8-KOther Events

ENTERPRISE PRODUCTS PARTNERS L.P. 8-K Report, Corporate Update (Sep 18, 2009)

Filed September 18, 2009For Securities:EPDEPDU

Summary

Enterprise Products Partners L.P. (EPD) filed an 8-K on September 17, 2009, to disclose the settlement of a dispute with Oiltanking and TOPS regarding the Texas Offshore Port System (TOPS) project. EPD and TEPPCO Partners L.P. had previously exited the TOPS partnership in April 2009, forfeiting their investments and incurring a non-cash charge of $34.2 million each for their cumulative investments. Oiltanking had initiated legal action, claiming the dissociation was wrongful and a breach of the partnership agreement, seeking to hold EPD and TEPPCO liable for further capital contributions and project costs. The settlement, reached on September 17, 2009, resolves all disputes related to the TOPS project. EPD and TEPPCO anticipate recognizing approximately $33.5 million in expenses each for the third quarter of 2009 in connection with this settlement.

Key Highlights

  • 1EPD has settled a legal dispute with Oiltanking and TOPS concerning the Texas Offshore Port System (TOPS) project.
  • 2The settlement resolves claims related to EPD's prior dissociation from the TOPS partnership in April 2009.
  • 3EPD and TEPPCO previously forfeited their investments in TOPS and recorded a $34.2 million non-cash charge each for the second quarter of 2009.
  • 4Oiltanking had sued EPD and TEPPCO affiliates, alleging wrongful dissociation and breach of the partnership agreement.
  • 5The settlement is expected to result in EPD recognizing approximately $33.5 million in expenses during the third quarter of 2009.
  • 6The TOPS project was an estimated $1.8 billion offshore crude oil port and pipeline system.

Frequently Asked Questions

The TOPS project was a joint venture initiated in August 2008 by a subsidiary of Enterprise Products Partners L.P. (EPD), a subsidiary of TEPPCO Partners, L.P. (TEPPCO), and a subsidiary of Oiltanking Holding Americas, Inc. The project aimed to design, construct, own, and operate a Texas offshore crude oil port and pipeline system to deliver waterborne crude oil to refining centers along the upper Texas Gulf Coast, with an estimated total cost of $1.8 billion.

EPD, along with TEPPCO, elected to exit the TOPS partnership effective April 16, 2009. In doing so, they forfeited their respective investments and one-third ownership interests. This dissociation resulted in EPD recording a non-cash charge of $34.2 million in its net income for the second quarter of 2009, representing its cumulative investment in the project up to that point.

Oiltanking filed a lawsuit against certain affiliates of EPD and TEPPCO, alleging that their dissociation from the TOPS partnership was wrongful and in breach of the partnership agreement. Oiltanking sought to hold EPD and TEPPCO liable for further capital contributions and other project-related liabilities, citing provisions of the agreement that they claimed would continue to obligate the exiting partners.

The settlement resolves all disputes related to the TOPS project. EPD anticipates recognizing approximately $33.5 million in expenses during the third quarter of 2009 in connection with this settlement. This is in addition to the $34.2 million non-cash charge already recorded in the second quarter due to the initial exit from the partnership.