FILED BY GULFTERRA ENERGY PARTNERS, L.P.
PURSUANT TO RULE 425 UNDER THE SECURITIES ACT OF 1933, AS AMENDED
AND DEEMED FILED PURSUANT TO RULE 14A-12 AND RULE 14D-2(b)
OF THE SECURITIES EXCHANGE ACT OF 1934

SUBJECT COMPANY: GULFTERRA ENERGY PARTNERS, L.P.
COMMISSION FILE NO.: 1-11680

GULFTERRA ENERGY PARTNERS, L.P. (“GULFTERRA”) AND ENTERPRISE PRODUCTS PARTNERS L.P. (“ENTERPRISE”) WILL FILE A JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS WITH THE SECURITIES AND EXCHANGE COMMISSION. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ CAREFULLY THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS WHEN THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION REGARDING GULFTERRA, ENTERPRISE AND THE MERGER. A DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS WILL BE SENT TO SECURITY HOLDERS OF GULFTERRA AND ENTERPRISE SEEKING THEIR APPROVAL OF THE MERGER TRANSACTIONS. INVESTORS AND SECURITY HOLDERS MAY OBTAIN A FREE COPY OF THE JOINT PROXY STATEMENT/PROSPECTUS (WHEN IT IS AVAILABLE) AND OTHER RELEVANT DOCUMENTS CONTAINING INFORMATION ABOUT GULFTERRA AND ENTERPRISE AT THE SEC’S WEB SITE AT WWW.SEC.GOV. COPIES OF THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS AND THE SEC FILINGS THAT WILL BE INCORPORATED BY REFERENCE IN THE JOINT PROXY STATEMENT/PROSPECTUS MAY ALSO BE OBTAINED FOR FREE BY DIRECTING A REQUEST TO THE RESPECTIVE PARTNERSHIPS.

GULFTERRA AND ENTERPRISE AND THE OFFICERS AND DIRECTORS OF THEIR RESPECTIVE GENERAL PARTNERS MAY BE DEEMED TO BE PARTICIPANTS IN THE SOLICITATION OF PROXIES FROM THEIR SECURITY HOLDERS. INFORMATION ABOUT THESE PERSONS CAN BE FOUND IN GULFTERRA’S AND ENTERPRISE’S RESPECTIVE ANNUAL REPORTS ON FORM 10-K FILED WITH THE SEC, AND ADDITIONAL INFORMATION ABOUT SUCH PERSONS MAY BE OBTAINED FROM THE JOINT PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE.

     GulfTerra Energy Partners, L.P. (“GulfTerra”) is filing the transcript and related materials from its earnings call of February 19, 2004.

Gulfterra Energy Partners
Moderator: Drew Cozby
February 19, 2004
11:30 a.m. EST

OPERATOR: Good morning, and welcome to the Gulfterra Energy Partners’ fourth-quarter earnings 2003 conference call.

At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions following the presentation.

It is now my pleasure to introduce your host for today’s call, Mr. Drew Cozby. Sir, you may begin.

DREW COZBY, GULFTERRA ENERGY PARTNERS: Thank you, Stephanie.

Good morning, everyone, and thank you for joining us for Gulfterra Energy Partners’ fourth-quarter 2003 earnings and presentation conference call. This morning, Bob Phillips, Chairman and Chief Executive Officer will begin our call with a review of 2003 highlights and a strategic overview. Bill Manias, Chief Financial Officer, will take us through the operating results, and present a review of the Balance Sheet and other financial items. James Lytal, President, will provide a commercial review and update you on our commercial projects. Other members of management are also here to assist in the Q&A portion of the call.

I’d like to detail a few regulatory-related items before we get started. First, Gulfterra EBITDA number is the same number we used to call adjusted EBITDA, so there’s continuity in our reporting. This is also covered in the Press Release and Web site issued this morning. In addition, reconciliations of non-GAAP measures used in this presentation and call are reconciled to the most comparable GAAP measures, and are incorporated in our Release and posted, along with our Release and operating statistics, on the Investor’s page of our Web site at www.gulfterra.com, on a tab entitled “Non-GAAP Reconciliations” including reconciliations of consolidated EBITDA to net income.

And now I wish to make you aware that this call will include forward-looking statements and projections. Gulfterra Energy Partners has made every reasonable effort to ensure the information and assumptions on which these statements and projections are based are current, reasonable and complete. However, a variety of factors, including the integration of acquired businesses, our pending merger with Enterprise, status of the partnership’s Greenfield project, successful negotiation of customer contracts and general economic and weather conditions in markets served by Gulfterra Energy Partners and its affiliates could cause actual results to differ materially from the projections and anticipated results or other expectations expressed in this Release. While the partnership makes these statements and projections in good faith, neither the partnership nor its management can guarantee that the anticipated future results will be achieved. Reference should be made to the partnership and its affilates’ Securities and Exchange Commission filings for additional important factors that may affect actual results.

I’ll now turn the call over to Bob Phillips, Gulfterra’s Chairman and CEO. Bob?

ROBERT PHILLIPS, CHAIRMAN & CEO, GULFTERRA ENERGY PARTNERS: Thank you, Drew.

And good morning to all of you. Thank you for joining us. I’m very pleased to announce Gulfterra’s full-year 2003 results, with EBITDA of $435 million and net income, before one-time charges, of $200 million, and net income after the non-recurring charges that were attributable to our debt retirement activities in 2003 of $163 million. All of those are records, and we’re very pleased with our full-year performance.

In the fourth quarter, our results were skewed a little bit by the majority of the debt-redemption charges that occurred. But I would characterize our fourth-quarter performance as solid, but coming in slightly under our expectations. And Bill can talk to you about some of those details.

We will take a slightly different approach today in this call, since we do not plan to hold our traditional annual analyst meeting, which we always have in the spring of the year. We’re combining some of the aspects of that analyst meeting with today’s earnings call to give you a broader review of both our performance of last year, as well as where we expect to hit in 2004. And I would note that we have posted a healthy number of slides that you can follow along with us, they’re on our Web site, and we will be referring to those slides. So I would recommend that, if you’re not there, that you get those and spend some time with those. There’s a lot of information, and it is typically the type of information that we would provide in our annual analyst meeting.

Before I start, I’d also like to very quickly thank a couple of our compatriots here, Mark Leland and Keith Forman. I want to thank them for the many contributions that they’ve made to the success of Gulfterra over the years. As you know, Mark and Keith have recently taken new executive positions with El Paso. I’m very proud of the opportunity for them, and very excited about what they bring to El Paso. I’ve worked with them, shoulder to shoulder, for a number of years, and I attribute a lot of our success to the hard work and contributions they’ve made. Very fortunately, however, we have an extremely deep bench here at Gulfterra. And on an interim basis, and both as we move forward in completing the merger with Enterprise later this year, I want you to know that this very deep bench insures that this partnership is in great hands. We will move forward and continue to be successful in managing our business.

Now if you would, I’d like to turn to slide five, which lets us begin to recap 2003. Clearly, our most significant achievement in the year was digesting the prior-year’s acquisitions, the San Juan and Permian gathering systems, the Chaco and Indian Basin processing plants, the Texas pipeline systems. All of those assets performed very well in 2003. They now form the core of our partnership’s business. They provide the stable cash flow from which we will use as a platform to grow with our organic projects. Of course the performance of those assets, and our ability to digest them properly, allowed us to achieve record cash flow and earnings for the year, and as I said, provides Gulfterra with that diversified base of stable cash flows for our 2004 objectives.

Importantly, our independence initiatives, and our name change, which were accomplished throughout the year, were important steps early in the year, to allow us to separate from the confusion of our general partner. And I think they played a large role in producing a record total return for our investors in 2003.

We did greatly improve our Balance Sheet in 2003, with more than $2 billion in new financings and refinancings that resulted in lower leverage. We clearly met our goal that we laid out for you in February of last year of coming in at the end of the year with leverage below 60 percent. We’ve done that. We also importantly improved our cost of capital, which will create more accretion as our organic growth projects move forward and begin to contribute significant cash flow in ‘04 and ‘05. That lower cost of capital will be very important to the earnings generation of this partnership.

We deliver on our distribution promise for the year. It was on the low end of the distribution range. We said, at the beginning of ‘03, we were going to concentrate on managing our Balance Sheet, improving our credit statistics and our credit profile, and I think we did that. But I also feel good about honoring our promise to our equity unit holders as well.

All of these, taken as a group, contributed to the most important event of the year for us. And that was the opportunity to merge Gulfterra with Enterprise Products to create the industry’s leading mid-stream company. We’re very proud of all these accomplishments. I think, from my perspective, the merger with Enterprise would not have been possible but for all of these other achievements that we laid out as objectives in the early part of the year, and then accomplished throughout the year, many times against a very difficult and challenging background.

Turning to the next slide, as you can see on slide six, we were extremely busy during the fourth quarter. I thought it was important to highlight a number of the achievements that we had during the quarter, as we negotiated and completed the Enterprise merger.

A number of things accomplished all had important effects, both on our 2003 performance as well as where we expect to go in 2004. I’ll just mention a few of those. We did complete a very important 9.9-percent interest sale in the general partner on behalf of El Paso to Goldman Sachs. And as a part of that transaction, we redeemed the Series B preferred units. That was all a part of our ring-fencing strategy that we had announced in the spring of 2003. The sale of the GP interest, of course, was unwound when El Paso completed step one of the Enterprise merger by selling 50 percent of the GP interest to Enterprise on December 15th. That was a challenging transaction, one in which I thought that we accomplished a lot. It was an important transaction, and we’re pleased to have accomplished that as a predicate to the Enterprise deal.

We did complete two important equity offerings, raising almost $300 million in new equity, and lowering our leverage, completed in the fourth quarter. We initiated service from two new sources of deepwater gas production, Matterhorn, a third-party gathering line, and Medusa, a gathering system that we had completed construction on earlier in the year.

We redeemed almost $270 million worth of high-coupon debt, which was an important aspect that led to the non-recurring charges that we took in the fourth quarter. But it will also, of course, result in interest savings and lower cost of capital for us as we go forward.

And importantly in the fourth quarter we expanded our term-loan B facility, while at the same time significantly lowering the cost of that facility. So that will be important in our cost of capital calculation and our debt capitalization as well.

And for the finance guys, I threw in an important note. They received a significant industry award, due to the creativity and structure of our Cameron Highway project financing. An industry publication awarded them the oil and gas deal of the year for 2003. We thought that was important for you to know.

Turning to slide seven, let me talk a little bit about the planned merger with Enterprise. I’d like to update you on our progress. Of course we did announce, on December 15th, this three-way multi step transaction, which will result later in the year in the merger of Enterprise and Gulfterra. The Hart-Scott-Rodino filing was made in January. We’re making good progress on that front. We continue to work on the Form S4, which should be filed in March. We have commenced the integration planning process. And I’m very pleased with our progress there. It’s going very well at this point. We have announced, just this morning, a portion of the post-merger executive team, focusing on the commercial and the operational sides of the post-merger team. I’m pleased that we’ll have a solid combination of executives from both partnerships to lead this company going forward. All this taken together, I think we’re on track to close the merger in the second half of the year, and I’m very pleased with the progress that we have made so far.

I would also hesitate to miss an opportunity to talk about the rationale for the merger. If you’ll turn to slide eight — just to look at the map. You can see that the combination creates North America’s leading mid-stream company. We’re very proud of the footprint of this combination. They touch all of the major supply basins in the country, several of the significant gas and natural-gas liquids markets. And we believe this combination, most importantly, will allow us to greatly enhance the services that we can provide to our customers, both on the supply side and the market side. We’re very pleased with that. The value drivers, as we have discussed previously in some presentations include a lower cost of capital due to Enterprise’s 25-percent cap on their general partner incentive distribution, which when combined with the significant organic growth projects that we bring to the combination, would create more accretion from those growth projects, and also result in a significant transfer of value from the GP to the LPs. And we’re very pleased with that. Post merger, we would expect, I think, the combined companies would expect to see substantial synergies from the combination. We’re targeting a non-heroic level of $30 plus million in cost savings. We expect to see potential interest savings as we consolidate the debt of the two partnerships. And of course we would expect to see incremental organic growth opportunities as well.

I think we’re in an excellent position to complete this merger on the timing and the schedule that we’ve talked about. We remain very excited about the prospects for the combined entity, and the opportunities for growth going forward. We think it’s a perfect match of a great financial structure with a tremendous

platform of stable cash flow, generating assets and tremendous growth opportunities. We expect to be one of the leading mid-stream companies, and of course one of the leading master limited partnership, or publicly-traded partnership investment opportunities going forward. And we’re excited about this opportunity.

With that overview of our 2003 accomplishments, and some background on kind of where we are headed going forward, I’m pleased to turn it over to Bill Manias, who is our newly-appointed Chief Financial Officer. As Drew said, Bill will give you some details on our earnings and our Balance Sheet, as well as our 2004 stand-alone objectives. And then we should look forward to James Lytal giving us an update not only on the performance of our core assets in 2003, but also an update on our numerous projects in the Gulf of Mexico.

Bill?

WILLIAM MANIAS, CHIEF FINANCIAL OFFICER, GULFTERRA ENERGY PARTNERS:

Thank you, Bob. I have a number of topics to cover today. First, I will summarize the earnings drivers for our business and the consolidated results for the fourth quarter and the full year. Second, I’ll provide details on our performance drivers at the segment level and summarize capital spending levels for the year. Third, I will present a review of our capital scorecard, balance sheet and other financial items. Finally, I will update EBITDA guidance for 2004.

2003 was another record year for GulfTerra in terms of overall business performance and EBITDA. I want to touch briefly on several factors which were the primary drivers of 2003’s solid performance. First was the continued top-line growth from the assets we acquired in 2002, namely the Texas — New Mexico assets which we acquired in April 2002 and the San Juan Basin assets which we acquired in November 2002. The second was the EBITDA contribution of our offshore projects. We benefited from the strong performance of our Falcon Nest platform and pipeline which received first production in March 2003 as well as stronger results from Viosca Knoll gathering through the addition of volumes from Medusa and Matterhorn both of which came on line in the fourth quarter of 2003. In addition, we benefited from improved throughput and margins in our San Juan and Texas Pipeline businesses. Finally, in 2003, we recognized the full year impact from our expansion project which we completed in mid year 2002 at our Hattiesburg natural gas storage facility.

For the 4th quarter of 2003, GulfTerra reported net income of $11.4 million or a loss of 13 cents per unit. Excluding the impact of the early retirement of debt in the fourth quarter, net income was $43.3 million or 32 cents per unit, that’s a 52% increase in net income over the same period last year. EBITDA, the key measure on which we evaluate our performance was $97.7 million in the quarter, up 25% from 2002. Total common units outstanding at the end of the quarter were 58.4 million as a result of equity that we issued in October through the Goldman-Sachs transaction and a public unit offering which accounted for an additional 7.5 million common units

For the full year of 2003, EBITDA totaled $435.1 million, up $168.3 million or 63% from 2002. In addition, we reported net income of $163.1 million or 1.32 cents per unit up 67% from last year. Excluding the impact of the early retirement of debt during the year, net income was $200MM or $1.94 per unit, a 100% year over year increase. The annual distribution coverage ratio was 1.07 times on this basis.

Now I would like to provide you with some details and on our segment results. James Lytal will discuss this in more detail later during his portion of the presentation.

The Natural Gas Pipeline and Plants Segment, by far the largest segment, continues to show solid EBITDA performance. In the fourth quarter of 2003 this segment generated EBITDA of $75 million, up 35% from the same period in 2002. While we had strong contributions from all of the assets in this segment, the largest cash flow contributions came from our San Juan Basin gathering system and the Chaco plant, which we acquired in November 2002.

The Oil and NGL Logistics Segment contributed $7.8 million of EBITDA compared with $9.4 million in the fourth quarter of 2002. Much of this decline in base cash flow was attributable to lower distributions from Poseidon related to lower volumes and the decision by the Poseidon JV partners to retain near term cash flow to fund the Front Runner project. The lower volumes at Poseidon were offset by increases in volumes at our Typhoon and Allegheny oil pipeline systems.

The Natural Gas Storage segment which is comprised of our Petal and Hattisburg facilities in Mississippi and our Wilson storage facility in Texas contributed approximately $7.0 million this past quarter. That is up from $6.4 million during the fourth quarter of 2002. For the full year 2003, this segment contributed approximately $29.6 million, a 78% increase over 2002. This year over year increase is primarily driven by a full year impact in 2003 from our 20 year contract with The Southern Company at the Hattsburg facility which went into effect in June 2002 and new interruptible transportation contracts at our Wilson storage facility.

The Platform Services Segment was flat quarter to quarter but down year over year, $20.2 million in 2003 versus $29.3 million in 2002. This year over year decrease was primarily related the sale of our Prince Platform in April 2002 and to a lesser extent lower demand fees associated with certain offshore platforms. Partially offsetting these decreases was the contributions from our Falcon’s Nest Platform which went into service in March 2003.

Now let’s turn to volumes.

Total gas pipeline throughput on the GulfTerra system was approximately 7.6 million dekatherms per day in the fourth quarter versus approximately 6.5 million dekatherms per day for the same period in 2002. The San Juan gathering system averaged about 1.3 million dekatherms per day this past quarter and we continue to see solid volume growth and well connect activity. Also contributing to growth in pipeline volumes was a nominal 180 thousand dekatherms per day moving on our Falcon Nest pipeline which came on in March 2003. We are extremely pleased with the performance of our Falcon Nest project. In January 2004, production from Pioneer’s Harrier discover started flowing to Falcon and current production to Falcon is approximately 270 thousand dekatherms per day versus the 167 thousand per day at year end. In addition, volumes on the Viosca Knoll Gathering system averaged about 618 thousand dekatherms a day up from approximately 550 thousand per day for the same period in 2002. This increase is attributable to additional volumes from Canyon Station and the November 2003 first production from Matterhorn and Medusa. Volumes on the Texas Pipeline were essentially flat at year over year at approximately 3.2 million dekatherms per day. Plant volumes increased slightly to 790 thousand dekatherms per day versus 779 thousand dekatherms per day last year, with a majority of these volumes attributable to the Chaco plant.

For the oil pipelines, quarter over quarter volumes were up approximately 16% as increased volumes from a full years contribution from the Typhoon oil pipeline which we acquired in November 2002 and the Allegheny oil pipeline both of which more than offset the decline in volumes on Poseidon. Poseidon volumes were down approximately 18,000 bpd quarter over quarter primarily due to lower than expected volumes and natural decline. We expect volumes on Poseidon to increase in the third quarter of 2004 as first production from the Front Runner project comes on line.

Our NGL volumes were up quarter over quarter by approximately 23%. The primary driver of this increase was the acquisition of the Texas NGL assets in November 2002. Partially offsetting the impact of the Texas NGL acquisition volumes, were lower volumes attributable to the Texas fractionation business as the high gas prices in 2003 made the extraction of NGLs by producers and processors less economic.

Now let me turn to capital expenditures.

For the full year 2003, we spent approx $279MM in growth capital primarily related to our offshore construction projects (Cameron Hwy, Marco Polo, Phoenix, Falcon Nest & Medusa) and our expansion project associated with our Texas NGL business. James will give you an update on the progress we are making on several of our deepwater growth projects in just a minute. In 2003, we spent approx $13.5MM on well ties. We added 343 new wells to our systems, the majority of them or 259 at San Juan, which

increased volume throughout the system. In addition, we spent approximately $6.6MM in our pipeline integrity program related to inspection & repairs. As you well know, pipeline integrity and safety is an issue of great concern to the industry. Under the regulations adopted by the Texas Railroad Commission and the Department of Transportation, pipeline operators must have completed a detailed integrity assessment covering 50% of their total pipeline system prior to September 30, 2004, for liquid pipelines and January 1, 2006 for gas pipelines. We have been working on this issue since 2001 and we are on track to meet the stringent requirements and deadlines. Maintenance capex for our assets amounted to approximately $32.3MM in 2003. Sustaining capex, which we defined as the sum of well tie capital, pipeline integrity capital, and maintenance capital was $52.4 million for the full year 2003 which was in line with our expectations and earlier guidance.

Now let’s talk about our capital raising activities in 2003 and the impact that these activities had on our balance sheet.

As you all know, during 2002 we were very active on the acquisition front completing over $1.5 billion in acquisitions. As a result, we entered 2003 with more leverage than we would have liked. Our financial goals for 2003 were simple. We told you we would reduce our leverage, improve our cost of capital, and continue to fund our organic growth projects. I think that as you look back at 2003 you will see that we accomplished these goals.

Throughout 2003 we opportunistically accessed both the debt and equity markets, raising a little over $2 billion in capital. We refinanced the acquisition loans for both the Texas/New Mexico and the San Juan Basin acquisitions with long term debt at favorable rates. In the fourth quarter of 2003, we refinanced our term B loan facility and upsized it from $160 million to $300 million at a pricing of LIBOR plus 225 basis points, a reduction of 125 basis points from the previous term B loan. For the full year, we raised nearly $500 million in new equity, almost $300 million in the fourth quarter alone.

In addition to these capital raising efforts, we were active in the debt redemption and swap markets. In December, we retired $269 million of our higher coupon bonds ranging from 8 1/2% to 10 5/8%. These redemptions in the fourth quarter resulted in a one time charge of $31.9 million related to the write-offs of the unamortized debt issuance costs, premiums and discounts attributable to the early retirement of bond debt and the refinancing of our term B loan facility. Also, earlier in the year, we retired our San Juan acquisition loan and recorded a charge of $3.8 million in unamortized debt issuance cost and another $1.2 million charge in July when we retired the EPN Holding term loan. These non-recurring expenses totaled approximately $37 million for the full year 2003. We expect the net effect of these redemptions to result in approximately $24 million in gross annual interest savings in 2004 forward. Finally, in July, we executed a fixed for floating swap for $250 million of our 8.5 percent bonds maturing in 2011. This swap is accounted for as a fair value hedge with an effective rate of 5.32% at year end 2003. The end result of all of this activity was a fixed to floating mix of 49 percent fixed and 51 percent floating and a reduced weighted average cost of debt of approximately 6.1%.

Now, let’s look at the balance sheet.

We ended the year with approximately $1.8 billion in total debt, a decrease of approximately $100 million from year end 2002. Our equity balance at year end was approximately $1.25 billion, an increase of approximately $302 million over 2002. As a result of all of our capital financing activities during the year, we were successful in reducing our ratio of debt to total capitalization to approximately 59% down from approximately 67% at year end 2002. Our debt to EBITDA ratio improved to 4.2 times versus 4.9 times at year end 2002. Equally as important, we were successful in decreasing our weighted average cost of capital to approximately 8.3%, down from almost 10% at year end 2002.

With that, I would like to say a few words about our expected performance in 2004 and 2005.

Looking forward to 2004, we expect we will achieve EBITDA totaling between $460 and $470 million. This is a 13 to 15 percent year over year growth rate on our base business. While we see further improvement in the base business EBITDA from the San Juan and the Texas Pipelines, we expect our 2004

performance to be driven by the contributions from several of our growth projects. In the Natural Gas Pipelines and Plants segment we will see contributions from the Marco Polo and Phoenix gas pipelines which are expected to be on line at mid year and a full years’ impact of the Falcon Nest pipeline. Falcon’s volumes are also expected to increase later in the year with the addition of the Tomahawk and Raptor discoveries which are anticipated to begin producing in the third quarter. The Oil and NGL Logistics segment will benefit from the Marco Polo oil pipeline and the impact of the Front Runner project which is scheduled to receive production in the third quarter. The Platform Services segment will be positively impacted by incremental volumes flowing through both the Marco Polo and the Falcon Nest platforms. Finally, given that many of these projects are coming on line over the next two years, we believe that it is reasonable to expect 13% to 15% year over year growth rate in EBITDA for 2005 from these organic and projects.

The critical take away here is that this growth in 2004 and 2005 does not include any new acquisitions. This future growth is based solely on organic projects which are currently underway or where we have signed commitments to proceed.

With that I will turn it over to James Lytal who will provide a review of our commercial asset performance and update you on the status of our deepwater construction projects.

JAMES LYTAL, PRESIDENT, GULFTERRA ENERGY PARTNERS: Thank you, Bill.

I’m going to take a few minutes today to provide highlights on some of our core assets as well as provide an update on our organic growth projects. Hopefully, I can give you a good feel where the growth Bill talked about will come from over the next couple of years.

Slide #22 shows the diversity of the midstream services we provide as well as the location of our assets in relation to excellent supply basins such as the San Juan Basin, Permian Basin, South Texas, the Black Warrior Basin and the Deepwater Gulf of Mexico.

Slide #23 shows our San Juan Basin gathering assets which include over 6,000 miles of pipeline connected to almost 10,000 wells. Producers in the basin are maintaining a very active drilling program as seen from our 259 well connects in 2003. This is above our five year average of 242 wells connected per year. Our gathered volumes for 2003 averaged 1,227 thousand dekatherms per day. This is in line with our five year average of 1234 thousand dk per day and 2003 included a period of reduced volumes of approximately 100 thousand dk per day in the 1st quarter due to a compressor overhaul, so we expect to see a higher average volume in 2004.

A portion of our gathering fees are based on a percentage of the San Juan gas index. We have hedge approximately 75% of that exposure for 2004 at $4.23 per Dth. In 2003, we hedged a similar percentage of our exposure at $3.53 per Dth so we should see cash flow increases in 2004 from this higher hedge price.

We processed 665 thousand Dth per day at our Chaco processing plant in 2003. This is above our 5 year average of 641 thousand Dth per day. Under a substantial portion of our processing agreements, we receive a percentage of the liquids as a fee. We have hedged approximately 50% of our liquid exposure at $.45 to $.51 per gal for the first three quarters of 2004. Using the current NGL strip for our unhedged NGL’s, we should see an average NGL price in 2004 comparable to our 2003 prices.

We have begun the $43MM system expansions that we discussed at last February’s analyst meeting and have already seen a 20 thousand Dth volume uptick from modifications to existing field compression. We are behind the expansion schedule that we laid out last February as the engineering took longer than expected. Slide #24 shows the new schedule. The differences from the previous schedule are that we expected to have capacity of 80 MMcf/d in 2004 as opposed to the new capacity of 40 MMcf/d and we expected to have capacity of 130 MMcf/d by 2005 as opposed to 130 MMcf/d in 2006 in the new schedule. Once up and running at maximum volumes, we expect this system optimization to add approximately $20-$25MM of incremental EBITDA to the partnership.

Slide #25 shows our Texas Pipeline and its strategic location to major markets and supply basins. The asset was negatively impacted by $18MM in 2003 due to lost and unaccounted for gas expense and revaluations of payables under pipeline shipper imbalances. We believe we have dealt with these issues and if there is any impact in 2004 it should be minimal. This puts us significantly ahead of the curve already in comparing 2004 to 2003. Our average gross volume on the system for 2003 was 3.4 Bcf/d. Our transportation revenues in 2003, without the impact of gas loss and imbalance revaluation, increased approximately 6% from 2002. We were able to recontract 325 MMcf/d of capacity in 2003 for an average term of 3 years and were able to increase the fees by 20%. We also increased volumes from the prolific Barnett Shale play in North Texas to 400 MMcf/d. In 2004, we believe we can increase transportation revenues by recontracting 360 MMcf/d of capacity at increased transport and fuel rates. With the increase in Barnett Shale volumes, we will be pursuing an expansion of our North Texas pipeline. This 36” pipeline can access both Carthage and Waha and of the competitive alternatives for this additional supply, we believe an expansion of this system will be the most cost effective alternative. We also are working on an expansion opportunity to provide additional volumes to Mexico.

Slide #26 — Our Petal and Hattiesburg Storage facilities are strategically located in the Southeast with total combined capacity of 13.5 Bcf and connections to multiple pipeline outlets. In 2003, in addition to revenue generated from our firm contracts, we were able to generate interruptible revenues of $3.5 MM. The facilities are 100% subscribed on a firm basis and over 50% subscribed out to the year 2021. We have a FERC authority to expand the Petal facility by 8 Bcf. 1.8 Bcf would be through the conversion to gas of our existing brine well at our propane caverns. We are finalizing commitments for over 80% of the capacity and expect to move forward with this project with initial service in the 4th quarter 2004. We have announced a letter of intent with Southern Natural under which GulfTerra would build and sell Southern Natural a 5 Bcf cavern and an undivided interest in our Petal Pipeline. Southern Natural is currently holding an open season for the space and there appears to be considerable interest from their customers. The additional 1.2 Bcf of space would be developed by expanding an existing caveran.

Slide #27 — HIOS and East Breaks volumes have remained stable with even a slight increase comparing 4th 2003 to 4th 2002. We are seeing enough activity on the shelf that we believe we can keep these volumes stable for 2004. We also see opportunities in the future with what appear to be major discoveries in the deepwater south of the Diana/Hoover development. At Viosca Knoll, we initiated flows from the Medusa and Matterhorn developments and expect combined flow from these fields to ramp up to close to 100 Mmcf/d by mid year 2004. We also see drilling around platforms connected to Viosca Knoll that should add volumes in 2004. Our Phoenix Pipeline, which connects Kerr-McGee and Devon’s Red Hawk development to ANR has been installed. The Producers expect to install their Spar production facility in March and expect first flows in mid-2004. The producers expect to ramp up quickly to a flow rate of 120 MMcf/d and also expect to do additional drilling in the areas surrounding the spar.

Slide #28 — Volumes were down in 2003 on Poseidon average 127,000 BOPD. The future looks bright for Poseidon with the initiation of flows from Marco Polo in mid-2004 and Front Runner late in the 3rd quarter We also are finalizing a commitment of a shelf based field which should add 15,000 BOPD in 2005. Poseidon should also have the potential of moving undedicated barrels from the Caesar Pipeline. With these new additions, we expect a 60% increase in volumes on Poseidon by 2005 as compared to 2003 average volumes.

Slide #29 — This cartoon depicts Pioneer’s subsea wells in the Falcon corridor connected to our new platform and pipeline. Our platform and pipeline were installed ahead of schedule and first production began in March 2003. Pioneer connected their Harrier Field to our platform in January 2004 which increased volumes to their current level of 270 MMcf/d. Pioneer’s Rapter and Tomahawk fields are planned to be connected in the 3rd quarter of 2003 at which time volumes on the platform are expected to increase to a rate of up to 350 MMcf/d. Pioneer also plans `additional exploration on their significant acreage position in the area. On Slide #30, you see the location of our Marco Polo platform and oil and gas pipelines. The installation of the platform was completed on January 12, 2004. It was originally scheduled to be installed in October 2003, but was delayed due to the late arrival of the installation contractor and weather conditions once the contractor was on location. We have handed over the TLP to Anadarko and they are currently installing their completion rig. The oil and gas pipelines have been installed and we

expect first production from Marco Polo in mid 2004. On Slide 31, you see all the activity in the area of the Marco Polo platform. Anadarko has indicated they expect Maro Polo to ramp up to 50,000 BOPD by year end 2004, and that K-2 and Green Canyon Block 518 will be subsea connected to the Marco Polo platform. First flows from these subsea connected fields should be mid year 2005 with ramp up to full rate by the end of the year. These additional volumes will also be beneficial to our downstream oil and gas pipelines. There are also producers in the area that plan to drill for gas and we believe Marco Polo will be the best option for tieback. We have some pictures of the Marco Polo platform. Slide #32 shows the Marco Polo hull near Corpus Christi. You can see the Marco Polo deck in the background. Slide #33 shows the installation barge lifting the deck and Slide #34 shows the platform installed with the installation barge on location.

Slide #35 shows our Cameron Highway Pipeline. On the construction side, the SS332 B and High Island platform jackets have been installed as well as the bifurcated 88 miles of offshore 24” pipeline. The Right of Way has been purchased for the onshore pipeline and construction is in progress to connect to the Beaumont/Port Arthur facilities and Texas City facilities. We are currently installing the offshore 30 inch pipeline and are 36% complete. We expect to be completed with the installation in the 3rd quarter of 2004 and expect first flows in the 4th quarter of 04.

This map shows on Slide #36 shows you the significant number of discoveries in the deepwater in relation to the Cameron Highway pipeline. For reference, GulfTerra has ownership in the green pipelines, third parties own the white pipelines and the red pipeline is our Marco Polo gas pipeline. Cameron Highway received life of reserves commitments from BP, BHP, and Unocal of their production from Holstein, Mad Dog, and Atlantis. We believe these fields combined contain 1 billion barrels. Of the discoveries you see on the map, Tahiti, Shenzi, and Neptune have been announced as potentially significant discoveries. The total capacity of the gathering pipelines from the deepwater to our SS332 platform is approximately 1 million barrels per day. We believe that puts Cameron Highway as well as our Poseidon system in an excellent position to access supplies from this prolific deepwater area. We also believe that with the number of discoveries, we may have the opportunity to build new oil gathering pipelines into the area. We have some pictures of the Cameron Highway installation. On page 37 is a picture of Allseas installation vessel called the Solitaire which is laying the 30” pipeline. On page 38 is a picture of a directional drill in Galveston Bay under the Texas City Dike and Ship Channel.

Side #39 — shows the deepwater discoveries awaiting development. You can see we are well positioned to offer our services on these developments. We are currently in discussions with producers on over $700 MM of new projects in the deepwater. We are proud of our accomplishments to date and strongly believe we can continue our growth in the Gulf of Mexico.

With that I will turn it over to the operator for questions.

OPERATOR: Thank you. The floor is now open for questions. If you do have a question, please press the numbers one followed by four on your touch-tone telephone at this time. If at any point your question has been answered, you may remove yourself from the queue by pressing the pound key. Questions will be taken in the order that they are received. And we do ask that while posing your question you please pick up your handset to ensure proper sound quality. Once again, if you do have a question at this time, please press the numbers one followed four on your touch-tone telephone. Please hold the line while we poll for questions.

Once again, if you do have a question at this time, please press the numbers one followed by four on your touch-tone telephone.

Gentlemen, there appear to be no questions at this time.

DREW COZBY: Well, Stephanie , thank you all for joining us for the fourth-quarter earnings call. This wraps up Gulfterra’s fourth-quarter earnings call and we look forward to talking to you at our next quarter regularly scheduled earnings call. Thank you.

OPERATOR: Thank you for your participation. That does conclude this afternoon’s teleconference. You may disconnect your lines at this time, and have a great day. Thank you.

END

GULFTERRA ENERGY PARTNERS, L.P.
PRELIMINARY CONSOLIDATED NET INCOME
($ In millions, except per unit data)
(Unaudited)

1

GULFTERRA ENERGY PARTNERS, L.P.
Income Statement footnote

Since November 2002 when we acquired the Typhoon Oil Pipeline, we have recognized revenue attributable to it using the “gross” method, which means we record as “revenues” all oil that we purchase from our customers at an index price less an amount that compensates us for our service and we record as “cost of oil” that same oil which we resell to those customers at the index price. We believe that a “net” presentation is more appropriate than a “gross” presentation and is consistent with how we evaluate the performance of the Typhoon Oil Pipeline. Based on our review of the accounting literature, we believe that generally accepted accounting principles permit us to use the “net” method, and accordingly we have presented the results of Typhoon Oil “net” for all periods. This change does not affect operating income or net income.

The following table presents revenues and cost of natural gas, oil and other products under the gross method:

1-1

GULFTERRA ENERGY PARTNERS, L.P.
SELECTED SEGMENT INFORMATION
($ In millions)
(Unaudited)

2

GULFTERRA ENERGY PARTNERS, L.P.
EBITDA RECONCILIATION
($ In millions)
(Unaudited)

VOLUME SUMMARY

3

NATURAL GAS PIPELINES AND PLANTS
(Excludes Intrasegment Transactions)
($ In millions)
(Unaudited)