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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: DECEMBER 26, 2002
(DATE OF EARLIEST EVENT REPORTED: NOVEMBER 27, 2002)
COMMISSION FILE NUMBER 1-11680
---------------------
EL PASO ENERGY PARTNERS, L.P.
(Exact name of Registrant as Specified in its Charter)
DELAWARE 76-0396023
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
4 GREENWAY PLAZA 77046
HOUSTON, TEXAS (Zip Code)
(Address of Principal Executive Offices)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE:
(832) 676-2600
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
This Form 8-K/A is furnished to amend the Form 8-K filed December 11, 2002,
and to update the pro forma financial information previously filed in our
Current Reports on Form 8-K discussed in Item 7(a) below.
On November 27, 2002, we acquired the San Juan assets described below from
affiliates of El Paso Corporation, the indirect parent of our general partner,
for $782 million, adjusted for capital expenditures and actual working capital
acquired, resulting in a net reduction to the purchase price of approximately $6
million. The acquired assets include a natural gas gathering system located in
the San Juan Basin of New Mexico, including the remaining interest we did not
already own in the Chaco cryogenic natural gas processing plant; natural gas
liquids (NGL) transportation and fractionation assets located in Texas; and an
oil and natural gas gathering system located in the deeper water regions of the
Gulf of Mexico, referred to collectively as the San Juan assets. As part of this
transaction, El Paso Corporation is required to repurchase the Chaco plant from
us for $77 million in October 2021, and at that time, we will have the right to
lease the plant from El Paso Corporation for a period of 10 years with the
option to renew the lease annually thereafter. We financed the purchase of these
assets with net proceeds from an offering of $200 million of 10 5/8% Senior
Subordinated Notes due 2012, borrowings of $237.5 million under our senior
secured acquisition term loan, the issuance of $350 million of our newly issued
Series C units and currently available funds. Additionally, our general partner
contributed $3.5 million to maintain its one percent ownership interest in us.
We intend to use the acquired San Juan assets in the same manner as they
were used immediately prior to our acquisition. The Contribution, Purchase and
Sale Agreement pursuant to which we acquired these assets is included as Exhibit
2.A to our Current Report on Form 8-K dated December 11, 2002.
In accordance with our procedures for evaluating and valuing material
acquisitions with El Paso Corporation, our Special Conflicts Committee engaged
independent financial advisors and obtained two separate fairness opinions
related to the acquisition of the San Juan assets and the issuance of the Series
C units. These opinions stated the transaction and the issuance were both fair
to us and our unitholders.
In connection with the acquisition of the San Juan assets and the financing
discussed above, we entered into other material agreements, each of which is
attached as an exhibit to our Current Report on Form 8-K dated December 11,
2002.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired.
We filed the required financial statements of the assets acquired on our
Current Reports on Form 8-K dated August 12, 2002 and November 15, 2002.
The audited combined financial statements of El Paso Field Services' San
Juan Gathering and Processing Businesses, Typhoon Gas Pipeline, Typhoon Oil
Pipeline, and Coastal Liquids Partners' NGL Business for the years ended
December 31, 2001, 2000 and 1999 are included in our Current Report on Form 8-K
dated August 12, 2002.
The unaudited condensed combined financial statements of El Paso Field
Services' San Juan Gathering and Processing Businesses, Typhoon Gas Pipeline,
Typhoon Oil Pipeline, and Coastal Liquids Partners' NGL Business at September
30, 2002 and December 31, 2001 and for the nine months ended September 30, 2002
and 2001 are included in our Current Report on Form 8-K dated November 15, 2002.
2
(b) Pro forma financial information(1)
We filed certain pro forma financial information on our Current Reports on
Form 8-K described in (a) above. We are updating the previously filed unaudited
pro forma financial information with the following unaudited pro forma financial
information:
(1) Unaudited Pro Forma Condensed Consolidated and Combined Balance
Sheet at September 30, 2002;
(2) Unaudited Pro Forma Condensed Consolidated and Combined Statement
of Operations for the nine months ended September 30, 2002; and
(3) Unaudited Pro Forma Condensed Consolidated and Combined Statement
of Operations for the year ended December 31, 2001.
The unaudited pro forma condensed consolidated and combined financial
statements are not necessarily indicative of the consolidated financial position
or results of operations that we might have realized had the transactions been
completed at the beginning of the earliest period presented, nor do they
necessarily indicate our consolidated operating results and financial position
for any future period.
The accompanying Notes to the Unaudited Pro Forma Condensed Consolidated
and Combined Financial Statements explain the assumptions used in preparing the
financial information. Accounting policy differences were not material and,
accordingly, such adjustments have not been included in these statements.
The unaudited pro forma financial information gives effect to the following
transactions as if they had occurred as of the beginning of the period presented
or as of the balance sheet date:
(1) The issuance of $350 million of our Series C common units to El
Paso Corporation and $198.5 million of 10 5/8% senior subordinated notes
due 2012, net of a $1.5 million discount; borrowings of approximately $1.5
million on our revolving credit facility to supplement the discounted funds
received from issuing our senior subordinated notes; borrowings of $237.5
million under our senior secured acquisition term loan; debt issuance costs
of $12 million relating to the above debt; and the contribution of $3.5
million from our general partner to maintain its one percent ownership
interest in us.
(2) The acquisition of the San Juan assets for a purchase price of
$782 million, adjusted for capital expenditures and actual working capital
acquired resulting in a net reduction to the purchase price of
approximately $6 million. The San Juan assets include gathering,
compression and treating assets located in the San Juan Basin of New
Mexico, offshore oil and natural gas pipelines located in the Gulf of
Mexico and NGL assets located in Texas.
(3) The increase in the interest rates on our revolving credit
facility and EPN Holding's acquisition facility as a result of the amended
terms of these agreements.
(4) The application of $160 million of net proceeds from our senior
secured term loan entered into in October 2002 to repay $160 million of our
revolving credit facility and of borrowings under our revolving credit
facility of $1.6 million for the payment of the associated issuance costs
of $1.6 million.
(5) The issuance in May 2002 of our 8 1/2% Senior Subordinated Notes
for net proceeds of approximately $230 million and the issuance in April
2002 of common units for net proceeds of approximately $150 million,
including the capital contribution by our general partner to maintain its
one percent capital account balance and the application of $375 million of
such proceeds to reduce indebtedness under EPN Holding's acquisition
facility.
(6) The repayment in April 2002 of the limited recourse debt of
approximately $95 million related to our Prince tension leg platform (TLP)
with proceeds from borrowings on our revolving credit facility.
- ---------------
(1) The terms "we," "our" or "us" as used in these pro forma condensed
consolidated and combined financial statements and related notes refer
collectively to El Paso Energy Partners, L.P. on a consolidated basis.
3
(7) The acquisition in April 2002 of the EPGT Texas intrastate
pipeline system and El Paso Field Services' Gathering and Processing
Businesses, including 1,300 miles of gathering systems in the Permian Basin
and a 42.3 percent non-operating interest in the Indian Basin natural gas
processing and treating facility. Total consideration for this transaction
was approximately $735 million consisting of a cash payment of
approximately $420 million, the sale of our Prince TLP and our approximate
9 percent overriding royalty interest in the Prince Field with a fair value
of approximately $190 million, the issuance of approximately $6 million of
common units and the assumption of approximately $119 million of
indebtedness. In connection with this transaction, we borrowed $535 million
under EPN Holding's acquisition facility. Our historical consolidated
financial statements include the accounts and results of operations of
these assets from the purchase date.
(8) The acquisition in October 2001 of the remaining 50% equity
interest that we did not already own in Deepwater Holdings. The High Island
Offshore system and the East Breaks natural gas gathering system became
indirect wholly-owned assets through this transaction. The total purchase
price was approximately $81 million, consisting of $26 million cash and $55
million of assumed indebtedness. We borrowed approximately $140 million
under our revolving credit facility to fund the acquisition and repay
Deepwater Holdings' indebtedness. Our historical consolidated financial
statements include the accounts and results of operations of these assets
from the purchase date.
(9) The acquisition in October 2001 of interests in the titleholder
of, and other interests in, the Chaco cryogenic natural gas processing
plant for approximately $198.5 million with funds obtained from our
revolving credit facility. The total purchase price was comprised of:
- A payment of $77.0 million to acquire the Chaco plant from the bank
group that provided the financing for the facility; and
- A payment of $121.5 million to El Paso Field Services, L.P., an El
Paso Corporation affiliate, in connection with the execution of a
20-year agreement relating to the processing capacity of the Chaco
plant and dedication of natural gas gathered by El Paso Field
Services.
Our historical consolidated financial statements include the accounts
and results of operations of this asset from the purchase date. However,
upon completing our acquisition of the San Juan assets, our future
operating results will be significantly different than our operating
results prior to the purchase as follows:
- The fixed fee revenue of $0.134/dekatherm (Dth) for natural gas
processed, currently received by the Chaco plant from El Paso Field
Services, will be replaced with actual revenues derived from sales of
natural gas on the open market, producing greater volatility in our
revenues. Our revenues would have approximated $0.231/Dth, $0.263/Dth
and $0.206/Dth had we operated the Chaco plant during the nine months
ended September 30, 2002 and the years ended December 31, 2001 and
2000.
- We will no longer receive revenue from leasing the Chaco plant to El
Paso Field Services. We recognized lease revenue of $1.5 million for
the nine months ended September 30, 2002 and $598,000 for the year
ended December 31, 2001.
- The unamortized portion of our investment in the processing agreement
with El Paso Field Services' San Juan Gathering and Processing
Businesses of $115.7 million will be offset by the unamortized portion
of deferred revenue recorded by El Paso Field Services' San Juan
Gathering and Processing Businesses totaling $115.7 million, thereby
eliminating future amortization expense related to this agreement.
(10) The $133 million acquisition in February 2001 of the South Texas
natural gas liquids transportation and fractionation assets from a
subsidiary of El Paso Corporation with funds obtained from our revolving
credit facility. Our historical consolidated financial statements include
the accounts and results of operations of these assets from the purchase
date.
4
(11) The exclusion of the (i) results of operations and losses on the
disposition of Deepwater Holdings' interests in the Stingray and UTOS
systems, and the West Cameron Dehydration facility; (ii) results of
operations and losses on the disposition of our interests in Nautilus,
Manta Ray Offshore, Nemo, Green Canyon and Tarpon as well as interests in
two offshore platforms; and (iii) income of $25.4 million we recognized
from the related payments from El Paso Corporation. Please see footnote
(CC) of the following table for further information.
5
EL PASO ENERGY PARTNERS, L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED AND COMBINED BALANCE SHEET
AT SEPTEMBER 30, 2002
(IN THOUSANDS)
PRO FORMA
PRO FORMA SAN JUAN PRO FORMA
EL PASO INTERIM ASSET SAN JUAN PRO FORMA
ENERGY FINANCING ACQUISITION SAN JUAN ASSET EL PASO
PARTNERS, L.P. ADJUSTMENTS FINANCING ASSETS ACQUISITION ENERGY
HISTORICAL (A) ADJUSTMENTS(B) (C) ADJUSTMENTS PARTNERS, L.P.
-------------- ----------- -------------- --------- ----------- --------------
ASSETS
Current Assets
Cash and cash equivalents.......... $ 22,278 $ 160,000 $350,000 $ -- $(782,000)(D) $ 22,278
(160,000) 237,500 5,917 (D)
1,600 198,484 (5,917)(D)
(1,600) 1,516
3,535
(3,535)
6,500
(12,000)
Accounts receivable, net
Trade............................ 41,331 -- -- 32,421 (32,421)(D) 41,331
Affiliates....................... 46,728 -- -- 1,867 (1,867)(D) 46,728
Other current assets............... 9,029 -- -- 8,147 (489)(D) 16,687
---------- --------- -------- -------- --------- ----------
Total current assets......... 119,366 -- 782,000 42,435 (816,777) 127,024
Property, plant and equipment, net... 1,798,705 -- -- 424,102 466,422 (D) 2,689,229
Investment in processing agreement... 115,678 -- -- (115,678)(E) --
Investment in transportation
agreement.......................... -- -- -- 16,495 -- 16,495
Investment in unconsolidated
affiliate.......................... 61,618 -- -- 1,921 2,071 (D) 65,610
Other noncurrent assets.............. 33,580 1,600 12,000 2,410 -- 49,590
---------- --------- -------- -------- --------- ----------
Total assets................. $2,128,947 $ 1,600 $794,000 $487,363 $(463,962) $2,947,948
========== ========= ======== ======== ========= ==========
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Accounts payable
Trade............................ $ 17,282 $ -- $ -- $ 15,173 $ (15,173)(D) $ 17,282
Affiliates....................... 27,608 -- -- 6,215 (6,215)(D) 27,608
Accrued interest................... 21,640 -- -- -- -- 21,640
Current deferred revenue from
processing agreement............. -- -- -- 6,075 (6,075)(E) --
Other current liabilities.......... 31,247 -- -- 16,026 7,142 (D) 54,415
---------- --------- -------- -------- --------- ----------
Total current liabilities.... 97,777 -- -- 43,489 (20,321) 120,945
Revolving credit facility............ 569,000 (160,000) (3,535) -- (5,917)(D) 409,164
1,600 6,500
1,516
EPN Holding's acquisition facility... 160,000 -- -- -- -- 160,000
Senior secured term loans............ -- 160,000 237,500 -- -- 397,500
Long-term debt....................... 659,430 -- 198,484 -- -- 857,914
Deferred revenue processing
agreement.......................... -- -- -- 109,603 (109,603)(E) --
Other noncurrent liabilities......... 24,939 -- -- 6,039 614 (D) 31,592
---------- --------- -------- -------- --------- ----------
Total liabilities............ 1,511,146 1,600 440,465 159,131 (135,227) 1,977,115
Commitments and contingencies
Minority interest.................... 914 -- -- -- -- 914
Partners' capital.................... 616,887 -- 350,000 -- (503)(D) 969,919
3,535
Owners' net investment............... -- -- -- 328,232 (328,232)(D) --
---------- --------- -------- -------- --------- ----------
Total liabilities and
partners' capital.......... $2,128,947 $ 1,600 $794,000 $487,363 $(463,962) $2,947,948
========== ========= ======== ======== ========= ==========
6
EL PASO ENERGY PARTNERS, L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
SUBTOTAL
PRO FORMA AFTER PRO FORMA
EL PASO EPN PRO FORMA SAN JUAN
ENERGY EPN HOLDING EPN PRO FORMA ASSET
PARTNERS, HOLDING ASSET HOLDING INTERIM ACQUISITION SAN JUAN
L.P. ASSETS ACQUISITION ASSET FINANCING FINANCING ASSETS
HISTORICAL (F) ADJUSTMENTS ACQUISITION ADJUSTMENTS ADJUSTMENTS (P)
---------- ------- ----------- ----------- ----------- ----------- ---------
Operating revenues.................... $304,282 $72,236 $ -- $376,518 $ -- $ -- $341,617
Operating expenses
Cost of natural gas and oil.......... 67,268 21,466 -- 88,734 -- -- 237,167
Operation and maintenance, net....... 76,531 15,647 -- 92,178 -- -- 40,675
Depreciation, depletion and
amortization....................... 49,939 6,700 (340)(G) 56,368 -- -- 19,199
69 (H)
-------- ------- ------- -------- ------- -------- --------
193,738 43,813 (271) 237,280 -- -- 297,041
-------- ------- ------- -------- ------- -------- --------
Operating income (loss)............... 110,544 28,423 271 139,238 -- -- 44,576
-------- ------- ------- -------- ------- -------- --------
Other income (loss)
Earnings from unconsolidated
affiliates......................... 10,541 -- -- 10,541 -- -- 1,154
Net gain on sale of assets........... (119) -- -- (119) -- -- --
Other income (expense)............... 1,181 (29) -- 1,152 -- -- --
-------- ------- ------- -------- ------- -------- --------
11,603 (29) -- 11,574 -- -- 1,154
-------- ------- ------- -------- ------- -------- --------
Income (loss) before interest, income
taxes and other charges.............. 122,147 28,394 271 150,812 -- -- 45,730
-------- ------- ------- -------- ------- -------- --------
Interest and debt expense............. 55,362 -- 5,844 (I) 62,062 (3,687)(K) 15,959(N) --
856 (J) (2,057)(K) 9,823(N)
6,976(L) 3,300(N)
6,247(M) 269(N)
(5,337)(M) 63(N)
53(M) (145)(N)
240(M) 6,416(O)
1,424(O)
433(O)
(897)(O)
Minority interest..................... 13 -- -- 13 -- -- --
-------- ------- ------- -------- ------- -------- --------
55,375 -- 6,700 62,075 2,435 36,645 --
-------- ------- ------- -------- ------- -------- --------
Net income (loss) from continuing
operations........................... 66,772 $28,394 $(6,429) 88,737 $(2,435) $(36,645) $ 45,730
======= ======= ======= ======== ========
Allocation of net income from
continuing operations to:
Series B unitholders................. 10,875 10,875
General Partner...................... 30,245 30,465
Series C unitholders................. -- --
-------- --------
Limited partners..................... $ 25,652 $ 47,397
======== ========
Basic and diluted net income per unit
from continuing operations........... $ 0.61 $ 1.12
======== ========
Weighted average basic and diluted
units outstanding.................... 42,373 42,373
======== ========
PRO FORMA PRO FORMA
SAN JUAN EL PASO
ASSET ENERGY
ACQUISITION PARTNERS,
ADJUSTMENTS L.P.
----------- ---------
Operating revenues.................... $(23,016)(Q) $693,627
(1,492)(Q)
Operating expenses
Cost of natural gas and oil.......... (23,016)(Q) 307,441
4,556(Q)
Operation and maintenance, net....... (1,044)(Q) 127,253
(4,556)(Q)
Depreciation, depletion and
amortization....................... 11,656 (R) 87,223
-------- --------
(12,404) 521,917
-------- --------
Operating income (loss)............... (12,104) 171,710
-------- --------
Other income (loss)
Earnings from unconsolidated
affiliates......................... -- 11,695
Net gain on sale of assets........... -- (119)
Other income (expense)............... -- 1,152
-------- --------
-- 12,728
-------- --------
Income (loss) before interest, income
taxes and other charges.............. (12,104) 184,438
-------- --------
Interest and debt expense............. (245)(Q) 100,897
Minority interest..................... -- 13
-------- --------
(245) 100,910
-------- --------
Net income (loss) from continuing
operations........................... $(11,859) 83,528
========
Allocation of net income from
continuing operations to:
Series B unitholders................. 10,875
General Partner...................... 39,309
Series C unitholders................. 6,635
--------
Limited partners..................... $ 26,709
========
Basic and diluted net income per unit
from continuing operations........... $ 0.61
========
Weighted average basic and diluted
units outstanding.................... 44,063
========
7
EL PASO ENERGY PARTNERS, L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2001
(IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
PRO FORMA PRO FORMA
DEEPWATER DEEPWATER TRANSPORTATION
EL PASO DEEPWATER HOLDINGS, HOLDINGS, PRO FORMA AND
ENERGY HOLDINGS, L.L.C. L.L.C. CHACO FRACTIONATION
PARTNERS, L.P. L.L.C DIVESTITURES ACQUISITION PLANT ASSET
HISTORICAL HISTORICAL(S) ADJUSTMENTS(T) ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS
-------------- ------------- -------------- ----------- ----------- --------------
Operating revenues................ $193,406 $ 40,933 $(2,726) $ -- $20,299(Y) $5,042(AA)
Operating expenses
Cost of natural gas and oil..... 51,542 -- -- -- -- --
Operation and maintenance,
net........................... 33,279 16,740 (658) -- 5,215(Y) 1,368(AA)
Depreciation, depletion and
amortization.................. 34,778 8,899 (323) 422 (U) 6,512(Y) 750(AA)
Asset impairment charge......... 3,921 -- -- -- -- --
-------- -------- ------- ------- ------- ------
123,520 25,639 (981) 422 11,727 2,118
-------- -------- ------- ------- ------- ------
Operating income (loss)........... 69,886 15,294 (1,745) (422) 8,572 2,924
-------- -------- ------- ------- ------- ------
Other income (loss)
Earnings from unconsolidated
affiliates.................... 8,449 -- -- 9,925 (V) -- --
Net (loss) gain on sale of
assets........................ (11,367) (21,453) 21,453 -- -- --
Other income (expense).......... 28,726 68 -- -- -- --
-------- -------- ------- ------- ------- ------
25,808 (21,385) 21,453 9,925 -- --
-------- -------- ------- ------- ------- ------
Income (loss) before interest,
income taxes and other
charges......................... 95,694 (6,091) 19,708 9,503 8,572 2,924
-------- -------- ------- ------- ------- ------
Interest and debt expense....... 41,542 5,936 -- (5,936)(W) 7,072(Z) 1,702(BB)
4,988 (X)
Minority interest............... 100 -- -- -- -- --
Income tax benefit.............. -- -- -- -- -- --
-------- -------- ------- ------- ------- ------
41,642 5,936 -- (948) 7,072 1,702
-------- -------- ------- ------- ------- ------
Net income (loss) from continuing
operations...................... 54,052 $(12,027) $19,708 $10,451 $ 1,500 $1,222
======== ======= ======= ======= ======
Allocation of net income from
continuing operations to:
Series B unitholders............ 17,228
General Partner................. 24,650
Series C unitholders............ --
--------
Limited Partners................ $ 12,174
========
Basic and diluted net income per
unit from continuing
operations...................... $ 0.35
========
Weighted average basic and diluted
units outstanding............... 34,376
========
OTHER GULF OF
MEXICO PRO FORMA
DIVESTITURE AFTER 2001
ADJUSTMENTS TRANSACTIONS
------------- ------------
Operating revenues................ $ -- $256,954
Operating expenses
Cost of natural gas and oil..... -- 51,542
Operation and maintenance,
net........................... -- 55,944
Depreciation, depletion and
amortization.................. -- 51,038
Asset impairment charge......... -- 3,921
-------- --------
-- 162,445
-------- --------
Operating income (loss)........... -- 94,509
-------- --------
Other income (loss)
Earnings from unconsolidated
affiliates.................... -- 18,374
Net (loss) gain on sale of
assets........................ 11,367 (CC) --
Other income (expense).......... (25,404)(CC) 3,390
-------- --------
(14,037) 21,764
-------- --------
Income (loss) before interest,
income taxes and other
charges......................... (14,037) 116,273
-------- --------
Interest and debt expense....... -- 55,304
Minority interest............... -- 100
Income tax benefit.............. -- --
-------- --------
-- 55,404
-------- --------
Net income (loss) from continuing
operations...................... $(14,037) 60,869
========
Allocation of net income from
continuing operations to:
Series B unitholders............ 17,228
General Partner................. 24,717
Series C unitholders............ --
--------
Limited Partners................ $ 18,924
========
Basic and diluted net income per
unit from continuing
operations...................... $ 0.55
========
Weighted average basic and diluted
units outstanding............... 34,376
========
8
EL PASO ENERGY PARTNERS, L.P.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED AND COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2001
(IN THOUSANDS, EXCEPT PER UNIT AMOUNTS)
SUBTOTAL
PRO FORMA AFTER PRO FORMA
EPN PRO FORMA SAN JUAN
EPN HOLDING EPN PRO FORMA ASSET
PRO FORMA HOLDING ASSET HOLDING EPN INTERIM ACQUISITION
AFTER 2001 ASSETS ACQUISITION ASSET FINANCING FINANCING
TRANSACTIONS (F) ADJUSTMENTS ACQUISITION ADJUSTMENTS ADJUSTMENTS
------------ -------- ----------- ----------- -------------- -----------
Operating revenues................ $256,954 $344,689 $ -- $601,643 $ -- $ --
Operating expenses
Cost of natural gas and oil...... 51,542 188,582 -- 240,124 -- --
Operation and maintenance, net... 55,944 66,615 -- 122,559 -- --
Depreciation, depletion and
amortization................... 51,038 32,305 (2,236)(G) 81,383 -- --
276 (H)
Asset impairment charge.......... 3,921 -- -- 3,921 -- --
-------- -------- -------- -------- ------- --------
162,445 287,502 (1,960) 447,987 -- --
-------- -------- -------- -------- ------- --------
Operating income (loss)........... 94,509 57,187 1,960 153,656 -- --
-------- -------- -------- -------- ------- --------
Other income (loss)
Earnings from unconsolidated
affiliates..................... 18,374 -- -- 18,374 -- --
Net (loss) gain on sale of
assets......................... -- -- -- -- -- --
Other income (expense)........... 3,390 (5,026) -- (1,636) -- --
-------- -------- -------- -------- ------- --------
21,764 (5,026) -- 16,738 -- --
-------- -------- -------- -------- ------- --------
Income (loss) before interest,
income taxes and other charges... 116,273 52,161 1,960 170,394 -- --
-------- -------- -------- -------- ------- --------
Interest and debt expense........ 55,304 -- 23,701 (I) 82,479 (9,968)(K) 21,337(N)
3,474 (J) (6,645)(K) 20,235 (N)
18,860(L) 4,400(N)
8,352(M) 554(N)
(7,136)(M) 129(N)
71(M) (301)(N)
320(M) 3,998(O)
6,544(O)
16,082(O)
(1,151)(O)
Minority interest................ 100 -- -- 100 -- --
Income tax (benefit) expense..... -- (24) -- (24) -- --
-------- -------- -------- -------- ------- --------
55,404 (24) 27,175 82,555 3,854 71,827
-------- -------- -------- -------- ------- --------
Net income (loss) from continuing
operations....................... 60,869 $ 52,185 $(25,215) 87,839 $(3,854) $(71,827)
======== ======== ======= ========
Allocation of net income from
continuing operations to:
Series B unitholders............. 17,228 17,228
General Partner.................. 24,717 25,628
Series C unitholders............. -- --
-------- --------
Limited Partners................. $ 18,924 $ 44,983
======== ========
Basic and diluted net income per
unit from continuing
operations....................... $ 0.55 $ 1.30
======== ========
Weighted average basic and diluted
units outstanding................ 34,376 34,535
======== ========
SAN JUAN
ASSET EL PASO
SAN JUAN ACQUISITION ENERGY
ASSETS PRO FORMA PARTNERS, L.P.
(P) ADJUSTMENTS PRO FORMA
-------- ----------- --------------
Operating revenues................ $324,996 $ (6,469)(Q) $899,273
(598)(Q)
(20,299)(Q)
Operating expenses
Cost of natural gas and oil...... 140,924 (6,469)(Q) 376,098
1,519 (Q)
Operation and maintenance, net... 61,172 (4,311)(Q) 172,686
(5,215)(Q)
(1,519)(Q)
Depreciation, depletion and
amortization................... 22,651 15,541 (R) 119,575
Asset impairment charge.......... -- -- 3,921
-------- -------- --------
224,747 (454) 672,280
-------- -------- --------
Operating income (loss)........... 100,249 (26,912) 226,993
-------- -------- --------
Other income (loss)
Earnings from unconsolidated
affiliates..................... 2,177 -- 20,551
Net (loss) gain on sale of
assets......................... -- -- --
Other income (expense)........... -- -- (1,636)
-------- -------- --------
2,177 -- 18,915
-------- -------- --------
Income (loss) before interest,
income taxes and other charges... 102,426 (26,912) 245,908
-------- -------- --------
Interest and debt expense........ -- (504)(Q) 157,656
Minority interest................ -- -- 100
Income tax (benefit) expense..... 23 -- (1)
-------- -------- --------
23 (504) 157,755
-------- -------- --------
Net income (loss) from continuing
operations....................... $102,403 $(26,408) 88,153
======== ========
Allocation of net income from
continuing operations to:
Series B unitholders............. 17,228
General Partner.................. 38,819
Series C unitholders............. 6,929
--------
Limited Partners................. $ 25,177
========
Basic and diluted net income per
unit from continuing
operations....................... $ 0.65
========
Weighted average basic and diluted
units outstanding................ 38,619
========
9
EL PASO ENERGY PARTNERS, L.P.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS
BALANCE SHEET ADJUSTMENTS
INTERIM FINANCING
A To record the application of $160 million of net proceeds from our
senior secured term loan entered into in October 2002 which we used to pay down
a portion of our revolving credit facility and the borrowings under our
revolving credit facility of $1.6 million for the payment of the associated
issuance costs of $1.6 million.
SAN JUAN ASSET ACQUISITION FINANCING
B To record the proceeds from (1) issuing $350 million of our Series C
common units to El Paso Corporation; (2) entering into a $237.5 million senior
secured acquisition term loan; (3) issuing 10 5/8% senior subordinated notes due
2012, net of a $1.5 million discount for net proceeds of $198.5 million; (4)
borrowings of $1.5 million on our revolving credit facility to supplement the
discounted funds received from issuing our 10 5/8% senior subordinated notes due
2012; (5) the contribution by our general partner of $3.5 million to maintain
its one percent ownership interest in us, which we used to pay down our
revolving credit facility; and (6) drawing $6.5 million on our revolving credit
facility for payment of a portion of the $12 million of issuance costs
associated with the above debt.
SAN JUAN ASSET ACQUISITION
C This column represents the unaudited historical condensed combined
balance sheet for the San Juan asset acquisition, which includes the El Paso
Field Services' San Juan Gathering and Processing Businesses, Typhoon Gas
Pipeline, Typhoon Oil Pipeline and the Coastal Liquids Partners' NGL Business.
D To record our purchase of the San Juan assets for $782 million, adjusted
for capital expenditures and actual working capital acquired, for a net
reduction to the purchase price of approximately $6 million. We acquired all the
historical property, plant and equipment, the natural gas imbalance receivables
and payables, the investments in transportation agreements and in unconsolidated
affiliate, and the environmental liabilities on the combined balance sheet. We
recorded an excess purchase price of $466 million related to the acquisition of
these assets. Additionally, we used approximately $6 million received for
preliminary settlement of capital expenditure and working capital items to pay
down our revolving credit facility.
E To eliminate the intercompany accounts and transactions as a result of
our acquisition of the San Juan assets.
STATEMENT OF OPERATIONS ADJUSTMENTS
EPN HOLDING ASSET ACQUISITION AND PRINCE SALE
F This column represents the unaudited historical condensed combined
statement of operations for the three months ended March 31, 2002 and the
audited historical combined statement of operations for the year ended December
31, 2001, for the EPN Holding asset acquisition, which includes EPGT Texas,
L.P., El Paso Gas Storage Company, El Paso Hub Services Company, and the El Paso
Field Services gathering and processing businesses. The operating results for
the EPN Holding assets acquired are included in the El Paso Energy Partners,
L.P. historical operating results from the acquisition date in April 2002.
G To record the reduction in depreciation expense related to the
communications assets not included in our EPN Holding asset acquisition.
H To record additional depreciation expense resulting from increased basis
of $10.8 million to property, plant and equipment relating to our EPN Holding
asset acquisition. Such property, plant and equipment will
10
EL PASO ENERGY PARTNERS, L.P.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
be depreciated on a straight line basis over the remaining useful lives of the
assets which approximates 40 years.
I To record the increase in interest expense related to our additional
borrowings of $535 million under EPN Holding's acquisition facility to fund the
EPN Holding asset acquisition. This amount was calculated based on the interest
rate on EPN Holding's acquisition facility at March 31, 2002, which was
approximately 4.43%. A change in the rate of 0.125% would impact our annual
results of operations by approximately $0.7 million.
J To record the increase in interest expense resulting from our additional
borrowings of $99 million under our revolving credit facility for use in
repaying our limited recourse term loan related to our Prince TLP of $95 million
and our EPN Holding asset acquisition of $4 million. This amount was calculated
based on the interest rate on our revolving credit facility at March 31, 2002,
which was approximately 3.50%. A change in the rate of 0.125% would impact our
annual results of operations by approximately $0.1 million.
EPN INTERIM FINANCING ADJUSTMENTS
K To record the decrease in interest expense related to our use of $375
million of proceeds from our May 2002 issuance of 8 1/2% Senior Subordinated
Notes and our April 2002 common unit issuance, including the capital
contribution by our general partner to maintain its one percent capital account
balance, to repay $375 million of indebtedness under EPN Holding's acquisition
facility. We calculated this amount based on the interest rate on EPN Holding's
acquisition facility at March 31, 2002, which was approximately 4.43%.
L To record the increase in interest expense related to our May 2002
issuance of $230 million of 8 1/2% Senior Subordinated Notes, the proceeds of
which were used to reduce $225 million of indebtedness under EPN Holding's
acquisition facility and the remainder for general partnership purposes.
M To record the increase in interest expense resulting from borrowing $160
million under our senior secured term loan and the corresponding decrease in
interest expense resulting from paying down our revolving credit facility by
$160 million. Additionally, we reflected the increase in interest expense
resulting from borrowing $1.6 million on our revolving credit facility to pay
our debt issuance costs, which we are amortizing to interest expense over the
five year term of the loan. The interest was computed based on an effective
interest rate of 5.22% for our senior secured term loan, which was the effective
rate at our October 2002 borrowing and an effective rate of 4.46% for our
revolving credit facility, the weighted average rate on September 30, 2002. A
change in the rate of 0.125% would impact our annual operating results by $0.2
million.
SAN JUAN ASSET ACQUISITION FINANCING
N To record the increase in interest expense resulting from: (1) the
issuance of $198.5 million of senior subordinated notes due 2012, net of a $1.5
million discount; (2) borrowings of $237.5 million under our senior secured
acquisition term loan; (3) amortization of $12 million for issuance costs
associated with the above debt; (4) borrowings of $6.5 million from our
revolving credit facility to pay for the closing costs associated with issuing
the above debt; and (5) borrowings of $1.5 million from our revolving credit
facility to supplement the discounted funds received from issuing our 10 5/8%
senior subordinated notes due 2012.
In addition, we decreased interest expense for the repayment of $3.5
million on our revolving credit facility from proceeds we received from our
general partner using interest rates of 5.53% for 2002 and 8.52% for 2001, which
represent the weighted average interest rates we would have incurred on our
revolving credit facility had the amended terms of the agreement been in effect
for the periods presented as discussed in "O" below. Interest expense was
computed using an effective rate of 10.75% for our 10 5/8% senior subordinated
notes due 2012, which were issued at a discount. We used effective rates of
5.53% for 2002 and 8.52% for 2001 for the senior secured acquisition term loan,
which represent the weighted average interest rates we would
11
EL PASO ENERGY PARTNERS, L.P.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
have incurred had the loan been outstanding during the periods presented. A
change in any of the above variable rates by 0.125% would impact our annual
operating results by $0.3 million. The following tables present the interest
expense we expect to have realized from incurring the above debt and amortizing
the related debt issuance costs during the periods presented (dollars in
thousands):
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
- -----------------------------------------------------------------------
EFFECTIVE PRO FORMA DEBT AMORTIZATION
PRINCIPAL INTEREST INTEREST ISSUANCE OF DEBT ISSUE
BALANCE RATE EXPENSE COSTS TERM COSTS
- --------- --------- --------- -------- -------- -------------
$198,474 10.75% $15,959 $ 4,000 10 years $ 300
$237,500 5.53% 9,823 $ 8,000 2 years 3,000
------- ------- ------
$25,782 $12,000 $3,300
======= ======= ======
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2001
- -----------------------------------------------------------------------
EFFECTIVE PRO FORMA DEBT AMORTIZATION
PRINCIPAL INTEREST INTEREST ISSUANCE OF DEBT ISSUE
BALANCE RATE EXPENSE COSTS TERM COSTS
- --------- --------- --------- -------- -------- -------------
$198,474 10.75% $21,337 $ 4,000 10 years $ 400
$237,500 8.52% 20,235 8,000 2 years 4,000
------- ------- ------
$41,572 $12,000 $4,400
======= ======= ======
O To reflect the incremental changes in historical and pro forma interest
expense resulting from amendments to the revolving credit facility and EPN
Holding's acquisition facility we entered into in connection with our
acquisition of the San Juan assets.
We agreed to pay interest at rates of LIBOR plus 3.50% on Eurodollar loans,
or a variable base rate plus 2.25%. The historical add-on rates during the nine
months ended September 30, 2002 and the year ended December 31, 2001 were LIBOR
plus amounts ranging from 1.5% to 2.5% for Eurodollar loans or a variable base
rate plus 0.75%. The pro forma weighted average interest rates represent the
interest rates which we would have incurred during the nine months ended
September 30, 2002 and the year ended December 31, 2001 had the amended terms of
the revolving credit facility and EPN Holding's acquisition facility agreements
been in effect during those periods.
12
EL PASO ENERGY PARTNERS, L.P.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
The following tables reflect the incremental interest expense we would have
incurred under the amended terms of our revolving credit facility and EPN
Holding's acquisition facility had they been in effect for the nine months ended
September 30, 2002 and the year ended December 31, 2001 (dollars in thousands):
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
--------------------------------------------------------------------------------------
HISTORICAL AND PRO FORMA REVISED PRO FORMA
WEIGHTED HISTORICAL PRO FORMA WEIGHTED PRO FORMA INCREMENTAL
AVERAGE AVERAGE INTEREST AVERAGE INTEREST INTEREST
OUTSTANDING INTEREST RATE EXPENSE INTEREST RATE EXPENSE EXPENSE
----------- ------------- -------------- ------------- --------- -----------
Revolving credit facility......... $ 457,861 3.66%(A) $12,523 5.53%(K) $18,939 $ 6,416
========= ======= ======= =======
EPN Holding's acquisition facility
Borrowings under EPN Holding's
acquisition facility.......... $ 535,000
Pre-acquisition pro forma
interest.................... 4.43%(B) $ 5,844 5.62%(L) $ 7,414 $ 1,570
Historical interest on $535
million..................... 4.43%(B) 1,493(H) 5.62%(L) 1,895 402
Historical interest on $385
million..................... 4.43%(B) 1,028(I) 5.62%(L) 1,304 276
Historical interest on $160
million..................... 4.43%(B) 2,680(J) 5.62%(L) 3,400 720
Repayment with proceeds from
$230 million senior
subordinated notes issued..... (225,000) 4.43%(B) (3,687) 5.62%(L) (4,677) (990)
Repayment with proceeds from
common unit offering.......... (150,000) 4.43%(B) (2,057) 5.62%(L) (2,611) (554)
--------- ------- ------- -------
$ 160,000 $ 5,301 $ 6,725 $ 1,424
========= ======= ======= =======
Borrowings under revolving credit
facility for repayment of Prince
TLP term loan................... $ 99,000 3.51%(C) $ 856 5.53%(K) $ 1,289 $ 433
========= ======= ======= =======
$160 million senior secured term
loan
Borrowings under senior secured
term loan..................... $ 160,000 5.22%(D) $ 6,247 5.53%(K) $ 6,618 $ 371
Repayment of revolving credit
facility...................... (160,000) 4.46%(E) (5,337) 5.53%(K) (6,618) (1,281)
Borrowing to pay debt issue
costs......................... 1,600 4.46%(E) 53 5.53%(K) 66 13
--------- ------- ------- -------
$ 1,600 $ 963 $ 66 $ (897)
========= ======= ======= =======
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2001
----------------------------------------------------------------------------------
PRO FORMA
HISTORICAL AND WEIGHTED REVISED PRO FORMA
WEIGHTED HISTORICAL PRO FORMA AVERAGE PRO FORMA INCREMENTAL
AVERAGE AVERAGE INTEREST INTEREST INTEREST INTEREST
OUTSTANDING INTEREST RATE EXPENSE RATE(K) EXPENSE EXPENSE
----------- ------------- -------------- --------- --------- -----------
Revolving credit facility............ $ 208,762 6.60%(A) $13,782 8.52% $ 17,780 $ 3,998
========= ======= ======== =======
EPN Holding's acquisition facility
Borrowings under EPN Holding's
acquisition facility............. $ 535,000 4.43%(B) $23,701 8.52% $ 45,584 $21,883
Repayment with proceeds from $230
million senior subordinated notes
issued........................... (225,000) 4.43%(B) (9,968) 8.52% (19,171) (9,203)
Repayment with proceeds from common
unit offering.................... (150,000) 4.43%(B) (6,645) 8.52% (12,781) (6,136)
--------- ------- -------- -------
$ 160,000 $ 7,088 $ 13,632 $ 6,544
========= ======= ======== =======
13
EL PASO ENERGY PARTNERS, L.P.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2001
----------------------------------------------------------------------------------
PRO FORMA
HISTORICAL AND WEIGHTED REVISED PRO FORMA
WEIGHTED HISTORICAL PRO FORMA AVERAGE PRO FORMA INCREMENTAL
AVERAGE AVERAGE INTEREST INTEREST INTEREST INTEREST
OUTSTANDING INTEREST RATE EXPENSE RATE(K) EXPENSE EXPENSE
----------- ------------- -------------- --------- --------- -----------
Revolving credit facility borrowings
Purchase of 50 percent interest in
Deepwater Holdings............... $ 140,000 4.47%(F) $ 4,988 8.52% $ 9,510 $ 4,522
Purchase Chaco cryogenic natural
gas processing plant............. 198,500 4.47%(F) 7,072 8.52% 13,483 6,411
Purchase NGL transportation and
fractionation assets............. 133,000 7.68%(G) 1,702 8.52% 1,889 187
Repayment of Prince TLP term
loan............................. 99,000 3.51%(C) 3,473 8.52% 8,435 $ 4,962
--------- ------- -------- -------
$ 570,500 $17,235 $ 33,317 $16,082
========= ======= ======== =======
$160 million senior secured term loan
Borrowings under senior secured
term loan........................ $ 160,000 5.22%(D) $ 8,352 8.52% $ 13,633 $ 5,281
Repayment of EPN revolving credit
facility......................... (160,000) 4.46%(E) (7,136) 8.52% (13,633) (6,497)
Borrowing to pay debt issue
costs............................ 1,600 4.46%(E) 71 8.52% 136 65
--------- ------- -------- -------
$ 1,600 $ 1,287 $ 136 $(1,151)
========= ======= ======== =======
- ---------------
(A) Represents the daily average interest rate on amounts outstanding during
the nine months ended September 30, 2002 and twelve months ended December
31, 2001.
(B) Represents the effective interest rate on EPN Holding's acquisition
facility at March 31, 2002.
(C) Represents the interest rate on our revolving credit facility at March 31,
2002.
(D) Represents the interest rate on our $160 million senior secured term loan
at our initial borrowing on October 16, 2002.
(E) Represents the average interest rate on amounts outstanding under our
revolving credit facility at September 30, 2002.
(F) Represents the average interest rate on amounts outstanding under our
revolving credit facility at September 30, 2001.
(G) Represents the average interest rate on amounts outstanding under our
revolving credit facility at March 31, 2001.
(H) Represents the historical interest expense incurred on $535 million
outstanding under EPN Holding's acquisition facility for the period from
April 1, 2002 through April 23, 2002, at which time $150 million was
repaid.
(I) Represents the historical interest expense incurred on $385 million
outstanding under EPN Holding's acquisition facility for the period from
April 23, 2002 through May 15, 2002, at which time $225 million was repaid.
(J) Represents the historical interest expense incurred on $160 million
outstanding under EPN Holding's acquisition facility for the period from
May 15, 2002 through September 30, 2002.
(K) Represents the weighted average interest rate on amounts outstanding under
our revolving credit facility for the nine months ended September 30, 2002
and twelve months ended December 31, 2001 had the add-on rates of 3.5% for
Eurodollar loans and 2.25% for alternate base rate loans been in effect
pursuant to the amended credit facility agreement.
(L) Represents the weighted average interest rate on amounts outstanding under
EPN Holding's acquisition facility from April 8, 2002 through September 30,
2002 had the add-on rates of 3.5% for Eurodollar loans and 2.25% for
alternate base rate loans been in effect pursuant to EPN Holding's amended
acquisition facility agreement.
SAN JUAN ASSET ACQUISITION
P This column represents the unaudited condensed combined statement of
operations for the nine months ended September 30, 2002 and the audited combined
statement of operations for the year ended December 31, 2001 of the San Juan
assets acquired.
14
EL PASO ENERGY PARTNERS, L.P.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
Q To eliminate intercompany accounts and transactions resulting from our
acquisition of the San Juan assets and to reflect the reduction in interest
expense resulting from repayment of approximately $6 million on our revolving
credit facility from proceeds received from settlement of working capital and
capital expenditure items.
R To record additional depreciation expense resulting from increased basis
of $466 million to property, plant and equipment relating to our acquisition of
the San Juan assets. Such property, plant and equipment will be depreciated on a
straight-line basis over the remaining useful lives of the assets which
approximates 30 years.
DEEPWATER HOLDINGS TRANSACTION
S This column represents the unaudited historical Deepwater Holdings,
L.L.C. consolidated statement of operations.
T To eliminate the results of operations of Stingray, UTOS and the West
Cameron dehydration facility, our associated equity earnings from these assets,
and the effect of the non-recurring loss related to the sales of these assets.
See note (CC) to this table.
U To record depreciation expense associated with the allocation of the
excess purchase price assigned to Deepwater Holdings' property, plant and
equipment relating to our acquisition of the additional interest in Deepwater
Holdings. Such property, plant and equipment will be depreciated on a straight
line basis over the remaining useful lives of the assets which approximate 30
years.
V To eliminate our equity losses from our investment in Deepwater Holdings
prior to our acquisition of the remaining 50 percent interest in Deepwater
Holdings.
W To record the elimination of the historical interest expense related to
Deepwater Holdings' credit facility which was repaid and terminated.
X To record the increase in interest expense due to additional borrowings
of approximately $140 million under our revolving credit facility to fund the
acquisition of El Paso Corporation's 50 percent interest in Deepwater Holdings
and to repay Deepwater Holdings' credit facility. The amount was calculated
based on the interest rate on our revolving credit facility at September 30,
2001, which was approximately 4.5%. A change in the rate of 0.125% would impact
our annual results of operations by approximately $0.2 million.
CHACO PLANT TRANSACTION
Y To record the results of operations of the Chaco plant. In connection
with the October 2001 acquisition of our interests in this asset, we secured a
fixed rate processing agreement from El Paso Field Services, an affiliate of our
general partner, to process natural gas for the next twenty years. Our pro forma
processing revenues are based on the contract price assuming historical daily
volumes for the respective period. Also, we expect to incur annual operating
expenses related to the Chaco plant of approximately $7 million per year. Our
depreciation and amortization estimate is based on the total cost of the plant
of $77 million assuming a remaining life of 30 years and the processing
agreement of $121.5 million assuming a remaining 20 year life.
Z To record the increase in interest expense due to additional borrowings
under our revolving credit facility to fund the acquisition of the Chaco plant
for $198.5 million. The amount was calculated based on the interest rate on our
revolving credit facility at September 30, 2001, which was approximately 4.5%. A
change in the rate of 0.125% would impact our annual results of operations by
approximately $0.3 million.
15
EL PASO ENERGY PARTNERS, L.P.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED AND COMBINED FINANCIAL STATEMENTS -- (CONTINUED)
TRANSPORTATION AND FRACTIONATION ASSET TRANSACTION
AA To record the results of operations of the NGL transportation and
fractionation assets acquired in February 2001.
BB To record the increase in interest expense related to our additional
borrowings under our revolving credit facility to fund the acquisition of the
NGL transportation and fractionation assets for $133 million. This amount was
calculated based on the interest rate on our revolving credit facility at March
31, 2001, which was approximately 7.68%. A change in the rate of 0.125% would
impact our annual results of operations by approximately $0.2 million.
OTHER GULF OF MEXICO ASSET DIVESTITURE TRANSACTIONS
CC To eliminate the results of operations of Nautilus, Manta Ray Offshore,
Nemo, Green Canyon and Tarpon and the effect of the non-recurring items, related
to the losses on the sales of these assets and the $25.4 million additional
consideration received from El Paso Corporation. We believe that the exclusion
of (1) the results of operations of Deepwater Holdings, L.L.C.'s (one of our
joint ventures) interests in the Stingray and UTOS systems and the West Cameron
dehydration facility (described in note (T) above), which were sold in 2001; (2)
the results of operations of our interests in the Nautilus, Manta Ray Offshore,
Nemo, Green Canyon and Tarpon systems as well as our interest in two offshore
platforms, which were sold in 2001; and (3) losses on the dispositions described
in (1) and (2) above and income of $25.4 million we recognized from payments by
El Paso Corporation as additional consideration for those dispositions is
appropriate for this presentation because those dispositions were non-recurring
events. We have not disposed of assets in that manner in the past, and we have
no plans to dispose of assets similarly in the future; rather, these
dispositions were a forced sale, required because of antitrust concerns in
connection with the 2001 merger of El Paso Corporation and The Coastal
Corporation.
16
(c) Exhibits.
Each exhibit identified below is filed as part of this report. Exhibits
included in this filing are designated by an asterisk; all exhibits not so
designated are incorporated herein by reference to a prior filing as indicated.
EXHIBIT NO. DESCRIPTION
----------- -----------
2.A Contribution, Purchase and Sale Agreement by and between El
Paso Corporation and El Paso Energy Partners, L.P. dated
November 21, 2002 (Exhibit 2.A to our Current Report on Form
8-K dated December 11, 2002).
3.B Second Amended and Restated Agreement of Limited Partnership
effective as of August 31, 2000 (Exhibit 3.B to our Current
Report on Form 8-K dated March 6, 2001).
3.B.1 First Amendment to the Second Amended and Restated Agreement
of Limited Partnership dated November 27, 2002 (Exhibit
3.B.1 to our Current Report on Form 8-K dated December 11,
2002).
4.G Registration Rights Agreement by and between El Paso
Corporation and El Paso Energy Partners, L.P. dated as
November 27, 2002 (Exhibit 4.G to our Current Report on Form
8-K dated December 11, 2002).
4.H A/B Exchange Registration Rights Agreement by and among El
Paso Energy Partners, L.P., El Paso Energy Partners Finance
Corporation, the Subsidiary Guarantors party thereto, J.P.
Morgan Securities Inc., Goldman, Sachs & Co., UBS Warburg
LLC and Wachovia Securities, Inc. dated as of November 27,
2002 (Exhibit 4.H to our Current Report on Form 8-K dated
December 11, 2002).
4.I Indenture dated as of November 27, 2002 by and among El Paso
Energy Partners, L.P., El Paso Energy Partners Finance
Corporation, the Subsidiary Guarantors named therein and
JPMorgan Chase Bank, as Trustee (Exhibit 4.I to our Current
Report on Form 8-K dated December 11, 2002).
10.A Amended and Restated General and Administrative Services
Agreement by and between DeepTech International Inc., El
Paso Energy Partners Company and El Paso Field Services,
L.P. dated November 27, 2002 (Exhibit 10.A to our Current
Report on Form 8-K dated December 11, 2002).
10.R Purchase Agreement by and among El Paso Energy Partners,
L.P., El Paso Energy Partners Finance Corporation, the
Subsidiary Guarantors party thereto, J.P. Morgan Securities
Inc., Goldman, Sachs & Co., UBS Warburg LLC and Wachovia
Securities, Inc. dated November 22, 2002 (Exhibit 10.R to
our Current Report on Form 8-K dated December 11, 2002).
17
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 thereunto duly authorized.
EL PASO ENERGY PARTNERS, L.P.
By: El Paso Energy Partners Company,
its General Partner
Date: December 26, 2002 By: /s/ D. MARK LELAND
------------------------------------
D. Mark Leland
Senior Vice President and Controller
(Principal Accounting Officer)
18
EXHIBIT INDEX
Each exhibit identified below is filed as part of this report. Exhibits
included in this filing are designated by an asterisk; all exhibits not so
designated are incorporated herein by reference to a prior filing as indicated.
EXHIBIT NO. DESCRIPTION
----------- -----------
2.A Contribution, Purchase and Sale Agreement by and between El
Paso Corporation and El Paso Energy Partners, L.P. dated
November 21, 2002 (Exhibit 2.A to our Current Report on Form
8-K dated December 11, 2002).
3.B Second Amended and Restated Agreement of Limited Partnership
effective as of August 31, 2000 (Exhibit 3.B to our Current
Report on Form 8-K dated March 6, 2001).
3.B.1 First Amendment to the Second Amended and Restated Agreement
of Limited Partnership dated November 27, 2002 (Exhibit
3.B.1 to our Current Report on Form 8-K dated December 11,
2002).
4.G Registration Rights Agreement by and between El Paso
Corporation and El Paso Energy Partners, L.P. dated as
November 27, 2002 (Exhibit 4.G to our Current Report on Form
8-K dated December 11, 2002).
4.H A/B Exchange Registration Rights Agreement by and among El
Paso Energy Partners, L.P., El Paso Energy Partners Finance
Corporation, the Subsidiary Guarantors party thereto, J.P.
Morgan Securities Inc., Goldman, Sachs & Co., UBS Warburg
LLC and Wachovia Securities, Inc. dated as of November 27,
2002 (Exhibit 4.H to our Current Report on Form 8-K dated
December 11, 2002).
4.I Indenture dated as of November 27, 2002 by and among El Paso
Energy Partners, L.P., El Paso Energy Partners Finance
Corporation, the Subsidiary Guarantors named therein and
JPMorgan Chase Bank, as Trustee (Exhibit 4.I to our Current
Report on Form 8-K dated December 11, 2002).
10.A Amended and Restated General and Administrative Services
Agreement by and between DeepTech International Inc., El
Paso Energy Partners Company and El Paso Field Services,
L.P. dated November 27, 2002 (Exhibit 10.A to our Current
Report on Form 8-K dated December 11, 2002).
10.R Purchase Agreement by and among El Paso Energy Partners,
L.P., El Paso Energy Partners Finance Corporation, the
Subsidiary Guarantors party thereto, J.P. Morgan Securities
Inc., Goldman, Sachs & Co., UBS Warburg LLC and Wachovia
Securities, Inc. dated November 22, 2002 (Exhibit 10.R to
our Current Report on Form 8-K dated December 11, 2002).
