Star Gas Partners, L.P.




Star Gas Partners, L.P.  is a diversified home energy distributor and services provider, specializing in heating oil, propane, natural gas and electricity.  These segments of Star Gas Partners’ business are organized as follows:


Ø    Star Gas Propane, L.P., a wholly owned subsidiary, markets and distributes propane gas and related products to approximately 345,000 residential, commercial, industrial, agricultural and motor fuel customers in the Midwest, Northeast, Florida and Georgia.  Customers are served from 123 branch locations and 126 satellite storage facilities in the Midwest, Northeast, Florida, and Georgia.  In addition to its retail business, which totals about 92% of sales, Star Gas Propane serves wholesale customers from its underground cavern and storage facilities in Seymour, Indiana.


Ø    Petro Holdings, Inc., an indirect wholly owned subsidiary, is the nation's largest distributor of home heating oil and serves approximately 535,000 customers in the Northeast and Mid-Atlantic.  Customers are served from 35 branch locations in the Northeast and Mid-Atlantic regions, from which the heating oil segment installs and repairs heating equipment 24 hours a day, seven days a week, 52 weeks a year, generally within four hours of request.  These services are an integral part of Petro’s basic heating oil business, and are designed to maximize customer satisfaction and loyalty.  In 2003, the heating oil segment’s sales were derived of approximately 76% from sales of home heating oil; 15% from the installation and repair of heating and air conditioning equipment; and 9% from the sale of other petroleum products, including diesel fuel and gasoline, to commercial customers. In fiscal 2003, sales to residential customers represented 83% of the retail heating oil gallons sold and 91% of heating oil gross profits.


Ø    Total Gas and Electric, TG&E), an 80% owned subsidiary, is an energy reseller that markets natural gas and electricity to homeowners in deregulated energy markets in New York, New Jersey, Florida, Maryland and the District of Columbia, serving approximately 64,000 residential customers in four states. In fiscal 2003, the sales were comprised of 85% from sales of approximately 89.0 million therms of natural gas and 15% from sales of approximately 135 million kilowatts of electricity.  TG&E purchases substantially all of its natural gas from major wholesalers, and transports it to the local utility, through purchased or assigned capacity on pipelines.  In fiscal 2003, all of TG&E’s electricity requirements were purchased at market from the New York Independent System Operator, which delivers the electricity to the local utility company. The utility then delivers the gas and electricity to TG&E customers using their distribution system. The utility and TG&E coordinate delivery and billing, and also compete to sell natural gas and electricity to the ultimate consumer. Generally, TG&E pays the local utility a charge to provide certain customer related services like billing. Customers pay a separate delivery charge to the utility for bringing the natural gas or electricity from the customer’s chosen supplier. In the case of all but three of the utilities where TG&E currently sells energy, TG&E and the local utility charges are itemized on one customer energy bill generated by the utility. For the remaining utilities, TG&E bills its customers directly.


The primary objective of Star Gas is to increase cash flow on a per unit basis. Star Gas pursues this objective principally through (i) the pursuit of strategic acquisitions which capitalize on its acquisition expertise in the highly fragmented propane and home heating oil distribution industries, (ii) the realization of operating efficiencies in existing and acquired operations, (iii) a focus on retention and potential customer growth, (iv) the continued enhancement in public awareness of the partnership’s quality brands and (v) the sale of rationally related products.


As a leading retail distributor of propane and heating oil in the United States, Star Gas is able to realize economies of scale in operating, marketing, information technology and other areas by spreading costs over a larger customer base. Additionally, the heating oil segment is using communication and computer technology that is generally not used by its competitors, which it hopes will allow it to realize operating efficiencies.


Star Gas Partners, L.P. trades on the New York Stock Exchange under the symbols SGU (common units) and SGH (senior subordinated units).  For more information, contact Richard Ambury at 203-328-7300 or visit the Star Gas website at


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Financial Information for Fiscal Year Ending September 30, 2003

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*As of March 31, 2003 and December 9, 2002.


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