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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  Marco Polo TLP
 
     The Marco Polo TLP was installed in the first quarter of 2004 and commenced
operations in July 2004. Deepwater Gateway L.L.C., the owner of the Marco Polo
TLP, began receiving monthly demand payments of $2.1 million in April 2004 and
volumetric payments started in July 2004. Additionally, in July 2004, Deepwater
Gateway converted its project finance loan into a term loan with payments on the
term loan beginning September 30, 2004. We expect to receive distributions in
2005 from Deepwater Gateway subject to term loan covenants.
 
     In March 2004, Deepwater Gateway executed a binding memorandum of
understanding with Eni Petroleum Exploration Co. Inc, ConocoPhillips Company and
Union Oil Company of California for the processing of their 47.5 percent working
interest in the K2 Field production on the Marco Polo TLP. Anadarko's 52.5
percent interest in the K2 Field was previously dedicated to the Marco Polo TLP.
Also, production from Anadarko's 100 percent interest in the K2 North Field in
Green Canyon Block 518 will be processed on the Marco Polo TLP. Deepwater
Gateway expects to receive volumes from these fields in the first half of 2005.
 
  Second Quarter Ended June 30, 2004 Compared With Second Quarter Ended June 30,
  2003
 
     For the quarter ended June 30, 2004, revenues were slightly higher than in
the same period in 2003. The increase is primarily due to increased volumes from
our Falcon Nest fixed leg platform resulting from new wells coming on line in
the first quarter of 2004.
 
     Operating expenses excluding depreciation, depletion and amortization for
the quarter ended June 30, 2004, were $0.5 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.
 
  Six Months Ended June 30, 2004 Compared With Six Months Ended June 30, 2003
 
     For the six months ended June 30, 2004, revenues were $2.2 million higher
than in the same period in 2003. An increase in volumes from new wells in the
first quarter of 2004 resulted in higher margins of $4.1 million at our Falcon
Nest Platform. Partially offsetting this increase were lower revenues of $1.9
million from East Cameron 373 resulting from lower demand fees.
 
     Operating expenses excluding depreciation, depletion and amortization for
the six months ended June 30, 2004, were $0.5 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.
 
OTHER, NON-SEGMENT RESULTS
 
     Our oil and natural gas production interests in the Garden Banks 72, Garden
Banks 117, Viosca Knoll 817 and West Delta 35 Blocks principally comprise the
non-segment activity. Production from these properties, except West Delta 35, is
gathered, transported, and processed through our pipeline systems and platform
facilities. Oil and natural gas production volumes are produced and sold to
various third parties at the market price. Revenue is recognized in the period
of production, all of which is sold to our customers. These revenues may be
impacted by market changes, hedging activities, and natural declines in
production reserves. We are reducing our oil and natural gas production
activities by not acquiring additional properties due to their higher risk
profile. Accordingly, our focus is to maximize the production from our existing
portfolio of oil and natural gas properties.
 
     Also included in other, non-segment results for the six months ended June
30, 2004 and for the quarter and six months ended June 30, 2003, are the
quarterly payments we received from El Paso Corporation in connection with the
sale of some of our Gulf of Mexico assets in January 2001. The sale of these
assets occurred as a result of a FTC order related to El Paso Corporation's
merger with The Coastal Corporation. El Paso Corporation agreed to pay us $2.25
million per quarter through the fourth quarter of 2003 and $2 million in the
first quarter of 2004. As of March 31, 2004, all required payments had been
received and, as a result, future performance cash flows for other non-segment
activities will be lower compared to prior periods.
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