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Buckeye Partners, L.P. Reports 2012 Third Quarter Earnings Results and Declares Cash Distribution

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HOUSTON, Nov. 2, 2012 (GLOBE NEWSWIRE) -- Buckeye Partners, L.P. ("Buckeye") (NYSE: BPL) today reported net income attributable to Buckeye's unitholders for the third quarter of 2012 of $85.1 million, or $0.87 per diluted unit, compared to a net loss attributable to Buckeye's unitholders for the third quarter of 2011 of $109.7 million, or a $1.18 loss per diluted unit. Buckeye's Adjusted EBITDA (as defined below) for the third quarter of 2012 was $152.6 million compared with Adjusted EBITDA of $126.5 million for the third quarter of 2011. Operating income for the third quarter of 2012 was $113.4 million compared to an operating loss of $77.3 million for the third quarter of 2011. Net income attributable to Buckeye's unitholders and operating income for the third quarter of 2011 were negatively impacted by a non-cash charge for the impairment of $169.6 million of goodwill associated with the acquisition of Lodi Gas Storage, L.L.C. Excluding the goodwill impairment charge, net income attributable to Buckeye's unitholders for the third quarter of 2011 would have been $59.9 million, or $0.64 per diluted unit, and operating income for the third quarter of 2011 would have been $92.3 million.

"Improving business conditions and the continued execution of our growth strategy contributed to very strong results for the third quarter of 2012," stated Clark C. Smith, President and Chief Executive Officer. "We benefited from higher volumes and rates for our domestic pipelines and terminals and increased cash flows from our international segment as a result of the 1.1 million barrel expansion at BORCO that became operational July 1st. Additionally, our Perth Amboy marine terminal in the New York Harbor, acquired in late July, contributed positively to third quarter results."

Buckeye also announced today that its general partner declared a cash distribution of $1.0375 per limited partner ("LP") unit for the quarter ended September 30, 2012. Class B unitholders will not receive a distribution of cash, but instead will be issued additional Class B units pursuant to Buckeye's partnership agreement. The distribution will be payable on November 30, 2012, to unitholders of record on November 12, 2012. This cash distribution represents a 1.2% increase over the $1.025 per LP unit distribution declared for the third quarter of 2011. Buckeye has paid cash distributions in each quarter since its formation in 1986. 

Buckeye will host a conference call with members of executive management today, November 2, 2012, at 11:00 a.m. Eastern Time. To access the live webcast of the call, go to http://investor.shareholder.com/media/eventdetail.cfm?eventid=120181&CompanyID=AMDA-QJUY2&e=1&mediaKey=D17492E652916DA0EAD3A8A9634A6324 10 minutes prior to its start. Interested parties may participate in the call by dialing 877-870-9226 and referencing conference ID 46981626.  A replay will be archived and available at this link through December 3, 2012, and the replay also may be accessed by dialing 800-585-8367 and entering conference ID 46981626

Buckeye Partners, L.P. (NYSE: BPL) is a publicly traded master limited partnership that owns and operates one of the largest independent liquid petroleum products pipeline systems in the United States in terms of volumes delivered, with over 6,000 miles of pipeline. Buckeye also owns approximately 100 liquid petroleum products terminals with aggregate storage capacity of approximately 70 million barrels. In addition, Buckeye operates and/or maintains third-party pipelines under agreements with major oil and chemical companies, owns a high-performance natural gas storage facility in Northern California, and markets liquid petroleum products in certain regions served by its pipeline and terminal operations. Buckeye's flagship marine terminal in The Bahamas, BORCO, is one of the largest crude oil and petroleum products storage facilities in the world, serving the international markets as a premier global logistics hub. More information concerning Buckeye can be found at www.buckeye.com.

Adjusted EBITDA and distributable cash flow are measures not defined by GAAP. Adjusted EBITDA is the primary measure used by our senior management, including our Chief Executive Officer, to (i) evaluate our consolidated operating performance and the operating performance of our business segments, (ii) allocate resources and capital to business segments, (iii) evaluate the viability of proposed projects, and (iv) determine overall rates of return on alternative investment opportunities. Distributable cash flow is another measure used by our senior management to provide a clearer picture of Buckeye's cash available for distribution to its unitholders. Adjusted EBITDA and distributable cash flow eliminate (i) non-cash expenses, including, but not limited to, depreciation and amortization expense resulting from the significant capital investments we make in our businesses and from intangible assets recognized in business combinations, (ii) charges for obligations expected to be settled with the issuance of equity instruments, and (iii) items that are not indicative of our core operating performance results and business outlook.

Buckeye believes that investors benefit from having access to the same financial measures used by senior management and that these measures are useful to investors because they aid in comparing Buckeye's operating performance with that of other companies with similar operations. The Adjusted EBITDA and distributable cash flow data presented by Buckeye may not be comparable to similarly titled measures at other companies because these items may be defined differently by other companies. Please see the attached reconciliations of each of Adjusted EBITDA and distributable cash flow to net income. 

This press release includes forward-looking statements that we believe to be reasonable as of today's date. Such statements are identified by use of the words "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "projects," "should," and similar expressions. Actual results may differ significantly because of risks and uncertainties that are difficult to predict and that may be beyond our control. Among them are (i) changes in federal, state, local, and foreign laws or regulations to which we are subject, including those governing pipeline tariff rates and those that permit the treatment of us as a partnership for federal income tax purposes, (ii) terrorism, adverse weather conditions, including hurricanes, environmental releases, and natural disasters, (iii) changes in the marketplace for our products or services, such as increased competition, better energy efficiency, or general reductions in demand, (iv) adverse regional, national, or international economic conditions, adverse capital market conditions, and adverse political developments, (v) shutdowns or interruptions at our pipeline, terminal, and storage assets or at the source points for the products we transport, store, or sell, (vi) unanticipated capital expenditures in connection with the construction, repair, or replacement of our assets, (vii) volatility in the price of refined petroleum products and the value of natural gas storage services, (viii) nonpayment or nonperformance by our customers, (ix) our ability to integrate acquired assets with our existing assets and to realize anticipated cost savings and other efficiencies and benefits, and (x) an unfavorable outcome with respect to the proceedings pending before the Federal Energy Regulatory Commission ("FERC") regarding Buckeye Pipe Line Company, L.P.'s tariff rates. You should read our filings with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2011 and our most recently filed Quarterly Report on Form 10-Q, for a more extensive list of factors that could affect results. We undertake no obligation to revise our forward-looking statements to reflect events or circumstances occurring after today's date. 

This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of Buckeye's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business. Accordingly, Buckeye's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.

BUCKEYE PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit amounts)
(Unaudited)
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2012  2011  2012  2011 
Revenue:        
Product sales  $688,948   $884,436   $2,462,699   $2,775,698 
Transportation and other services  277,022   232,475   745,350   670,841 
Total revenue  965,970   1,116,911   3,208,049   3,446,539 
         
Costs and expenses:        
Cost of product sales and natural gas storage services  698,019   881,596   2,476,659   2,773,899 
Operating expenses  101,242   96,776   300,263   266,909 
Depreciation and amortization  37,134   31,230   104,486   87,227 
General and administrative  16,222   15,054   51,074   47,751 
Goodwill impairment expense  --   169,560   --   169,560 
Total costs and expenses  852,617   1,194,216   2,932,482   3,345,346 
         
Operating income (loss)  113,353  (77,305)  275,567   101,193 
         
Other income (expense):        
Earnings from equity investments  553   2,379   4,287   7,760 
Gain on sale of equity investment  --   --   --   34,112 
Interest and debt expense (28,737) (33,199) (85,159) (90,292)
Other income (expense)  90  (75)  57   432 
Total other expense, net (28,094) (30,895) (80,815) (47,988)
         
Net income (loss)  85,259  (108,200)  194,752   53,205 
Less: Net income attributable to noncontrolling interests (143) (1,500) (3,298) (4,391)
 
Net income (loss) attributable to Buckeye Partners, L.P.  $85,116  $(109,700)  $191,454   $48,814 
         
Earnings (loss) per unit:        
Basic  $0.87  $(1.18)  $1.97   $0.55 
Diluted  $0.87  $(1.18)  $1.97   $0.54 
 
Weighted average units outstanding:
Basic  97,993   92,982   97,017   89,499 
Diluted  98,342   92,982   97,340   89,831 
 
BUCKEYE PARTNERS, L.P.
SELECTED FINANCIAL AND OPERATING DATA
(In thousands)
(Unaudited)
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2012  2011  2012  2011 
Revenue:         
Pipelines & Terminals   $194,609   $162,740   $527,849   $456,056 
International Operations   51,686   47,986   152,349   146,051 
Natural Gas Storage   20,229   15,742   46,909   49,431 
Energy Services   691,875   894,618   2,469,122   2,810,055 
Development & Logistics   11,798   10,766   37,415   30,937 
Intersegment  (4,227) (14,941) (25,595) (45,991)
Total revenue   $965,970   $1,116,911   $3,208,049   $3,446,539 
         
Total costs and expenses: (1)        
Pipelines & Terminals   $103,158   $93,482   $297,043   $247,679 
International Operations   30,615   30,329   92,660   89,693 
Natural Gas Storage   21,872   187,820   56,367   227,527 
Energy Services   692,303   889,203   2,482,856   2,801,115 
Development & Logistics   8,896   8,323   29,151   25,323 
Intersegment  (4,227) (14,941) (25,595) (45,991)
Total costs and expenses   $852,617   $1,194,216   $2,932,482   $3,345,346 
         
Depreciation and amortization:         
Pipelines & Terminals   $18,272   $14,727   $49,368   $40,502 
International Operations   14,971   12,868   43,873   36,299 
Natural Gas Storage   1,893   1,807   5,668   5,326 
Energy Services   1,510   1,379   4,104   3,894 
Development & Logistics   488   449   1,473   1,206 
Total depreciation and amortization   $37,134   $31,230   $104,486   $87,227 
         
Operating income (loss):         
Pipelines & Terminals   $91,451   $69,258   $230,806   $208,377 
International Operations   21,071   17,657   59,689   56,358 
Natural Gas Storage  (1,643) (172,078) (9,458) (178,096)
Energy Services  (428)  5,415  (13,734)  8,940 
Development & Logistics   2,902   2,443   8,264   5,614 
Total operating income (loss)   $113,353  $(77,305)  $275,567   $101,193 
         
Adjusted EBITDA:         
Pipelines & Terminals   $112,879   $86,510   $290,709   $260,743 
International Operations   33,548   30,095   95,805   86,248 
Natural Gas Storage   1,357   426  (299)  266 
Energy Services   1,619   6,978  (7,759)  13,578 
Development & Logistics   3,168   2,519   9,034   5,563 
Adjusted EBITDA   $152,571   $126,528   $387,490   $366,398 
         
Capital additions: (2)        
Pipelines & Terminals   $34,944   $26,644   $107,050   $61,156 
International Operations   48,704   62,442   122,203   122,837 
Natural Gas Storage   235   852   1,964   5,673 
Energy Services   1,020   538   1,507   1,228 
Development & Logistics   102   431   281   474 
Total capital additions   $85,005   $90,907   $233,005   $191,368 
         
Summary of capital additions: (2)        
Maintenance capital expenditures   $11,889   $16,803   $35,764   $36,569 
Expansion and cost reduction   73,116   74,104   197,241   154,799 
Total capital additions   $85,005   $90,907   $233,005   $191,368 
       September 30, December 31, 
Key Balance Sheet information:       2012  2011
Cash and cash equivalents       $2,951   $12,986 
Long-term debt, total (3)       2,672,677   2,393,574 
         
__________________         
 (1) Includes depreciation and amortization.
 (2) Amounts exclude accruals for capital expenditures.
 (3) Includes long-term debt portion of Buckeye Partners, L.P. Credit Facility of $602.6 million and $324.0 million as of September 30, 2012 and December 31, 2011, respectively. 
 
BUCKEYE PARTNERS, L.P.
SELECTED FINANCIAL AND OPERATING DATA - Continued
(Unaudited)
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2012  2011  2012  2011 
         
Pipelines & Terminals (average bpd in thousands):        
Pipelines:        
Gasoline  729.7   693.4   705.9   658.3 
Jet fuel  352.7   344.8   342.7   339.8 
Middle distillates (1)  306.0   298.7   314.6   309.4 
Other products (2)  18.8   19.6   23.5   24.7 
Total pipelines throughput  1,407.2   1,356.5   1,386.7   1,332.2 
Terminals:        
Products throughput (3)  910.9   879.1   888.3   681.5 
         
Pipeline Average Tariff (cents/bbl)  84.5   77.3   82.0   76.1 
         
Energy Services (in millions of gallons):        
Sales volumes  233.4   297.4   836.7   960.8 
         
_________________        
(1)  Includes diesel fuel, heating oil and kerosene.
(2)  Includes liquefied petroleum gas ("LPG").
(3)  Amounts include throughput volumes at terminals acquired from BP Products North America Inc. and its affiliates ("BP") and ExxonMobil Corporation on June 1, 2011 and July 19, 2011, respectively.
 
BUCKEYE PARTNERS, L.P.
SELECTED FINANCIAL AND OPERATING DATA
Non-GAAP Reconciliations
(In thousands, except per unit amounts and coverage ratio)
(Unaudited)
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2012  2011  2012  2011 
Net income (loss)   $85,259  $(108,200)  $194,752   $53,205 
Less: Net income attributable to noncontrolling interests  (143) (1,500) (3,298) (4,391)
Net income (loss) attributable to Buckeye Partners, L.P.   85,116  (109,700)  191,454   48,814 
Add: Interest and debt expense   28,737   33,199   85,159   90,292 
Income tax expense (benefit)   511   --   1,177  (193)
Depreciation and amortization   37,134   31,230   104,486   87,227 
Non-cash deferred lease expense   975   1,030   2,925   3,091 
Non-cash unit-based compensation expense   2,846   1,694   10,534   6,532 
Goodwill impairment expense   --   169,560   --   169,560 
Less: Amortization of unfavorable storage contracts (1) (2,748) (485) (8,245) (4,813)
Gain on sale of equity investment   --   --   --  (34,112)
Adjusted EBITDA   $152,571   $126,528   $387,490   $366,398 
Less: Interest and debt expense, excluding amortization of deferred financing costs and debt discounts  (27,868) (28,709) (82,552) (83,541)
Income tax (expense) benefit  (511)  --  (1,177)  193 
Maintenance capital expenditures  (11,889) (16,803) (35,764) (36,569)
Distributable cash flow   $112,303   $81,016   $267,997   $246,481 
         
Distributions for Coverage Ratio (2)  $94,055   $88,357   $282,160   $261,742 
         
Coverage Ratio   1.19   0.92   0.95   0.94 
_____________________        
(1) Represents the amortization of the negative fair values allocated to certain unfavorable storage contracts acquired in connection with the BORCO acquisition. 
(2) Represents cash distributions declared for limited partner units ("LP units") outstanding as of each respective period. Amounts for 2012 reflect actual cash distributions paid on LP units for the quarters ended March 31, 2012 and June 30, 2012 and estimated cash distributions for the quarter ended September 30, 2012. Distributions with respect to the 7,445,999 and 7,605,510 Class B Units outstanding on the record date for the quarters ending March 31, 2012 and June 30, 2012, respectively, and the 7,777,811 Class B units expected to be outstanding for the quarter ending September 30, 2012 are paid in additional Class B units rather than in cash.
 
BUCKEYE PARTNERS, L.P.
SELECTED FINANCIAL AND OPERATING DATA
Non-GAAP Reconciliations - Continued
(In thousands, except per unit amounts)
(Unaudited)
         
  Three Months Ended Nine Months Ended
  September 30, September 30,
  2012  2011  2012  2011 
         
Net income attributable to Buckeye Partners, L.P., as adjusted:    
Net income (loss), as reported  $85,259   $(108,200)   $194,752   $53,205 
 Add: Goodwill impairment expense  --   169,560   --   169,560 
Net income, as adjusted  85,259   61,360   194,752  222,765
 Less: Net income attributable to noncontrolling interests (143) (1,500) (3,298) (4,391)
Net income attributable to Buckeye Partners, L.P., as adjusted  $85,116   $59,860   $191,454   $218,374 
         
Earnings per unit-diluted, as adjusted  $0.87   $0.64   $1.97   $2.43 
         
Operating income, as adjusted:        
Operating income (loss), as reported  $113,353   $(77,305)   $275,567   $101,193 
 Add: Goodwill impairment expense  --   169,560   --   169,560 
Operating income, as adjusted  $113,353   $92,255   $275,567   $270,753 
CONTACT: Kevin J. Goodwin Senior Director, Investor Relations Irelations@buckeye.com (800) 422-2825
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