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UNITED STATES
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): December 21, 1998
LAKEHEAD PIPE LINE PARTNERS, L.P.
(Exact name of registrant as specified in its charter)
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<S><C>
DELAWARE 1-10934 39-1715850
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
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LAKE SUPERIOR PLACE, 21 WEST SUPERIOR STREET, DULUTH, MN 55802-2067
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (218) 725-0100
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ITEM 5. OTHER EVENTS
On December 21, 1998, Lakehead Pipe Line Partners, L.P., issued a press release
announcing a tariff filing by its operating partnership for recent capacity
expansion programs and net income expectations for 1999. This press release,
which is filed as Exhibit 99.1 hereto, is incorporated by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(C) Exhibits:
Exhibit No. Description
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99.1 Press release, dated December 21, 1998.
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 thereunto duly authorized.
LAKEHEAD PIPE LINE PARTNERS, L.P.
(Registrant)
By: Lakehead Pipe Line Company, Inc.
as General Partner
/s/ Mark Maki
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M. A. Maki
Chief Accountant
(Principal Financial and Accounting Officer)
Date: December 23, 1998
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EXHIBIT 99.1
News
Release
For Immediate Release
December 21, 1998
LAKEHEAD PIPE LINE PARTNERS, L.P. ANNOUNCES TARIFF FILING
(Duluth, Minnesota, December 21, 1998) Lakehead Pipe Line Partners, L.P. (NYSE -
LHP) today filed new tariffs with the Federal Energy Regulatory Commission
("FERC"). The tariff filing implements new tariff rate surcharges, effective
January 1, 1999, permitting the Partnership to earn a return on and recover the
costs of its $450 million System Expansion Program II ("SEP II").
The tariff filing was made pursuant to a recent FERC order that approved a
Settlement Agreement between the Partnership and the Canadian Association of
Petroleum Producers ("CAPP"), a trade association that represents most of the
Partnership's customers. The Settlement Agreement establishes tariff principles
and guidelines for SEP II and the Partnership's Terrace expansion project. The
Partnership anticipates filing a tariff rate surcharge for Terrace later in the
first quarter of 1999.
The SEP II tariff rate surcharge is being implemented to coincide with the
anticipated completion of the SEP II expansion in late December 1998. All
rights-of-way for the new pipeline have been obtained and the last significant
construction activity is nearing completion in Illinois. Filling segments of the
new pipeline with crude oil began on December 17 and is anticipated to be
ongoing through January 1999.
In a related matter, representatives of the Partnership and CAPP concluded
informal discussions concerning the supply of western Canadian crude oil and
natural gas liquids available for delivery during 1999. Based on these
discussions, and as a result of the decline in crude oil prices, it is
anticipated that deliveries on the Partnership's pipeline system could be
approximately 50,000 to 75,000 barrels per day (on average) less than
anticipated 1998 delivery levels of approximately 1,560,000 barrels per day. At
the forecast level of utilization, the Partnership will earn a 7.5% nominal rate
of return on its SEP II equity investment during 1999, the minimum permitted in
the Settlement Agreement. When fully utilized, the nominal rate of return on
equity is the lesser of 15.0% or the National Energy Board of Canada
multi-pipeline rate of return on equity plus 3.0% (currently 12.58%).
The collective impact of reduced deliveries and decreased rate of return on SEP
II is anticipated to result in net income for 1999 of approximately $80 to $90
million. This range of net income is approximately the same as the anticipated
net income for the twelve months ended December 31, 1998. Based on current
projections, the Partnership anticipates generating more than sufficient cash
from operating activities to continue its current level of cash distribution
through 1999.
Despite the recent downturn in crude oil prices, the Partnership's outlook
regarding future growth prospects continues to be positive. The Partnership
believes that recent announcements by major Canadian producers affirming oil
sands development and other
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long-term expansion projects is encouraging and illustrative of long-term supply
growth of crude oil from the western Canadian sedimentary basin.
This press release includes forward-looking statements within the meaning of the
Securities Litigation Reform Act. Such statements reflect the Partnership's
current views with respect to future events and are subject to the risks,
uncertainties and assumptions disclosed herein and in the Partnership's Form
10-K, as amended. Such statements are subject to various risks, including the
availability of western Canadian crude oil and regulatory uncertainties as well
as other risks. The availability of western Canadian crude oil is sensitive to
the long-term outlook for crude oil prices. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, believed, expected,
estimated, forecasted, or projected. Except as required by applicable securities
laws, the Partnership does not intend to update these forward-looking statements
and information. For additional discussion of such risks, uncertainties and
assumptions, see the Partnership's Annual Report on Form 10-K, as amended.
Lakehead Pipe Line Partners, L.P. owns the United States portion of the world's
longest liquid petroleum pipeline. Lakehead Pipe Line Company, Inc., an indirect
wholly-owned subsidiary of Enbridge Inc. of Calgary, Alberta, holds an
approximate 16.6% interest in the Partnership and serves as General Partner. The
Partnership's Class A Common Units are traded on the New York Stock Exchange
under the symbol "LHP." Enbridge Inc. common shares are traded on the Toronto
and Montreal stock exchanges under the symbol "ENB" and on the NASDAQ under the
symbol "ENBRF."
For more information contact:
Ron Karlen, Investor Relations
Telephone: (800) 525-3999 (218) 725-0570
Facsimile: (218) 725-0169
Internet: E-mail - [email protected]
Home Page - http://www.lakehead.com
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