Sunoco Logistics Partners said that operating income increased by $45.2 million or 100% from the prior year’s first quarter driven largely by significantly higher lease acquisition results, increased crude oil pipeline and storage revenues and results from the November 2008 acquisition of the MagTex refined products pipeline and terminal system.

Distributable cash flow for the quarter was a record $89.8 million, a 78% increase from the first quarter of 2008. Distributable cash flow per limited partner unit was $1.89 compared to $1.19 for the prior year first quarter. Net income per limited partner unit increased to $2.36 from $1.04 for the first quarter of 2008.

Sunoco Partners LLC, the general partner of the partnership, declared a cash distribution for the first quarter of 2009 of $1.015 per common partnership unit ($4.06 annualized) payable May 15, 2009 to unitholders of record on May 11, 2009. This distribution increase is a 2.5% increase versus last quarter and a 13.4% increase over the first quarter of 2008. It is the twenty-third distribution increase in the past 24 quarters.

“We are pleased to announce record quarterly earnings across each of our three business segments,” said Deborah M. Fretz, president and chief executive officer. “We took advantage of the strong contango crude oil market in both our Crude Oil Pipeline System, which includes Lease Acquisition, as well as in the Nederland terminal. The recent acquisition of the Texas MagTex refined products system and organic growth projects including additional tankage at the Nederland terminal, have also substantially contributed to our strong quarterly results.

Despite the general weakness in the refining environment, our geographic and business diversification continue to serve us well. Our ongoing Nederland capacity expansion, the expected 2009 completion of a pipeline from Nederland to Port Arthur, Texas, and the recent commencement of extensions to the MagTex pipeline system will serve as catalysts for future earnings growth. We recently accessed the financial markets with both debt and equity financing to enhance our liquidity and balance sheet strength and we are positioned to further expand our business platform as opportunities arise.”

Segmented First Quarter Results

On January 1, 2009 the partnership re-aligned its reporting segments. Prior to this date, the reporting segments were designated by geographic region. The partnership has determined it more meaningful to functionally align its reporting segments. As such, the updated reporting segments as of January 1, 2009 are refined products pipeline system, terminal facilities, and crude oil pipeline system. The primary difference in the new reporting is the consolidation of an eastern area crude oil pipeline with the western area crude oil pipelines. For comparative purposes all prior year amounts have been recast to reflect the new segment reporting and do not impact consolidated net income.

Refined Products Pipeline System

Operating income for the refined products pipeline system increased $3.9 million to $10.6 million for the first quarter ended March 31, 2009 compared to the prior year’s quarter. Sales and other operating revenue increased by $7.1 million to $31.4 million due primarily to results from the partnership’s acquisition of the MagTex refined products pipeline and terminals system in November 2008. Other income increased $1 million due primarily to an increase in equity income associated with the partnership’s joint venture interests. Operating expenses and depreciation and amortization expense increased primarily due to the MagTex acquisition.

Terminal Facilities

Operating income for the terminal facilities segment increased $10 million to $21.2 million for the first quarter ended March 31, 2009 compared to the prior year’s quarter.

Total revenues for the first quarter of 2009 increased $6.9 million to $46.3 million due primarily to increased throughput and fees at the Nederland crude oil terminal facility, additional tankage placed into service during 2008 and 2009 at the Nederland facility and results from the MagTex acquisition. These increases were partially offset by lower volumes at the partnership’s refinery terminals. Cost of products sold and operating expenses increased $1.4 million for the first quarter of 2009 to $15.1 million due primarily to increased costs associated with the MagTex acquisition partially offset by reduced utilities expense. Depreciation and amortization expense increased $0.8 million to $4.7 million for the first quarter of 2009 due to the MagTex acquisition and increased tankage at the Nederland facility. During 2008, a $5.7 million non cash impairment charge was recognized related to the partnership’s decision to discontinue efforts to expand LPG storage capacity at its Inkster, Michigan facility.

Crude Oil Pipeline System

Operating income for the crude oil pipeline system increased $31.3 million to a record $58.6 million for the first quarter of 2009 compared to the prior year’s quarter due to significantly higher lease acquisition results and optimization of crude oil storage capabilities as the crude oil market shifted to contango. Higher pipeline fees also contributed to the improved operating performance. Other income decreased $1.1 million compared to the prior year’s quarter due primarily to reduced equity income from the partnership’s joint venture interests.

Lower crude oil prices were a key driver of the decrease in total revenue and cost of products sold and operating expenses from the prior year’s quarter. The average price of West Texas Intermediate crude oil at Cushing, Oklahoma decreased to $43.21 per barrel for the first quarter of 2009 from $97.96 per barrel for the first quarter of 2008.

Other Analysis

Financing Update

Net interest expense increased by $1.8 million for the three months ended March 31, 2009, compared to the prior year’s quarter. This increase was primarily due to higher borrowings associated with the $185.4 million MagTex acquisition, organic growth projects, and increased contango inventory positions.

On February 6, 2009 the partnership issued $175 million of 5 year Senior Notes maturing on February 15, 2014 at an 8.75% interest rate.

On March 13, 2009 the partnership entered into a new $62.5 million revolving credit facility which matures in September 2011.

At March 31, 2009, the partnership had total debt outstanding of $887 million, which consisted of $599.3 million of Senior Notes and $287.7 million of borrowings under its $400 million revolving credit facility, as compared to $747.6 million at December 31, 2008. The partnership had available borrowing capacity of $269.8 million under its credit facilities as of March 31, 2009 and a debt to EBITDA ratio of 2.7x for the twelve months ended March 31, 2009.

On April 17, 2009 the partnership completed a public offering of 2.2 million common units. In connection with this offering, the underwriters were granted an option to purchase up to 0.3 million additional common units. Net proceeds before underwriting expenses of approximately $107.4 million were used to reduce outstanding borrowings under the partnership’s $400 million revolving credit facility.

Capital Expenditures:

Maintenance capital expenditures for the three months ended March 31, 2009 were $2.7 million. The partnership continues to expect maintenance capital spending for 2009 of approximately $30 million.