Buckeye Partners, L.P. Master Limited Partner Conference February 2005

Transcription

1 Buckeye Partners, L.P. Master Limited Partner Conference February 2005

2 Forward Looking Statements This presentation may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that the General Partner of the Partnership believes to be reasonable as of the date hereof. Actual results may differ significantly because of risks and uncertainties that are difficult to predict and many of which are beyond the control of the Partnership. In this regard, please refer r to the risk factors set forth in the Partnership's most recently filed Form 10Q and Form 10K and in the Prospectus and the Prospectus Supplement associated with the offering. 2

3 Overview of Buckeye Partners, L.P. Buckeye is a publicly traded master limited partnership (NYSE:BPL) whose principal line of business is the transportation, terminalling and storage of refined petroleum products in the U.S. One of the largest independent refined petroleum products pipeline systems in the U.S., with approximately 4,500 miles of pipeline serving 13 states Owns and operates 38 refined petroleum product terminals with an aggregate storage capacity of approximately 15.4 million barrels Customers include major integrated oil companies, large refined products marketing companies and major end-users of petroleum products Current enterprise value of approximately $2.3 billion Rated BBB+ / Baa2 by S&P and Moodys 3

4 Strategically Located Asset Base Rochester Bay City Buffalo Syracuse Springfield Flint Binghamton New Haven Rockford Chicago Detroit Toledo Cleveland Allentown New York South Bend Lima Pittsburgh Harrisburg Philadelphia Peoria Columbus Indianapolis Dayton Cincinnati Buckeye Owned Pipe Lines 9/30/04 Robinson Wood River Pipeline LLC (Shell) St. Louis Proposed ExxonMobil Acquisition Terminals on Buckeye System Mt. Vernon Off System Terminals 4 Paducah

5 Partnership History 1886 Initial operation as crude oil distribution system for Standard Oil 1964 Purchased by Pennsylvania Railroad (Penn Central) 1986 Began trading on NYSE as first MLP IPO 1996 Purchase of GP interest by management, facilitated by a leveraged ESOP May 2004 Purchase of GP interest by Carlyle/Riverstone Global Energy and Power Fund II, L.P. October 2004 Purchased Midwest pipelines and terminals from Shell for $517 million January 2005 Announced agreement to acquire northeast pipeline system and associated terminals from ExxonMobil for $180 million 5

6 Organizational Structure Carlyle/Riverstone and its Affiliates Senior Management MainLine L.P. 100% MainLine Sub LLC 100% 7% LP Interest Employee Stock Ownership Plan 100% Buckeye Pipe Line Services Company 2.4 million Units Public Unitholders 32.9 million Units 92% LP Interest Buckeye GP LLC 1% GP Interest Buckeye Partners, L.P. (NYSE: BPL) 1% GP Interest 99% LP Interest 100% Membership Interest Buckeye Pipe Line Company, L.P. Laurel Pipe Line Company, L.P. Everglades Pipe Line Company, L.P. Buckeye Pipe Line Holdings, L.P. Wood River Pipe Lines LLC 6

7 Key Investment Considerations High quality, strategically located asset base Located in areas with high demand and tight supply Ability to take advantage of product imports in NY harbor Predictable and stable fee-based business Demonstrated consistency in product volume and mix Supply geographically diverse end-markets from multiple source points Limited commodity price exposure Focus on continued growth consistent with risk profile Shell and recently announced ExxonMobil pipeline and terminal acquisitions highly complementary to existing operations Alignment of employee and management interests with those of unitholders Strong investment grade credit metrics 7

8 Buckeye Business Strategy Own and operate high-quality logistics assets Increase throughput on pipelines and terminals that have additional capacity Expand existing pipelines and terminals to facilitate customer generated growth Maintain and enhance the integrity of our pipelines and terminals Focus on customer service Pursue accretive acquisition opportunities Complementary Strategic, including entry into attractive new markets 8

9 Business Overview Product Pipelines 77% of 2004 revenues Approximately 4,500 miles of pipeline with 90 delivery points Geographically diverse operations in 13 states Limited commodity price exposure 90 customers major integrated oil companies or large refined product marketing companies Transported an average of over 1.2 million barrels per day during

10 Business Overview Terminals & Storage 13% of 2004 revenues Owns and operates 38 terminals located in IL, IN, MA, MI, MO, NY, OH and PA Aggregate storage capacity of approximately 15.4 million barrels 10

11 Strategically Located Asset Base Rochester Bay City Buffalo Syracuse Springfield Flint Binghamton New Haven Rockford Chicago Detroit Toledo Cleveland Allentown New York South Bend Lima Pittsburgh Harrisburg Philadelphia Peoria Columbus Indianapolis Dayton Cincinnati Buckeye Owned Pipe Lines 9/30/04 Robinson Wood River Pipeline LLC (Shell) St. Louis Proposed ExxonMobil Acquisition Terminals on Buckeye System Mt. Vernon Off System Terminals 11 Paducah

12 Business Overview Contract Services 10% of 2004 revenues Operates approximately 1,300 miles of pipeline owned by major petrochemical companies in Texas and Louisiana Eight operations and maintenance contracts in place Owns 63% of a 90-mile pipeline under a long-term lease with a petrochemical company 12

13 Pipeline Operating Statistics Steady, predictable transported volumes Thousands of Barrels Transported per Day CAGR 1.8% ,029 1,010 1,007 1,024 1,031 1, ,201 1,090 1,062 1,101 1, Gasoline Jet Fuels Middle Distillates Other 13

14 Internal Development Projects In addition to pursuing growth through acquisitions, Buckeye increases revenues through internal development projects Consistently develop $10 to $20 million in internal growth projects annually Internal growth projects typically include pipeline connections and expansions and new terminal construction Internal growth projects are generally expected to produce returns in in the 15% to 20% range During 2004, Buckeye invested approximately $40 million in internal nal growth projects Laurel pipeline capacity expansion Memphis airport pipeline and terminal facilities 14

15 Customers Approximately 90 customers Major integrated oil companies, large refined product marketing companies, and airlines 20 largest customers accounted for 61% of 2004 consolidated revenues 15

16 ExxonMobil Acquisition Overview

17 ExxonMobil Asset Acquisition On January 21, 2005, the Partnership agreed to acquire a major refined petroleum products system consisting of approximately miles of pipeline and associated terminal assets from ExxonMobil for $180 million The pipeline system delivers refined products from the Valero refinery in Paulsboro, NJ to destinations in PA and NY This acquisition will significantly expand the Partnership s presence in its core northeastern US market area A planned connection with the Buckeye pipeline system will provide Paulsboro origin shippers with access to additional delivery points The acquisition is expected to close in the first half of 2005, subject to customary closing conditions 17

18 Strategic Value of Acquisition Buckeye Pipe Line Rochester Proposed ExxonMobil Acquisition Syracuse Product Terminals Buffalo Binghamton New York Allentown Pittsburgh Harrisburg Philadelphia 18

19 Financial Overview

20 Financial Policies Prudently grow distributions to unitholders based on increases in i sustainable cash flow Maintain strong financial flexibility New $400mm 5-year 5 credit facility closed in August 2004 Commitment to maintain a strong investment grade credit rating Discretionary capital spending program Improve cash distribution payout ratio 20

21 Proven Cash Flow Stability $350 $300 CAGR Revenue 2.0% 7.4% $2.10 $2.18 $2.40 $2.45 $2.64 $2.54 $2.50 $2.75 $2.50 $2.25 Revenues / EBITDA ($ in millions) $250 $200 $150 $100 $1.10 EBITDA 0.4% 8.2% LP Unit Dist. 3.5% 7.3% $1.30 $1.30 $1.13 $1.23 $1.30 $1.30 $1.40 $1.50 $1.40 $1.72 $2.00 $1.75 $1.50 $1.25 $1.00 $0.75 Annual Distribution per Unit $0.50 $50 $0.25 $ $0.00 Revenue EBITDA 21

22 Financial Summary ($ in millions) FYE December 31, Total revenue $ $ $ $ Costs and expenses Operating expenses Depreciation and amortization General and administrative expenses Total costs and expenses Operating income Other income / (expenses) Investment income Interest and debt expense (18.9) (20.5) (22.8) (27.6) Premium paid on retirement of debt - - (45.5) - GP incentive compensation (10.3) (10.8) (11.9) (14.0) Minority interests and other (1.3) (1.1) (2.7) (3.6) Total other income / (expenses) (29.0) (30.5) (79.2) (39.2) Net income $ 69.4 $ 71.9 $ 30.1 $

23 Partnership Capital Structure Pro forma for the Shell acquisition and subsequent financings including the February 2005 equity offering of 1.1 million common units As of September 30, 2004 Pro Forma for Pro Forma As Shell Adjusted for Acquisition & Feb ($ in millions) Actual Financing Equity Offering Cash and cash equivalents $ 20.8 $ 20.8 $ 20.8 Long-term debt 4.625% Notes due June 15, 2013 $ $ $ % Notes due October 15, % Notes due August 15, Revolving credit facility Less: unamortized discount (2.0) (2.8) (2.8) Adjustment to fair value associated with hedge Total long-term debt Total partners' capital Total capitalization $ $ 1,384.9 $ 1, Total debt / total capitalization 57.1% 56.2% 52.8%

24 Low Cost of Capital Buckeye s incentive distribution structure effectively caps the general partner s split at 32% of incremental cash flow Buckeye general partner s right to incentive compensation is lower than many peer pipeline MLPs and contributes to our low cost of capital Strong credit metrics BBB+ from S&P and Baa2 from Moody s Low cost of capital enhances future growth prospects 24

25 Key Investment Considerations High quality, strategically located asset base Located in areas with high demand and tight supply Ability to take advantage of product imports in NY harbor Predictable and stable fee-based business Demonstrated consistency in product volume and mix Supply geographically diverse end-markets from multiple source points Limited commodity price exposure Focus on continued growth consistent with risk profile Shell and recently announced ExxonMobil pipeline and terminal acquisitions highly complementary to existing operations Alignment of employee and management interests with those of unitholders Strong investment grade credit metrics 25

26 Buckeye Partners, L.P. Questions & Answers