Enterprise Products Partners L.P.

SEC Filings

10-Q
GULFTERRA ENERGY PARTNERS L P filed this Form 10-Q on 08/09/2004
Entire Document
 
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CONSTITUTION GATHERING SYSTEM
 
     In July 2004, we announced we had entered into a definitive agreement to
construct, own, and operate oil and natural gas pipelines to provide firm
gathering services from the Constitution field, which is 100 percent owned by
Kerr-McGee. The Constitution field is located in 5,300 feet of water in Green
Canyon Blocks 679 and 680 in the Central Gulf of Mexico. The new 32-mile,
16-inch natural gas pipeline will have a capacity of up to 200 MMcf/d and will
connect to our existing Anaconda Gathering System (the combination of our Marco
Polo natural gas pipeline and our Typhoon natural gas pipeline). The new oil
pipeline will be a 70-mile, 16-inch line with a minimum capacity of 80 MBbls/d
that will connect with the Cameron Highway Oil Pipeline and Poseidon Oil
Pipeline systems at the new Ship Shoal 332B platform. We plan to install the new
pipelines in the summer of 2005, with first production scheduled for the first
half of 2006. Kerr-McGee has dedicated production from its Constitution and
Ticonderoga discoveries, as well as future potential production from several
undeveloped blocks in the area, for gathering on our new oil and natural gas
pipelines. We expect to fund this construction project through internally
generated funds and borrowings under our credit facility.
 
CASH FROM OPERATING ACTIVITIES
 
     Net cash provided by operating activities was $136.2 million for the six
months ended June 30, 2004, compared to $134.2 million for the same period in
2003. This increase was primarily attributable to higher operating cash flows
generated by our Texas intrastate pipeline system, NGL pipeline systems, and
Falcon Nest platform. This increase was partially offset by lower distributions
from our unconsolidated affiliate, Poseidon, as Poseidon began withholding
distributions to fund its capital expenditures related to its Front Runner oil
pipeline.
 
CASH USED IN INVESTING ACTIVITIES
 
     Net cash used in investing activities was approximately $103.9 million for
the six months ended June 30, 2004. Our investing activities included capital
expenditures of $86.1 million primarily related to our Marco Polo pipelines,
Phoenix gathering system and the San Juan optimization project, as well as
maintenance expenditures related to our Chaco plant, San Juan gathering system,
Texas Intrastate system and our NGL pipeline systems. Our investing activities
also included additions to investments in unconsolidated affiliates of $17.9
million, of which $14.2 million related to additional equity contributions we
made to Deepwater Gateway for the construction of the Marco Polo TLP and $3.7
million related to the capitalization of interest associated with our equity
investments in Deepwater Gateway and Cameron Highway.
 
CASH USED IN FINANCING ACTIVITIES
 
     Net cash used in financing activities was approximately $29.4 million for
the six months ended June 30, 2004. During 2004, cash used in our financing
activities included repayments on our revolving credit facility, repayments of
our long-term debt and distributions to our partners. Cash provided by financing
activities included the proceeds received from the conversion of Series F1
convertible units into common units, the proceeds received from the exercise of
unit options, the proceeds received from our additional senior secured term loan
and the proceeds from borrowings under our revolving credit facility.
 
                             RESULTS OF OPERATIONS
 
     Our business activities are segregated into four distinct operating
segments:
 
     - Natural gas pipelines and plants;
 
     - Oil and NGL logistics;
 
     - Natural gas storage; and
 
     - Platform services.
 
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