MGG Announces Second-Quarter Earnings

TULSA, Okla., Aug. 3  /PRNewswire-FirstCall/ -- Magellan Midstream Holdings, L.P. (NYSE:MGG) today reported second-quarter 2009 operating profit of $63.9 million compared to $102.1 million for second quarter 2008. The 2008 period benefited from unusually high product margins (defined as product sales revenues less product purchases) and a $12.1 million one-time expense reduction related to a June 2008 favorable settlement for a historical environmental matter. Excluding these two items, operating profit from core fee-based transportation and terminals activities increased in the 2009 period.

Net income was $49.1 million during second quarter 2009 versus $90.3 million in second quarter 2008.

MGG owns the general partner interest and incentive distribution rights of Magellan Midstream Partners, L.P. (NYSE:MMP) and reports its financial results on a consolidated basis with the financial results of MMP. The partnership currently has no separate operating activities apart from those conducted by MMP, and its distributable cash flow is derived from cash distributions received from MMP.

Related to second quarter 2009, MGG will receive distributions of $23.5 million from its ownership interest in MMP, almost all of which is available for distribution to MGG unitholders.

Operating profit decreased between quarters primarily due to a one-time favorable environmental settlement, which significantly reduced second-quarter 2008 expenses, and lower commodity margin. The reduced commodity margin resulted from timing of mark-to-market adjustments for New York Mercantile Exchange positions, which MMP began utilizing in late 2008 to hedge its commodity-related activity, and lower fractionation margins due to the sale of unprocessed transmix in the 2008 period and lower commodity prices in 2009.

Increased financial contributions from MMP's core fee-based transportation and terminals activities due to higher rates and recent expansion projects partially offset the variances from the one-time benefit and commodities.

An analyst call with management regarding second-quarter 2009 financial results for the partnership and MMP is scheduled today at 1:30 p.m. Eastern. To participate, dial [phone] and provide code 4352508. Investors also may listen to the call via the partnership's web site at http://www.mgglp.com/webcasts.asp.

Audio replays of the conference call will be available from 4:30 p.m. Eastern today through midnight on Aug. 9. To access the replay, dial [phone] and provide code 4352508. The replay also will be available at http://www.mgglp.com/.

About Magellan Midstream Holdings, L.P.

Magellan Midstream Holdings, L.P. (NYSE:MGG) is a publicly traded partnership formed to own the general partner interest and 100% of the incentive distribution rights in Magellan Midstream Partners, L.P. (NYSE: MMP), which primarily transports, stores and distributes refined petroleum products. More information is available at http://www.mgglp.com/.

Portions of this document may constitute forward-looking statements as defined by federal law. Although management believes any such statements are based on reasonable assumptions, there is no assurance that actual outcomes will not be materially different. Additional information about issues that could lead to material changes in performance is contained in the partnership's filings with the Securities and Exchange Commission.

MMP and MGG have filed a joint proxy statement/prospectus and other documents with the Securities and Exchange Commission (SEC) in relation to the proposed simplification of their capital structure. Investors and security holders are urged to read these documents carefully because they contain important information regarding MMP, MGG and the simplification. A definitive joint proxy statement/prospectus has been sent to unitholders of MMP and MGG seeking their approvals as contemplated by the simplification agreement. Investors and security holders may obtain a free copy of the joint proxy statement/prospectus and other documents containing information about MMP and MGG at the SEC's website at http://www.sec.gov/. Copies of the joint proxy statement/prospectus and the SEC filings incorporated by reference in the joint proxy statement/prospectus may also be obtained free of charge by contacting Investor Relations at [phone] or by accessing http://www.magellanlp.com/ or http://www.mgglp.com/.

MMP, MGG and the officers and directors of the general partner of each partnership may be deemed to be participants in the solicitation of proxies from their security holders. Information about these persons can be found in the annual report and proxy statement for each partnership as filed with the SEC, and additional information about such persons may be obtained from the joint proxy statement/prospectus.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of the Securities Act of 1933, as amended.

                          MAGELLAN MIDSTREAM HOLDINGS, L.P.
                          CONSOLIDATED STATEMENTS OF INCOME
                        (In thousands, except per unit amounts)
                                     (Unaudited)


                                Three Months Ended     Six Months Ended
                                      June 30,              June 30,
                                  2008        2009      2008        2009

  Transportation and
   terminals revenues         $162,580    $166,703  $307,385    $321,723
  Product sales revenues       110,364      41,327   312,082      99,043
  Affiliate management fee
   revenue                         183         190       366         380

    Total revenues             273,127     208,220   619,833     421,146
  Costs and expenses:
    Operating                   56,794      60,848   112,219     121,315
    Product purchases           75,292      40,990   252,860      93,620
    Depreciation and
     amortization               21,271      23,163    42,284      46,315
    Affiliate general and
     administrative             19,060      20,248    37,350      41,384

    Total costs and expenses   172,417     145,249   444,713     302,634
  Gain on assignment of
   supply agreement                 -           -     26,492         -
  Equity earnings                1,377         939     1,782       1,458
  Operating profit             102,087      63,910   203,394     119,970
  Interest expense              12,754      15,809    25,693      31,361
  Interest income                 (303)       (206)     (599)       (427)
  Interest capitalized          (1,110)       (942)   (2,412)     (1,878)
  Debt placement fee
   amortization expense            169         224       337         444
  Other income                    (254)       (565)     (254)       (647)

  Income before provision for
   income taxes                 90,831      49,590   180,629      91,117
  Provision for income taxes       502         452       945         809

  Net income                   $90,329     $49,138  $179,684     $90,308

  Allocation of net
   income (1):
    Non-controlling owners'
     interest                  $59,425     $34,527  $131,161     $63,675
    Limited partners' interest  31,308      14,611    49,332      26,633
    General partner's interest    (404)        -        (809)        -

      Net income               $90,329     $49,138  $179,684     $90,308


  Basic and diluted net
   income per limited partner
   unit                          $0.50       $0.23     $0.79       $0.42


  Weighted average number of
   limited partner units
   outstanding used for basic
   and diluted net income per
   unit calculation
                                62,654      62,670    62,654      62,669

  (1)  The partnership adopted Statement of Financial Accounting Standard
       ("SFAS") No. 160, Non-Controlling Interests in Consolidated Financial
       Statements on January 1, 2009.  As prescribed by SFAS No. 160, the
       non-controlling owners' interest is treated as a component of equity
       and is no longer included in expense; therefore, in the statements
       above, the partnership has allocated net income between the
       non-controlling owners' interest, the limited partners' interest and
       the general partner's interest. For presentation and disclosure
       purposes, the partnership has retrospectively applied SFAS No. 160
       for all periods presented.



                          MAGELLAN MIDSTREAM HOLDINGS, L.P.
                              ALLOCATION OF NET INCOME
                       (In thousands, unless otherwise noted)
                                     (Unaudited)


                                 Three Months Ended     Six Months Ended
                                      June 30,              June 30,
                                  2008        2009      2008        2009

  Net income                   $90,329     $49,138  $179,684     $90,308
  Net income applicable to
   non-controlling owners'
   interest                     59,425      34,527   131,161      63,675

  Net income applicable to
   limited partners and
   general partner              30,904      14,611    48,523      26,633
  Direct charges to the
   general partner:
    Reimbursable general and
     administrative costs          408          -       816           -

  Income applicable to
   limited partners and
   general partner before
   direct charges to general
   partner                      31,312      14,611    49,339      26,633
  General partner's share
   of income (1)                0.0141%          0%   0.0141%          0%
  General partner's allocated
   share of net income before
   direct charges                    4          -          7          -
  Direct charges to general
   partner                         408          -        816          -
  Net loss allocated to
   general partner               $(404)        $-      $(809)        $-

  Net income applicable to
   limited partners and
   general partner             $30,904     $14,611   $48,523     $26,633
  Less: net loss allocated to
   general partner                (404)         -       (809)         -
  Net income allocated to
   limited partners            $31,308     $14,611   $49,332     $26,633

  (1)  In December 2008, the partnership acquired its general partner from
       MGG Midstream Holdings, L.P. and since that date its general partner
       has owned a non-economic interest in the partnership.  Subsequent to
       that transaction, the general partner has not been allocated a
       portion of the partnership's net income.

  Contact:      Paula Farrell
                [phone]
                

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DATASOURCE: Magellan Midstream Holdings, L.P.



CONTACT:  Paula Farrell of Magellan Midstream Holdings, L.P.,

[phone], 



Web Site:  http://www.mgglp.com/ 

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