Steve Letwin and Terry McGill |
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efore we talk about our accomplishments in 2007, we need to address something that did not go well. The tragic deaths of two employees during pipeline maintenance near Clearbrook, Minn., last November saddened us and reinforced our focus on operational and community safety. We are committed to the thorough investigation of this incident and to thoughtfully applying the knowledge gained from that inquiry.
Operating and developing oil and gas transportation infrastructure is our greatest strength and our business purpose. Our strategy in 2007 was based on executing our expansion program, which will more than double the Partnership’s asset base through organic growth by 2010. Our ability to continue to deliver unitholder and shareholder value is directly attributable to our strengths in operational excellence and our success in developing energy infrastructure. In this regard, we are pleased to say that 2007 was a very good year for the Partnership’s liquids and natural gas businesses. Having a very talented workforce and strong management team in place and working closely with customers and other stakeholders only help to ensure our success.
Our accomplishments in executing business and expansion plans contributed to a strong year financially for the Partnership, which reported total adjusted net income for 2007 of $281.1 million, up 23 percent over the prior year. Adjusted operating income for the liquids business was up 4 percent over 2006 and the natural gas business reported a 33 percent increase over the same period. We increased our distribution following the third quarter of 2007, as completed projects began to provide increased earnings and cash flow. Our investors realized distributions of $3.725 per unit/share for the year. Our low-risk business model (for example, our liquids projects are backstopped by long-term, low-risk commercial agreements with our customers) allows us to acquire capital at attractive rates. Our growth program will result in increased earnings and shareholder/unitholder value.
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We believe that the supply and demand fundamentals for both the liquids and natural gas businesses remain positive for our growth projects. During the last few years, we have had an ambitious program of capital spending, and this year has been no different. Almost $2 billion was invested in projects during 2007. This amount included capital to complete long-term growth projects started in previous years that are now contributing to the bottom line. We also employed capital for new expansion and growth projects. We faced challenging times executing our plans for growth in 2007 as demand continued to escalate for construction resources. Orders for pipe are backing up at pipe mills around the world and competition for contractors with specialized skills is fierce.