference to Exhibit 3.7 to Form 10-K for the year ended
December 31, 2007.)
|
|
3.8
|
Bylaws
of Genesis Energy, Inc. (incorporated by reference to Exhibit 3.8 to Form
10-K for the year ended December 31, 2007.)
|
|
4.1
|
Form
of Unit Certificate of Genesis Energy, L.P. (incorporated by reference to
Exhibit 4.1 to Form 10-K for the year ended December 31,
2007.)
|
|
10.1
|
Pipeline
Financing Lease Agreement by and between Genesis NEJD Pipeline, LLC, as
Lessor and Denbury Onshore, LLC, as Lessee for the North East Jackson Dome
Pipeline dated May 30, 2008 (incorporated by reference to Exhibit 10.1 to
Form 8-K dated June 5, 2008.)
|
|
10.2
|
Purchase
and Sale Agreement between Denbury Onshore, LLC and Genesis Free State
Pipeline, LLC dated May 30, 2008 (incorporated by reference to Exhibit
10.2 to Form 8-K dated June 5, 2008.)
|
|
10.3
|
Transportation
Services Agreement between Genesis Free State Pipeline, LLC and Denbury
Onshore, LLC dated May 30, 2008 (incorporated by reference to Exhibit 10.3
to Form 8-K dated June 5, 2008.)
|
|
10.4
|
First
Amended and Restated Credit Agreement dated as of May 30, 2008 among
Genesis Crude Oil, L.P., Genesis Energy, L.P., the Lenders Party Hereto,
Fortis Capital Corp., and Deutsche Bank Securities Inc. (incorporated by
reference to Exhibit 10.4 to Form 8-K dated June 5,
2008.)
|
10.5
|
Contribution
and Sale Agreement by and Among Grifco Transportation, Ltd., Grifco
Transportation Two, Ltd., and Shore Thing, Ltd. and Genesis Marine
Investments, LLC and Genesis Energy, L.P. and TD Marine, LLC (incorporated
by reference to Exhibit 10.1 to Form 8-K dated July 22,
2008)
|
|
10.6
|
Omnibus
Agreement dated as of June 11, 2008 by and among TD Marine, LLC, James E.
Davison, Steven K. Davison, Todd A Davison and Genesis Energy, L.P.
(incorporated by reference to Exhibit 10.2 to Form 8-K dated July 22,
2008)
|
|
10.7
|
First
Amendment to First Amended and Restated Credit Agreement dated as of July
18, 2008, among Genesis Crude Oil, L.P., Genesis Energy, L.P. and the
lenders party thereto, Fortis Capital Corp. and Deutsche Bank Securities
Inc. (incorporated by reference to Exhibit 10.3 to Form 8-K dated July 22,
2008)
|
|
*
|
Certification
by Chief Executive Officer Pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934.
|
|
*
|
Certification
by Chief Financial Officer Pursuant to Rule 13a-14(a) of the Securities
Exchange Act of 1934.
|
|
*
|
Certification
by Chief Executive Officer and Chief Financial Officer Pursuant to Rule
13a-14(b) of the Securities Exchange Act of
1934.
|
GENESIS
ENERGY, L.P.
(A
Delaware Limited Partnership)
|
|||
By:
|
GENESIS
ENERGY, INC., as General Partner
|
||
Date: November
10 2008
|
By:
|
/s/ Robert V.
Deere
|
|
Robert V. Deere
Chief Financial
Officer
|