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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): November 30, 1998
COMMISSION FILE NO. 1-10403
TEPPCO PARTNERS, L.P.
(Exact name of Registrant as specified in its charter)
DELAWARE 76-0291058
(State of Incorporation (I.R.S. Employer
or Organization) Identification Number)
2929 ALLEN PARKWAY
P.O. BOX 2521
HOUSTON, TEXAS 77252-2521
(Address of principal executive offices, including zip code)
(713) 759-3636
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On November 30, 1998, TEPPCO Partners, L.P. (the "Partnership")
announced the completion of its acquisition of substantially all of the business
and assets of Duke Energy Transport and Trading Company ("DETTCO") from Duke
Energy Corporation ("Duke Energy"). In consideration for such assets, Duke
Energy received 3,916,547 Class B Limited Partnership Units ("Class B Units").
The Class B Units are substantially identical to the 29,000,000 Limited Partner
Units currently outstanding, but they will not be listed on the New York Stock
Exchange. The Class B Units will be convertible into Limited Partner Units upon
approval by the Limited Partner Unitholders. If conversion is not approved
within approximately sixteen months, the holder of the Class B Units will have
the right to sell them to the Partnership at 95.5% of the market price of the
Limited Partner Units.
The terms of the acquisition were negotiated between Texas Eastern
Products Pipeline Company (the "General Partner"), as general partner of the
Partnership, and Duke Energy. The General Partner is an indirect wholly-owned
subsidiary of Duke Energy. Such terms were approved by a special committee of
the General Partner's Board of Directors comprised of persons who are not
employees of Duke Energy or the General Partner.
DETTCO, based in Oklahoma City, gathers, stores, transports and markets
crude oil principally in Oklahoma and Texas; operates two trunkline natural gas
liquids ("NGL") pipelines in South Texas; and distributes lube oil to industrial
and commercial accounts through its wholly-owned subsidiary, Lubrication
Services, Inc. DETTCO's crude oil gathering, transportation and storage assets
include two major systems and various smaller systems. The Red River System,
located on the Texas-Oklahoma border, is the larger system, with 960 miles of
pipeline and 750,000 barrels of storage. The majority of crude oil is delivered
to Cushing, Oklahoma via connecting pipelines, or to two local refineries. The
South Texas System, located west of Houston, consists of 550 miles of pipeline
and 550,000 barrels of storage. The majority of the crude oil on this system is
delivered on a tariff basis to the Houston refining complex. Other crude oil
assets, located primarily in Texas and Louisiana, consist of 310 miles of
pipeline and 240,000 barrels of storage. The NGL pipelines are located along the
Texas Gulf Coast. The Dean NGL Pipeline consists of 338 miles of pipeline
originating in South Texas and terminating at Mont Belvieu, Texas, and has a
capacity of 20,000 barrels per day. The Dean NGL Pipeline is currently supported
by a 17,000 barrel per day take-or-pay commitment through 2002. The Wilcox NGL
Pipeline is 90 miles long, has a capacity of 5,000 barrels per day and currently
transports third party volumes at contract rates. The Partnership intends to
continue the business of DETTCO using the acquired assets.
ITEM 7. STATEMENTS AND EXHIBITS
(c) EXHIBITS:
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
99.1 Press release of TEPPCO Partners, L.P., dated
November 30, 1998.
</TABLE>
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TEPPCO Partners, L.P.
(Registrant)
By: Texas Eastern Products Pipeline Company,
General Partner
/s/ CHARLES H. LEONARD
--------------------------------------------
Charles H. Leonard
Sr. Vice President, Chief Financial Officer
and Treasurer
Date: December 11, 1998
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Description
------ -----------
<S> <C>
99.1 Press release of TEPPCO Partners, L.P., dated
November 30, 1998.
</TABLE>
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Release: November 30, 1998
Contact: Media Relations -- Eric W. Thode, (713) 759-3635
Investor Relations -- Brenda J. Peters, (713) 759-3954
TEPPCO PARTNERS, L.P. ACQUIRES
DUKE ENERGY TRANSPORT AND TRADING COMPANY
HOUSTON, November 30, 1998 -- TEPPCO Partners, L.P. (NYSE:TPP) today
announced the completion of its acquisition of the business of Duke Energy
Transport and Trading Company (DETTCO) from Duke Energy Corporation (Duke).
DETTCO, based in Oklahoma City, gathers, stores, transports and markets
crude oil principally in Texas and Oklahoma, operates two trunkline natural gas
liquids (NGL) pipelines in South Texas and distributes lube oil to industrial
and commercial accounts through Lubrication Services, Inc. (LSI). The crude
gathering and transportation segment has historically accounted for about 71% of
DETTCO's operating margin. The NGL segment's contribution has been about 24%,
with LSI accounting for the remaining 5%. Unaudited margin and volume data for
DETTCO for the years ended December 31, 1995 through 1997 were as follows:
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<TABLE>
<CAPTION>
December 31,
------------
1995 1996 1997
-------- -------- --------
(unaudited)
<S> <C> <C> <C>
Margin and Revenue ($M)
- ------------------
Crude pipeline transportation revenue $ 12,236 $ 12,314 $ 14,645
Crude oil marketing margin 5,416 7,624 5,975
NGL transportation revenue 7,014 6,751 6,754
LSI margin 1,431 1,530 1,523
Other 217 93 87
-------- -------- --------
Total 26,314 28,312 28,984
Operating Expense 12,916 14,673 13,978
-------- -------- --------
EBITD 13,398 13,639 15,006
Depreciation 2,842 3,175 3,724
Other 20 1 (11)
-------- -------- --------
EBIT $ 10,536 $ 10,463 $ 11,293
System Receipts (BPD):
- ----------------------
Crude Oil 74,248 67,687 70,967
NGLs 19,965 19,347 16,902
</TABLE>
"TEPPCO is pleased to close on this acquisition," said William L.
Thacker, chairman, president and chief executive officer. "These assets provide
a first step into the crude oil gathering, transportation, storage and marketing
business with the necessary infrastructure and personnel to grow this segment of
the energy industry. We expect the acquisition to be accretive to TEPPCO's
income and cash flow beginning in 1999. DETTCO's philosophy has been to create
solid margins by closely linking the purchase and sale of crude oil, and
utilizing their significant storage and pipeline asset base. This approach
greatly reduces commodity risk, and has resulted in DETTCO being one of the most
consistent and successful companies in the crude gathering business for a number
of years. Steady performance in both up and down crude markets, while
maintaining one of the highest per barrel margins in the business has been a
DETTCO trademark."
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TEPPCO issued approximately 3.9 million Class B limited partnership
units to Duke Energy in exchange for the DETTCO business. The units are
substantially identical to TEPPCO's outstanding common units, but they will not
be listed on the New York Stock Exchange. The Class B limited partner units will
be convertible into common units, upon approval by TEPPCO's unitholders. If
conversion is not approved within approximately 16 months, Duke Energy will have
the right to sell the Class B limited partner units to TEPPCO at 95.5% of the
then market price of the common units.
The crude oil and NGL activities of DETTCO will be conducted under the
name TEPPCO Crude Oil, LLC (TCO), which is a subsidiary of TCTM, L.P. and an
indirect subsidiary of TEPPCO Partners, L.P.
TEPPCO Partners, L.P. is a publicly owned master limited partnership
which conducts business through two operating partnerships. TE Products Pipeline
Company, Limited Partnership is one of the largest common carrier pipelines of
refined petroleum products and liquefied petroleum gases in the United States.
TCTM, L.P. is a crude oil gathering, transportation, storage and marketing
company operating primarily in Texas and Oklahoma.
Except for the historical information contained herein, the matters
discussed in this news release are forward looking statements that involve
certain risks and uncertainties. These risks and uncertainties include, among
other things, market conditions, governmental regulations and other factors
discussed in TEPPCO's filings with the Securities and Exchange Commission.
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