Sunoco Logistics Partners L.P. Reports Record Results With a 103 Percent Increase...

Sunoco Logistics Partners L.P. Reports Record Results With a 103 Percent
Increase in Net Income for the Second Quarter 2008 and Declares Second Quarter
Distribution

PHILADELPHIA, July 22 /PRNewswire-FirstCall/ -- Sunoco Logistics Partners
L.P. (NYSE: SXL) (the "Partnership") today announced record quarterly net
income for the second quarter ended June 30, 2008 of $51.3 million, or $1.21
per limited partner unit on a diluted basis, compared with $25.3 million, or
$0.76 per limited partner unit on a diluted basis, for the second quarter
ended June 30, 2007. Operating income for the second quarter ended June 30,
2008 increased by $24.6 million, or 71 percent, from the prior year's second
quarter. The improvement was driven by higher margins and fees across all
segments, stronger asset utilization in the Western Pipeline system and
additional tankage placed into service at the Nederland terminal during 2007
and 2008. These improvements to operating income were partially offset by
lower volumes in the Eastern Pipeline and Terminal systems. Decreased interest
expense contributed further to the $26.0 million increase in net income.
For the six months ended June 30, 2008, net income increased to $88.8
million compared to $47.6 million for the first six months of 2007. Operating
income for the first half of 2008 increased $38.9 million, or 59 percent, when
compared to the prior year period. The increase was the result of higher
margins and fees across all segments, improved asset utilization within the
Western Pipeline system and additional tankage placed into service at the
Nederland terminal during 2007 and 2008. These improvements to operating
income were partially offset by lower volumes in the Eastern Pipeline system
and Terminal Facilities along with a $5.7 million non-cash impairment charge
related to a cancelled project. Decreased interest expense contributed
further to the $41.2 million increase in net income.
Sunoco Partners LLC, the general partner of Sunoco Logistics Partners
L.P., declared a cash distribution for the second quarter of 2008 of $0.935
per common partnership unit ($3.74 annualized) payable August 14, 2008 to unit
holders of record on August 7, 2008.
"The second quarter represents the second straight record quarter for
Sunoco Logistics Partners," said Deborah M. Fretz, President and Chief
Executive Officer. "Over the past year, we have improved the business with
solid, sustainable growth by capitalizing on market opportunities and
realizing higher value from our infrastructure in the current marketplace.
Since last year we have completed construction of four additional tanks at our
Nederland terminal, with six additional tanks at various stages of completion.
Our announced crude oil project for Motiva is expected to come within our cost
projections and the tankage will be completed early. Our geographically
diverse group of businesses has served us well in the current market place and
we expect to sustain and grow our future cash flow and distributions. As a
result, we increased the distribution to our unit holders by $0.16 from $3.58
per unit to $3.74 per unit, which represents the twentieth distribution
increase in the past twenty-one quarters, an 11.7 percent increase over the
second quarter 2007."
Segmented Second Quarter Results
Eastern Pipeline System
Operating income for the Eastern Pipeline system increased $3.8 million to
$14.6 million for the second quarter ended June 30, 2008 compared to the prior
year's second quarter. Sales and other operating revenue increased by $1.0
million to $29.0 million due primarily to higher fees across the Partnership's
refined product and crude oil pipelines, partially offset by decreased
volumes. Other income decreased $0.8 million compared to the prior year's
second quarter due primarily to a decrease in equity income associated with
the Partnership's joint venture interests. Operating expenses decreased by
$3.6 million to $10.0 million due primarily to the impact of increased crude
oil and refined product prices on operating gains and a decreased level of
environmental charges. These changes were partially offset by increased
utility costs throughout the system.
Terminal Facilities
Operating income for the Terminal Facilities segment increased by $2.4
million to a record level of $17.9 million for the second quarter ended June
30, 2008 compared to the prior year's second quarter. Sales and other
operating revenue increased by $4.0 million to $39.3 million due primarily to
the addition of tankage at the Nederland terminal, increased terminal fees,
sales of product overages which were favorably impacted by the increased price
of crude oil and increased product additive revenues. These increases were
partially offset by decreased throughput within the refinery and refined
product terminals. Other income increased $0.8 million from the prior year's
second quarter as a result of the final insurance recovery for hurricane
damage sustained during 2005 at the Partnership's Nederland terminal. Cost of
goods sold and operating expenses increased by $1.1 million to $13.9 million
for the second quarter of 2008 due primarily to increased product additive
costs, higher utility costs and timing of maintenance activity. Selling,
general and administrative expenses increased by $1.1 million to $4.2 million
for the second quarter of 2008. During 2007, expenses were reduced by $0.9
million in connection with an insurance recovery.
Western Pipeline System
Operating income for the Western Pipeline system increased $18.5 million
to a record level of $26.9 million for the second quarter of 2008 compared to
the prior year's second quarter due primarily to improved asset utilization
resulting from the creation of a bi-directional pipeline connection to the
Partnership's Nederland terminal, increased pipeline volumes and fees and
higher lease acquisition margins. Other income increased $1.1 million
compared to the prior year's quarter due primarily to a gain recognized on the
insurance recovery discussed earlier.
Higher crude oil prices were a key driver of the overall increase in total
revenue, cost of products sold and operating expenses from the prior year's
quarters. The average price of West Texas Intermediate crude oil at Cushing,
Oklahoma increased to $124.00 per barrel for the second quarter of 2008 from
$65.02 per barrel for the second quarter of 2007.
Segmented Six Month Results
Eastern Pipeline System
Operating income for the Eastern Pipeline system increased $4.8 million to
$25.3 million for the six months ended June 30, 2008 compared to the prior
year period. Sales and other operating revenue increased by $3.0 million to
$57.8 million due primarily to higher fees across the Partnership's refined
product and crude oil pipelines, partially offset by decreased volumes. Other
income decreased $2.1 million compared to the prior year period as a result of
a decrease in equity income associated with the Partnership's joint venture
interests. Operating expenses decreased by $3.6 million to $22.0 million due
primarily to the impact of increased crude oil and refined product prices on
operating gains and a decreased level of environmental charges. This decrease
was partially offset by increased utility costs throughout the system.
Terminal Facilities
Operating income for the Terminal Facilities segment increased by $1.3
million to $29.1 million for the six months ended June 30, 2008 compared to
the prior year period. Operating income was reduced during the first six
months of 2008 due to a $5.7 million non-cash impairment charge related to the
Partnership's decision to discontinue efforts to expand LPG storage capacity
at its Inkster, Michigan facility. Sales and other operating revenue
increased by $10.5 million to $78.7 million due primarily to the addition of
new tankage at the Nederland terminal, higher fees at the Partnership's
Nederland and refined products terminals, the sale of product overages which
were favorably impacted by the increased price of crude oil and increased
product additive revenues. The increases were partially offset by decreased
volumes in the Partnership's refinery and refined products terminals. Other
income increased $0.8 million from the first six months of 2008 as a result of
the insurance recovery discussed above. Cost of goods sold and operating
expenses increased by $2.3 million to $27.6 million for the period ended June
30, 2008 due primarily to increased utility costs and timing of maintenance
activity. Selling, general and administrative expenses increased by $1.5
million to $9.1 million for the six months ended June 30, 2008. During 2007,
expenses were reduced by $0.9 million in connection with an insurance
recovery.
Western Pipeline System
Operating income for the Western Pipeline system increased $32.8 million
to $50.2 million for the first six months of 2008 compared to the prior year
period due primarily to improved asset utilization resulting from creation of
a bi-directional pipeline connection to the Partnership's Nederland terminal,
increased pipeline volumes and fees and higher lease acquisition margins.
Other income also contributed to the increased profitability due to increased
equity income associated with the Partnership's joint venture interests and
the gain on an insurance recovery discussed above.
Higher crude oil prices were a key driver of the overall increase in total
revenue, cost of products sold and operating expenses from the prior year
period. The average price of West Texas Intermediate crude oil at Cushing,
Oklahoma increased to $110.98 per barrel for the first six months of 2008 from
$61.64 per barrel for the first six months of 2007.
Other Analysis
Financing Costs
Net interest expense decreased $2.4 million for the six months ended June
30, 2008, compared to the prior year period. The decrease was due primarily
to decreased borrowings and lower interest rates related to the Partnership's
revolving credit facility along with an increase in capitalized interest
driven by the Partnership's expansion capital program. As of June 30, 2008,
the Partnership had total debt outstanding of $514.2 million, which consisted
of $424.2 million of Senior Notes and $90.0 million of borrowings under the
Partnership's credit facility as compared to $515.1 million at December 31,
2007.
Capital Expenditures
Maintenance capital expenditures for the six months ended June 30, 2008
were $7.8 million. The Partnership continues to expect that maintenance
capital spending for 2008 will be approximately $26.0 million for the full
year.
Expansion capital expenditures for the six months ended June 30, 2008 were
$44.5 million compared to $56.3 million for the first six months of 2007.
Expansion capital for 2007 included the $13.4 million acquisition of a 50
percent interest in the Syracuse, New York refined products terminal.
Expansion capital for 2008 includes construction in progress, in connection
with the Partnership's agreement with Motiva Enterprises LLC, of three crude
oil storage tanks at its Nederland Terminal and a crude oil pipeline from
Nederland to Motiva's Port Arthur, Texas refinery. Expansion capital also
includes construction of five additional crude oil storage tanks at Nederland,
of which two began construction during the second quarter of 2008. These five
crude oil storage tanks will have a combined shell capacity of approximately
3.0 million barrels.

Sunoco Logistics Partners L.P.
Financial Highlights
(in thousands, except units and per unit amounts)
(unaudited)

Three Months Ended Six Months Ended
June 30, June 30,
Income Statement 2008 2007 2008 2007
Sales and other
operating revenue $3,315,421 $1,630,280 $5,709,810 $3,179,850
Other income 8,783 7,698 13,609 12,737
Total Revenues 3,324,204 1,637,978 5,723,419 3,192,587
Cost of products
sold and operating
expenses 3,240,861 1,580,330 5,564,111 3,079,588
Depreciation and
amortization 9,830 9,407 19,489 18,311
Selling, general
and administrative
expenses 14,126 13,487 29,557 29,006
Impairment Charge - - 5,674 -
Total costs and
expenses 3,264,817 1,603,224 5,618,831 3,126,905
Operating income 59,387 34,754 104,588 65,682
Interest cost and
debt expense, net 8,928 10,445 17,398 19,619
Capitalized interest (864) (945) (1,636) (1,498)

Net Income $51,323 $25,254 $ 88,826 $ 47,561

Calculation of Limited
Partners' interest:
Net Income $51,323 $25,254 $88,826 $47,561
Less: General
Partner's interest (16,565) (3,552) (26,219) (5,631)
Limited Partners'
interest in Net
Income $34,758 $21,702 $62,607 $41,930

Net Income per Limited
Partner unit
Basic $1.21 $0.76 $2.19 $1.47
Diluted $1.21 $0.76 $2.17 $1.46

Weighted average
Limited Partners'
units outstanding:
Basic 28,657,485 28,586,280 28,642,571 28,575,697
Diluted 28,840,262 28,723,884 28,823,146 28,713,365

Capital
Expenditure Data:
Maintenance capital
expenditures $4,449 $4,905 $7,771 $7,541

Expansion capital
expenditures 24,694 41,029 44,503 56,274
Total $29,143 $45,934 $52,274 $63,815

June 30, December 31,
2008 2007
Balance Sheet Data (at period end):
Cash and cash equivalents $2,000 $2,000
Total Debt 514,201 515,104
Total Partners' Capital 618,030 591,045

Sunoco Logistics Partners L.P.
Earnings Contribution by Business Segment
(in thousands, unaudited)

Three Months Ended Six Months Ended
June 30, June 30,

2008 2007 2008 2007
Eastern Pipeline System:
Sales and other
operating revenue $28,951 $27,916 $57,843 $54,890
Other income 2,971 3,796 4,250 6,332
Total Revenues 31,922 31,712 62,093 61,222
Operating expenses 10,034 13,627 21,985 25,583
Depreciation and
amortization 2,465 2,249 4,879 4,556
Selling, general and
administrative expenses 4,866 5,021 9,936 10,580
Operating Income $14,557 $10,815 $25,293 $20,503

Terminal Facilities:
Sales and other operating
revenues $39,272 $35,279 $78,656 $68,159
Other Income 825 - 825 -
Total Revenues 40,097 35,279 79,481 68,159
Operating expenses 13,913 12,797 27,601 25,278
Depreciation and
amortization 4,056 3,815 7,993 7,490
Selling, general and
administrative expenses 4,218 3,139 9,093 7,608
Impairment Charge - - 5,674 -
Operating Income $17,910 $15,528 $29,120 $27,783

Western Pipeline System:
Sales and other
operating revenue $3,247,198 $1,567,078 $5,573,311 $3,056,786
Other income 4,987 3,909 8,534 6,420
Total Revenues 3,252,185 1,570,987 5,581,845 3,063,206
Cost of products sold
and operating expenses 3,216,914 1,553,906 5,514,525 3,028,727
Depreciation and
amortization 3,309 3,343 6,617 6,265
Selling, general and
administrative expenses 5,042 5,327 10,528 10,818
Operating Income $26,920 $8,411 $50,175 $17,396

Sunoco Logistics Partners L.P.
Operating Highlights
(unaudited)

Three Months Ended Six Months Ended
June 30, June 30,

2008 2007 2008 2007
Eastern Pipeline
System: (1)
Total shipments (barrel
miles per day) (2) 61,028,163 63,253,888 60,705,947 63,372,001
Revenue per barrel mile
(cents) 0.521 0.485 0.524 0.479

Terminal Facilities:
Terminal throughput
(bpd):
Refined product
terminals (3) 428,704 440,152 423,662 427,923
Nederland terminal 526,350 529,462 539,702 536,840
Refinery terminals (4) 622,011 715,462 648,604 664,768

Western Pipeline
System: (1)
Crude oil pipeline
throughput (bpd) 547,489 535,715 548,957 534,816
Crude oil purchases
at wellhead (bpd) 177,317 180,390 174,381 182,757
Gross margin per barrel
of pipeline
throughput (cents) (5) 54.1 20.2 52.3 22.5

(1) Excludes amounts attributable to equity ownership interests in
corporate joint ventures.
(2) Represents total average daily pipeline throughput multiplied by the
number of miles of pipeline through which each barrel has been shipped.
(3) Includes results from the Partnership's purchase of a 50% undivided
interest in a refined products terminal in Syracuse, New York in June 2007.
(4) Consists of the Partnership's Fort Mifflin Terminal Complex, the
Marcus Hook Tank Farm and the Eagle Point Dock.
(5) Represents total segment sales and other operating revenue minus cost
of products sold and operating expenses and depreciation and amortization
divided by crude oil pipeline throughput.
An investor call with management regarding the second-quarter results is
scheduled for Wednesday morning, July 23 at 9:00 am EDT. Those wishing to
listen can access the call by dialing (USA toll free) 1-877-297-3442;
International (USA toll) 1-706-643-1335 and request "Sunoco Logistics Partners
Earnings Call, Conference Code 54169985". This event may also be accessed by
a webcast, which will be available at www.sunocologistics.com. A number of
presentation slides will accompany the audio portion of the call and will be
available to be viewed and printed shortly before the call begins.
Individuals wishing to listen to the call on the Partnership's web site will
need Windows Media Player, which can be downloaded free of charge from
Microsoft or from Sunoco Logistics Partners' conference call page. Please
allow at least fifteen minutes to complete the download.
Audio replays of the conference call will be available for two weeks after
the conference call beginning approximately two hours following the completion
of the call. To access the replay, dial 1-800-642-1687. International
callers should dial 1-706-645-9291. Please enter Conference ID #54169985.
Sunoco Logistics Partners L.P. (NYSE: SXL), headquartered in Philadelphia,
is a master limited partnership formed to acquire, own and operate refined
product and crude oil pipelines and terminal facilities. The Eastern Pipeline
System consists of approximately 1,800 miles of primarily refined product
pipelines and interests in four refined products pipelines, consisting of a
9.4 percent interest in Explorer Pipeline Company, a 31.5 percent interest in
Wolverine Pipe Line Company, a 12.3 percent interest in West Shore Pipe Line
Company and a 14.0 percent interest in Yellowstone Pipe Line Company. The
Terminal Facilities consist of 9.2 million shell barrels of refined products
terminal capacity and 22.8 million shell barrels of crude oil terminal
capacity (including approximately 15.9 million shell barrels of capacity at
the Texas Gulf Coast Nederland Terminal). The Western Pipeline System consists
of approximately 3,700 miles of crude oil pipelines, located principally in
Oklahoma and Texas, a 55.3 percent interest in Mid-Valley Pipeline Company, a
43.8 percent interest in the West Texas Gulf Pipe Line Company and a 37.0
percent interest in the Mesa Pipe Line System. For additional information
visit Sunoco Logistics' web site at www.sunocologistics.com.
Although Sunoco Logistics Partners L.P. believes that the assumptions
underlying these statements are reasonable, investors are cautioned that such
forward-looking statements are inherently uncertain and necessarily involve
risks that may affect the Partnership's business prospects and performance
causing actual results to differ from those discussed in the foregoing
release. Such risks and uncertainties include, by way of example and not of
limitation: whether or not the transactions described in the foregoing news
release will be cash flow accretive; increased competition; changes in demand
for crude oil and refined products that we store and distribute; changes in
operating conditions and costs; changes in the level of environmental
remediation spending; potential equipment malfunction; potential labor issues;
the legislative or regulatory environment; plant construction/repair delays;
nonperformance by major customers or suppliers; and political and economic
conditions, including the impact of potential terrorist acts and international
hostilities. These and other applicable risks and uncertainties have been
described more fully in the Partnership's Form 10-Q filed with the Securities
and Exchange Commission on April 30, 2008. The Partnership undertakes no
obligation to update any forward-looking statements in this release, whether
as a result of new information or future events.
SOURCE Sunoco Logistics Partners L.P.

Thomas Golembeski (media), +1-215-977-6298 or Neal Murphy (investors),
+1-866-248-4344, both of Sunoco Logistics Partners L.P.