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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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): JULY 15, 1999
LAKEHEAD PIPE LINE PARTNERS, L.P.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 1-10934 39-1715850
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(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
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LAKE SUPERIOR PLACE, 21 WEST SUPERIOR STREET, DULUTH, MN 55802-2057
(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 July 15, 1999, Lakehead Pipe Line Partners, L.P. issued a press release
(the "Press Release") announcing its financial results for the quarter ended
June 30, 1999. The Press Release is filed as Exhibit 99.1 to this Current
Report on Form 8-K, and the contents of such Exhibit are incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) EXHIBITS
Exhibit 99.1 -- Press Release, dated July 15, 1999, of
Lakehead Pipe Line Partners, L.P.
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SIGNATURES
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.
LAKEHEAD PIPE LINE PARTNERS, L.P.
Date: July 20, 1999
By: /s/ MARK MAKI
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Mark Maki
Chief Accountant
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EXHIBIT INDEX
Exhibit No.
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Exhibit 99.1 -- Press Release, dated July 15, 1999, of
Lakehead Pipe Line Partners, L.P.
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EXHIBIT 99.1
Thursday July 15, 2:52 p.m. Eastern Time
Company Press Release
SOURCE: Lakehead Pipe Line Partners, L.P.
LAKEHEAD PIPE LINE PARTNERS, L.P. DECLARES CASH DISTRIBUTION AND REPORTS SECOND
QUARTER FINANCIAL RESULTS
DULUTH, Minn., July 15/PRNewswire/-- Lakehead Pipe Line Partners, L.P.
(NYSE: LHP - news) today declared a cash distribution of $0.875 per unit
payable August 13, 1999, to unitholders of record on July 30, 1999. For the six
months ended June 30, 1999, the Partnership reported net income of $44.2
million or $1.46 per unit, compared to $47.1 million, or $1.65 per unit for the
same period in 1998. Net income for the second quarter was $22.5 million, or
$0.71 per unit, compared with net income of $24.2 million, or $0.85 per unit,
for the comparable quarter last year.
The decline in the first half and quarterly results reflects lower
throughput and higher interest expense which were partially offset by lower
power and operating and administrative costs. First half deliveries averaged
1.386 million barrels per day compared to 1.598 million barrels per day for the
same period of 1998. The reduction stems primarily from low crude oil prices in
1998 and early 1999 that continue to impact the supply of crude oil available
to the Partnership. Second quarter deliveries averaged approximately 1.376
million barrels per day compared with 1.608 million barrels per day for the
second quarter of 1998, a record quarter for the Partnership. Second quarter
1999 deliveries were also affected by scheduled and unscheduled maintenance
activities at a number of refinery sites served by the Partnership.
Commenting on the Partnership's outlook, Mr. Stephen J. Wuori,
President of Lakehead Pipe Line Company, Inc., the General Partner said,
"Recent emergence from the low crude oil price environment, which prevailed in
late 1998 and early 1999, is very encouraging. In fact, nominations to
transport on the Enbridge/Lakehead system have increased from March to July by
some 130,000 barrels per day, a good indication that western Canadian producers
are beginning to respond to higher prices. Continued strength and stability of
oil prices are expected to result in modest growth over the near term as
western Canadian production returns to previous levels." Mr. Wuori added, "With
higher oil prices and confirmation by large producers to proceed with oil sands
development, the conditions are in place for substantial increases in heavy and
synthetic crude oil production in western Canada."
Operating revenue for the first six months and for the second quarter
of 1999 increased over the corresponding periods in 1998 as declines in
deliveries were more than offset by increased tariffs. Total operating expenses
for the first six months and for the second quarter of 1999 decreased from the
corresponding periods last year. The declines resulted from lower power costs
associated with reduced deliveries and lower operating and administrative costs
due to timing and cost control efforts
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by the Partnership. These savings were partially offset by increased
depreciation expense resulting from placing the System Expansion Program II in
service. Interest expense increased due to higher borrowings associated with
the Partnership's expansion projects.
Construction on the Terrace expansion is proceeding on schedule and
will add 170,000 barrels per day of capacity in the fourth quarter of this
year. Commenting on the expansion activities, Mr. Wuori states, "The
Partnership and Enbridge Pipelines in Canada are working in close coordination
with our customers to bring Terrace facilities on line and to explore further
expansion of the pipeline system to serve forecast increases in western
Canadian crude oil production."
Lakehead will be hosting an investment analysts conference call on
July 16, 1999 commencing at 10:00 AM EDT. Interested parties may listen in via
the Internet, on either a live or delayed basis, at http://www.prnewswire.com.
This press release includes forward-looking statements within the
meaning of the Securities Litigation Reform Act. Such statements are subject to
various risks, including the availability of western Canadian crude oil and
regulatory uncertainties, as well as other risks discussed in detail in the
Partnership's SEC filings, including its Annual Report on Form 10-K for the
year ended December 31, 1998.
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., based in Calgary,
Alberta, holds a 15.3% interest in the Partnership. 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 National Market under the
symbol "ENBRF."
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LAKEHEAD PIPE LINE PARTNERS, L.P.
CONSOLIDATED STATEMENT OF INCOME
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THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
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1999 1998 1999 1998
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(UNAUDITED; DOLLARS IN MILLIONS,
EXCEPT PER UNIT AMOUNTS)
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Operating Revenue ........................... $ 80.4 $ 74.4 $ 154.4 $ 147.3
Expenses
Power .............................. 13.6 18.9 27.1 36.6
Operating and administrative ....... 16.8 16.5 30.6 33.3
Depreciation (a) ................... 14.6 10.4 28.1 20.8
45.0 45.8 85.8 90.7
Operating Income ............................ 35.4 28.6 68.6 56.6
Interest and Other Income ................... 0.7 1.2 2.2 4.1
Interest Expense ............................ (13.4) (5.3) (26.1) (13.0)
Minority Interest ........................... (0.2) (0.3) (0.5) (0.6)
Net Income .................................. $ 22.5 $ 24.2 $ 44.2 $ 47.1
Net Income Per Unit (b) ..................... $ 0.71 $ 0.85 $ 1.46 $ 1.65
Weighted Average Units Outstanding
(millions)(c) ....................... 28.1 26.2 27.2 26.2
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(a) Revised depreciation rates were approved by the Federal Energy Regulatory
Commission to be effective on January 1, 1999, better representing the
expected remaining service life of the pipeline system and coinciding with
the in-service date for the System Expansion Program II. Depreciation
expense for the three-month and six-month periods ended June 30, 1999, is
$1.8 million and $3.4 million lower, respectively, than it would have been
under previous depreciation rates.
(b) Net income per unit is computed by dividing net income, after deduction of
the General Partner's allocation, by the weighted average number of Class
A and Class B Common Units outstanding. Net income allocated to the
General Partner for the three-month and six-month periods ended June 30,
1999, was $2.5 million and $4.6 million, respectively, as compared with
$2.0 million and $4.0 million for the same periods last year.
(c) On April 28, 1999, the Partnership issued an additional 2,700,000 Class A
Common Units, increasing the total number of Class A Common Units
outstanding to 24,990,000, which, combined with the General Partner's
contribution, provided net proceeds of approximately $119.7 million.
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OTHER FINANCIAL & OPERATING HIGHLIGHTS
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SIX MONTHS ENDED
JUNE 30,
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1999 1998
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(UNAUDITED)
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Cash Provided from Operating Activities
(millions)(d) .................. $44.7 $ 56.4
Capital Expenditures .................... $42.8 $223.9
Cash Distributions to Partners .......... $52.1 $ 46.2
Deliveries (thousands of barrels per day) 1,386 1,598
Barrel miles (billions) ................. 176 200
Average Haul (miles) .................... 703 691
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(d) The amount for 1998 is reclassified to conform with the current period's
financial statement presentation.
SOURCE: Lakehead Pipe Line Partners, L.P.
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