SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

For the quarterly period ended September 30, 2004 or

For the transition period from                                       to                                       .

Commission file number 1-9356

BUCKEYE PARTNERS, L.P.

Registrant’s telephone number, including area code: 484-232-4000

Not Applicable

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes   x     No   o

     Indicate by check mark whether the registrant is an accelerated filer as defined in Exchange Act 12b-2.   Yes   x     No   o

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

BUCKEYE PARTNERS, L.P.

INDEX

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Part I. Financial Information

Item 1. Condensed Consolidated Financial Statements

Buckeye Partners, L.P.

See notes to condensed consolidated financial statements.

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Buckeye Partners, L.P.

See notes to condensed consolidated financial statements.

2

Buckeye Partners, L.P.

See notes to condensed consolidated financial statements.

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BUCKEYE PARTNERS, L.P.

1. BASIS OF PRESENTATION

     In the opinion of management, the accompanying condensed consolidated financial statements of Buckeye Partners, L.P. (the “Partnership”), which are unaudited except that the Balance Sheet as of December 31, 2003 is derived from audited financial statements, include all adjustments necessary to present fairly the Partnership’s financial position as of September 30, 2004, along with the results of the Partnership’s operations for the three and nine month periods ended September 30, 2004 and 2003 and its cash flows for the nine months ended September 30, 2004 and 2003. The results of operations for the three and nine months ended September 30, 2004 are not necessarily indicative of the results to be expected for the full year ending December 31, 2004. Certain amounts in 2003 have been reclassified to conform to the 2004 presentation.

     Commencing in the third quarter of 2004, the Partnership reclassified revenues related to a jet fuel supply arrangement and an operating services contract on a gross basis, rather than the net-of-cost basis previously used. This reclassification, which had no effect on operating income or net income, increased both revenues and operating expenses by $1.2 million with respect to the jet fuel supply arrangement and $2.8 million with respect to the operating services contract for the three and nine months ended September 30, 2004. Prior periods in 2004 and 2003 were not reclassified.

     The Partnership is a master limited partnership organized in 1986 under the laws of the state of Delaware. The Partnership owns approximately 99 percent of the limited partnership interests in Buckeye Pipe Line Company, L.P. (“Buckeye”), Laurel Pipe Line Company, L.P. (“Laurel”), Everglades Pipe Line Company, L.P. (“Everglades”) and Buckeye Pipe Line Holdings, L.P. (“BPH”). These entities are hereinafter referred to as the “Operating Partnerships.”

     Buckeye Pipe Line Company LLC (the “General Partner”) serves as the general partner of the Partnership. As of September 30, 2004, the General Partner owned approximately a 1 percent general partnership interest in the Partnership and approximately a 1 percent general partnership interest in each of the Operating Partnerships, for an approximate 2 percent interest in the Partnership. The General Partner is a wholly-owned subsidiary of Buckeye Management Company LLC (“BMC”), which is a wholly-owned subsidiary of Glenmoor LLC (“Glenmoor”). Approximately 80 percent of the employees that work for the Operating Partnerships are employed by Buckeye Pipe Line Services Company (“Services Company”), which owns an approximate 8 percent limited partnership interest in the Partnership. Pursuant to an Amended and Restated Services Agreement dated May 4, 2004, BMC and the General Partner reimburse Services Company for its direct and indirect expenses. These expenses are reimbursed to the General Partner by the Operating Partnerships except for certain executive compensation costs and related benefits expense.

     Until May 4, 2004, Glenmoor was owned by certain directors and members of senior management of the General Partner, trusts for the benefit of their families and certain other management employees of Services Company. On May 4, 2004, each of the General Partner, BMC and Glenmoor converted from a stock corporation into a limited liability company, and the membership interests of Glenmoor were sold to BPL Acquisition Company L.P. (“BPL Acquisition”) for

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approximately $235 million. BPL Acquisition is a limited partnership owned by affiliates of Carlyle/Riverstone Global Energy and Power Fund II, L.P. (“Carlyle/Riverstone”) and certain members of senior management.

     Pursuant to the rules and regulations of the Securities and Exchange Commission, the condensed consolidated financial statements do not include all of the information and notes normally included with financial statements prepared in accordance with accounting principles generally accepted in the United States of America. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2003.

2. SEGMENT INFORMATION

     During the three and nine month periods ended September 30, 2004 and 2003, the Partnership had one business segment, the transportation segment. The transportation segment derives its revenues primarily from the transportation of refined petroleum products that it receives from refineries, connecting pipelines and marine terminals. Other transportation segment revenues are received from storage and terminal throughput services of refined petroleum products and contract operation of third-party pipelines. Revenues from the transportation segment are, for the most part, subject to regulation by the Federal Energy Regulatory Commission.

3. CONTINGENCIES

     The Partnership and the Operating Partnerships in the ordinary course of business are involved in various claims and legal proceedings, some of which are covered in whole or in part by insurance. The General Partner is unable to predict the timing or outcome of these claims and proceedings. Although it is possible that one or more of these claims or proceedings, if adversely determined, could, depending on the relative amounts involved, have a material effect on the Partnership for a future period, the General Partner does not believe that their outcome will have a material effect on the Partnership’s consolidated financial condition or annual results of operations.

Environmental

     Various claims for the cost of cleaning up releases of hazardous substances and for damage to the environment resulting from the activities of the Operating Partnerships or their predecessors have been asserted and may be asserted in the future under various federal and state laws. The General Partner believes that the generation, handling and disposal of hazardous substances by the Operating Partnerships and their predecessors have been in material compliance with applicable environmental and regulatory requirements. The total potential remediation costs, to be borne by the Operating Partnerships relating to these clean-up sites, cannot be reasonably estimated and could be material. With respect to certain sites, however, the Operating Partnership involved is one of several or as many as several hundred potentially responsible parties that would share in the total costs of clean-up under the principle of joint and several liability. The General Partner is unable to determine the timing or outcome of pending proceedings.

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4. LONG-TERM DEBT AND CREDIT FACILITIES

Long-term debt consists of the following:

     At September 30, 2004, $60.0 million of debt was scheduled to mature on August 6, 2009, $300.0 million was scheduled to mature on June 15, 2013 and $150.0 million was scheduled to mature on August 15, 2033.

     The fair value of the Partnership’s debt was estimated to be $497 million as of September 30, 2004 and $429 million at December 31, 2003. The values at September 30, 2004 and December 31, 2003 were calculated using interest rates currently available to the Partnership for issuance of debt with similar terms and remaining maturities.

     On August 6, 2004, the Partnership entered into a $400 million 5-year revolving credit facility (the “Credit Facility”) with a syndicate of banks led by SunTrust Bank. The Credit Facility contains a one-time expansion feature to $550 million subject to certain conditions. The Credit Facility replaced a $277.5 million 5-year credit facility that would have expired in September 2006 and a $100 million 364-day credit facility that would have expired in September 2004. Borrowings under the Credit Facility are guaranteed by certain of our subsidiaries. The Credit Facility matures on August 6, 2009.

     Borrowings under the Credit Facility bear interest under one of two rate options, selected by us, equal to either (i) the greater of (a) the federal funds rate plus one half of one percent and (b) SunTrust Bank’s prime rate or (ii) the London Interbank Offered Rate (“LIBOR”) plus an applicable margin. The applicable margin is determined based upon ratings assigned by Standard and Poors and Moody’s Investor Services for our senior unsecured non-credit enhanced long-term debt. The applicable margin, which was 0.5 percent at September 30, 2004, will increase during any period in which our Funded Debt Ratio (described below) exceeds 5.25 to 1.0. At September 30, 2004, the weighted average interest rate of borrowings under the Credit Facility was 2.32 percent.

     The Credit Facility contains covenants and provisions which affect the Partnership including covenants and provisions that:

	•		Restrict the Partnership and certain of its subsidiaries’ ability to incur additional indebtedness based on certain ratios described below;
	•		Prohibit the Partnership and certain of its subsidiaries from creating or incurring certain liens on its property;
	•		Prohibit the partnership and certain of its subsidiaries from disposing of property material to its operations;
	•		Limit consolidations, mergers and asset transfers by the Partnership and certain of its subsidiaries.

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     The Credit Facility requires that the Partnership and certain of its subsidiaries maintain a maximum “Funded Debt Ratio” and a minimum “Fixed Charge Coverage Ratio”. The Funded Debt Ratio equals the ratio of the long-term debt of the Partnership and certain of its subsidiaries(including the current portion, if any) to “Adjusted EBITDA”, which is defined in the Credit Facility as earnings before interest, taxes, depreciation, depletion and amortization and incentive compensation payments to the General Partner, for the four preceding fiscal quarters. As of the end of any fiscal quarter, the Funded Debt Ratio may not exceed 4.75 to 1.00, subject to a provision for increases to 5.25 to 1.00 in connection with future acquisitions.

     In connection with the Partnership’s acquisition of certain pipeline and terminal assets from affiliates of Shell Oil Products, U.S. (“Shell”) on October 1, 2004 (see Note 11), the Credit Facility provided for a one-time increase in the Funded Debt Ratio limit to 5.75 to 1.00 for the first two quarters following the closing of this acquisition and 5.25 to 1.00 for the third quarter following the closing of the acquisition.

     The Fixed Charge Coverage Ratio is defined as the ratio of Adjusted EBITDA for the four preceding fiscal quarters to the sum of payments for interest and principal on debt plus certain capital expenditures required for the ongoing maintenance and operation of the Partnership’s assets. The Partnership is required to maintain a Fixed Charge Coverage Ratio of greater than 1.25 to 1.00 as of the end of any fiscal quarter.

     As of September 30, 2004, the Partnership’s Funded Debt Ratio was 3.71 to 1.00 and its Fixed Charge Coverage Ratio was 2.63 to 1.00, and the Partnership was in compliance with all of the covenants under the Credit Facility.

     On October 28, 2003, the Partnership entered into an interest rate swap agreement with a financial institution in order to hedge a portion of its fair value risk associated with its 4 5/8% Notes. The notional amount of the swap agreement is $100 million. The swap agreement calls for the Partnership to receive fixed payments from the financial institution at a rate of 4 5/8% of the notional amount in exchange for floating rate payments from the Partnership based on the notional amount using a rate equal to the six-month LIBOR (determined in arrears) minus 0.28%. The swap agreement terminates on the maturity date of the 4 5/8% Notes and interest amounts under the swap agreement are payable semiannually on the same date as interest payments on the 4 5/8% Notes. The Partnership designated the swap agreement as a fair value hedge at the inception of the agreement and elected to use the short-cut method provided for in Statement of Financial Accounting Standards No. 133 “Accounting for Derivative Instruments and Hedging Activities”, which assumes no ineffectiveness will result from the use of the hedge.

     Interest expense in the Partnership’s condensed consolidated statement of income was reduced by $0.6 million and by $2.2 million in the three and nine months ended September 30, 2004 as a result of the interest rate swap agreement.

     The fair values of the swap agreement at September 30, 2004 and December 31, 2003 were assets of $1,828,000 and $200,000, respectively, which have been reflected in other non-current assets in the accompanying consolidated balance sheets of the Partnership with a corresponding increase in the carrying value of the hedged debt.

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5. PARTNERS’ CAPITAL AND EARNINGS PER PARTNERSHIP UNIT

Partners’ capital consists of the following:

     During the nine months ended September 30, 2004, Partnership net income was less than comprehensive income by $348,000 due to the settlement of a minimum pension liability. During the nine months ended September 30, 2003, comprehensive income was less than net income by $358,000 due to the accrual of the minimum pension liability.

     The following is a reconciliation of basic and diluted net income per Partnership Unit for the three month and nine month periods ended September 30:

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6. CASH DISTRIBUTIONS

     The Partnership will generally make quarterly cash distributions of substantially all of its available cash, generally defined as consolidated cash receipts less consolidated cash expenditures and such retentions for working capital, anticipated cash expenditures and contingencies as the General Partner deems appropriate.

     On October 28, 2004, the Partnership declared a cash distribution of $0.675 per unit payable on November 30, 2004 to Unitholders of record on November 8, 2004. The total distribution will amount to approximately $23,300,000.

7. RELATED PARTY ACCRUED CHARGES

     Accrued and other current liabilities include $1,419,000 and $4,780,000 due to the General Partner for payroll and other reimbursable costs at September 30, 2004 and December 31, 2003, respectively.

8. UNIT OPTION AND DISTRIBUTION EQUIVALENT PLAN

     The Partnership has adopted Statement of Financial Accounting Standards No. 123 “Accounting for Stock-Based Compensation,” (“SFAS 123”), which requires expanded disclosures of stock-based compensation arrangements with employees. SFAS 123 encourages, but does not require, compensation cost to be measured based on the fair value of the equity instrument awarded. It allows the Partnership to continue to measure compensation cost for these plans using the intrinsic value based method of accounting prescribed by Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”). The Partnership has elected to continue to recognize compensation cost based on the intrinsic value of the equity instrument awarded as promulgated in APB 25.

     If compensation cost had been determined based on the fair value at the time of the grant dates for awards consistent with SFAS 123, the Partnership’s net income and earnings per unit would have been as indicated by the proforma amounts below: