Delaware
(State
or other jurisdictions of incorporation
or organization)
|
76-0513049
(I.R.S.
Employer Identification
No.)
|
|||
500
Dallas, Suite 2500, Houston, TX
(Address
of principal executive offices)
|
77002
(Zip
code)
|
Registrant's
telephone number, including area code:
|
(713)
860-2500
|
Title
of Each Class on Which Registered
|
Name
of Each Exchange on Which Registered
|
|||
Common
Units
|
American
Stock Exchange
|
Large
accelerated filer ¨
|
Accelerated
filer x
|
Non-accelerated
filer ¨
|
Page
|
|||
Part
I
|
|||
Items 1 and 2 |
4
|
||
Item
1A.
|
18
|
||
Item
1B.
|
29
|
||
Item
3.
|
29
|
||
Item
4.
|
30
|
||
Part
II
|
|||
Item
5.
|
30
|
||
Item
6.
|
31
|
||
Item
7.
|
33
|
||
Item
7A.
|
54
|
||
Item
8.
|
55
|
||
Item
9.
|
55
|
||
Item
9A.
|
55
|
||
Item
9B.
|
57
|
||
Part
III
|
|||
Item
10.
|
57
|
||
Item
11.
|
60
|
||
Item
12.
|
75
|
||
Item
13.
|
76
|
||
Item
14.
|
77
|
||
Part
IV
|
|||
Item
15.
|
78
|
·
|
demand
for, the supply of, changes in forecast data for, and price trends
related
to crude oil, liquid petroleum, natural gas and natural gas liquids
or
“NGLs” in the United States, all of which may be affected by economic
activity, capital expenditures by energy producers, weather, alternative
energy sources, international events, conservation and technological
advances;
|
·
|
throughput
levels and rates;
|
·
|
changes
in, or challenges to, our tariff
rates;
|
·
|
our
ability to successfully identify and consummate strategic acquisitions,
make cost saving changes in operations and integrate acquired assets
or
businesses into our existing
operations;
|
·
|
service
interruptions in our liquids transportation systems, natural gas
transportation systems or natural gas gathering and processing
operations;
|
·
|
shut-downs
or cutbacks at refineries, petrochemical plants, utilities or other
businesses for which we transport crude oil, natural gas or other
products
or to whom we sell such
products;
|
·
|
changes
in laws or regulations to which we are
subject;
|
·
|
our
inability to borrow or otherwise access funds needed for operations,
expansions or capital expenditures as a result of existing debt
agreements
that contain restrictive financial
covenants;
|
·
|
loss
of key personnel;
|
·
|
the
effects of competition, in particular, by other pipeline
systems;
|
·
|
hazards
and operating risks that may not be covered fully by
insurance;
|
·
|
the
condition of the capital markets in the United
States;
|
·
|
loss
of key customers;
|
·
|
the
political and economic stability of the oil producing nations of
the
world; and
|
·
|
general
economic conditions, including rates of inflation and interest
rates.
|
·
|
CO2
—
We supply CO2
to
industrial customers under seven long-term contracts, with an average
remaining contract life of 10 years. We acquired those contracts,
as well
as the CO2
necessary to satisfy substantially all of the obligations under
those
contracts, in three separate transactions with affiliates of our
general
partner. Our compensation for supplying CO2
to
our industrial customers is the effective difference between the
price at
which we sell our CO2
under each contract and the price at which we acquired our CO2
pursuant to our volumetric production payments (also known as VPPs),
minus
transportation costs. We expect our CO2
contracts to provide stable cash flows until they expire. Prior
to the
expiration, we intend to extend or replace those
contracts.
|
·
|
Syngas—Through
our 50% interest in a joint venture, we receive a proportionate
share of
fees under a processing agreement covering a facility that manufactures
syngas and high-pressure steam. Under that processing agreement,
Praxair
provides the raw materials to be processed and receives the syngas
and
steam produced by the facility. Praxair has the exclusive right
to use the
facility through at least 2016, which Praxair has the option to
extend for
two additional five year terms. Praxair also is our partner in
the joint
venture and owns the remaining 50%
interest.
|
·
|
Sandhill
- Through
our 50% interest in a joint venture, we participate in the production
and
distribution of liquid carbon dioxide for use in the food, chemical
and
oil industries. The Sandhill facility acquires CO2
from us under one of the long-term supply contracts described
above.
|
·
|
the
only shipper (other than us) on our Mississippi System, utilizing
approximately 90% of the current daily
throughput;
|
·
|
the
company that sold us seven long-term CO2
sales contracts with industrial customers, along with the CO2
necessary to satisfy substantially all of our obligations under
those
contracts (280.0 billion cubic feet (Bcf) of CO2
under three separate VPPs);
|
·
|
the
operator of the fields in which our CO2
reserves are located; and
|
·
|
the
sole shipper on our Brookhaven CO2
pipeline.
|
·
|
Increasing
throughput on our existing assets.
|
·
|
Pursuing
organic growth opportunities through construction and expansion
opportunities.
|
·
|
Pursuing
accretive acquisitions and expanding our
footprint.
|
·
|
Leveraging
our CO2
expertise, along with our relationship with Denbury, to create
new
opportunities with Denbury and third
parties.
|
·
|
Capitalizing
on the regional crude oil supply and demand imbalances that exist
in our
market areas through our marketing and distribution
expertise.
|
·
|
Emphasizing
services for which the compensation is not linked to commodity
prices
(like gathering and transportation) and managing commodity risks
by using
contractual arrangements.
|
·
|
Maintaining
a balanced and diversified portfolio of midstream energy and industrial
gases interests and assets.
|
·
|
Maintaining
a sound capital structure.
|
·
|
Sharing
capital costs and risks through joint ventures and strategic
alliances.
|
·
|
Quality
Asset Base.
We have a quality asset base characterized
by:
|
·
|
Strategic
Locations.
Our Mississippi System is adjacent to several oil fields operated
by
Denbury, which is the sole shipper (other than us) on our Mississippi
System. To our knowledge, our Jay System is the only system serving
the
Florida panhandle and southwest
Alabama.
|
·
|
Additional
Throughput Capacity.
All of our systems have additional throughput capacity which allows
us to
transport additional volumes at minimal additional cost to
us.
|
·
|
Cash
Flow Stability.
Our relatively low exposure to commodity price fluctuations, diversified
asset base and long-term contracts related to our industrial gases
operations provide us with a stable source of cash
flows.
|
·
|
A
Unique Platform in Industrial Gases.
We believe we have the potential to expand our CO2
business and leverage that expertise, along with our relationship
with
Denbury, to create a unique growth platform in industrial gases,
an area
not currently as competitive as other midstream industry
activities.
|
·
|
Strong
Relationship with Denbury.
We have a strong relationship with Denbury, which is the indirect
owner of
our general partner and the largest exploration and production
company
(based on average barrels produced per day) currently operating
in
Mississippi. Denbury is the sole shipper (other than us) on our
Mississippi System, and its extensive CO2
reserves and operations provide us the opportunity to expand our
crude oil
transportation and CO2
opportunities.
|
·
|
Financial
Flexibility and Strong Distribution Coverage.
We have the financial flexibility to pursue growth projects. As
of
December 31, 2006, we had a credit facility with a maximum credit
amount
of $500 million and an initial committed amount of $125 million.
Our
borrowing base as of December 31, 2006 was approximately $82 million.
The
commitment amount can be increased up to the maximum facility amount
for
acquisitions or internal growth projects with approval of the lenders.
Likewise, the borrowing base may be increased to the extent of
earnings
before interest, taxes, depreciation and amortization, or EBITDA,
attributable to acquisitions. We had $8 million of long-term debt
and $4.6
million of letters of credit outstanding and we have approximately
$70
million of borrowing capacity under our credit facility available
on
December 31, 2006.
|
·
|
Insulation
from Commodity Price Risks.
Many of our contractual arrangements help insulate our operating
cash
flows from changes in energy commodity prices. Our compensation
arrangements include fee-based arrangements, back-to-back purchases
and
sales, and tolling-type arrangements, which in general do not vary
with
changes in the price of the underlying commodity. We also use hedges
from
time to time to mitigate the impact of fluctuations in energy commodity
prices on our segment margins.
|
·
|
Balanced
and Diversified Operations.
We have a balanced portfolio of customers and assets and a proven
track
record of cash flow diversification. Our operations include the
pipeline
transportation of crude oil and, to a lesser extent, CO2
and natural gas in the Gulf Coast; crude oil gathering and marketing
primarily around our Gulf Coast crude oil pipelines; and industrial
gas
activities.
|
o
|
the
prices at which we purchase and sell crude oil;
|
o
|
the
volumes of crude oil we transport;
|
o
|
the
volumes of CO2
we
sell;
|
o
|
the
level of our operating costs;
|
o
|
the
level of our general and administrative costs; and
|
o
|
prevailing
economic conditions.
|
o
|
the
level of capital expenditures we make, including the cost of acquisitions
(if any);
|
o
|
our
debt service requirements;
|
o
|
fluctuations
in our working capital;
|
o
|
restrictions
on distributions contained in our debt instruments;
|
o
|
our
ability to borrow under our working capital facility to pay distributions;
and
|
o
|
the
amount of cash reserves established by our general partner in its
sole
discretion in the conduct of our business.
|
o
|
geographic
proximity to the production;
|
o
|
costs
of connection;
|
o
|
available
capacity;
|
o
|
rates;
and
|
o
|
access
to markets.
|
o
|
incur
additional indebtedness or liens;
|
o
|
make
payments in respect of or redeem or acquire any debt or equity issued
by
us;
|
o
|
sell
assets;
|
o
|
make
loans or investments;
|
o
|
make
guarantees;
|
o
|
enter
into any hedging agreement for speculative
purposes;
|
o
|
acquire
or be acquired by other companies; and
|
o
|
amend
some of our contracts.
|
o
|
increase
our vulnerability to general adverse economic and industry conditions;
|
o
|
limit
our ability to make distributions; to fund future working capital,
capital
expenditures and other general partnership requirements; to engage
in
future acquisitions and construction or development activities; or
to
otherwise fully realize the value of our assets and opportunities
because
of the need to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness or to comply with any
restrictive terms of our indebtedness;
|
o
|
limit
our flexibility in planning for, or reacting to, changes in our businesses
and the industries in which we operate; and
|
o
|
place
us at a competitive disadvantage as compared to our competitors that
have
less debt.
|
·
|
difficulties
in the assimilation of the operations, technologies, services and
products
of the acquired companies or business segments;
|
·
|
inefficiencies
and complexities that can arise because of unfamiliarity with new
assets
and the businesses associated with them, including unfamiliarity
with
their markets; and
|
·
|
diversion
of the attention of management and other personnel from day-to-day
business to the development or acquisition of new businesses and
other
business opportunities.
|
·
|
using
cash from operations;
|
·
|
delaying
other planned projects;
|
·
|
incurring
additional indebtedness; or
|
·
|
issuing
additional debt or equity.
|
·
|
rate
structures;
|
·
|
rates
of return on equity;
|
·
|
recovery
of costs;
|
·
|
the
services that our regulated assets are permitted to perform;
|
·
|
the
acquisition, construction and disposition of assets; and
|
·
|
to
an extent, the level of competition in that regulated industry.
|
·
|
neither
our partnership agreement nor any other agreement requires Denbury
Resources to pursue a business strategy that favors us or utilizes
our
assets. Denbury Resources' directors and officers have a fiduciary
duty to
make these decisions in the best interest of the stockholders of
Denbury
Resources;
|
·
|
Denbury
Resources may compete with us. Denbury Resources owns the largest
reserves
of CO2
used for tertiary oil recovery east of the Mississippi River and
may
manage these reserves in a manner that could adversely affect our
CO2
business;
|
·
|
our
general partner is allowed to take into account the interest of parties
other than us, such as Denbury Resources, in resolving conflicts
of
interest;
|
·
|
our
general partner may limit its liability and reduce its fiduciary
duties,
while also restricting the remedies available to our unitholders
for
actions that, without the limitations, might constitute breaches
of
fiduciary duty;
|
·
|
our
general partner determines the amount and timing of asset purchases
and
sales, capital expenditures, borrowings, including for incentive
distributions, issuance of additional partnership securities,
reimbursements and enforcement of obligations to the general partner
and
its affiliates, retention of counsel, accountants and service providers,
and cash reserves, each of which can also affect the amount of cash
that
is distributed to our unitholders;
|
·
|
our
general partner determines which costs incurred by it and its affiliates
are reimbursable by us and the reimbursement of these costs and of
any
services provided by our general partner could adversely affect our
ability to pay cash distributions to our unitholders;
|
·
|
our
general partner controls the enforcement of obligations owed to us
by our
general partner and its affiliates;
|
·
|
our
general partner decides whether to retain separate counsel, accountants
or
others to perform services for us; and
|
·
|
in
some instances, our general partner may cause us to borrow funds
in order
to permit the payment of distributions even if the purpose or effect
of
the borrowing is to make incentive distributions.
|
·
|
transportation
services
|
·
|
pipeline
monitoring services; and
|
·
|
CO2
volumetric production payment.
|
·
|
our
unitholders' proportionate ownership interest in us will decrease;
|
·
|
the
amount of cash available for distribution on each unit may decrease;
|
·
|
the
relative voting strength of each previously outstanding unit may
be
diminished; and
|
·
|
the
market price of our common units may decline.
|
Price
Range
|
Cash
|
|||||||||
High
|
Low
|
Distributions
(1)
|
||||||||
2007
|
||||||||||
First
Quarter (through March 1, 2007)
|
$
|
20.00
|
$
|
18.76
|
$
|
0.21
|
||||
2006
|
||||||||||
First
Quarter
|
$
|
12.85
|
$
|
11.25
|
$
|
0.17
|
||||
Second
Quarter
|
$
|
14.14
|
$
|
10.25
|
$
|
0.18
|
||||
Third
Quarter
|
$
|
19.18
|
$
|
11.20
|
$
|
0.19
|
||||
Fourth
Quarter
|
$
|
20.65
|
$
|
14.48
|
$
|
0.20
|
||||
2005
|
||||||||||
First
Quarter
|
$
|
12.60
|
$
|
8.50
|
$
|
0.15
|
||||
Second
Quarter
|
$
|
10.00
|
$
|
8.25
|
$
|
0.15
|
||||
Third
Quarter
|
$
|
12.15
|
$
|
9.22
|
$
|
0.15
|
||||
Fourth
Quarter
|
$
|
12.00
|
$
|
9.61
|
$
|
0.16
|
Year
Ended December 31,
|
|||||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
|||||||||||||||
Income
Statement Data:
|
|||||||||||||||||||
Revenues:
|
|||||||||||||||||||
Crude
oil gathering and marketing (1)
|
$
|
873,268
|
$
|
1,038,549
|
$
|
901,902
|
$
|
641,684
|
$
|
639,143
|
|||||||||
Pipeline
transportation, including natural gas sales
|
29,947
|
28,888
|
16,680
|
15,134
|
13,485
|
||||||||||||||
CO2
marketing
|
15,154
|
11,302
|
8,561
|
1,079
|
-
|
||||||||||||||
Total
revenues
|
918,369
|
1,078,739
|
927,143
|
657,897
|
652,628
|
||||||||||||||
Costs
and expenses:
|
|||||||||||||||||||
Crude
oil and field operating (1)
|
865,902
|
1,034,888
|
897,868
|
633,776
|
629,245
|
||||||||||||||
Pipeline
transportation, including natural gas purchases
|
17,521
|
19,084
|
8,137
|
10,026
|
9,576
|
||||||||||||||
CO2
marketing transportation costs
|
4,842
|
3,649
|
2,799
|
355
|
-
|
||||||||||||||
General
and administrative expenses
|
13,573
|
9,656
|
11,031
|
8,768
|
7,864
|
||||||||||||||
Depreciation
and amortization
|
7,963
|
6,721
|
7,298
|
(2)
|
|
4,641
|
4,603
|
||||||||||||
(Gain)
loss from sales of surplus assets
|
(16
|
)
|
(479
|
)
|
33
|
(236
|
)
|
(705
|
)
|
||||||||||
Total
costs and expenses
|
909,785
|
1,073,519
|
927,166
|
657,330
|
650,583
|
||||||||||||||
Operating
income (loss) from continuing operations
|
8,584
|
5,220
|
(23
|
)
|
567
|
2,045
|
|||||||||||||
Earnings
from equity in joint ventures
|
1,131
|
501
|
-
|
-
|
-
|
||||||||||||||
Interest
expense, net
|
(1,374
|
)
|
(2,032
|
)
|
(926
|
)
|
(986
|
)
|
(1,035
|
)
|
|||||||||
Income
(loss) from continuing operations before cumulative effect of change
in
accounting principle, income taxes and minority intersst
|
8,341
|
3,689
|
(949
|
)
|
(419
|
)
|
1,010
|
||||||||||||
Income
tax credit
|
11
|
-
|
-
|
-
|
-
|
||||||||||||||
Minority
interest
|
(1
|
)
|
-
|
-
|
-
|
-
|
|||||||||||||
Income
(loss) from continuing operations before cumulative effect of change
in
accounting principle
|
8,351
|
3,689
|
(949
|
)
|
(419
|
)
|
1,010
|
||||||||||||
Income
(loss) from discontinued operations
|
-
|
312
|
(463
|
)
|
13,741
|
4,082
|
|||||||||||||
Cumulative
effect of changes in accounting principle
|
30
|
(586
|
)
|
-
|
-
|
-
|
|||||||||||||
Net
income (loss)
|
$
|
8,381
|
$
|
3,415
|
$
|
(1,412
|
)
|
$
|
13,322
|
$
|
5,092
|
||||||||
Net
income (loss) per common unit - basic and diluted:
|
|||||||||||||||||||
Continuing
operations
|
$
|
0.59
|
$
|
0.38
|
$
|
(0.10
|
)
|
$
|
(0.05
|
)
|
$
|
0.12
|
|||||||
Discontinued
operations
|
-
|
0.03
|
(0.05
|
)
|
1.55
|
0.46
|
|||||||||||||
Cumulative
effect of change in accounting principle
|
-
|
(0.06
|
)
|
-
|
-
|
-
|
|||||||||||||
Net
income (loss)
|
$
|
0.59
|
$
|
0.35
|
$
|
(0.15
|
)
|
$
|
1.50
|
$
|
0.58
|
||||||||
Cash
distributions per common unit
|
$
|
0.74
|
$
|
0.61
|
$
|
0.60
|
$
|
0.15
|
$
|
0.20
|
Year
Ended December 31,
|
|||||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
|||||||||||||||
Balance
Sheet Data (at end of period):
|
|||||||||||||||||||
Current
assets
|
$
|
99,992
|
$
|
90,449
|
$
|
77,396
|
$
|
88,211
|
$
|
92,830
|
|||||||||
Total
assets
|
191,087
|
181,777
|
143,154
|
147,115
|
137,537
|
||||||||||||||
Long-term
liabilities
|
8,991
|
955
|
15,460
|
7,000
|
5,500
|
||||||||||||||
Minority
interests
|
522
|
522
|
517
|
517
|
515
|
||||||||||||||
Partners'
capital
|
85,662
|
87,689
|
45,239
|
52,354
|
35,302
|
||||||||||||||
Other
Data:
|
|||||||||||||||||||
Maintenance
capital expenditures (3)
|
967
|
1,543
|
939
|
4,178
|
4,211
|
||||||||||||||
Volumes
- continuing operations:
|
|||||||||||||||||||
Crude
oil pipeline (bpd)
|
61,585
|
61,296
|
63,441
|
66,959
|
71,870
|
||||||||||||||
CO2
sales (Mcf per day)
|
72,841
|
56,823
|
45,312
|
36,332
|
(4)
|
-
|
|||||||||||||
Crude
oil gathering and marketing:
|
|||||||||||||||||||
Wellhead
(bpd)
|
33,853
|
39,194
|
45,919
|
45,015
|
47,819
|
||||||||||||||
Total
(bpd)
|
37,180
|
52,943
|
60,419
|
56,805
|
73,429
|
(1)
|
Crude
oil gathering and marketing revenues, costs and volumes are reflected
net
of buy/sell arrangements since April 1,
2006.
|
(2)
|
In
2004, we recorded an impairment charge of $0.9 million related to
our
pipeline transportation operations.
|
(3)
|
Maintenance
capital expenditures are capital expenditures to replace or enhance
partially or fully depreciated assets to sustain the existing operating
capacity or efficiency of our assets and extend their useful
lives.
|
(4)
|
Represents
average daily volume for the two month period in 2003 that we owned
the
assets.
|
2006
Quarters
|
|||||||||||||
First
|
Second
|
Third
|
Fourth
|
||||||||||
Revenues
|
$
|
263,602
|
$
|
233,343
|
$
|
229,551
|
$
|
191,873
|
|||||
Operating
income
|
$
|
2,370
|
$
|
3,357
|
$
|
1,688
|
$
|
1,169
|
|||||
Income
from continuing operations
|
$
|
2,561
|
$
|
3,444
|
$
|
1,695
|
$
|
651
|
|||||
Cumulative
effect adjustment
|
$
|
30
|
$
|
-
|
$
|
-
|
$
|
-
|
|||||
Net
income
|
$
|
2,591
|
$
|
3,444
|
$
|
1,695
|
$
|
651
|
|||||
Income
from continuing operations per common unit - basic and
diluted
|
$
|
0.18
|
$
|
0.24
|
$
|
0.12
|
$
|
0.05
|
|||||
Net
income per common unit - basic and diluted
|
$
|
0.18
|
$
|
0.24
|
$
|
0.12
|
$
|
0.05
|
2005
Quarters
|
|||||||||||||
First
|
Second
|
Third
|
Fourth
|
||||||||||
Revenues
|
$
|
256,600
|
$
|
257,144
|
$
|
300,577
|
$
|
264,418
|
|||||
Operating
income (loss) - continuing operations
|
$
|
2,843
|
$
|
1,006
|
$
|
(109
|
)
|
$
|
1,480
|
||||
Income
(loss) from continuing operations
|
$
|
2,488
|
$
|
752
|
$
|
(641
|
)
|
$
|
1,090
|
||||
Income
(loss) from discontinued operations
|
$
|
282
|
$
|
(9
|
)
|
$
|
45
|
$
|
(6
|
)
|
|||
Cumulative
effect adjustment
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
(586
|
)
|
||||
Net
income (loss)
|
$
|
2,770
|
$
|
743
|
$
|
(596
|
)
|
$
|
498
|
||||
Income
from continuing operations per common unit - basic and
diluted
|
$
|
0.26
|
$
|
0.08
|
$
|
(0.06
|
)
|
$
|
0.10
|
||||
Net
income (loss) per common unit - basic and diluted
|
$
|
0.29
|
$
|
0.08
|
$
|
(0.06
|
)
|
$
|
0.05
|
·
|
Overview
of 2006
|
·
|
Significant
Events in 2006
|
·
|
Critical
Accounting Policies
|
·
|
Results
of Operations
|
·
|
Liquidity
and Capital Resources
|
·
|
Commitments
and Off-Balance Sheet Arrangements
|
·
|
Other
Matters
|
·
|
New
Accounting Pronouncements
|
Year
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
(in
thousands)
|
||||||||||
Pipeline
transportation
|
$
|
12,426
|
$
|
9,804
|
$
|
8,543
|
||||
Industrial
gases
|
11,443
|
8,154
|
5,762
|
|||||||
Crude
oil gathering and marketing
|
7,366
|
3,661
|
4,034
|
|||||||
Total
segment margin
|
$
|
31,235
|
$
|
21,619
|
$
|
18,339
|
Pipeline
System
|
2006
|
2005
|
2004
|
|||||||
Mississippi
|
16,931
|
16,021
|
12,589
|
|||||||
Jay
|
13,351
|
13,725
|
14,440
|
|||||||
Texas
|
31,303
|
31,550
|
36,413
|
Year
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
(in
thousands)
|
||||||||||
Crude
oil tariffs and revenues from direct financing leases of crude oil
pipelines
|
$
|
14,309
|
$
|
13,490
|
$
|
13,048
|
||||
Sales
of crude oil pipeline loss allowance volumes
|
6,472
|
4,672
|
3,475
|
|||||||
Revenues
from direct financing leases of CO2
pipelines
|
340
|
359
|
25
|
|||||||
Tank
rental reimbursements and other miscellaneous revenues
|
621
|
566
|
132
|
|||||||
Total
revenues from crude oil and CO2
tariffs, including revenues from direct financing leases
|
21,742
|
19,087
|
16,680
|
|||||||
Revenues
from natural gas tariffs and sales
|
8,205
|
9,801
|
-
|
|||||||
Natural
gas purchases
|
(7,593
|
)
|
(9,343
|
)
|
-
|
|||||
Pipeline
operating costs
|
(9,928
|
)
|
(9,741
|
)
|
(8,137
|
)
|
||||
Segment
margin
|
$
|
12,426
|
$
|
9,804
|
$
|
8,543
|
||||
Volumes
per day:
|
||||||||||
Crude
oil pipeline - barrels
|
61,585
|
61,296
|
63,441
|
Quarter
|
2006
|
2005
|
|||||
First
|
66,565
|
67,434
|
|||||
Second
|
73,980
|
73,307
|
|||||
Third
|
82,244
|
77,264
|
|||||
Fourth
|
68,452
|
77,089
|
Year
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
(in
thousands)
|
||||||||||
Revenues
from CO2
sales
|
$
|
15,154
|
$
|
11,302
|
$
|
8,561
|
||||
CO2
transportation and other costs
|
(4,842
|
)
|
(3,649
|
)
|
(2,799
|
)
|
||||
Equity
in earnings of joint ventures
|
1,131
|
501
|
-
|
|||||||
Segment
margin
|
$
|
11,443
|
$
|
8,154
|
$
|
5,762
|
||||
Volumes
per day:
|
||||||||||
CO2
sales - Mcf (1)
|
72,841
|
56,823
|
45,312
|
Year
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
(in
thousands)
|
||||||||||
Revenues
|
$
|
873,268
|
$
|
1,038,549
|
$
|
901,902
|
||||
Crude
oil costs
|
(851,671
|
)
|
(1,018,896
|
)
|
(883,988
|
)
|
||||
Field
operating costs
|
(14,231
|
)
|
(15,992
|
)
|
(13,880
|
)
|
||||
Segment
margin
|
$
|
7,366
|
$
|
3,661
|
$
|
4,034
|
||||
Volumes
per day:
|
||||||||||
Crude
oil total - barrels
|
37,180
|
52,943
|
60,419
|
|||||||
Crude
oil truck transported only - barrels
|
3,368
|
3,084
|
1,742
|
·
|
A
$0.4 million increase in revenues from volumes that we transported
for a
fee but did not purchase. Approximately 63% of the total transportation
fee revenue related to volumes transported for Denbury. Through August
31,
2004, we purchased Denbury’s crude oil at the wellhead. Beginning in
September 2004, Denbury started selling its production to the end-market
directly, and we provide transportation services for fees in our
trucks
and in our pipeline.
|
·
|
An
increase in the average difference between the sales price and the
purchase price of crude oil increased segment margin by $0.7 million,
despite a 7,786 barrel per day decrease in purchased volumes.
|
·
|
A
$0.4 million realized gain from a fair value hedge of inventory.
Due to
market conditions in the second quarter, we elected to hold inventory
and
hedge it in the market. We sold this inventory in the fourth quarter
realizing the gain.
|
Year
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
(in
thousands)
|
||||||||||
Expenses
excluding effect of stock appreciation rights plan, bonus plan and
management team transition
|
$
|
9,007
|
$
|
8,903
|
$
|
9,662
|
||||
Bonus
plan expense
|
1,747
|
1,235
|
218
|
|||||||
Stock
appreciation rights plan expense (credit)
|
1,279
|
(482
|
)
|
1,151
|
||||||
Management
team transition costs and write-off of deferred charges from prior
credit
facility
|
1,540
|
-
|
-
|
|||||||
Total
general and administrative expenses
|
$
|
13,573
|
$
|
9,656
|
$
|
11,031
|
Year
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
(in
thousands)
|
||||||||||
Interest
expense, including commitment fees
|
$
|
781
|
$
|
1,831
|
$
|
743
|
||||
Capitalized
interest
|
(9
|
)
|
(35
|
)
|
(76
|
)
|
||||
Amortization
of facility fees
|
300
|
307
|
303
|
|||||||
Write-off
of facility fees and other fees
|
500
|
-
|
-
|
|||||||
Interest
income
|
(198
|
)
|
(71
|
)
|
(44
|
)
|
||||
Net
interest expense
|
$
|
1,374
|
$
|
2,032
|
$
|
926
|
·
|
In
determining the expected life of the rights, we used the simplified
method
allowed by the Securities and Exchange Commission. We have very limited
experience with employee exercise patterns, as our plan was initiated
on
December 31, 2003. The simplified method produces an initial expected
life
of 6.25 years for those rights we issued that vest 25% per year for
four
years, and an initial expected life of 7 years for those rights we
issued
that fully vest at the end of a four-year period.
|
·
|
The
expected volatility of our units was computed using the historical
period
we believe is representative of future expectations. We determined
the
period to use as the historical period by considering our distribution
history and distribution yield. The expected volatility used in the
fair
value calculations was approximately 33% at January 1, 2006 and 32%
at
December 31, 2006.
|
·
|
The
risk-free interest rate was determined from the current yield for
U.S.
Treasury zero-coupon bonds with a term similar to the remaining expected
life of the rights.
|
·
|
In
determining our expected future distribution yield, we considered
our
history of distribution payments, our expectations for future payments,
and the distribution yields of entities similar to
us.
|
·
|
We
estimated the expected forfeitures of non-vested rights and expirations
of
vested rights. As our stock appreciation rights plan was not put
in place
until December 31, 2003, we have very limited experience with employee
forfeiture and expiration patterns. We reviewed the history available
to
us as well as employee turnover patterns in determining the rates
to use.
We also used different estimates for different groups of
employees.
|
·
|
incur
additional indebtedness or liens;
|
·
|
sell
assets;
|
·
|
make
loans, investments or guarantees;
|
·
|
acquire
or be acquired by other companies;
|
·
|
enter
into or amend certain existing agreements;
and
|
·
|
enter
into any hedging agreement for speculative
purposes.
|
· |
increase
our vulnerability to general adverse economic and industry
conditions;
|
· |
limit
our ability to make distributions; to fund future working capital,
capital
expenditures and other general partnership requirements; to engage
in
future acquisitions and construction or development activities; or
to
otherwise fully realize the value of our assets and opportunities
because
of the need to dedicate a substantial portion of our cash flow from
operations to payments on our indebtedness or to comply with any
restrictive terms of our indebtedness;
and
|
· |
limit
our flexibility in planning for, or reacting to, changes in our businesses
and the industries in which we
operate.
|
Years
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
(in
thousands)
|
||||||||||
Maintenance
capital expenditures:
|
||||||||||
Mississippi
pipeline systems
|
$
|
355
|
$
|
1,147
|
$
|
505
|
||||
Jay
pipeline system
|
122
|
7
|
28
|
|||||||
Texas
pipeline system
|
134
|
102
|
122
|
|||||||
Crude
oil gathering assets
|
175
|
34
|
159
|
|||||||
Administrative
and other assets
|
181
|
253
|
125
|
|||||||
Total
maintenance capital expenditures
|
967
|
1,543
|
939
|
|||||||
Growth
capital expenditures (including construction in progress and investments
in joint ventures)
|
||||||||||
Mississippi
pipeline systems
|
360
|
1,059
|
7,371
|
|||||||
Natural
gas gathering assets
|
-
|
3,110
|
-
|
|||||||
CO2
contracts
|
-
|
14,446
|
4,723
|
|||||||
T&P
Syngas investment
|
-
|
13,418
|
-
|
|||||||
Sandhill
investment
|
5,042
|
-
|
-
|
|||||||
Other
industrial gases investments
|
1,016
|
-
|
-
|
|||||||
Crude
oil gathering assets
|
-
|
260
|
161
|
|||||||
Total
growth capital expenditures
|
6,418
|
32,293
|
12,255
|
|||||||
Total
capital expenditures
|
$
|
7,385
|
$
|
33,836
|
$
|
13,194
|
Years
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
(in
thousands)
|
||||||||||
Cash
provided by (used in):
|
||||||||||
Operating
activities
|
$
|
11,262
|
$
|
9,490
|
$
|
9,702
|
||||
Investing
activities
|
$
|
(6,842
|
)
|
$
|
(31,809
|
)
|
$
|
(12,805
|
)
|
|
Financing
activities
|
$
|
(5,201
|
)
|
$
|
23,340
|
$
|
2,312
|
Distribution
For
|
Date
Paid
|
Per
Unit Amount
|
Total
Amount (000's)
|
|||||||
Fourth
quarter 2004
|
February 2005 |
$
|
0.15
|
$
|
1,426
|
|||||
First
quarter 2005
|
May 2005 |
$
|
0.15
|
$
|
1,426
|
|||||
Second
quarter 2005
|
August 2005 |
$
|
0.15
|
$
|
1,426
|
|||||
Third
quarter 2005
|
November 2005 |
$
|
0.16
|
$
|
1,521
|
|||||
Fourth
quarter 2005
|
February 2006 |
$
|
0.17
|
$
|
2,391
|
|||||
First
quarter 2006
|
May 2006 |
$
|
0.18
|
$
|
2,532
|
|||||
Second
quarter 2006
|
August 2006 |
$
|
0.19
|
$
|
2,672
|
|||||
Third
quarter 2006
|
November 2006 |
$
|
0.20
|
$
|
2,813
|
|||||
Fourth
quarter 2006
|
February 2007 |
$
|
0.21
|
$
|
2,954
|
Net
income
|
$
|
8,381
|
||
Depreciation
and amortization
|
7,963
|
|||
Cash
received from direct financing leases not included in
income
|
531
|
|||
Cash
effects of sales of certain assets
|
51
|
|||
Effects
of available cash generated by investments in joint ventures not
included
in income
|
1,401
|
|||
Non-cash
charges
|
1,471
|
|||
Maintenance
capital expenditures
|
(967
|
)
|
||
Available
Cash before reserves
|
$
|
18,831
|
Cash
flows from operating activities
|
$
|
11,262
|
||
Adjustments
to reconcile operating cash flows to Available Cash:
|
||||
Maintenance
capital expenditures
|
(967
|
)
|
||
Proceeds
from sales of certain assets
|
67
|
|||
Amortization
and write-off of credit facility issuance fees
|
(969
|
)
|
||
Effects
of available cash generated by investments in joint ventures not
included
in cash flows from operating activities
|
967
|
|||
Cash
effects of exercises under SAR Plan
|
(364
|
)
|
||
Other
items affecting Available Cash
|
(38
|
)
|
||
Net
effect of changes in operating accounts not included in calculation
of
Available Cash
|
8,873
|
|||
Available
Cash before reserves
|
$
|
18,831
|
Payments
Due by Period
|
||||||||||||||||
Commercial
Cash Obligations and Commitments
|
2007
|
2008
and 2009
|
2010
and 2011
|
After
2011
|
Total
|
|||||||||||
Long-term
debt (1)
|
$
|
-
|
$
|
-
|
$
|
8,000
|
$
|
-
|
$
|
8,000
|
||||||
Estimated
interest payable on long-term debt (2)
|
700
|
1,402
|
1,310
|
-
|
3,412
|
|||||||||||
Operating
lease obligations
|
2,724
|
3,845
|
1,705
|
274
|
8,548
|
|||||||||||
Unconditional
purchase obligations (3)
|
103,078
|
-
|
-
|
-
|
103,078
|
|||||||||||
Total
Contractual Cash Obligations
|
$
|
106,502
|
$
|
5,247
|
$
|
11,015
|
$
|
274
|
$
|
123,038
|
(1)
|
Our
credit facility allows us to repay and re-borrow funds at any time
through
the maturity date of November 15,
2011.
|
(2)
|
Interest
on our long-term debt is at market-based rates. The amount shown
for
interest payments represents the amount that would be paid if the
debt
outstanding at December 31, 2006 remained outstanding through the
maturity
date through the final maturity date of November 15, 2011 and interest
rates remained at the December 31, 2006 market levels through November
15,
2011.
|
(3)
|
The
unconditional purchase obligations included above are contracts to
purchase crude oil, generally at market-based prices. For purposes
of this
table, market prices at December 31, 2006, were used to value the
obligations. Actual obligations may differ from the amounts included
above.
|
Sell
(Short) Contracts
|
Buy
(Long) Contracts
|
||||||
Futures
Contracts
|
|||||||
Contract
volumes (1,000 bbls)
|
95
|
7
|
|||||
Weighted
average price per bbl
|
$
|
62.85
|
$
|
61.87
|
|||
Contract
value (in thousands)
|
$
|
5,971
|
433
|
||||
Mark-to-market
change (in thousands)
|
(171
|
)
|
(6
|
)
|
|||
Market
settlement value (in thousands)
|
$
|
5,800
|
$
|
427
|
Name
|
Age
|
Position
|
||
Gareth
Roberts
|
54
|
Director
and Chairman of the Board
|
||
Grant
E. Sims
|
51
|
Director
and Chief Executive Officer
|
||
Mark
C. Allen
|
38
|
Director
|
||
Ronald
T. Evans
|
44
|
Director
|
||
Herbert
I. Goodman
|
84
|
Director
|
||
Susan
O. Rheney
|
47
|
Director
|
||
Phil
Rykhoek
|
50
|
Director
|
||
J.
Conley Stone
|
75
|
Director
|
||
Joseph
A. Blount, Jr.
|
46
|
President
and Chief Operating Officer
|
||
Brad
N. Graves
|
40
|
Executive
Vice President, Business Development
|
||
Ross
A. Benavides
|
53
|
Chief
Financial Officer, General Counsel and Secretary
|
||
Kerry
W. Mazoch
|
60
|
Vice
President, Crude Oil Acquisitions
|
||
Karen
N. Pape
|
48
|
Vice
President and Controller
|
·
|
base
salaries,
|
·
|
a
General Partner Interest plan (long-term incentive plan),
|
·
|
other
compensation (including contributions to the 401(k) plan and annual
term
life insurance premiums).
|
·
|
base
salaries,
|
·
|
a
Bonus Plan (annual performance-based cash incentive compensation),
|
·
|
a
Stock Appreciation Rights plan (long-term incentive plan),
|
·
|
a
Severance Protection Plan, and
|
·
|
other
compensation (including contributions to the 401(k) plan and annual
term
life insurance premiums).
|
Cumulative
Amount of Acquisitions from Third Parties
|
Percentage
Vested in General Partner Interest
|
|
$150
million
|
2.0%
|
|
$300
million
|
4.0%
|
|
$450
million
|
6.0%
|
|
$600
million
|
8.0%
|
|
$750
million
|
10.0%
|
|
$900
million
|
12.0%
|
|
$1,050
million
|
14.0%
|
|
$1,200
million
|
16.0%
|
|
$1,350
million
|
18.0%
|
|
$1,500
million
|
20.0%
|
Bucket
Number
|
Bucket
Size
|
Contribution
to Bonus Pool
|
Year-to-Date
Available Cash before Reserves and Bonus Accrual
|
Year-to-Date
Contributions to Bonus Pool
|
|||||||||
1
|
$
|
2,042,288
|
$
|
60,000
|
$
|
2,042,288
|
$
|
60,000
|
|||||
2
|
$
|
2,042,288
|
$
|
120,000
|
$
|
4,084,576
|
$
|
180,000
|
|||||
3
|
$
|
2,042,288
|
$
|
120,000
|
$
|
6,126,864
|
$
|
300,000
|
|||||
4
|
$
|
2,042,288
|
$
|
240,000
|
$
|
8,169,152
|
$
|
540,000
|
|||||
5
|
$
|
2,042,288
|
$
|
300,000
|
$
|
10,211,440
|
$
|
840,000
|
|||||
6
|
$
|
2,042,288
|
$
|
360,000
|
$
|
12,253,728
|
$
|
1,200,000
|
|||||
7
|
$
|
2,042,288
|
$
|
360,000
|
$
|
14,296,016
|
$
|
1,560,000
|
|||||
8
|
$
|
2,042,288
|
$
|
360,000
|
$
|
16,338,304
|
$
|
1,920,000
|
|||||
9
|
$
|
2,042,288
|
$
|
360,000
|
$
|
18,380,592
|
$
|
2,280,000
|
·
|
Each
eligible employee will receive a bonus after the end of the year
equal to
a specified percentage of their year-to-date gross wages. Certain
compensation, such as car allowances and relocation expenses, will
be
excluded from the calculation. Each employee must be a regular, full-time
active employee, not on probation, at the time the bonus is paid
in order
to receive a bonus. The date of payment of the bonuses is at the
discretion of management, but bonuses will not be paid until after
annual
earnings have been released to the
public.
|
·
|
There
will be four levels of participation in the Plan. Employees in each
level
will be eligible for a bonus each year in accordance with the following
table. The determination of what level applies to each employee will
be
made by the Compensation Committee based on the recommendation of
the
Chief Executive Officer. The Executive Officers are included in Level
Four.
|
·
|
The
percentage of adjusted year-to-date gross wages paid as a bonus will
be a
function of the number of Buckets earned during the year and the
employee’s Participation Level in the Bonus Plan. The bonus amount each
employee is entitled to receive will be determined in accordance
with the
table shown below. The bonus may be adjusted up or down to reflect
individual performance.
|
·
|
The
total of all bonuses paid may not exceed the total Bonus Pool. Should
the
amount of bonuses calculated in accordance with the table below exceed
the
total Bonus Pool available, all calculated bonuses will be reduced
proportionately. Should the adjusted amount of bonuses calculated
in
accordance with the table below be less than the Bonus Pool, the
Bonus
Pool shall be reduced to the calculated
amount.
|
Cumulative
Percentage
|
||||||||||||||||||||||||||||
Participation
|
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
9
|
|||||||||||||||||||
Level
|
Bucket
|
Buckets
|
Buckets
|
Buckets
|
Buckets
|
Buckets
|
Buckets
|
Buckets
|
Buckets
|
|||||||||||||||||||
One
|
0.495
|
%
|
1.480
|
%
|
2.470
|
%
|
4.460
|
%
|
6.000
|
%
|
7.000
|
%
|
8.000
|
%
|
9.000
|
%
|
10.000
|
%
|
||||||||||
Two
|
0.495
|
%
|
1.480
|
%
|
2.470
|
%
|
4.460
|
%
|
8.000
|
%
|
11.000
|
%
|
14.000
|
%
|
17.000
|
%
|
20.000
|
%
|
||||||||||
Three
|
0.495
|
%
|
1.480
|
%
|
2.470
|
%
|
4.460
|
%
|
8.000
|
%
|
15.000
|
%
|
20.000
|
%
|
25.000
|
%
|
30.000
|
%
|
||||||||||
Four
|
0.495
|
%
|
1.480
|
%
|
2.470
|
%
|
4.460
|
%
|
8.000
|
%
|
16.000
|
%
|
24.000
|
%
|
32.000
|
%
|
40.000
|
%
|
Ross
A. Benavides
|
Kerry
W. Mazoch
|
Karen
N. Pape
|
||||||||
If
termination date is between January 1, 2007 and December 30,
2007
|
||||||||||
Severance
plan payment
|
$
|
768,600
|
$
|
474,000
|
$
|
590,940
|
||||
Healthcare
and other insurance benefits
|
7,967
|
9,355
|
7,510
|
|||||||
Fair
market value of stock appreciation rights
|
224,728
|
212,580
|
171,888
|
|||||||
Total
|
$
|
1,001,295
|
$
|
695,935
|
$
|
770,338
|
||||
If
termination date is between December 31, 2007 and December 31,
2008
|
||||||||||
Severance
plan payment
|
$
|
768,600
|
$
|
474,000
|
$
|
590,940
|
||||
Healthcare
and other insurance benefits
|
7,967
|
9,355
|
7,510
|
|||||||
Fair
market value of stock appreciation rights
|
162,386
|
153,607
|
124,204
|
|||||||
Total
|
$
|
938,953
|
$
|
636,962
|
$
|
722,654
|
2006
Summary Compensation Table
|
|||||||||||||||||||||||||
Name
& Principal Position
|
Year
|
Salary
($)
|
Stock
Awards (1)
($)
|
Non-Equity
Incentive Plan Compensation (2)
($)
|
All
Other Compensation ($)
|
Total
($)
|
|||||||||||||||||||
Grant
E. Sims (3)
|
2006
|
$
|
112,077
|
-
|
-
|
56
|
(4)
|
$
|
112,133
|
||||||||||||||||
Chief
Executive Officer (Principal Executive Officer)
|
|||||||||||||||||||||||||
Mark
J. Gorman (5)
|
2006
|
$
|
190,894
|
$
|
28,167
|
(6)
|
-
|
$
|
1,232,958
|
(7)
|
$
|
1,452,019
|
|||||||||||||
Former
Chief Executive Officer and President (Former Principal Executive
Officer)
|
|||||||||||||||||||||||||
Ross
A. Benavides
|
2006
|
$
|
195,000
|
$
|
101,231
|
(8)
|
$
|
78,000
|
$
|
16,668
|
(9)
|
$
|
390,899
|
||||||||||||
Chief
Financial Officer and General Counsel (Principal Financial
Officer)
|
|||||||||||||||||||||||||
Joseph
A., Blount, Jr. (10)
|
2006
|
$
|
97,615
|
-
|
-
|
$
|
4,449
|
(11)
|
$
|
102,064
|
|||||||||||||||
President
& Chief Operating Officer
|
|||||||||||||||||||||||||
Kerry
W. Mazoch
|
2006
|
$
|
180,000
|
$
|
95,752
|
(12)
|
$
|
72,000
|
$
|
14,367
|
(13)
|
$
|
362,119
|
||||||||||||
Vice
President, Crude Oil Acquisitions
|
|||||||||||||||||||||||||
Karen
N. Pape
|
2006
|
$
|
150,000
|
$
|
77,430
|
(14)
|
$
|
60,000
|
$
|
15,032
|
(15)
|
$
|
302,462
|
||||||||||||
Vice
President & Controller (Principal Accounting Officer)
|
(1)
|
Amounts
in this column represent the amounts, before consideration of expected
forfeiture rate, that are included in the determination of net income
for
2006 under the provisions of SFAS 123(R) for awards under our Stock
Appreciation Rights plan. The forfeiture rate that was applied to
these
amounts at December 31, 2006 was 10%.
|
(2)
|
Amounts
in this column represent the amount that will be paid to the Executive
Officer as an award under our Bonus Plan. In each case with an amount
shown, the amount is equal to 40% of the named executive officers
annual
salary. Mr. Sims and Mr. Blount do not participate in the Bonus
Plan.
|
(3)
|
Mr.
Sims was named Chief Executive Officer on August 8, 2006. His annual
salary is $310,000. The amount shown as his salary is the amount
he
received from August 8, 2006 through December 31,
2006.
|
(4)
|
This
amount represents the amount paid for term life insurance
premiums.
|
(5)
|
Mr.
Gorman was Chief Executive Officer from January 1, 2006 through August
7,
2006.
|
(6)
|
Mr.
Gorman exercised all vested SARs after his resignation from Genesis.
This
amount represents the difference between the cash he received upon
exercise of his SARs of $91,173 and the liability that had been recorded
for SARs granted to him as of January 1, 2006.
|
(7)
|
Mr.
Gorman received a lump sum severance payment of $1,200,000 upon his
resignation, $11,510 for his services during the transition to the
new
executive team, $1,436 of health benefits, and transition assistance
from
a third party of $10,000. During the period he was employed by us,
he
received $9,900 of matching contributions to our defined contribution
401(k) plan. We paid $112 for annual term life insurance
premiums.
|
(8)
|
This
amount represents the change in the fair value of the outstanding
SAR
awards to Mr. Benavides between January 1, 2006 and December 31,
2006.
|
(9)
|
This
amount includes $9,900 of matching contributions to our 401(k) plan,
$6,600 of profit-sharing contributions to our 401(k) plan and $168
for
annual term life insurance
premiums.
|
(10)
|
Mr.
Blount was named President and Chief Operating Officer on August
8, 2006.
His annual salary is $270,000. The amount shown as his salary is
the
amount he received from August 8, 2006 through December 31,
2006.
|
(11)
|
This
amount includes $4,393 of matching contributions to our 401(k) plan
and
$56 for term life insurance
premiums.
|
(12)
|
This
amount represents the change in the fair value of the outstanding
SAR
awards to Mr. Mazoch between January 1, 2006 and December 31,
2006.
|
(13)
|
This
amount includes $8,690 of matching contributions to our 401(k) plan,
$5,509 of profit-sharing contributions to our 401(k) plan and $168
for
annual term life insurance
premiums.
|
(14)
|
This
amount represents the change in the fair value of the outstanding
SAR
awards to Ms. Pape between January 1, 2006 and December 31,
2006.
|
(15)
|
This
amount includes $8,264 of matching contributions to our 401(k) plan,
$6,600 of profit-sharing contributions to our 401(k) plan and $168
for
annual term life insurance
premiums.
|
Grants
of Plan-Based Awards in Fiscal Year 2006
|
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||
Estimated
Possible Payouts
|
All
Other
|
|||||||||||||||||||||
Under
Non-Equity Incentive Plan
|
Stock
|
|||||||||||||||||||||
Awards
(1)
|
Awards:
|
Exercise
or
|
Grant
Date
|
|||||||||||||||||||
Number
of
|
Base
Price
|
Fair
Value
|
||||||||||||||||||||
Board
|
Shares
of
|
of
Option
|
of
Stock
|
|||||||||||||||||||
Approval
|
Stock
or Units)
|
Awards
|
and
Option
|
|||||||||||||||||||
Name
|
Grant
Date
|
Date
|
Threshold
$
|
Maximum
$
|
(#)
(2)
|
($/Sh)
(3)
|
Awards
(4)
|
|||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||
Ross
A. Benavides
|
8/29/2006
|
8/29/2006
|
1,003
|
$
|
16.95
|
$
|
3,388
|
|||||||||||||||
|
12/29/2006 |
12/28/2006
|
5,270
|
$
|
19.57
|
$
|
19,810
|
|||||||||||||||
|
5/27/2003 |
$
|
0
|
$
|
78,000
|
|||||||||||||||||
|
||||||||||||||||||||||
Kerry
W. Mazoch
|
8/29/2006
|
8/29/2006
|
949
|
$
|
16.95
|
$
|
3,206
|
|||||||||||||||
|
12/29/2006 |
12/28/2006
|
4,127
|
$
|
19.57
|
$
|
15,513
|
|||||||||||||||
|
5/27/2003 |
$
|
0
|
$
|
72,000
|
|||||||||||||||||
|
||||||||||||||||||||||
Karen
N. Pape
|
8/29/2006
|
8/29/2006
|
767
|
$
|
16.95
|
$
|
2,591
|
|||||||||||||||
|
12/29/2006 |
12/28/2006
|
4,254
|
$
|
19.57
|
$
|
15,991
|
|||||||||||||||
|
5/27/2003 |
$
|
0
|
$
|
60,000
|
(1)
|
Under
the terms of our Bonus Plan, the Executive Officers named in this
table
were eligible to receive cash bonus awards in an amount that ranged
from
no award to the amounts shown as the Maximum, which represent 40%
of their
base salary. The amount of the award is based on the amount of Available
Cash before bonus expense generated by us for the year. Each of these
Executive Officers received the maximum award for
2006.
|
(2)
|
The
amounts in this column represent the SARs granted to the named Executive
Officer during 2006.
|
(3)
|
For
the awards granted on August 29, 2006, the exercise price represents
the
closing market price for our units for that date. For the awards
granted
on December 29, 2006, the exercise price represents the average of
the
closing market price of our units for the ten days preceding December
29,
2006. The closing market price for our units on December 29, 2006
was
$19.48.
|
(4)
|
The
amounts in this column represent the fair value of the award on December
31, 2006, as calculated in accordance with the provisions of SFAS
123(R).
|
Oustanding
Equity Awards at 2006 Fiscal Year-End
|
|||||||||||||
Stock
Appreciation Rights
|
|||||||||||||
Name
|
Number
of Securities Underlying Stock Appreciation Rights (#)
Exercisable
|
Number
of Securities Underlying Unexercised Stock Appreciation Rights (#)
Unexercisable (1)
|
Stock
Appreciation Rights Exercise Price ($)
|
Stock
Appreciation Rights Expiration Date
|
|||||||||
Ross
A. Benavides
|
11,916
|
3,973
|
$
|
9.26
|
12/31/2013
|
||||||||
-
|
3,777
|
$
|
12.48
|
12/31/2014
|
|||||||||
-
|
4,015
|
$
|
11.17
|
12/31/2015
|
|||||||||
-
|
1,003
|
$
|
16.95
|
8/29/2016
|
|||||||||
-
|
5,270
|
$
|
19.57
|
12/29/2016
|
|||||||||
Kerry
W. Mazoch
|
11,272
|
3,758
|
$
|
9.26
|
12/31/2013
|
||||||||
-
|
3,573
|
$
|
12.48
|
12/31/2014
|
|||||||||
-
|
3,798
|
$
|
11.17
|
12/31/2015
|
|||||||||
-
|
949
|
$
|
16.95
|
8/29/2016
|
|||||||||
-
|
4,127
|
$
|
19.57
|
12/29/2016
|
|||||||||
Karen
N. Pape
|
9,114
|
3,039
|
$
|
9.26
|
12/31/2013
|
||||||||
-
|
2,889
|
$
|
12.48
|
12/31/2014
|
|||||||||
-
|
3,071
|
$
|
11.17
|
12/31/2015
|
|||||||||
-
|
767
|
$
|
16.95
|
8/29/2016
|
|||||||||
-
|
4,254
|
$
|
19.57
|
12/29/2016
|
(1)
|
The
unexercisable rights
of each named executive officer vest on the following dates in the
order
they are listed: December 31, 2007, January 1, 2009, January 1, 2010,
January 1, 2010 and January 1, 2011.
|
Option
Exercises and Stock Vested in Fiscal Year 2006
|
|||||||
Stock
Appreciation Rights
|
|||||||
Name
|
Number
of Rights Exercised (#)
|
Value
Realized on Exercise ($)
|
|||||
Mark
J. Gorman
|
11,810
|
$
|
91,173
|
Director
Compensation in Fiscal 2006
|
||||||||||
Name
|
Fees
Earned or Paid in Cash ($)
|
Stock
Appreciation Rights Awards ($)
(1)
|
Total
($)
|
|||||||
Mark
C. Allen (2)
(3) (4)
|
$
|
15,000
|
$
|
1,645
|
$
|
16,645
|
||||
Ronald
T. Evans (2)
(4)
|
$
|
30,000
|
$
|
16,340
|
$
|
46,340
|
||||
Herbert
I. Goodman
(4) (5)
|
$
|
36,000
|
$
|
19,611
|
$
|
55,611
|
||||
Susan
O. Rheney
(4) (6)
|
$
|
40,000
|
$
|
21,785
|
$
|
61,785
|
||||
Gareth
Roberts (2)
(4)
|
$
|
30,000
|
$
|
16,340
|
$
|
46,340
|
||||
Phil
Rykhoek (2)
(4)
|
$
|
30,000
|
$
|
14,167
|
$
|
44,167
|
||||
J.
Conley Stone (4)
(5)
|
$
|
36,000
|
$
|
19,611
|
$
|
55,611
|
||||
Mark
Worthey (2)
(7)
|
$
|
15,000
|
$
|
(2,631
|
)
|
$
|
12,369
|
(1)
|
Amounts
in this column represent the amounts, before consideration of expected
forfeiture rate, that are included in the determination of net income
for
2006 under the provisions of SFAS 123(R) for awards under our Stock
Appreciation Rights plan. The forfeiture rate that was applied to
these
amounts at December 31, 2006 was
10%.
|
(2)
|
Fees
were paid in cash for these directors to Denbury Resources,
Inc.
|
(3)
|
Mr.
Allen received an initial award of stock appreciation rights on September
29, 2006 for 2,576 rights with a strike price of $15.77. The award
will
vest one-fourth annually through September 29, 2010 and will expire
September 29, 2016. The closing market price for our units on the
grant
date of this award was $15.63. The fair value of this award on the
grant
date was $7,866.
|
(4)
|
All
of the directors received an award of 1,000 stock appreciation rights
on
December 29, 2006 with a strike price of $19.57. The awards will
vest on
January 1, 2011 and will expire on December 29, 2016. The closing
market
price for our units on the grant date of this award was $19.48. The
fair
value of each award on the grant date was $3,759. This amount represents
the expected value of the award to the director at the end of the
vesting
period, as calculated under the methodology of SFAS
123(R).
|
(5) |
In
addition to $30,000 received for service on the Board of Directors,
Mr.
Goodman and Mr. Stone received payments totaling $6,000 for their
service
on the Audit Committee.
|
(6)
|
In
addition to $30,000 received for service on the Board of Directors,
Ms.
Rheney received payments totaling $6,000 for her service on the Audit
Committee and payments totaling $4,000 for her service as Audit Committee
Chairman.
|
(7) |
Upon
his departure from the Board of Directors, Mr. Worthey exercised
1,288
stock appreciation rights and received $4,240. He forfeited 2,551
unvested
stock appreciation rights. The amount included for stock appreciation
rights awards in this table for Mr. Worthey represents the difference
between the liability at January 1, 2006 for the outstanding awards
issued
to Mr. Worthey and the cash he received upon exercise of vested
awards.
|
Oustanding
Equity Awards at 2006 Fiscal Year-End to
Directors
|
|||||||||||||
Stock
Appreciation Rights
|
|||||||||||||
Name
|
Number
of Securities Underlying Stock Appreciation Rights (#)
Exercisable
|
Number
of Securities Underlying Unexercised Stock Appreciation Rights (#)
Unexercisable
|
Stock
Appreciation Rights Exercise Price ($)
|
Stock
Appreciation Rights Expiration Date
|
|||||||||
Mark
C. Allen (1)
|
-
|
2,576
|
$
|
15.77
|
9/29/2016
|
||||||||
-
|
1,000
|
$
|
19.57
|
12/29/2016
|
|||||||||
Ronald
T. Evans (2)
|
1,932
|
644
|
$
|
9.26
|
12/31/2013
|
||||||||
-
|
612
|
$
|
12.48
|
12/31/2014
|
|||||||||
-
|
651
|
$
|
11.17
|
12/31/2015
|
|||||||||
-
|
1,000
|
$
|
19.57
|
12/29/2016
|
|||||||||
Herbert
I. Goodman (2)
|
2,319
|
773
|
$
|
9.26
|
12/31/2013
|
||||||||
-
|
735
|
$
|
12.48
|
12/31/2014
|
|||||||||
-
|
781
|
$
|
11.17
|
12/31/2015
|
|||||||||
-
|
1,000
|
$
|
19.57
|
12/29/2016
|
|||||||||
Susan
O. Rheney
(2)
|
2,576
|
859
|
$
|
9.26
|
12/31/2013
|
||||||||
-
|
816
|
$
|
12.48
|
12/31/2014
|
|||||||||
-
|
868
|
$
|
11.17
|
12/31/2015
|
|||||||||
-
|
1,000
|
$
|
19.57
|
12/29/2016
|
|||||||||
Gareth
Roberts (2)
|
1,932
|
644
|
$
|
9.26
|
12/31/2013
|
||||||||
-
|
612
|
$
|
12.48
|
12/31/2014
|
|||||||||
-
|
651
|
$
|
11.17
|
12/31/2015
|
|||||||||
-
|
1,000
|
$
|
19.57
|
12/29/2016
|
|||||||||
Phil
Rykhoek (3)
|
1,288
|
1,288
|
$
|
11.00
|
8/25/2014
|
||||||||
-
|
612
|
$
|
12.48
|
12/31/2014
|
|||||||||
-
|
651
|
$
|
11.17
|
12/31/2015
|
|||||||||
-
|
1,000
|
$
|
19.57
|
12/29/2016
|
|||||||||
J.
Conley Stone (2)
|
2,319
|
773
|
$
|
9.26
|
12/31/2013
|
||||||||
-
|
735
|
$
|
12.48
|
12/31/2014
|
|||||||||
-
|
781
|
$
|
11.17
|
12/31/2015
|
|||||||||
-
|
1,000
|
$
|
19.57
|
12/29/2016
|
(1)
|
Mr.
Allen’s first award will vest one-fourth annually beginning September 29,
2007 through September 29, 2010. Mr. Allen’s second award will vest on
January 1, 2011.
|
(2)
|
The
unexercisable rights of this director vest on the following dates
in the
order they are listed: December 31, 2007, January 1, 2009, January
1, 2010
and January 1, 2011.
|
(3)
|
The
unexercisable portion of Mr. Rykhoek’s first award will vest 644 rights on
August 25, 2007 and 644 rights on August 25, 2008. Mr. Rykhoek’s remaining
awards will vest on January 1, 2009, January 1, 2010 and January
1,
2011.
|
Beneficial
Ownership of Common Units
|
||||||
Percent
|
||||||
Title
of Class
|
Name
of Beneficial Owner
|
Number
of Units
|
of
Class
|
|||
Genesis
Energy, L.P.
|
Genesis
Energy, Inc.
|
1,019,441
|
7.4
|
|||
Common
Unit
|
Gareth
Roberts
|
10,000
|
|
*
|
||
Grant
E. Sims (1)
|
1,000
|
*
|
||||
Ronald
T. Evans
|
1,000
|
*
|
||||
Herbert
I. Goodman
|
2,000
|
*
|
||||
Susan
O. Rheney
|
700
|
*
|
||||
Phil
Rykhoek
|
2,500
|
*
|
||||
J.
Conley Stone
|
2,000
|
*
|
||||
Ross
A. Benavides
|
9,283
|
*
|
||||
Kerry
W. Mazoch (2)
|
8,669
|
*
|
||||
Karen
N. Pape
|
3,386
|
*
|
||||
All
directors and executive officers as a group (12 in total)
|
40,538
|
*
|
||||
Swank
Capital, L.L.C., Swank
|
||||||
Energy
Income Advisors,
|
||||||
L.P.
and Mr. Jerry V. Swank
|
1,710,754
|
12.4
|
||||
3300
Oak Lawn Ave., Suite 650
|
||||||
Dallas,
Texas 75219
|
||||||
|
||||||
*
Less than 1%
|
(1)
|
Common
units are held by Mr. Sims’ father. Mr. Sims disclaims beneficial
ownership of these units.
|
(2)
|
Includes
584 units which Mr. Mazoch holds with his
children.
|
·
|
evaluates
and, where appropriate, negotiates the proposed
transaction;
|
·
|
engages
an independent financial advisor and independent legal counsel to
assist
with its evaluation of the proposed transaction; and
|
·
|
determines
whether to reject or approve and recommend the proposed
transaction.
|
·
|
Purchases
of crude oil from Denbury totaling $1.6
million.
|
·
|
Provision
of transportation services for crude oil by truck totaling $0.8
million.
|
·
|
Provision
of crude oil pipeline transportation services totaling $4.2
million.
|
·
|
Provision
of crude oil from and CO2
transportation to the Brookhaven field and crude oil from the Olive
field
for $1.2 million.
|
·
|
Provision
of CO2
transportation services to our wholesale industrial customers by
Denbury’s
pipeline. The fees for this service totaled $4.6 million in
2006.
|
·
|
Provision
of pipeline monitoring services to Denbury for its CO2
pipelines totaling $65,000 in 2006.
|
·
|
Provision
of services by Denbury officers as directors of our general partner.
We
paid Denbury $120,000 for these services in
2006.
|
2006
|
2005
|
||||||
(in
thousands)
|
|||||||
Audit
Fees (1)
|
$
|
632
|
$
|
733
|
|||
Audit-Related
Fees (2)
|
25
|
41
|
|||||
Tax-Related
Fees (3)
|
88
|
66
|
|||||
All
Other Fees
(4)
|
1
|
1
|
|||||
Total
|
$
|
746
|
$
|
841
|
(1)
|
Includes
fees for the annual audit and quarterly reviews, SEC registration
statements, accounting and financial reporting consultations and
research
work regarding Generally Accepted Accounting Principles and the audit
of
the effectiveness of our internal controls over financial
reporting.
|
(2)
|
Includes
fees for the audit of our employee benefit
plan.
|
(3)
|
Includes
fees for tax return preparation and tax treatment
consultations.
|
(4)
|
Includes
fees associated with a license for accounting research
software.
|
3.1
|
Certificate
of Limited Partnership of Genesis Energy, L.P. (“Genesis”) (incorporated
by reference to Exhibit 3.1 to Registration Statement, File No.
333-11545
|
||
3.2
|
Fourth
Amended and Restated Agreement of Limited Partnership of Genesis
(incorporated by reference to Exhibit 4.1 to Form 8-K dated June
15,
2005
|
||
3.3
|
Certificate
of Limited Partnership of Genesis Crude Oil, L.P. (“the Operating
Partnership”) (incorporated by reference to Exhibit 3.3 to Form 10-K for
the year ended December 31, 1996)
|
||
3.4
|
Fourth
Amended and Restated Agreement of Limited Partnership of the Operating
Partnership (incorporated by reference to Exhibit 4.2 to Form 8-K
dated
June 15, 2005)
|
||
10.1
|
Purchase
& Sale and Contribution & Conveyance Agreement dated December 3,
1996 among Basis Petroleum, Inc., Howell Corporation (“Howell”), certain
subsidiaries of Howell, Genesis, the Operating Partnership and Genesis
Energy, L.L.C. (incorporated by reference to Exhibit 10.1 to Form
10-K for
the year ended December 31, 1996)
|
||
10.2
|
First
Amendment to Purchase & Sale and Contribution and Conveyance Agreement
(incorporated by reference to Exhibit 10.2 to Form 10-K for the year
ended
December 31, 1996)
|
||
10.3
|
Credit
Agreement dated as of November 15, 2006 among Genesis Crude Oil,
L.P.,
Genesis Energy, L.P., the Lenders Party Hereto, Fortis Capital Corp.,
and
Deutsche Bank Securities Inc. (incorporated by reference to Exhibit
10.1
to Form 8-K dated November 15, 2006)
|
||
10.4
|
+
|
Letter
dated August 3, 2006 to Grant E. Sims regarding Offer to Enter into
Employment Agreements (incorporated by reference to Exhibit 10.1
to Form
10-Q for the quarterly period ended September 30, 2006)
|
10.5
|
Pipeline
Sale and Purchase Agreement between TEPPCO Crude Pipeline, L.P. and
Genesis Crude Oil, L.P. and Genesis Pipeline Texas, L.P. (incorporated
by
reference to Exhibit 10.1 to Form 8-K dated October 31, 2003)
|
||
10.6
|
Purchase
and Sale Agreement between TEPPCO Crude Pipeline, L.P. and Genesis
Crude
Oil, L.P. (incorporated by reference to Exhibit 10.2 to Form 8-K
dated
October 31, 2003)
|
||
10.7
|
Production
Payment Purchase and Sale Agreement between Denbury Resources, Inc.
and
Genesis Crude Oil, L.P. (incorporated by reference to Exhibit 10.7
to Form
10-K for the year ended December 31, 2003)
|
||
10.8
|
Carbon
Dioxide Transportation Agreement between Denbury Resources, Inc.
and
Genesis Crude Oil, L.P. (incorporated by reference to Exhibit 10.8
to Form
10-K for the year ended December 31, 2003)
|
||
10.9
|
+
|
Genesis
Stock Appreciation Rights Plan (incorporated by reference to Exhibit
10.9
to Form 10-K for the year ended December 31, 2004)
|
|
10.10
|
+
|
Form
of Stock Appreciation Rights Plan Grant Notice (incorporated by reference
to Exhibit 10.10 to Form 10-K for the year ended December 31,
2004)
|
|
*
|
|
+
|
Summary
of Genesis Energy, Inc. Bonus Plan
|
10.13
|
+
|
Genesis
Energy Amended and Restated Severance Protection Plan (incorporated
by
reference to Exhibit 10.1 to Form 8-K dated December 12,
2006)
|
|
10.14
|
Second
Production Payment Purchase and Sale Agreement between Denbury Onshore,
LLC and Genesis Crude Oil, L.P. executed August 26, 2004 (incorporated
by
reference to Exhibit 99.1 to Form 8-K dated August 26, 2004)
|
||
10.15
|
Second
Carbon Dioxide Transportation Agreement between Denbury Onshore,
LLC and
Genesis Crude Oil, L.P. (incorporated by reference to Exhibit 99.2
to Form
8-K dated August 24, 2004)
|
||
10.16
|
Third
Production Payment Purchase and Sale Agreement between Denbury Onshore,
LLC and Genesis Crude Oil, L.P. executed October 11, 2005 (incorporated
by
reference to Exhibit 99.2 to Form 8-K dated October 11, 2005)
|
||
10.17
|
Third
Carbon Dioxide Transportation Agreement between Denbury Onshore,
LLC and
Genesis Crude Oil, L.P. (incorporated by reference to Exhibit 99.3
to Form
8-K dated October 11, 2005)
|
||
11.1
|
Statement
Regarding Computation of Per Share Earnings (See Notes 2 and 9 to
the
Consolidated Financial Statements
|
||
*
|
|
Subsidiaries
of the Registrant
|
|
*
|
|
Consent
of Deloitte & Touche LLP
|
|
*
|
|
Certification
by Chief Executive Officer Pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934
|
|
*
|
|
Certification
by Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities
Exchange Act of 1934
|
|
*
|
|
Certification
by Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
|
|
*
|
|
Certification
by Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002
|
*
|
Filed
herewith
|
+
|
A
management contract or compensation plan or
arrangement.
|
GENESIS
ENERGY, L.P.
(A
Delaware Limited Partnership)
|
||
By:
|
GENESIS
ENERGY, INC.,
as
General Partner
|
|
By:
|
/s/
GRANT
E. SIMS
|
|
Grant E. Sims
Chief Executive Officer
|
/s/
|
GRANT
E. SIMS
|
Director
and Chief Executive Officer
|
March
15, 2007
|
||
Grant
E. Sims
|
(Principal
Executive Officer
|
||||
/s/
|
ROSS
A. BENAVIDES
|
Chief
Financial Officer,
|
March
15, 2007
|
||
Ross
A. Benavides
|
General
Counsel and Secretary
|
||||
(Principal
Financial Officer)
|
|||||
/s/
|
KAREN
N. PAPE
|
Vice
President and Controller
|
March
15, 2007
|
||
Karen
N. Pape
|
(Principal
Accounting Officer)
|
||||
/s/
|
GARETH
ROBERTS
|
Chairman
of the Board and
|
March
15, 2007
|
||
Gareth
Roberts
|
Director
|
||||
/s/
|
MARK
C. ALLEN
|
Director
|
March
15, 2007
|
||
Mark
C. Allen
|
|||||
/s/
|
RONALD
T. EVANS
|
Director
|
March
15, 2007
|
||
Ronald
T. Evans
|
|||||
/s/
|
HERBERT
I. GOODMAN
|
Director
|
March
15, 2007
|
||
Herbert
I. Goodman
|
|||||
/s/
|
SUSAN
O. RHENEY
|
Director
|
March
15, 2007
|
||
Susan
O. Rheney
|
|||||
/s/
|
PHIL
RYKHOEK
|
Director
|
March
15, 2007
|
||
Phil
Rykhoek
|
|||||
/s/
|
J.
CONLEY STONE
|
Director
|
March
15, 2007
|
||
J.
Conley Stone
|
Page
|
||
Financial
Statements
|
||
Report
of Independent Registered Public Accounting Firm
|
82
|
|
Consolidated
Balance Sheets, December 31, 2006 and 2005
|
83
|
|
Consolidated
Statements of Operations for the Years Ended December 31, 2006, 2005
and
2004
|
84
|
|
Consolidated
Statements of Partners’ Capital for the Years Ended December 31, 2006,
2005 and 2004
|
85
|
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2006, 2005
and
2004
|
86
|
|
Notes
to Consolidated Financial Statements
|
87
|
|
Financial
Statement Schedules
|
||
Schedule
I - Condensed Financial Information
|
111
|
GENESIS
ENERGY, L.P.
|
|||||||
CONSOLIDATED
BALANCE SHEETS
|
|||||||
(In
thousands)
|
|||||||
December
31,
2006
|
December
31,
2005
|
||||||
ASSETS
|
|||||||
CURRENT
ASSETS:
|
|||||||
Cash
and cash equivalents
|
$
|
2,318
|
$
|
3,099
|
|||
Accounts
receivable:
|
|||||||
Trade
|
88,006
|
82,119
|
|||||
Related
Party
|
1,100
|
515
|
|||||
Inventories
|
5,172
|
498
|
|||||
Net
investment in direct financing leases, net of unearned income - current
portion
|
568
|
531
|
|||||
Other
|
2,828
|
3,687
|
|||||
Total
current assets
|
99,992
|
90,449
|
|||||
FIXED
ASSETS, at cost
|
70,382
|
69,708
|
|||||
Less:
Accumulated depreciation
|
(39,066
|
)
|
(35,939
|
)
|
|||
Net
fixed assets
|
31,316
|
33,769
|
|||||
NET
INVESTMENT IN DIRECT FINANCING LEASES, net of unearned
income
|
5,373
|
5,941
|
|||||
CO2
ASSETS, net of amortization
|
33,404
|
37,648
|
|||||
JOINT
VENTURES AND OTHER INVESTMENTS
|
18,226
|
13,042
|
|||||
OTHER
ASSETS, net of amortization
|
2,776
|
928
|
|||||
TOTAL
ASSETS
|
$
|
191,087
|
$
|
181,777
|
|||
LIABILITIES
AND PARTNERS' CAPITAL
|
|||||||
CURRENT
LIABILITIES:
|
|||||||
Accounts
payable:
|
|||||||
Trade
|
$
|
85,063
|
$
|
82,369
|
|||
Related
party
|
1,629
|
2,917
|
|||||
Accrued
liabilities
|
9,220
|
7,325
|
|||||
Total
current liabilities
|
95,912
|
92,611
|
|||||
LONG-TERM
DEBT
|
8,000
|
-
|
|||||
OTHER
LONG-TERM LIABILITIES
|
991
|
955
|
|||||
COMMITMENTS
AND CONTINGENCIES (Note 17)
|
|||||||
MINORITY
INTERESTS
|
522
|
522
|
|||||
PARTNERS'
CAPITAL:
|
|||||||
Common
unitholders, 13,784 units issued and outstanding at 2006 and
2005
|
83,884
|
85,870
|
|||||
General
partner
|
1,778
|
1,819
|
|||||
Total
partners' capital
|
85,662
|
87,689
|
|||||
TOTAL
LIABILITIES AND PARTNERS' CAPITAL
|
$
|
191,087
|
$
|
181,777
|
GENESIS
ENERGY, L.P.
|
||||||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
||||||||||
(In
thousands, except per unit amounts)
|
||||||||||
Year
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
REVENUES:
|
||||||||||
Crude
oil gathering and marketing:
|
||||||||||
Unrelated
parties (including revenues from buy/sell arrangements of $69,772,
$365,067 and $296,329, in 2006, 2005 and 2004,
respectively)
|
$
|
872,443
|
$
|
1,037,577
|
$
|
901,689
|
||||
Related
parties
|
825
|
972
|
213
|
|||||||
Pipeline
transportation, including natural gas sales:
|
||||||||||
Unrelated
parties
|
24,999
|
24,297
|
15,506
|
|||||||
Related
parties
|
4,948
|
4,591
|
1,174
|
|||||||
CO2
marketing revenues
|
||||||||||
Unrelated
parties
|
13,098
|
11,302
|
8,561
|
|||||||
Related
parties
|
2,056
|
-
|
-
|
|||||||
Total
revenues
|
918,369
|
1,078,739
|
927,143
|
|||||||
COSTS
AND EXPENSES:
|
||||||||||
Crude
oil costs:
|
||||||||||
Unrelated
parties (including costs from buy/sell arrangements of $68,899, $363,208
and $295,380, in 2006, 2005 and 2004, respectively)
|
850,106
|
1,014,249
|
805,990
|
|||||||
Related
parties
|
1,565
|
4,647
|
77,998
|
|||||||
Field
operating costs
|
14,231
|
15,992
|
13,880
|
|||||||
Pipeline
transportation costs:
|
||||||||||
Pipeline
operating costs
|
9,928
|
9,741
|
8,137
|
|||||||
Natural
gas purchases
|
7,593
|
9,343
|
-
|
|||||||
CO2
marketing costs:
|
||||||||||
Transportation
costs - related party
|
4,640
|
3,501
|
2,694
|
|||||||
Other
costs
|
202
|
148
|
105
|
|||||||
General
and administrative
|
13,573
|
9,656
|
11,031
|
|||||||
Depreciation
and amortization
|
7,963
|
6,721
|
7,298
|
|||||||
Net
(gain) loss on disposal of surplus assets
|
(16
|
)
|
(479
|
)
|
33
|
|||||
Total
costs and expenses
|
909,785
|
1,073,519
|
927,166
|
|||||||
OPERATING
INCOME (LOSS)
|
8,584
|
5,220
|
(23
|
)
|
||||||
OTHER
INCOME (EXPENSE):
|
||||||||||
Equity
in earnings of joint ventures
|
1,131
|
501
|
-
|
|||||||
Interest
income
|
198
|
71
|
44
|
|||||||
Interest
expense
|
(1,572
|
)
|
(2,103
|
)
|
(970
|
)
|
||||
Income
from continuing operations before income taxes and minority
interest
|
8,341
|
3,689
|
(949
|
)
|
||||||
Income
tax benefit
|
11
|
-
|
-
|
|||||||
Minority
interest
|
(1
|
)
|
-
|
-
|
||||||
INCOME
(LOSS) FROM CONTINUING OPERATIONS
|
8,351
|
3,689
|
(949
|
)
|
||||||
Income
(loss) from discontinued Texas operations
|
-
|
312
|
(463
|
)
|
||||||
Cumulative
effect adjustment of adoption of new accounting principles
|
30
|
(586
|
)
|
-
|
||||||
NET
INCOME (LOSS)
|
$
|
8,381
|
$
|
3,415
|
$
|
(1,412
|
)
|
GENESIS
ENERGY, L.P.
|
||||||||||
CONSOLIDATED
STATEMENTS OF OPERATIONS - CONTINUED
|
||||||||||
(In
thousands, except per unit amounts)
|
||||||||||
Year
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
NET
INCOME (LOSS) PER COMMON UNIT - BASIC AND DILUTED:
|
||||||||||
Income
(loss) from continuing operations
|
$
|
0.59
|
$
|
0.38
|
$
|
(0.10
|
)
|
|||
Income
(loss) from discontinued operations
|
-
|
0.03
|
(0.05
|
)
|
||||||
Cumulative
effect adjustment
|
-
|
(0.06
|
)
|
-
|
||||||
NET
INCOME (LOSS)
|
$
|
0.59
|
$
|
0.35
|
$
|
(0.15
|
)
|
|||
Weighted
average number of common units outstanding
|
13,784
|
9,547
|
9,314
|
GENESIS
ENERGY, L.P.
|
|||||||||||||
CONSOLIDATED
STATEMENTS OF PARTNERS' CAPITAL
|
|||||||||||||
(In
thousands)
|
|||||||||||||
Partners'
Capital
|
|||||||||||||
Number
of Common Units
|
Common
Unitholders
|
General
Partner
|
Total
|
||||||||||
Partners'
capital, January 1, 2004
|
9,314
|
$
|
51,299
|
$
|
1,055
|
$
|
52,354
|
||||||
Net
loss
|
-
|
(1,384
|
)
|
(28
|
)
|
(1,412
|
)
|
||||||
Cash
distributions
|
-
|
(5,589
|
)
|
(114
|
)
|
(5,703
|
)
|
||||||
Partners'
capital, December 31, 2004
|
9,314
|
44,326
|
913
|
45,239
|
|||||||||
Net
income
|
-
|
3,347
|
68
|
3,415
|
|||||||||
Cash
distributions
|
-
|
(5,682
|
)
|
(116
|
)
|
(5,798
|
)
|
||||||
Issuance
of units
|
4,470
|
43,879
|
954
|
44,833
|
|||||||||
Partners'
capital, December 31, 2005
|
13,784
|
85,870
|
1,819
|
87,689
|
|||||||||
Net
income
|
-
|
8,214
|
167
|
8,381
|
|||||||||
Cash
distributions
|
-
|
(10,200
|
)
|
(208
|
)
|
(10,408
|
)
|
||||||
Partners'
capital, December 31, 2006
|
13,784
|
$
|
83,884
|
$
|
1,778
|
$
|
85,662
|
GENESIS
ENERGY, L.P.
|
||||||||||
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
||||||||||
(In
thousands)
|
||||||||||
Year
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||
Net
income (loss)
|
$
|
8,381
|
$
|
3,415
|
$
|
(1,412
|
)
|
|||
Adjustments
to reconcile net income to net cash provided by operating activities
-
|
||||||||||
Depreciation
|
3,719
|
3,579
|
4,846
|
|||||||
Amortization
of CO2
contracts
|
4,244
|
3,142
|
2,452
|
|||||||
Amortization
and write-off of credit facility issuance costs
|
969
|
373
|
373
|
|||||||
Amortization
of unearned income on direct financing leases
|
(655
|
)
|
(689
|
)
|
(36
|
)
|
||||
Payments
received under direct financing leases
|
1,186
|
1,185
|
75
|
|||||||
Equity
in earnings of investments in joint ventures
|
(1,131
|
)
|
(501
|
)
|
-
|
|||||
Distributions
from joint ventures - return on investment
|
1,565
|
435
|
-
|
|||||||
(Gain)
loss on disposal of assets
|
(16
|
)
|
(791
|
)
|
33
|
|||||
Cumulative
effect adjustment
|
(30
|
)
|
586
|
-
|
||||||
Other
non-cash charges (credits)
|
1,903
|
(54
|
)
|
1,151
|
||||||
Changes
in components of working capital -
|
||||||||||
Accounts
receivable
|
(6,472
|
)
|
(13,313
|
)
|
(2,589
|
)
|
||||
Inventories
|
(4,664
|
)
|
790
|
(1,170
|
)
|
|||||
Other
current assets
|
870
|
132
|
13,251
|
|||||||
Accounts
payable
|
1,359
|
10,431
|
7,525
|
|||||||
Accrued
liabilities
|
34
|
770
|
(14,797
|
)
|
||||||
Net
cash provided by operating activities
|
11,262
|
9,490
|
9,702
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||||
Additions
to property and equipment
|
(1,260
|
)
|
(6,106
|
)
|
(8,322
|
)
|
||||
Investments
in joint ventures and other investments
|
(6,042
|
)
|
(13,418
|
)
|
-
|
|||||
CO2
contracts acquisition
|
-
|
(14,446
|
)
|
(4,723
|
)
|
|||||
Distributions
from joint ventures - return of investment
|
528
|
388
|
-
|
|||||||
Proceeds
from disposal of assets
|
67
|
1,585
|
112
|
|||||||
Other,
net
|
(135
|
)
|
188
|
128
|
||||||
Net
cash used in investing activities
|
(6,842
|
)
|
(31,809
|
)
|
(12,805
|
)
|
||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||||
Bank
borrowings (repayments), net
|
8,000
|
(15,300
|
)
|
8,300
|
||||||
Credit
facility issuance costs
|
(2,726
|
)
|
-
|
(826
|
)
|
|||||
Other,
net
|
(66
|
)
|
(400
|
)
|
541
|
|||||
Issuance
of limited and general partner interests, net
|
-
|
44,833
|
-
|
|||||||
Minority
interest (distributions) contributions
|
(1
|
)
|
5
|
-
|
||||||
Distributions
to common unitholders
|
(10,200
|
)
|
(5,682
|
)
|
(5,589
|
)
|
||||
Distributions
to general partner
|
(208
|
)
|
(116
|
)
|
(114
|
)
|
||||
Net
cash (used in) provided by financing activities
|
(5,201
|
)
|
23,340
|
2,312
|
||||||
Net
(decrease) increase in cash and cash equivalents
|
(781
|
)
|
1,021
|
(791
|
)
|
|||||
Cash
and cash equivalents at beginning of period
|
3,099
|
2,078
|
2,869
|
|||||||
Cash
and cash equivalents at end of period
|
$
|
2,318
|
$
|
3,099
|
$
|
2,078
|
December
31,
|
|||||||
2006
|
2005
|
||||||
Crude
oil inventories, at lower of cost or market
|
$
|
5,081
|
$
|
411
|
|||
Fuel
and supplies inventories, at lower of cost or market
|
91
|
87
|
|||||
Total
inventories
|
$
|
5,172
|
$
|
498
|
December
31,
|
|||||||
2006
|
2005
|
||||||
Land
and buildings
|
$
|
808
|
$
|
967
|
|||
Pipelines
and related assets
|
58,428
|
57,706
|
|||||
Vehicles
and transportation equipment
|
1,257
|
1,169
|
|||||
Office
equipment, furniture and fixtures
|
2,616
|
2,724
|
|||||
Construction
in progress
|
78
|
-
|
|||||
Other
|
7,195
|
7,142
|
|||||
70,382
|
69,708
|
||||||
Less
- Accumulated depreciation
|
(39,066
|
)
|
(35,939
|
)
|
|||
Net
fixed assets
|
$
|
31,316
|
$
|
33,769
|
Asset
retirement obligations as of December 31, 2004
|
$
|
146
|
||
Additions
to asset retirement obligations due to FIN 47
|
651
|
|||
Asset
retirement liability obligations incurred during 2005
|
34
|
|||
Asset
retirement obligations settled during 2005
|
(183
|
)
|
||
Revisions
to asset retirement obligations
|
9
|
|||
Asset
retirement obligations as of December 31. 2005
|
657
|
|||
Accretion
of discount during 2006
|
51
|
|||
Asset
retirement obligations as of December 31. 2006
|
$
|
708
|
Year
Ended December 31,
|
|||||||
2005
|
2004
|
||||||
(Unaudited)
|
|||||||
Income
(loss) from continuing operations - as reported
|
$
|
3,689
|
$
|
(949
|
)
|
||
Impact
of change in accounting principle
|
(85
|
)
|
(67
|
)
|
|||
Pro
forma income (loss) from continuing operations
|
$
|
3,604
|
$
|
(1,016
|
)
|
||
Net
income (loss) - as reported
|
$
|
3,415
|
$
|
(1,412
|
)
|
||
Add
back cumulative effect adjustment
|
586
|
-
|
|||||
Impact
of change in accounting principle
|
(85
|
)
|
(67
|
)
|
|||
Pro
forma income (loss) from continuing operations
|
$
|
3,916
|
$
|
(1,479
|
)
|
||
Basic
and diluted net income (loss) per common unit:
|
|||||||
Income
(loss) from continuing operations - as reported
|
$
|
0.38
|
$
|
(0.10
|
)
|
||
Impact
of change in accounting principle
|
(0.01
|
)
|
(0.01
|
)
|
|||
Pro
forma income (loss) from continuing operations
|
$
|
0.37
|
$
|
(0.11
|
)
|
||
Net
income (loss) - as reported
|
$
|
0.35
|
$
|
(0.15
|
)
|
||
Impact
of change in accounting principle and add back of cumulative effect
adjustment
|
0.05
|
(0.01
|
)
|
||||
Pro
forma income (loss) from continuing operations
|
$
|
0.40
|
$
|
(0.16
|
)
|
December
31,
|
|||||||
2006
|
2005
|
||||||
Total
minimum lease payments to be received
|
$
|
8,225
|
$
|
9,410
|
|||
Estimated
residual values of leased property (unguaranteed)
|
1,287
|
1,287
|
|||||
Less
unearned income
|
(3,571
|
)
|
(4,225
|
)
|
|||
Net
investment in direct financing leases
|
$
|
5,941
|
$
|
6,472
|
December
31,
|
|||||||
2006
|
2005
|
||||||
CO2
volumetric production payments
|
$
|
43,570
|
$
|
43,570
|
|||
Less
- Accumulated amortization
|
(10,166
|
)
|
(5,922
|
)
|
|||
Net
CO2
assets
|
$
|
33,404
|
$
|
37,648
|
December
31,
|
|||||||
2006
|
2005
|
||||||
Credit
facility fees
|
$
|
2,726
|
$
|
1,491
|
|||
Other
deferred costs and deposits
|
119
|
28
|
|||||
2,845
|
1,519
|
||||||
Less
- Accumulated amortization
|
(69
|
)
|
(591
|
)
|
|||
Net
other assets
|
$
|
2,776
|
$
|
928
|
Year
Ended
December
31, 2006
|
Nine
Months Ended
December
31, 2005
|
||||||
Revenues
|
$
|
4,911
|
$
|
3,073
|
|||
Operating
expenses and depreciation
|
(1,830
|
)
|
(1,553
|
)
|
|||
Other
income
|
17
|
9
|
|||||
-
|
(108
|
)
|
|||||
Net
income
|
$
|
3,098
|
$
|
1,421
|
December
31, 2006
|
December
31, 2005
|
||||||
Current
assets
|
$
|
1,355
|
$
|
1,358
|
|||
Non-current
assets
|
15,387
|
16,956
|
|||||
Total
assets
|
$
|
16,742
|
$
|
18,314
|
|||
Current
liabilities
|
$
|
156
|
$
|
1,016
|
|||
Non-current
liabilties
|
165
|
-
|
|||||
Partners'
capital
|
16,421
|
17,298
|
|||||
Total
liabilites and partners' capital
|
$
|
16,742
|
$
|
18,314
|
Nine
Months Ended December 31, 2006
|
||||
Revenues
|
$
|
8,254
|
||
Operating
expenses and depreciation
|
(7,977
|
)
|
||
Other
income
|
3
|
|||
Net
income
|
$
|
280
|
December
31, 2006
|
||||
Current
assets
|
$
|
1,606
|
||
Non-current
assets
|
6,592
|
|||
Total
assets
|
$
|
8,198
|
||
Current
liabilities
|
$
|
1,463
|
||
Non-current
liabilties
|
4,140
|
|||
Members'
interests
|
2,595
|
|||
Total
liabilites and members' interests
|
$
|
8,198
|
·
|
The
interest rate on borrowings may be based on the prime rate or the
LIBOR
rate, at our option. The interest rate on prime rate loans can range
from
the prime rate plus 0.50% to the prime rate plus 1.875%. The interest
rate
for LIBOR-based loans can range from the LIBOR rate plus 1.50% to
the
LIBOR rate plus 2.875%. The rate is based on our leverage ratio as
computed under the credit facility. The rate can fluctuate
quarterly.
|
·
|
Letter
of credit fees will range from 1.50% to 2.875% based on our leverage
ratio
as computed under the credit facility. The rate can fluctuate quarterly.
At December 31, 2006, the rate was
1.50%.
|
·
|
We
pay a commitment fee on the unused portion of the $125 million commitment.
The commitment fee will range from 0.30% to 0.50% based on our leverage
ratio as computed under the credit facility. The rate can fluctuate
quarterly. At December 31, 2006, the commitment fee rate was
0.30%.
|
·
|
Collateral
under the credit facility consists of our accounts receivable, inventory,
cash accounts, margin accounts and fixed assets. Our credit facility
is
non-recourse to our general partner, except to the extent of its
pledge of
its 0.01% general partner interest in our operating
partnership.
|
Period
|
Purchaser
of Common
Units
|
Units
|
Gross
Unit Price
|
Proceeds
from Sale
|
GP
Contributions
|
Costs
|
Net
Proceeds
|
|||||||||||||||
(in
thousands, except per unit amounts)
|
||||||||||||||||||||||
December
2005
|
Public
|
4,140
|
$
|
10.500
|
$
|
43,470
|
$
|
887
|
$
|
2,889
|
$
|
41,468
|
||||||||||
December
2005
|
General
Partner
|
331
|
$
|
9.975
|
$
|
3,298
|
$
|
67
|
$
|
-
|
$
|
3,365
|
||||||||||
November
2003
|
General
Partner
|
689
|
$
|
7.150
|
$
|
4,925
|
$
|
101
|
$
|
14
|
$
|
5,012
|
Distribution
For
|
Date
Paid or to be Paid
|
Per
Unit Amount
|
Total
Amount (000's)
|
|||||||
Fourth
quarter 2003
|
February
2004
|
$
|
0.15
|
$
|
1,426
|
|||||
First
quarter 2004
|
May
2004
|
$
|
0.15
|
$
|
1,426
|
|||||
Second
quarter 2004
|
August
2004
|
$
|
0.15
|
$
|
1,426
|
|||||
Third
quarter 2004
|
November
2004
|
$
|
0.15
|
$
|
1,426
|
|||||
Fourth
quarter 2004
|
February
2005
|
$
|
0.15
|
$
|
1,426
|
|||||
First
quarter 2005
|
May
2005
|
$
|
0.15
|
$
|
1,426
|
|||||
Second
quarter 2005
|
August
2005
|
$
|
0.15
|
$
|
1,426
|
|||||
Third
quarter 2005
|
November
2005
|
$
|
0.16
|
$
|
1,521
|
|||||
Fourth
quarter 2005
|
February
2006
|
$
|
0.17
|
$
|
2,391
|
|||||
First
quarter 2006
|
May
2006
|
$
|
0.18
|
$
|
2,532
|
|||||
Second
quarter 2006
|
August
2006
|
$
|
0.19
|
$
|
2,672
|
|||||
Third
quarter 2006
|
November
2006
|
$
|
0.20
|
$
|
2,813
|
|||||
Fourth
quarter 2006
|
February
2007
|
$
|
0.21
|
$
|
2,954
|
Year
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
(in
thousands, except per unit amounts)
|
||||||||||
Numerators
for basic and diluted net income (loss)per common unit:
|
||||||||||
Income
(loss) from continuing operations
|
$
|
8,351
|
$
|
3,689
|
$
|
(949
|
)
|
|||
Less
general partner 2% ownership
|
167
|
74
|
(19
|
)
|
||||||
Income
(loss) from continuing operations available for common
unitholders
|
$
|
8,184
|
$
|
3,615
|
$
|
(930
|
)
|
|||
Income
(loss) from discontinued operations
|
$
|
-
|
$
|
312
|
$
|
(463
|
)
|
|||
Less
general partner 2% ownership
|
-
|
6
|
(9
|
)
|
||||||
Income
(loss) from discontinued operations available for common
unitholders
|
$
|
-
|
$
|
306
|
$
|
(454
|
)
|
|||
Income
(loss) from cumulative effect adjustment
|
$
|
30
|
$
|
(586
|
)
|
$
|
-
|
|||
Less
general partner 2% ownership
|
-
|
(12
|
)
|
-
|
||||||
Income
(loss) from cumulative effect adjustment available for common
unitholders
|
$
|
30
|
$
|
(598
|
)
|
$
|
-
|
|||
Denominator
for basic and diluted per common unit -weighted average number of
common
units outstanding
|
13,784
|
9,547
|
9,314
|
|||||||
Basic
and diluted net income (loss) per common unit:
|
||||||||||
Income
(loss) from continuing operations
|
$
|
0.59
|
$
|
0.38
|
$
|
(0.10
|
)
|
|||
Income
(loss) from discontinuted operations
|
-
|
0.03
|
(0.05
|
)
|
||||||
Loss
from cumulative effect adjustment
|
-
|
(0.06
|
)
|
-
|
||||||
Net
income (loss)
|
$
|
0.59
|
$
|
0.35
|
$
|
(0.15
|
)
|
Pipeline
Transportation
|
Industrial
Gases (a)
|
Crude
Oil Gathering & Marketing
|
Total
|
||||||||||
(in
thousands)
|
|||||||||||||
Year
Ended December 31, 2006
|
|||||||||||||
Segment
margin excluding depreciation and amortization (b)
|
$
|
12,426
|
$
|
11,443
|
$
|
7,366
|
$
|
31,235
|
|||||
Capital
expenditures
|
$
|
971
|
$
|
6,058
|
$
|
356
|
$
|
7,385
|
|||||
Maintenance
capital expenditures
|
$
|
611
|
$
|
-
|
$
|
356
|
$
|
967
|
|||||
Net
fixed and other long-term assets (c)
|
$
|
31,863
|
$
|
51,630
|
$
|
7,602
|
$
|
91,095
|
|||||
Revenues:
|
|||||||||||||
External
customers
|
$
|
25,479
|
$
|
15,154
|
$
|
873,268
|
$
|
913,901
|
|||||
Intersegment
(d)
|
4,468
|
-
|
-
|
4,468
|
|||||||||
Total
revenues of reportable segments
|
$
|
29,947
|
$
|
15,154
|
$
|
873,268
|
$
|
918,369
|
|||||
Year
Ended December 31, 2005
|
|||||||||||||
Segment
margin excluding depreciation and amortization (b)
|
$
|
9,804
|
$
|
8,154
|
$
|
3,661
|
$
|
21,619
|
|||||
Capital
expenditures
|
$
|
5,425
|
$
|
27,863
|
$
|
547
|
$
|
33,835
|
|||||
Maintenance
capital expenditures
|
$
|
1,256
|
$
|
-
|
$
|
287
|
$
|
1,543
|
|||||
Net
fixed and other long-term assets (c)
|
$
|
34,725
|
$
|
50,690
|
$
|
5,913
|
$
|
91,328
|
|||||
Revenues:
|
|||||||||||||
External
customers
|
$
|
25,613
|
$
|
11,302
|
$
|
1,038,549
|
$
|
1,075,464
|
|||||
Intersegment
(d)
|
3,275
|
-
|
-
|
3,275
|
|||||||||
Total
revenues of reportable segments
|
$
|
28,888
|
$
|
11,302
|
$
|
1,038,549
|
$
|
1,078,739
|
|||||
Year
Ended December 31, 2004
|
|||||||||||||
Segment
margin excluding depreciation and amortization (b)
|
$
|
8,543
|
$
|
5,762
|
$
|
4,034
|
$
|
18,339
|
|||||
Capital
expenditures
|
$
|
8,187
|
$
|
4,723
|
$
|
284
|
$
|
13,194
|
|||||
Maintenance
capital expenditures
|
$
|
655
|
$
|
-
|
$
|
284
|
$
|
939
|
|||||
Net
fixed and other long-term assets (c)
|
$
|
33,347
|
$
|
26,344
|
$
|
6,067
|
$
|
65,758
|
|||||
Revenues:
|
|||||||||||||
External
customers
|
$
|
13,212
|
$
|
8,561
|
$
|
901,902
|
$
|
923,675
|
|||||
Intersegment
(d)
|
3,468
|
-
|
-
|
3,468
|
|||||||||
Total
revenues of reportable segments
|
$
|
16,680
|
$
|
8,561
|
$
|
901,902
|
$
|
927,143
|
(a)
|
The
industrial gases segment includes our CO2
marketing operations and the income from our investments in T&P Syngas
Supply Company and Sandhill Group,
LLC.
|
(b)
|
Segment
margin was calculated as revenues less cost of sales and operations
expense. It includes our share of the operating income of equity
joint
ventures. A reconciliation of segment margin to income from continuing
operations for each year presented is as
follows:
|
Year
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
(in
thousands)
|
||||||||||
Segment
margin excluding depreciation and amortization
|
$
|
31,235
|
$
|
21,619
|
$
|
18,339
|
||||
General
and administrative expenses
|
(13,573
|
)
|
(9,656
|
)
|
(11,031
|
)
|
||||
Depreciation,
amortization and impairment
|
(7,963
|
)
|
(6,721
|
)
|
(7,298
|
)
|
||||
Net
loss (gain) on disposal of surplus assets
|
16
|
479
|
(33
|
)
|
||||||
Interest
expense, net
|
(1,374
|
)
|
(2,032
|
)
|
(926
|
)
|
||||
Income
tax credit
|
-
|
-
|
-
|
|||||||
Minority
interest
|
-
|
-
|
-
|
|||||||
Income
(loss) from continuing operations
|
$
|
8,341
|
$
|
3,689
|
$
|
(949
|
)
|
(c)
|
Net
fixed and other long-term assets are the measure used by management
in
evaluating the results of its operations on a segment basis. Current
assets are not allocated to segments as the amounts are shared by
the
segments or are not meaningful in evaluating the success of the segment’s
operations.
|
(d)
|
Intersegment
sales were conducted on an arm’s length
basis.
|
Year
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
(in
thousands)
|
||||||||||
Truck
transportation services provided to Denbury
|
$
|
825
|
$
|
796
|
$
|
213
|
||||
Pipeline
transportation services provided to Denbury
|
$
|
4,228
|
$
|
3,853
|
$
|
1,111
|
||||
Payments
received under direct financing leases from Denbury
|
$
|
1,186
|
$
|
1,186
|
$
|
76
|
||||
Pipeline
transportation income portion of direct financing lease
fees
|
$
|
655
|
$
|
689
|
$
|
36
|
||||
Pipeline
monitoring services provided to Denbury
|
$
|
65
|
$
|
30
|
$
|
22
|
||||
Directors'
fees paid to Denbury
|
$
|
120
|
$
|
120
|
$
|
120
|
||||
CO2
transportation services provided by Denbury
|
$
|
4,640
|
$
|
3,501
|
$
|
2,694
|
||||
Crude
oil purchases from Denbury
|
$
|
1,565
|
$
|
4,647
|
$
|
77,998
|
||||
Crude
oil sales to Denbury
|
$
|
-
|
$
|
176
|
$
|
-
|
||||
Purchase
of CO2
volumetric production payment from
|
||||||||||
Denbury
|
$
|
-
|
$
|
14,363
|
$
|
4,663
|
||||
Operations,
general and administrative services provided by our general
partner
|
$
|
16,777
|
$
|
15,145
|
$
|
14,065
|
||||
Distributions
to our general partner on its limited partner units and general partner
interest
|
$
|
963
|
$
|
536
|
$
|
527
|
||||
Sales
of CO2
to
Sandhill (for the period since Sandhill became a related
party)
|
$
|
2,056
|
$
|
-
|
$
|
-
|
·
|
In
determining the expected life of the rights, we used the simplified
method
allowed by the Securities and Exchange Commission. As our stock
appreciation rights plan was not put in place until December 31,
2003, we
have very limited experience with employee exercise patterns. The
simplified method produces an initial expected life of 6.25 years
for
those rights we issued that vest 25% per year for four years, and
an
initial expected life of 7 years for those rights we issued that
fully
vest at the end of a four-year period.
|
·
|
The
expected volatility of our units was computed using the historical
period
we believe is representative of future expectations. We determined
the
period to use as the historical period by considering our distribution
history and distribution yield. The expected volatility used in the
fair
value calculations was approximately 33% and 32% at January 1, 2006
and
December 31, 2006, respectively.
|
·
|
The
risk-free interest rate was determined from the current yield for
U.S.
Treasury zero-coupon bonds with a term similar to the remaining expected
life of the rights. At January 1, 2006, the risk-free interest rate
ranged
from 4.39% to 4.41%. At December 31, 2006, the risk-free interest
rate
ranged from 4.53% to 4.57%.
|
·
|
In
determining our expected future distribution yield, we considered
our
history of distribution payments, our expectations for future payments,
and the distribution yields of entities similar to us. At January
1, 2006
and December 31, 2006, we used an expected future distribution yield
of
6%.
|
·
|
We
estimated the expected forfeitures of non-vested rights and expirations
of
vested rights. We have very limited experience with employee forfeiture
and expiration patterns, as our plan was not initiated until December
31,
2003. We reviewed the history available to us as well as employee
turnover
patterns in determining the rates to use. We also used different
estimates
for different groups of employees.
|
Stock
Appreciation Rights
|
Rights
|
Weighted
Average Exercise Price
|
Weighted
Average Contractual Remaining Term (Yrs)
|
Aggregate
Intrinsic Value (in
thousands)
|
|||||||||
Outstanding
at January 1, 2006
|
596,128
|
$
|
10.39
|
||||||||||
Granted
during 2006
|
205,520
|
$
|
18.31
|
||||||||||
Exercised
during 2006
|
(58,193
|
)
|
$
|
9.58
|
|||||||||
Forfeited
or expired during 2006
|
(84,445
|
)
|
$
|
11.10
|
|||||||||
Outstanding
at December 31, 2006
|
659,010
|
$
|
12.79
|
8.3
|
$
|
2,458
|
|||||||
Exercisable
at December 31, 2006
|
223,135
|
$
|
10.40
|
7.4
|
$
|
2,063
|
Office
Space
|
Tractors
and Trailers
|
Tanks
|
Service
Vehicles
|
Total
|
||||||||||||
2007
|
$
|
363
|
$
|
1,604
|
$
|
508
|
$
|
249
|
$
|
2,724
|
||||||
2008
|
299
|
1,604
|
-
|
215
|
2,118
|
|||||||||||
2009
|
54
|
1,604
|
-
|
69
|
1,727
|
|||||||||||
2010
|
54
|
1,100
|
-
|
20
|
1,174
|
|||||||||||
2011
|
53
|
478
|
-
|
-
|
531
|
|||||||||||
2012
and thereafter
|
67
|
207
|
-
|
-
|
274
|
|||||||||||
Total
minimum lease obligations
|
$
|
890
|
$
|
6,597
|
$
|
508
|
$
|
553
|
$
|
8,548
|
Year
ended December 31, 2006
|
$
|
3,258
|
||
Year
ended December 31, 2005
|
$
|
3,929
|
||
Year
ended December 31, 2004
|
$
|
3,824
|
Schedule
I - Condensed Financial Information
|
||||||||||
Genesis
Energy, L.P. (Parent Company Only)
|
||||||||||
Condensed
Statements of Operations
|
||||||||||
Years
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
(in
thousands)
|
||||||||||
Equity
in earnings (losses) of subsidiary
|
$
|
8,381
|
$
|
3,415
|
$
|
(1,412
|
)
|
|||
Net
income (loss)
|
$
|
8,381
|
$
|
3,415
|
$
|
(1,412
|
)
|
Condensed
Balance Sheets
|
|||||||
December
31,
|
|||||||
2006
|
2005
|
||||||
(in
thousands)
|
|||||||
Assets
|
|||||||
Cash
|
$
|
6
|
$
|
6
|
|||
Investment
in subsidiary
|
118,338
|
120,365
|
|||||
Advances
to subsidiary
|
88
|
88
|
|||||
Total
Assets
|
$
|
118,432
|
$
|
120,459
|
|||
Partners'
Capital
|
|||||||
Limited
Partners
|
$
|
115,960
|
$
|
117,946
|
|||
General
Partner
|
2,472
|
2,513
|
|||||
Total
Partners' Capital
|
$
|
118,432
|
$
|
120,459
|
Schedule
I - Condensed Financial Information - Continued
|
||||||||||
Genesis
Energy, L.P. (Parent Company Only)
|
||||||||||
Condensed
Statements of Cash Flows
|
||||||||||
Years
Ended December 31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
(in
thousands)
|
||||||||||
Cash
Flows from Operating Activities:
|
||||||||||
Net
income (loss)
|
$
|
8,381
|
$
|
3,415
|
$
|
(1,412
|
)
|
|||
Equity
in earnings (losses) of GCO
|
$
|
(8,381
|
)
|
$
|
(3,415
|
)
|
$
|
1,412
|
||
Change
in advances to GCO
|
-
|
-
|
4
|
|||||||
Net
cash provided by operating activities
|
-
|
-
|
4
|
|||||||
Cash
Flows from Investing Activities:
|
||||||||||
Investment
in GCO
|
-
|
(44,833
|
)
|
(5,012
|
)
|
|||||
Distributions
from GCO - return of investment
|
10,408
|
5,798
|
5,703
|
|||||||
Net
cash provided by (used in) investing activities
|
10,408
|
(39,035
|
)
|
691
|
||||||
Cash
Flows from Financing Activities:
|
||||||||||
Issuance
of limited and general partner interests, net
|
-
|
44,833
|
5,012
|
|||||||
Distributions
to limited and general partners
|
(10,408
|
)
|
(5,798
|
)
|
(5,703
|
)
|
||||
Net
cash (used in) provided by financing activities
|
(10,408
|
)
|
39,035
|
(691
|
)
|
|||||
Net
increase in cash
|
-
|
-
|
4
|
|||||||
Cash
at beginning of period
|
$
|
6
|
$
|
6
|
$
|
2
|
||||
Cash
at end of period
|
$
|
6
|
$
|
6
|
$
|
6
|