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NORTHERN BORDER PARTNERS, L.P. REPORTS 15 PERCENT INCREASE IN SECOND QUARTER EARNINGS PER UNIT AND DECLARES SECOND QUARTER DISTRIBUTION
FOR IMMEDIATE RELEASE: Monday, July 20, 1998
HOUSTON -- Northern Border Partners, L.P. (the Partnership) announced today a 15 percent increase in reported earnings per unit of $0.55 for the second quarter of 1998, which compares to $0.48 per unit for the same period in 1997. The Partnership generated net income of $16.4 million for the second quarter of 1998 versus $12.8 million for the same period in 1997. The second quarter 1997 results included non-recurring earnings of $0.02 per unit, or net income of $0.6 million.
For the first half of 1998, the Partnership reported earnings per unit of $1.05 compared to $0.98 per unit in the first half of 1997. The Partnership reported net income of $31.3 million for the first half of 1998 versus $26.2 million in the prior year period. 1997 results included non-recurring earnings of $0.07 per unit, or net income of $2.0 million.
The increase in earnings per unit during the first two quarters of 1998 is primarily attributable to the return on equity allowed on the Partnership's investments in the construction of the Chicago Project, an $839 million expansion and extension of the Northern Border Pipeline system. The additional returns allowed more than offset the effects of approximately 3 million new common units issued in late 1997 and early 1998 to fund the Partnership's investment.
"Completion of construction on the Chicago Project remains our top priority during 1998," said Larry L. DeRoin, chairman and chief executive officer of Northern Border Partners, L.P. "Installation of compressor station and pipeline facilities is progressing, and we continue to target a November 1998 in-service date."
Second quarter 1998 throughput volumes for Northern Border Pipeline averaged 1,695 million cubic feet per day (MMcf/d) versus 1,755 MMcf/d for the second quarter of 1997.
"Northern Border Pipeline continues to expand its strong market position as the largest transporter of Canadian gas into the Midwest," DeRoin said. "We currently are developing two new pipeline projects: Project 2000, a proposed $165 million to $175 million mainline extension of the Northern Border Pipeline system into Indiana and the recently proposed Illinois-Wisconsin Express Project, a joint venture to develop a $220 million to $280 million pipeline to serve Northern Illinois and Wisconsin markets."
The Partnership Policy Committee of Northern Border Partners, L.P. today declared the Partnership's regular quarterly cash distribution of $0.575 per unit for the second quarter of 1998. The indicated annual rate is $2.30 per unit. The distribution is payable August 14, 1998 to unitholders of record as of July 31, 1998, out of the available cash flow from operations of the Partnership from April 1, 1998 to June 30, 1998. The Partnership previously announced its intention to increase its quarterly cash distribution to $0.60 per unit ($2.40 per unit on an annualized basis) by the fourth quarter of 1998.
Northern Border Partners, L.P. owns a 70 percent general partner interest in Northern Border Pipeline Company, which owns a 969-mile U.S. interstate pipeline system that transports approximately 20 percent of all Canadian natural gas into the U.S. Northern Border Pipeline is currently expanding its capacity by 700 MMcf/d and extending the pipeline into the Chicago, Ill. area. The Partnership also owns the Black Mesa Pipeline, a 273-mile, coal-water slurry pipeline from Kayenta, Ariz. to the Mohave Power Station in Laughlin, Nev. The common units of Northern Border Partners, L.P. are listed on the New York Stock Exchange and trade under the symbol "NBP."
| Northern Border Partners, L.P.Financial Highlights(Unaudited: in millions except net income per unit) |
| | Second Quarter | Year-to-Date |
| | 1998 | 1997 | 1998 | 1997 |
| Operating Revenue | $ 53.8 | $ 48.1 | $106.6 | $ 94.7 |
| Net Income | $ 16.4 | $ 12.8 | $ 31.3 | $ 26.2 |
| Per Unit Net Income | $ .55 | $ .48 | $ 1.05 | $ .98 |
| Average Units Outstanding | 29.3 | 26.2 | 29.3 | 26.2 |
| Consolidated Statement of Income*(Unaudited: in millions) |
| | Second Quarter | Year-to-Date |
| | 1998 | 1997 | 1998 | 1997 |
| Operating Revenue | $ 53.8 | $ 48.1 | $106.6 | $ 94.7 |
| Operating Expenses |
| Operations and maintenance | 9.4 | 8.5 | 20.0 | 15.6 |
| Depreciation and amortization | 10.6 | 9.8 | 21.1 | 19.5 |
| Taxes other than income | 6.1 | 6.0 | 12.2 | 12.0 |
| Total Operating Expenses | 26.1 | 24.3 | 53.3 | 47.1 |
| Operating Income | 27.7 | 23.8 | 53.3 | 47.6 |
| Interest expense | ( 10.8) | ( 8.2) | ( 20.6) | ( 16.1) |
| Other income | 7.0 | 2.5 | 12.1 | 5.6 |
| Minority interest | ( 7.5) | ( 5.3) | ( 13.5) | ( 10.9) |
| Net Income | $ 16.4 | $ 12.8 | $ 31.3 | $ 26.2 |
| * As of December 31, 1997, the Partnership owns 100% of Black Mesa Pipeline and Williams Technologies, Inc., which for all of 1998 are included on a consolidated basis. Effective June 1997, the Partnership increased its effective ownership interest of Black Mesa Pipeline from 60.5% to 71.75% through the acquisition of Williams Technologies, Inc. and began to reflect their operating results on a consolidated basis. Prior to this time Black Mesa Pipeline was accounted for on the equity method and included in Other income. |
| Northern Border Partners, L.P.Operating Highlights(Unaudited) |
| | Second Quarter | Year-to-Date |
| | 1998 | 1997 | 1998 | 1997 |
| Northern Border Pipeline Company: |
| Gas Delivered (MMcf) | 150,949 | 156,875 | 310,201 | 316,582 |
| Average throughput (MMcf/d) | 1,695 | 1,755 | 1,751 | 1,785 |
| Financial Results (in millions): |
| Operating Revenue | $48.9 | $46.2 | $96.4 | $92.9 |
| Depreciation & Amortization | $10.0 | $ 9.6 | $19.8 | $19.3 |
| Interest Expense | $ 9.5 | $ 8.0 | $18.7 | $15.8 |
| AFUDC Debt | $ 3.5 | $ 0.6 | $ 6.2 | $ 0.9 |
| AFUDC Equity | $ 2.9 | $ 0.3 | $ 4.5 | $ 0.4 |
| Minority Interest | $ 7.5 | $ 5.2 | $13.5 | $10.8 |
| Net Income | $17.4 | $12.1 | $31.6 | $25.2 |
This press release includes 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. Although Northern Border Partners' believe that its expectations are based on reasonable assumptions, it can give no assurance that such expectations will be achieved. Important factors that could cause actual results to differ materially from those in the forward looking statement herein include, but are not limited to, extreme weather conditions that could delay construction, the failure of vendors and contractors to adhere to contract delivery and timing specifications, and the resolution of certain state and local pipeline right-of-way issues during the periods covered by the forward looking statements.
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For additional information please contact:
A. H. Davis
(713) 853-6941
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