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 January 13, 1999
KINDER MORGAN ENERGY PARTNERS, L.P.
KINDER MORGAN OPERATING L.P. "A"
KINDER MORGAN OPERATING L.P. "B"
KINDER MORGAN OPERATING L.P. "C"
KINDER MORGAN OPERATING L.P. "D"
KINDER MORGAN NATURAL GAS LIQUIDS CORPORATION
KINDER MORGAN CO2, LLC
KINDER MORGAN BULK TERMINALS, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-11234 76-0380342
Delaware 333-66931-01 76-0380015
Delaware 333-66931-02 76-0414819
Delaware 333-66931-03 76-0547319
Delaware 333-66931-04 76-0561780
Delaware 333-66931-05 76-0256928
Delaware 333-66931-06 76-0563308
Louisiana 333-66931-07 72-1073113
(State or other jurisdiction (Commission File Number) (I.R.S.Employer
of incorporation) Identification)
1301 McKinney Street, Ste. 3450, Houston, Texas 77010
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: 713-844-9500
----------------------
<PAGE>
Item 5. Other Events
On January 14, 1999, Kinder Morgan Energy Partners L.P.(the "Partnership")
released a press release regarding the draft order issued by the Federal Energy
Regulatory Commission concerning complaints against rates and practices of the
Partnership's subsidiary, SFPP, L.P. This press release is attached to this Form
8-K as Exhibit 99.1.
On January 13, 1999, the Partnership released the following:
Kinder Morgan Energy Partners, L.P. and Subsidiaries
Consolidated Statement of Income
(Unaudited)
(in thousands except per unit amounts)
<TABLE>
<CAPTION>
Three Mos. Ended Dec 31 Twelve Mos. Ended Dec 31
----------------------- ------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues $ 101,932 $ 21,379 $ 322,617 $ 73,932
--------- --------- ---------- --------
Costs and Expenses
Cost of products sold 378 1,847 5,860 7,154
Operations and maintenance 21,241 4,236 65,022 15,039
Fuel and power 6,607 1,880 22,385 5,636
Depreciation and amortization 11,881 2,270 37,321 10,067
General and administrative 14,038 2,298 39,984 8,862
Taxes, other than income taxes 3,967 659 12,140 2,943
--------- --------- ---------- ---------
58,112 13,190 182,712 49,701
--------- --------- ---------- ---------
Operating Income 43,820 8,189 139,905 24,231
Other Income/(Expense)
Earnings from equity investments 9,315 1,540 25,732 5,724
Reserve for contested product loss 0 (626) 0 (626)
Interest expense (11,870) (3,039) (40,856) (12,605)
Other (1,976) 54 (5,007) 452
Minority interest (61) (78) (985) (179)
---------- --------- ---------- ----------
Income before income taxes and extraordinary charge 39,228 6,040 118,789 16,997
Income tax (expense)/benefit (1,404) 1,649 (1,572) 740
---------- --------- ---------- ----------
Net Income before extraordinary charge 37,824 7,689 117,217 17,737
Extraordinary charge on early extinguishment of debt - - (13,611) -
---------- --------- ---------- ----------
Net Income $ 37,824 $ 7,689 $ 103,606 $ 17,737
========== ========= ========== ==========
Calculation of Limited Partners' Interest in Net Income:
- -------------------------------------------------------
Net Income before extraordinary charge $ 37,824 $ 7,689 $ 117,217 $ 17,737
Less: General Partner's interest in Net Income (10,989) (1,959) (33,447) (4,074)
--------- --------- ---------- ----------
Limited Partners' Net Income before extraordinary charge 26,835 5,730 83,770 13,663
Less: Extraordinary charge on early extinguishment of debt - - (13,611) -
--------- --------- ---------- ----------
Limited Partners' Net Income $ 26,835 $ 5,730 $ 70,159 $ 13,663
========= ========= ========== ==========
2
<PAGE>
Three Mos. Ended Dec 31 Twelve Mos. Ended Dec 31
----------------------- ------------------------
1998 1997 1998 1997
---- ---- ---- ----
Calculation per Limited Partner Unit:
- ------------------------------------
Net Income per unit before extraordinary charge $ 0.55 $ 0.41 $ 2.09 $ 1.02
========= ========= ========== ==========
Net Income per unit $ 0.55 $ 0.41 $ 1.75 $ 1.02
========= ========= ========== ==========
Number of Units Used in Computation 48,845 14,111 40,120 13,411
========= ========= ========== ==========
Additional per unit information:
- -------------------------------
Depreciation and amortization $0.24 $0.93
===== =====
Sustaining capital expenditures $0.18 $0.45
===== =====
</TABLE>
Kinder Morgan Energy Partners, L.P. and Subsidiaries
Earnings Contribution by Business Segment
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Three Mos. Ended Dec 31 Twelve Mos. Ended Dec 31
----------------------- ------------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Earnings Contribution:
Pacific Operations (1) $ 44,223 $ - $ 140,070 $ -
Mid-Continent Operations 12,185 10,167 37,156 27,482
Bulk Terminals 6,643 2,645 19,244 10,708
General & Administrative (14,038) (2,298) (39,984) (8,862)
Debt Costs (11,128) (2,747) (38,284) (11,412)
Less: Minority Interest (61) (78) (985) (179)
--------- -------- ---------- ----------
Net income before extraordinary charge $ 37,824 $ 7,689 $ 117,217 $ 17,737
Extraordinary charge on early extinguishment of debt - - (13,611) -
--------- -------- ---------- ----------
Net income $ 37,824 $ 7,689 $ 103,606 $ 17,737
3
<PAGE>
Volume Highlights
-----------------
Three Mos. Ended Dec 31 Twelve Mos. Ended Dec 31
----------------------- ------------------------
1998 1997 1998 1997
---- ---- ---- ----
Pacific Operations
Delivery Volumes (MBbl) (1) 97,289 - 325,954 -
Mid-Continent Operations
Delivery Volumes (MBbl) (2) 12,120 14,176 44,783 46,308
Bulk Terminals
Transport (M Tons) (3) 9,143 2,910 24,016 9,087
(1) Actual March-December 1998 only.
(2) North System and Cypress only.
(3) Includes terminals acquired in Hall-Buck acquisition post 6/30/98.
</TABLE>
4
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits
Exhibits:
Exhibit No. Description
99.1 Press Release dated January 14, 1999 re: Draft order of the Federal Energy
Regulatory Commission Concerning Complaints Against Rates and
Practices of Kinder Morgan Energy Partners, L.P.'s Subsidiary SFPP, L.P.
5
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
KINDER MORGAN ENERGY PARTNERS, L.P.
(A Delaware Limited Partnership)
By: KINDER MORGAN G.P., Inc.,
as General Partner
By: /s/ David G. Dehaemers, Jr.
_______________________________________
David G. Dehaemers, Jr.,
Vice President, CFO, Treasurer
and Assistant Secretary
KINDER MORGAN OPERATING L.P. "A"
(A Delaware Limited Partnership)
By: KINDER MORGAN G.P., Inc.,
as General Partner
By: /s/ David G. Dehaemers, Jr.
_______________________________________
David G. Dehaemers, Jr.,
Vice President, CFO, Treasurer
and Assistant Secretary
KINDER MORGAN OPERATING L.P. "B"
(A Delaware Limited Partnership)
By: KINDER MORGAN G.P., Inc.,
as General Partner
By: /s/ David G. Dehaemers, Jr.
_______________________________________
David G. Dehaemers, Jr.,
Vice President, CFO, Treasurer
and Assistant Secretary
KINDER MORGAN OPERATING L.P. "C"
(A Delaware Limited Partnership)
By: KINDER MORGAN G.P., Inc.,
as General Partner
By: /s/ David G. Dehaemers, Jr.
_______________________________________
David G. Dehaemers, Jr.,
Vice President, CFO, Treasurer
and Assistant Secretary
6
<PAGE>
KINDER MORGAN OPERATING L.P. "D"
(A Delaware Limited Partnership)
By: KINDER MORGAN G.P., Inc.,
as General Partner
By: /s/ David G. Dehaemers, Jr.
_______________________________________
David G. Dehaemers, Jr.,
Vice President, CFO, Treasurer
and Assistant Secretary
KINDER MORGAN NATURAL GAS LIQUIDS CORPORATION
(A Delaware Corporation)
By: /s/ David G. Dehaemers, Jr.
_______________________________________
David G. Dehaemers, Jr.,
Vice President, CFO, Treasurer
and Assistant Secretary
KINDER MORGAN CO2, LLC
(A Delaware Limited Liability Company)
By: KINDER MORGAN OPERATING L.P. "A"
as sole Member
By: KINDER MORGAN G.P., INC.
as General Partner
By: /s/ David G. Dehaemers, Jr.
_______________________________________
David G. Dehaemers, Jr.,
Vice President, CFO, Treasurer
and Assistant Secretary
KINDER MORGAN BULK TERMINALS, INC.
(A Louisiana Corporation)
By: /s/ David G. Dehaemers, Jr.
_______________________________________
David G. Dehaemers, Jr.,
Vice President, CFO and Treasurer
Date: January 14, 1999
7
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
FEDERAL ENERGY REGULATORY COMMISSION ISSUES DRAFT ORDER ON COMPLAINTS AGAINST
RATES AND PRACTICES OF KINDER MORGAN ENERGY PARTNERS, L. P. SUBSIDIARY SFPP,
L.P.
FOR IMMEDIATE RELEASE: Thursday, January 14, 1999
--------------------------
HOUSTON - Kinder Morgan Energy Partners, L. P. (NYSE: "ENP") today
announced that the Federal Energy Regulatory Commission ("FERC" or "Commission")
published a draft order which, when formally issued will affirm in major
respects the September, 1997 Initial Decision of one of its Administrative Law
Judges, regarding certain rates and practices of its subsidiary SFPP, L. P.
Richard D. Kinder, Chairman and CEO of Kinder Morgan, stated, "We applaud
the Commission for issuing its decision in such a timely manner. Based on our
preliminary review of this far reaching decision, we believe that it fairly
resolves many of the contentious issues that have existed on our Pacific system
for a number of years. We are particularly pleased with the Commission's
findings that our West Line rates remain grandfathered under the Energy Policy
Act of 1992 ("EPAct"). Additionally, although we are continuing to review this
lengthy and complex decision, we believe some of the other modifications and
changes made by the Commission support the positions we have taken and
substantially lessen the negative aspects of the Administrative Law Judge's
decision. Accordingly, we believe our historical reserves relative to the rate
case litigation should be more than sufficient to cover our ultimate financial
exposure."
The FERC's draft order, which was voted on and approved on January 13,
1999, affirms, in large part, the September 1997 decision of Administrative Law
Judge Ernst Liebman. Specifically, the Commission dismissed the complaints filed
by certain customers of SFPP arguing that its "West Line" rates were not
"grandfathered" within the meaning of EPAct. Under the EPAct, "grandfathered"
rates are deemed just and reasonable and are subject to challenge only under
limited circumstances.
Additionally, on review, the Commission modified and clarified certain
aspects of the Judge's decision relative to SFPP's East Line which provides
service from El Paso, Texas to Phoenix and Tucson, Arizona. These rulings relate
to, among other things, the appropriate capital structure and starting rate base
to be used in setting SFPP's rates, certain aspects of the income tax allowance
allowed SFPP, and the period for which reparations may potentially be owed to
complaining customers.
Mr. Kinder concluded, "In short, we believe that this decision, when
formally issued by the Commission, affirms our position on many of the issues
that have festered on this system for some time. Hopefully, this will provide a
basis to move forward with our customers to focus on continuing to grow our
business in a cooperative fashion." Kinder Morgan Energy Partners, L. P., which
has an enterprise value in excess of $2 billion, is the nation's largest
pipeline master limited partnership. It owns and operates one of the largest
product pipeline systems in the United States, serving customers in sixteen
states with more than 5,000 miles of pipeline and over twenty associated
terminals. Kinder Morgan also operates 24 bulk terminal facilities which
transload approximately 50 million tons of coal, petroleum coke and other
products annually. In addition, Kinder Morgan owns 24% of Plantation Pipe Line
Company, 20% of Shell CO2 Company, Ltd. and a 25% interest in an NGL
fractionator.
This press release includes forward looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Although Kinder Morgan believes that its expectations are
based on reasonable assumptions it can give no assurance that such assumptions
will materialize.
- ### -
For further information, contact: Irene Twardowski; Carol Haskins; or Christina
West @ 713-844-9500
www.kindermorgan.com
