Lakehead Pipe Line Partners Declares Cash Distribution and Reports 2001 First Quarter Results

Apr 19, 2001, 01:00 ET from Lakehead Pipe Line Partners, L.P.

    DULUTH, Minn., April 19 /PRNewswire/ -- Lakehead Pipe Line Partners, L.P.
 today declared a cash distribution of $0.875 per unit payable May 15, 2001, to
 unitholders of record on April 30, 2001.  For the quarter ended March 31,
 2001, the Partnership reported cash provided from operating activities of
 $46.7 million compared with $49.5 million for the same period in 2000.  Net
 income of $10.1 million for the quarter, or $0.27 per unit, compares to
 $20.1 million, or $0.62 per unit, for the first quarter of the prior year.
 The decline was attributable to lower operating revenue due to reduced
 deliveries, a lower tariff and shorter average haul distance, as well as an
 increase in oil measurement losses.
     Deliveries on the Lakehead System during the first quarter were slightly
 ahead of Partnership expectations, averaging 1.347 million barrels per day
 compared to 1.362 million barrels in the first quarter of 2000.  The
 Partnership anticipates that deliveries will improve over the remainder of
 2001 to average between 1.40 and 1.45 million barrels per day on a full year
 basis.  Based on this forecast, the Partnership estimates net income will be
 between $75 million and $80 million in 2001.
     The Partnership recently completed its annual survey of upstream producers
 related to the long-term supply potential of hydrocarbon liquids from the
 western Canadian basin.  The survey, which aligns with results of a forecast
 by the Canadian Association of Petroleum Producers, indicates that production
 is expected to climb steadily over the next decade as increased heavy and
 synthetic crude oil will offset declines in conventional supply.  This
 forecast is consistent with the recent request by shippers to trigger Phase II
 of the Terrace Expansion Program to increase capacity by 40,000 barrels per
 day on the upstream portion of the pipeline system owned by Enbridge.  As
 well, shippers have requested that delivery capability of the Lakehead System
 in the major Chicago Area refining center be enhanced by late 2003.  Enbridge
 and Lakehead are in discussions with customers regarding further system
 expansion to handle crude oil transportation requirements in late 2003 and
 beyond, in particular, the timing and specifications for Terrace Phase III.
 Terrace is a multi-stage expansion program designed to provide an additional
 net 350,000 barrels per day of heavy crude oil transportation capacity on the
 Lakehead System.
     Commenting on the Partnership's outlook, Mr. J. Richard Bird, President of
 the General Partner, said, "The recent survey of producers reinforces our
 positive outlook for the Partnership.  In the short term, we expect deliveries
 to increase by approximately 125,000 barrels per day over the course of 2001.
 In 2002, we anticipate that deliveries will reach record full year historical
 levels, partially as a result of the full year benefit of the Suncor
 Millennium oil sands plant expansion which is scheduled for completion later
 this year.  Longer term, numerous planned oil sands and heavy oil projects are
 expected to significantly boost volumes seeking attractive U.S. Midwest
 markets via the Lakehead System.  Lakehead is in an excellent position to
 benefit from greater throughput given that system facilities are essentially
 in place to handle the forecast growth in volumes and longer average hauls
 through late 2003."
     Regarding the acquisition strategy announced by the Partnership, Mr. Bird
 stated, "We have made good progress since unveiling the Partnership's new
 strategy in January.  Our goal is to ramp up the acquisition of energy
 transportation and terminal systems so that we can deliver on our objective to
 increase cash distributions to unitholders.  Our first transaction, the
 $33 million purchase of a North Dakota feeder system from Enbridge Inc., is
 scheduled to close early next month.  More significantly, the planned
 acquisition of Midcoast Energy by Enbridge, which is scheduled to close in
 mid-May, increases the portfolio of assets for potential transfer to the
 Partnership by some $600 million.  The Midcoast management team has a strong
 track record of growth through acquisition and will play a key role in
 assisting the Lakehead Partnership to acquire additional mature cash
 generating assets from third parties."
     Effective April 1, 2001, tariffs applying to new receipts of commodities
 on the Lakehead System increased by an average of 4%.  For example, the
 representative tariff for movements of light crude oil from the Canadian
 Border to the Chicago Area increased from $0.642 per barrel to $0.668 per
 barrel.  The tariffs were approved by the Federal Energy Regulatory Commission
 (FERC) pursuant to agreements covering two of the Partnership's expansion
 programs, System Expansion Program II and Terrace Expansion Program.  Tariffs
 which are subject to the FERC indexing methodology will next be adjusted on
 July 1, 2001.  The Partnership anticipates an average increase of
 approximately 2.7% based on the change in the Producer Price Index for
 Finished Goods in 2000, minus 1%.
     In other Partnership related matters, Lakehead Pipe Line Company, Inc.,
 the General Partner, welcomed Mr. George K. Petty to its Board of Directors in
 February.  Mr. Petty brings a wealth of business experience to the Board,
 including in mergers and acquisitions, gained while formerly serving in
 executive management positions in the telecommunications industry.
     Lakehead will be hosting an investment conference call today commencing at
 4:45 PM Eastern Time to discuss its first quarter 2001 results and its outlook
 for the future.  Interested parties may listen to either a live broadcast of
 the call via the Internet at http://www.lakehead.com/investor or to a replay
 which will be available on the website for fourteen days following the call.
     This news release includes forward-looking statements regarding future
 events and the future financial performance of Lakehead.  All forward-looking
 statements are based on Lakehead's beliefs as well as assumptions made by and
 information currently available to Lakehead. When used herein, words such as
 "believes," "expects," "intends," "forecasts," "projects," and similar
 expressions, identify forward-looking statements within the meaning of the
 Securities Litigation Reform Act.  These statements reflect Lakehead's current
 views with respect to future events and are subject to various risks,
 uncertainties and assumptions including ability of the Partnership to acquire
 other assets, the price of crude oil, willingness of producers to ship on the
 Lakehead System, effects of competition, regulatory uncertainties, and other
 risks discussed in detail in SEC filings, including the Annual Report on Form
 10-K for the year ended December 31, 2000.  If one or more of these risks or
 uncertainties materialize, or if the underlying assumptions prove incorrect,
 actual results may vary materially from those described in the forward-looking
 statement.  Except as required by applicable securities laws, Lakehead does
 not intend to update these forward-looking statements.
     Lakehead Pipe Line Partners, L.P. ( http://www.lakehead.com ) owns the
 United States portion of the world's longest liquid petroleum pipeline.
 Lakehead Pipe Line Company, Inc., an indirect wholly owned subsidiary of
 Enbridge Inc. of Calgary, Alberta, holds a 15.3% interest in the Partnership.
 The Partnership's Class A Common Units are traded on the New York Stock
 Exchange under the symbol "LHP."  Enbridge Inc. common shares are traded on
 the Toronto Stock Exchange under the symbol "ENB" and on the Nasdaq National
 Market under the symbol "ENBR."
 
 
                       LAKEHEAD PIPE LINE PARTNERS, L.P.
                        CONSOLIDATED STATEMENT OF INCOME
 
     (unaudited; dollars in millions,
      except per unit amounts)
     Three months ended March 31,                    2001     2000
 
     Operating revenue                              $71.9    $78.8
     Expenses
       Power                                         11.7     12.5
       Operating and administrative                  20.1     17.7
       Depreciation                                  15.4     15.3
                                                     47.2     45.5
     Operating income                                24.7     33.3
     Interest and other income                        0.7      1.6
     Interest expense                               (15.2)   (14.6)
     Minority interest                               (0.1)    (0.2)
     Net income                                     $10.1    $20.1
 
     Net income per unit (Note 1)                   $0.27    $0.62
     Units outstanding (millions)                    28.9     28.9
 
 
                       LAKEHEAD PIPE LINE PARTNERS, L.P.
                 CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
 
     (unaudited; dollars in millions)
     Three months ended March 31, 2001 2000
 
     Cash provided from operating activities                   $46.7     $49.5
     Investing activities
       Repayments from affiliate (Note 2)                        0.1       0.9
       Additions to property, plant and equipment               (2.4)     (0.2)
       Changes in construction payables                         (4.0)     (0.2)
                                                                (6.3)      0.5
     Financing activities
       Variable rate financing, net                               --     (10.0)
       Distributions to partners                               (27.6)    (27.6)
       Minority interest                                        (0.3)     (0.3)
       Other                                                    (0.1)       --
                                                               (28.0)    (37.9)
     Increase in cash and cash equivalents                      12.4      12.1
     Cash and cash equivalents at beginning of period           37.2      40.0
     Cash and cash equivalents at end of period                $49.6     $52.1
 
 
                       LAKEHEAD PIPE LINE PARTNERS, L.P.
             CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
 
     (unaudited, except for
      December 31, 2000;
      dollars in millions)
                                                        March 31   December 31
                                                          2001         2000
     ASSETS
     Cash and cash equivalents                           $49.6        $37.2
     Due from General Partner and affiliates                --          1.5
     Advances to affiliate (Note 2)                        5.8          5.9
     Other current assets                                 38.5         42.3
     Deferred charges and other                            7.0          7.9
     Property, plant and equipment, net                1,268.9      1,281.9
                                                      $1,369.8     $1,376.7
 
     LIABILITIES AND PARTNERS' CAPITAL
     Due to General Partner and affiliates                $3.2          $--
     Other current liabilities                            45.9         38.3
     Other deferred credits                                1.0           --
     Long-term debt                                      799.3        799.3
     Minority interest                                     3.0          3.2
     Partners' capital                                   517.4        535.9
                                                      $1,369.8     $1,376.7
 
 
                       LAKEHEAD PIPE LINE PARTNERS, L.P.
                              OPERATING HIGHLIGHTS
 
     (Three months ended March 31) (unaudited)                  2001      2000
 
     Deliveries (thousands of barrels per day)                 1,347     1,362
     Barrel miles (billions)                                      83        85
     Average Haul (miles)                                        686       689
 
     1. Net income per unit is computed by dividing net income, after deduction
        of the General Partner's allocation, by the number of Class A and Class
        B Common Units outstanding.  Net income allocated to the General
        Partner for the three-month period ended March 31, 2001, is $2.2
        million as compared with $2.3 million for the same period last year.
     2. The Partnership entered into an easement acquisition agreement with
        Enbridge Holdings (Mustang) Inc. ("Mustang"), an affiliate of the
        General Partner.  Mustang acquired certain real property for the
        purpose of granting pipeline easements to the Partnership.  To
        facilitate the acquisitions, the Partnership made non-interest bearing
        cash advances to Mustang.  Mustang is disposing of this real property
        and repaying the advances.
     3. During 2001, the Partnership adopted Statement of Financial Accounting
        Standards No. 133, "Accounting for Derivative Instruments and Hedging
        Activities." This Statement requires that all derivatives be recognized
        at fair value in the balance sheet and all changes in fair value be
        recognized currently in earnings or deferred as a component of other
        comprehensive income, depending on the intended use of the derivative,
        its resulting designation and its effectiveness.  Adoption of this
        standard resulted in other comprehensive loss of $1.0 million due to
        revaluation of the floating to fixed interest rate swaps held by
        Lakehead Pipe Line Company, Limited Partnership and is reflected in
        Partners' Capital on the Consolidated Condensed Statement of Financial
        Position. The company enters into forward interest rate agreements,
        swaps and collars to hedge against the effect of future interest rate
        movements on its short to long term borrowing requirements.
 
 

SOURCE Lakehead Pipe Line Partners, L.P.
    DULUTH, Minn., April 19 /PRNewswire/ -- Lakehead Pipe Line Partners, L.P.
 today declared a cash distribution of $0.875 per unit payable May 15, 2001, to
 unitholders of record on April 30, 2001.  For the quarter ended March 31,
 2001, the Partnership reported cash provided from operating activities of
 $46.7 million compared with $49.5 million for the same period in 2000.  Net
 income of $10.1 million for the quarter, or $0.27 per unit, compares to
 $20.1 million, or $0.62 per unit, for the first quarter of the prior year.
 The decline was attributable to lower operating revenue due to reduced
 deliveries, a lower tariff and shorter average haul distance, as well as an
 increase in oil measurement losses.
     Deliveries on the Lakehead System during the first quarter were slightly
 ahead of Partnership expectations, averaging 1.347 million barrels per day
 compared to 1.362 million barrels in the first quarter of 2000.  The
 Partnership anticipates that deliveries will improve over the remainder of
 2001 to average between 1.40 and 1.45 million barrels per day on a full year
 basis.  Based on this forecast, the Partnership estimates net income will be
 between $75 million and $80 million in 2001.
     The Partnership recently completed its annual survey of upstream producers
 related to the long-term supply potential of hydrocarbon liquids from the
 western Canadian basin.  The survey, which aligns with results of a forecast
 by the Canadian Association of Petroleum Producers, indicates that production
 is expected to climb steadily over the next decade as increased heavy and
 synthetic crude oil will offset declines in conventional supply.  This
 forecast is consistent with the recent request by shippers to trigger Phase II
 of the Terrace Expansion Program to increase capacity by 40,000 barrels per
 day on the upstream portion of the pipeline system owned by Enbridge.  As
 well, shippers have requested that delivery capability of the Lakehead System
 in the major Chicago Area refining center be enhanced by late 2003.  Enbridge
 and Lakehead are in discussions with customers regarding further system
 expansion to handle crude oil transportation requirements in late 2003 and
 beyond, in particular, the timing and specifications for Terrace Phase III.
 Terrace is a multi-stage expansion program designed to provide an additional
 net 350,000 barrels per day of heavy crude oil transportation capacity on the
 Lakehead System.
     Commenting on the Partnership's outlook, Mr. J. Richard Bird, President of
 the General Partner, said, "The recent survey of producers reinforces our
 positive outlook for the Partnership.  In the short term, we expect deliveries
 to increase by approximately 125,000 barrels per day over the course of 2001.
 In 2002, we anticipate that deliveries will reach record full year historical
 levels, partially as a result of the full year benefit of the Suncor
 Millennium oil sands plant expansion which is scheduled for completion later
 this year.  Longer term, numerous planned oil sands and heavy oil projects are
 expected to significantly boost volumes seeking attractive U.S. Midwest
 markets via the Lakehead System.  Lakehead is in an excellent position to
 benefit from greater throughput given that system facilities are essentially
 in place to handle the forecast growth in volumes and longer average hauls
 through late 2003."
     Regarding the acquisition strategy announced by the Partnership, Mr. Bird
 stated, "We have made good progress since unveiling the Partnership's new
 strategy in January.  Our goal is to ramp up the acquisition of energy
 transportation and terminal systems so that we can deliver on our objective to
 increase cash distributions to unitholders.  Our first transaction, the
 $33 million purchase of a North Dakota feeder system from Enbridge Inc., is
 scheduled to close early next month.  More significantly, the planned
 acquisition of Midcoast Energy by Enbridge, which is scheduled to close in
 mid-May, increases the portfolio of assets for potential transfer to the
 Partnership by some $600 million.  The Midcoast management team has a strong
 track record of growth through acquisition and will play a key role in
 assisting the Lakehead Partnership to acquire additional mature cash
 generating assets from third parties."
     Effective April 1, 2001, tariffs applying to new receipts of commodities
 on the Lakehead System increased by an average of 4%.  For example, the
 representative tariff for movements of light crude oil from the Canadian
 Border to the Chicago Area increased from $0.642 per barrel to $0.668 per
 barrel.  The tariffs were approved by the Federal Energy Regulatory Commission
 (FERC) pursuant to agreements covering two of the Partnership's expansion
 programs, System Expansion Program II and Terrace Expansion Program.  Tariffs
 which are subject to the FERC indexing methodology will next be adjusted on
 July 1, 2001.  The Partnership anticipates an average increase of
 approximately 2.7% based on the change in the Producer Price Index for
 Finished Goods in 2000, minus 1%.
     In other Partnership related matters, Lakehead Pipe Line Company, Inc.,
 the General Partner, welcomed Mr. George K. Petty to its Board of Directors in
 February.  Mr. Petty brings a wealth of business experience to the Board,
 including in mergers and acquisitions, gained while formerly serving in
 executive management positions in the telecommunications industry.
     Lakehead will be hosting an investment conference call today commencing at
 4:45 PM Eastern Time to discuss its first quarter 2001 results and its outlook
 for the future.  Interested parties may listen to either a live broadcast of
 the call via the Internet at http://www.lakehead.com/investor or to a replay
 which will be available on the website for fourteen days following the call.
     This news release includes forward-looking statements regarding future
 events and the future financial performance of Lakehead.  All forward-looking
 statements are based on Lakehead's beliefs as well as assumptions made by and
 information currently available to Lakehead. When used herein, words such as
 "believes," "expects," "intends," "forecasts," "projects," and similar
 expressions, identify forward-looking statements within the meaning of the
 Securities Litigation Reform Act.  These statements reflect Lakehead's current
 views with respect to future events and are subject to various risks,
 uncertainties and assumptions including ability of the Partnership to acquire
 other assets, the price of crude oil, willingness of producers to ship on the
 Lakehead System, effects of competition, regulatory uncertainties, and other
 risks discussed in detail in SEC filings, including the Annual Report on Form
 10-K for the year ended December 31, 2000.  If one or more of these risks or
 uncertainties materialize, or if the underlying assumptions prove incorrect,
 actual results may vary materially from those described in the forward-looking
 statement.  Except as required by applicable securities laws, Lakehead does
 not intend to update these forward-looking statements.
     Lakehead Pipe Line Partners, L.P. ( http://www.lakehead.com ) owns the
 United States portion of the world's longest liquid petroleum pipeline.
 Lakehead Pipe Line Company, Inc., an indirect wholly owned subsidiary of
 Enbridge Inc. of Calgary, Alberta, holds a 15.3% interest in the Partnership.
 The Partnership's Class A Common Units are traded on the New York Stock
 Exchange under the symbol "LHP."  Enbridge Inc. common shares are traded on
 the Toronto Stock Exchange under the symbol "ENB" and on the Nasdaq National
 Market under the symbol "ENBR."
 
 
                       LAKEHEAD PIPE LINE PARTNERS, L.P.
                        CONSOLIDATED STATEMENT OF INCOME
 
     (unaudited; dollars in millions,
      except per unit amounts)
     Three months ended March 31,                    2001     2000
 
     Operating revenue                              $71.9    $78.8
     Expenses
       Power                                         11.7     12.5
       Operating and administrative                  20.1     17.7
       Depreciation                                  15.4     15.3
                                                     47.2     45.5
     Operating income                                24.7     33.3
     Interest and other income                        0.7      1.6
     Interest expense                               (15.2)   (14.6)
     Minority interest                               (0.1)    (0.2)
     Net income                                     $10.1    $20.1
 
     Net income per unit (Note 1)                   $0.27    $0.62
     Units outstanding (millions)                    28.9     28.9
 
 
                       LAKEHEAD PIPE LINE PARTNERS, L.P.
                 CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
 
     (unaudited; dollars in millions)
     Three months ended March 31, 2001 2000
 
     Cash provided from operating activities                   $46.7     $49.5
     Investing activities
       Repayments from affiliate (Note 2)                        0.1       0.9
       Additions to property, plant and equipment               (2.4)     (0.2)
       Changes in construction payables                         (4.0)     (0.2)
                                                                (6.3)      0.5
     Financing activities
       Variable rate financing, net                               --     (10.0)
       Distributions to partners                               (27.6)    (27.6)
       Minority interest                                        (0.3)     (0.3)
       Other                                                    (0.1)       --
                                                               (28.0)    (37.9)
     Increase in cash and cash equivalents                      12.4      12.1
     Cash and cash equivalents at beginning of period           37.2      40.0
     Cash and cash equivalents at end of period                $49.6     $52.1
 
 
                       LAKEHEAD PIPE LINE PARTNERS, L.P.
             CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
 
     (unaudited, except for
      December 31, 2000;
      dollars in millions)
                                                        March 31   December 31
                                                          2001         2000
     ASSETS
     Cash and cash equivalents                           $49.6        $37.2
     Due from General Partner and affiliates                --          1.5
     Advances to affiliate (Note 2)                        5.8          5.9
     Other current assets                                 38.5         42.3
     Deferred charges and other                            7.0          7.9
     Property, plant and equipment, net                1,268.9      1,281.9
                                                      $1,369.8     $1,376.7
 
     LIABILITIES AND PARTNERS' CAPITAL
     Due to General Partner and affiliates                $3.2          $--
     Other current liabilities                            45.9         38.3
     Other deferred credits                                1.0           --
     Long-term debt                                      799.3        799.3
     Minority interest                                     3.0          3.2
     Partners' capital                                   517.4        535.9
                                                      $1,369.8     $1,376.7
 
 
                       LAKEHEAD PIPE LINE PARTNERS, L.P.
                              OPERATING HIGHLIGHTS
 
     (Three months ended March 31) (unaudited)                  2001      2000
 
     Deliveries (thousands of barrels per day)                 1,347     1,362
     Barrel miles (billions)                                      83        85
     Average Haul (miles)                                        686       689
 
     1. Net income per unit is computed by dividing net income, after deduction
        of the General Partner's allocation, by the number of Class A and Class
        B Common Units outstanding.  Net income allocated to the General
        Partner for the three-month period ended March 31, 2001, is $2.2
        million as compared with $2.3 million for the same period last year.
     2. The Partnership entered into an easement acquisition agreement with
        Enbridge Holdings (Mustang) Inc. ("Mustang"), an affiliate of the
        General Partner.  Mustang acquired certain real property for the
        purpose of granting pipeline easements to the Partnership.  To
        facilitate the acquisitions, the Partnership made non-interest bearing
        cash advances to Mustang.  Mustang is disposing of this real property
        and repaying the advances.
     3. During 2001, the Partnership adopted Statement of Financial Accounting
        Standards No. 133, "Accounting for Derivative Instruments and Hedging
        Activities." This Statement requires that all derivatives be recognized
        at fair value in the balance sheet and all changes in fair value be
        recognized currently in earnings or deferred as a component of other
        comprehensive income, depending on the intended use of the derivative,
        its resulting designation and its effectiveness.  Adoption of this
        standard resulted in other comprehensive loss of $1.0 million due to
        revaluation of the floating to fixed interest rate swaps held by
        Lakehead Pipe Line Company, Limited Partnership and is reflected in
        Partners' Capital on the Consolidated Condensed Statement of Financial
        Position. The company enters into forward interest rate agreements,
        swaps and collars to hedge against the effect of future interest rate
        movements on its short to long term borrowing requirements.
 
 SOURCE  Lakehead Pipe Line Partners, L.P.