El Paso Pipeline Partners, LP, Houston, has reported its first quarter 2011 financial and operational results for the partnership.

Highlights are:

  • $0.57 earnings per common unit for first quarter 2011, an 8% increase from first quarter 2010.
  • $230 million adjusted EBITDA for the first quarter 2011, up 35% from first quarter 2010.
  • $152 million distributable cash flow for first quarter 2011, a 67% increase from first quarter 2010.
  • Completed acquisition of an additional 25% interest in Southern Natural Gas (SNG).
  • Raised quarterly cash distributions to $0.46 per common unit for the first quarter 2011, a 21% increase from the first quarter of 2010.

"We started 2011 the same way we finished 2010 -- executing on our acquisition strategy and delivering significant growth in distributable cash flow," said Jim Yardley, president and chief executive officer of El Paso Pipeline Partners. "Our recent acquisition of additional interests in Southern Natural Gas provides unitholders with more exposure to one of the country's best positioned pipelines and increases an asset base that consistently delivers very stable cash flows. We have made excellent progress towards our targets for the year, and will remain focused on execution as we move forward."

Financial Results

Revenues and operating income for the first quarter 2011 increased 10% and 7%, respectively, from the same period in 2010. These increases were driven by the completion of several organic growth projects that went into service throughout 2010 including the Southern LNG (SLNG) Elba Phase IIIA expansion, the Elba Express Pipeline, the WIC System Expansion, and the CIG Raton 2010 Expansion.

Net income attributable to the limited partners was $103 million and $70 million for the first quarter 2011 and first quarter 2010, respectively, or an increase of 47%. Earnings per common unit increased 8% to $0.57. These increases were primarily the result of the acquisition of SLNG and Elba Express, as well as additional interests in SNG.

Adjusted EBITDA for the first quarter 2011 grew 35% from the first quarter 2010 to $230 million, and distributable cash flow of $152 million for the first quarter 2011 represents a 67% increase from the same period in 2010. Distribution coverage for the first quarter 2011 was 1.5 times.

The primary drivers for the quarter-to-quarter increase in Adjusted EBITDA and distributable cash flow were the acquisition of an additional 49% member interest in both SLNG and Elba Express in November 2010, the acquisition of an aggregate 35% additional interest in SNG in June and November 2010, and the completion of the previously mentioned organic growth projects during 2010.

First Quarter 2011 Acquisition

On March 14, 2011, El Paso Pipeline Partners completed its acquisition of an additional 25-percent interest in SNG for $667 million in cash. Following the acquisition, El Paso Pipeline Partners now owns an aggregate 85% general partner interest in SNG.

Interest And Debt Expense

For the first quarter 2011, interest and debt expense increased $24 million from the same period in 2010. The higher interest expense is due to the issuance of debt during 2010 that was used to partially finance the acquisition of SLNG and Elba Express and additional interests in SNG, with the balance used to retire debt associated with the construction of Elba Express and to reduce outstanding borrowings on EPB's revolving credit facility.

Capital Expenditures

During the first quarter 2011, El Paso Pipeline Partners invested $48 million of growth capital, primarily for Phase II of SNG's South System III expansion project. Maintenance capital expenditures for the first quarter 2011 totaled $20 million.