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
 
<PAGE>
 
NATURAL GAS STORAGE
 

<Table>
<Caption>
                                                          QUARTER ENDED      SIX MONTHS ENDED
                                                            JUNE 30,             JUNE 30,
                                                        -----------------   ------------------
                                                         2004      2003      2004       2003
                                                        -------   -------   -------    -------
                                                          (IN THOUSANDS, EXCEPT FOR VOLUMES)
<S>                                                     <C>       <C>       <C>        <C>
Natural gas storage revenue...........................  $11,743   $11,057   $24,193    $22,755
Cost of natural gas...................................     (132)      132        75     (1,429)
                                                        -------   -------   -------    -------
Natural gas storage margin............................   11,611    11,189    24,268     21,326
Operating expenses excluding depreciation, depletion,
  and amortization....................................   (3,890)   (3,121)   (7,487)    (6,257)
Other income and cash distributions from
  unconsolidated affiliates in excess of earnings.....       --        --        13         --
Minority interest.....................................       --        --       (12)        --
                                                        -------   -------   -------    -------
Performance cash flows................................  $ 7,721   $ 8,068   $16,782    $15,069
                                                        =======   =======   =======    =======
Firm storage (Bcf)
  Average working gas capacity available..............     13.5      13.5      13.5       13.5
  Average firm subscription...........................     12.8      12.7      12.9       12.7
  Average monthly commodity volumes(1)................      4.8       4.7       5.5        4.8
Interruptible storage (Bcf)
  Contracted volumes..................................      0.4       0.4       0.3        0.2
  Average monthly commodity volumes(1)................      1.4       0.2       1.0        0.2
</Table>

 
----------
 
(1) Combined injections and withdrawals volumes.
 
     At our Petal and Hattiesburg natural gas storage facilities, we collect
fixed and variable fees for providing storage services. We incur expenses, which
are reflected as cost of natural gas, as we maintain these volumetric imbalance
receivables and payables, all of which are valued at current gas prices. Cost of
natural gas reflects the initial imbalance and the monthly revaluation of these
amounts based on the monthly change in natural gas prices. For these reasons, we
believe that gross margin (revenue less cost of natural gas) provides a more
accurate and meaningful basis for analyzing operating results for this segment.
 
  Petal Conversion Project
 
     In the second quarter of 2004, Petal executed agreements with BP Energy
Company for the 1.8 Bcf of firm storage capacity in Petal's new natural gas
storage cavern. The agreements will commence in October 2004, and we expect an
increase in storage revenues in the fourth quarter of 2004 derived from the firm
storage at Petal.
 
  Second Quarter Ended June 30, 2004 Compared With Second Quarter Ended June 30,
  2003
 
     For the quarter ended June 30, 2004, margin was $0.4 million higher than
the same period in 2003 primarily due to an increase in interruptible storage
services at our leased Wilson storage facility.
 
     Operating expenses excluding depreciation, depletion and amortization for
the quarter ended June 30, 2004, were $0.8 million higher than the same period
in 2003 primarily due to an increase in allocated administrative costs,
including merger-related costs and directors and officers liability insurance.
 
                                        50