##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended March 31, 2010
 OR
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission file number 1-32963
 Buckeye GP Holdings L.P.
 (Exact name of registrant as specified in its charter)
 Delaware
    
    11-3776228(State or other jurisdiction of
    
    (IRS Employerincorporation or organization)
    
    Identification number)One Greenway PlazaSuite 600Houston, TX
    
    77046(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code: (832) 615-8600
 þ o
 o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




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TABLE OF CONTENTS
 PagePART I. FINANCIAL INFORMATIONItem 1.Financial StatementsCondensed Consolidated Statements of Operations for the Three Months Ended
March 31, 2010 and 2009 (Unaudited)
    
    
    2Condensed Consolidated Balance Sheets as of March 31, 2010 and December 31, 2009
(Unaudited)
    
    
    3Condensed Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2010 and 2009 (Unaudited)
    
    
    4Condensed Consolidated Statements of Partners Capital for the Three Months Ended
March 31, 2010 and 2009 (Unaudited)
    
    
    5Notes to Unaudited Condensed Consolidated Financial Statements:1. Organization and Basis of Presentation
    
    
    62. Acquisition and Disposition
    
    
    73. Commitments and Contingencies
    
    
    84. Inventories
    
    
    95. Prepaid and Other Current Assets
    
    
    106. Equity Investments
    
    
    107. Intangible Assets
    
    
    118. Other Non-Current Assets
    
    
    119. Accrued and Other Current Liabilities
    
    
    1210. Debt Obligations
    
    
    1211. Other Non-Current Liabilities
    
    
    1512. Derivative Instruments, Hedging Activities and Fair Value Measurements
    
    
    1513. Pensions and Other Postretirement Benefits
    
    
    2214. Unit-Based Compensation Plans
    
    
    2215. Related Party Transactions
    
    
    2416. Cash Distributions
    
    
    2417. Earnings Per Partnership Unit
    
    
    2518. Business Segments
    
    
    2519. Supplemental Cash Flow Information
    
    
    27Item 2.Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    28Item 3.Quantitative and Qualitative Disclosures About Market Risk
    
    
    41Item 4.Controls and Procedures
    
    
    44PART II. OTHER INFORMATIONItem 1.Legal Proceedings
    
    
    44Item 1A.Risk Factors
    
    
    44Item 6.Exhibits
    
    
    45EX-31.1EX-31.2EX-32.1EX-32.2
  1




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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements
 BUCKEYE GP HOLDINGS L.P.
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per unit amounts)  (Unaudited)
 Three Months EndedMarch 31,2010
    
    
    2009Revenues:Product sales
    
    $
    568,170
    
    
    $
    268,779Transportation and other services
    
    
    163,004
    
    
    
    148,061Total revenue
    
    
    731,174
    
    
    
    416,840Costs and expenses:Cost of product sales and natural gas storage services
    
    
    569,737
    
    
    
    250,676Operating expenses
    
    
    66,583
    
    
    
    73,900Depreciation and amortization
    
    
    14,528
    
    
    
    13,364General and administrative
    
    
    10,835
    
    
    
    10,035Total costs and expenses
    
    
    661,683
    
    
    
    347,975Operating income
    
    
    69,491
    
    
    
    68,865Other income (expense):Investment income
    
    
    155
    
    
    
    152Interest and debt expense
    
    
    (21,656
    )
    
    
    (17,403
    )Total other expense
    
    
    (21,501
    )
    
    
    (17,251
    )Income before earnings from equity investments
    
    
    47,990
    
    
    
    51,614Earnings from equity investments
    
    
    2,652
    
    
    
    2,082Net income
    
    
    50,642
    
    
    
    53,696Less: net income attributable to noncontrolling interests
    
    
    (39,372
    )
    
    
    (43,547
    )Net income attributable to Buckeye GP Holdings L.P.
    
    $
    11,270
    
    
    $
    10,149Earnings per partnership unit:Basic
    
    $
    0.40
    
    
    $
    0.36Diluted
    
    $
    0.40
    
    
    $
    0.36Weighted average number of common units outstanding:Basic
    
    
    28,300
    
    
    
    28,300Diluted
    
    
    28,300
    
    
    
    28,300
  2




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BUCKEYE GP HOLDINGS L.P.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except unit amounts)  (Unaudited)
 March 31,
    
    
    December 31,2010
    
    
    2009Assets:Current assets:Cash and cash equivalents
    
    $
    20,154
    
    
    $
    37,574Trade receivables, net
    
    
    134,563
    
    
    
    124,165Construction and pipeline relocation receivables
    
    
    11,420
    
    
    
    14,095Inventories
    
    
    246,230
    
    
    
    310,214Derivative assets
    
    
    1,964
    
    
    
    4,959Assets held for sale
    
    
    
    
    
    
    22,000Prepaid and other current assets
    
    
    79,084
    
    
    
    104,251Total current assets
    
    
    493,415
    
    
    
    617,258Property, plant and equipment, net
    
    
    2,234,407
    
    
    
    2,238,321Equity investments
    
    
    99,503
    
    
    
    96,851Goodwill
    
    
    432,124
    
    
    
    432,124Intangible assets, net
    
    
    44,044
    
    
    
    45,157Other non-current assets
    
    
    51,586
    
    
    
    56,860Total assets
    
    $
    3,355,079
    
    
    $
    3,486,571Liabilities and partners capital:Current liabilities:Line of credit
    
    $
    183,500
    
    
    $
    239,800Current portion of long-term debt
    
    
    6,146
    
    
    
    6,178Accounts payable
    
    
    53,670
    
    
    
    56,723Derivative liabilities
    
    
    2,831
    
    
    
    14,665Accrued and other current liabilities
    
    
    114,393
    
    
    
    113,474Total current liabilities
    
    
    360,540
    
    
    
    430,840Long-term debt
    
    
    1,441,076
    
    
    
    1,500,495Other non-current liabilities
    
    
    106,381
    
    
    
    102,942Total liabilities
    
    
    1,907,997
    
    
    
    2,034,277Commitments and contingent liabilities
    
    
    
    
    
    
    Partners capital:Buckeye GP Holdings L.P. capital:General Partner (2,830 common units outstanding
as of March 31, 2010 and December 31, 2009)
    
    
    7
    
    
    
    7Limited Partners (27,771,213 common units outstanding
as of March 31, 2010 and December 31, 2009)
    
    
    236,537
    
    
    
    236,545Management (525,957 units outstanding
as of March 31, 2010 and December 31, 2009)
    
    
    3,226
    
    
    
    3,225Equity gains on issuance of Buckeye Partners, L.P.
limited partner units
    
    
    2,557
    
    
    
    2,557Total Buckeye GP Holdings L.P. capital
    
    
    242,327
    
    
    
    242,334Noncontrolling interests
    
    
    1,204,755
    
    
    
    1,209,960Total partners capital
    
    
    1,447,082
    
    
    
    1,452,294Total liabilities and partners capital
    
    $
    3,355,079
    
    
    $
    3,486,571
  3




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BUCKEYE GP HOLDINGS L.P.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)  (Unaudited)
 Three Months EndedMarch 31,2010
    
    
    2009Cash flows from operating activities:Net income
    
    $
    50,642
    
    
    $
    53,696Adjustments to reconcile net income to cash provided by
operating activities:Value of ESOP shares released
    
    
    1,141
    
    
    
    183Depreciation and amortization
    
    
    14,528
    
    
    
    13,364Net changes in fair value of derivatives
    
    
    (19,183
    )
    
    
    4,103Non-cash deferred lease expense
    
    
    1,059
    
    
    
    1,125Earnings from equity investments of Buckeye Partners, L.P.
    
    
    (2,652
    )
    
    
    (2,082
    )Distributions from equity investments of Buckeye Partners, L.P.
    
    
    
    
    
    
    235Amortization of other non-cash items
    
    
    2,806
    
    
    
    1,245Change in assets and liabilities:Trade receivables
    
    
    (10,398
    )
    
    
    (2,012
    )Construction and pipeline relocation receivables
    
    
    2,675
    
    
    
    3,064Inventories
    
    
    73,705
    
    
    
    26,101Prepaid and other current assets
    
    
    26,214
    
    
    
    5,422Accounts payable
    
    
    (3,053
    )
    
    
    (11,659
    )Accrued and other current liabilities
    
    
    1,271
    
    
    
    (18,821
    )Other non-current assets
    
    
    2,948
    
    
    
    2,466Other non-current liabilities
    
    
    2,345
    
    
    
    2,343Total adjustments from operating activities
    
    
    93,406
    
    
    
    25,077Net cash provided by operating activities
    
    
    144,048
    
    
    
    78,773Cash flows from investing activities:Capital expenditures
    
    
    (10,963
    )
    
    
    (20,976
    )Net proceeds (expenditures) for disposal of property, plant and
equipment
    
    
    22,174
    
    
    
    (42
    )Net cash provided by (used in) investing activities
    
    
    11,211
    
    
    
    (21,018
    )Cash flows from financing activities:Net proceeds from issuance of Buckeye Partners, L.P. limited partner
units
    
    
    
    
    
    
    91,042Proceeds from exercise of Buckeye Partners, L.P. unit options
    
    
    2,376
    
    
    
    Repayment of long term-debt
    
    
    (1,557
    )
    
    
    (1,587
    )Borrowings under credit facilities
    
    
    59,500
    
    
    
    30,000Repayments under credit facilities
    
    
    (117,500
    )
    
    
    (120,267
    )Net repayments under BES credit agreement
    
    
    (56,300
    )
    
    
    (46,000
    )Debt issuance costs
    
    
    (9
    )
    
    
    (13
    )Distributions paid to noncontrolling partners of Buckeye Partners, L.P.
    
    
    (47,586
    )
    
    
    (41,925
    )Distributions paid to partners
    
    
    (11,603
    )
    
    
    (9,339
    )Net cash used in financing activities
    
    
    (172,679
    )
    
    
    (98,089
    )Net decrease in cash and cash equivalents
    
    
    (17,420
    )
    
    
    (40,334
    )Cash and cash equivalents  Beginning of period
    
    
    37,574
    
    
    
    61,281Cash and cash equivalents  End of period
    
    $
    20,154
    
    
    $
    20,947
  4




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BUCKEYE GP HOLDINGS L.P.  CONDENSED CONSOLIDATED STATEMENTS OF PARTNERS CAPITAL
(In thousands)
(Unaudited)
 Buckeye GP Holdings L.P. UnitholdersEquity GainsGeneral
    
    
    Limited
    
    
    
    
    
    
    on IssuancePartner
    
    
    Partner
    
    
    
    
    
    
    of BuckeyesCommon
    
    
    Common
    
    
    Management
    
    
    Limited
    
    
    NoncontrollingUnits
    
    
    Units
    
    
    Units
    
    
    Partner Units
    
    
    Interests
    
    
    TotalBalance  January 1, 2009
    
    $
    7
    
    
    $
    226,565
    
    
    $
    3,037
    
    
    $
    2,451
    
    
    $
    1,166,774
    
    
    $
    1,398,834Net income*
    
    
    
    
    
    
    9,959
    
    
    
    190
    
    
    
    
    
    
    
    43,547
    
    
    
    53,696Distributions paid to partners
    
    
    
    
    
    
    (9,164
    )
    
    
    (175
    )
    
    
    
    
    
    
    
    
    
    
    (9,339
    )Recognition of unit-based compensation charges
    
    
    
    
    
    
    358
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    366Equity gains on issuance of Buckeye LP Units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    93
    
    
    
    (93
    )
    
    
    Net proceeds from issuance of 2.6 million ofBuckeyes limited partner units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    91,042
    
    
    
    91,042Distributions paid to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (41,925
    )
    
    
    (41,925
    )Change in value of derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    71
    
    
    
    71Investment in Buckeyes limited partner units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    697
    
    
    
    697Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (425
    )
    
    
    (425
    )Balance  March 31, 2009
    
    $
    7
    
    
    $
    227,718
    
    
    $
    3,060
    
    
    $
    2,544
    
    
    $
    1,259,688
    
    
    $
    1,493,017Balance  January 1, 2010
    
    $
    7
    
    
    $
    236,545
    
    
    $
    3,225
    
    
    $
    2,557
    
    
    $
    1,209,960
    
    
    $
    1,452,294Net income*
    
    
    
    
    
    
    11,058
    
    
    
    212
    
    
    
    
    
    
    
    39,372
    
    
    
    50,642Distributions paid to partners
    
    
    
    
    
    
    (11,386
    )
    
    
    (217
    )
    
    
    
    
    
    
    
    
    
    
    (11,603
    )Recognition of unit-based compensation charges
    
    
    
    
    
    
    320
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    326Amortization of Buckeyes
limited partner unit options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,024
    
    
    
    2,024Exercise of limited partner unit options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,376
    
    
    
    2,376Services Companys non-cash ESOP distributions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,316
    )
    
    
    (1,316
    )Distributions paid to noncontrolling interests
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (47,586
    )
    
    
    (47,586
    )Change in value of derivatives
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,928
    )
    
    
    (1,928
    )Investment in Buckeyes limited partner units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,318
    
    
    
    4,318Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,465
    )
    
    
    (2,465
    )Balance  March 31, 2010
    
    $
    7
    
    
    $
    236,537
    
    
    $
    3,226
    
    
    $
    2,557
    
    
    $
    1,204,755
    
    
    $
    1,447,082
 
 *
    
    Comprehensive income equals net income.  5




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BUCKEYE GP HOLDINGS L.P.
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Except for per unit amounts, or as otherwise noted within the context of each footnote
disclosure, the dollar amounts presented in the tabular data within these footnote disclosures are
stated in thousands.
 
 1. ORGANIZATION AND BASIS OF PRESENTATION
 Partnership Organization
 we us our BGH Buckeye
    Basis of Presentation
  6




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Reclassifications
  
    
    Earnings from equity investments are now presented on a separate line item in the
condensed consolidated statements of operations for the three months ended March 31,
2009. The other investment income that had previously been included with earnings from
equity investments has been reclassified and included in Other income in the 2009
period.
  
    
    We have separately disclosed cash flows from the issuance of long-term debt and
borrowings under our credit facilities for the three months ended March 31, 2009.
These amounts had been included within the same line item in the 2009 period.
  Recent Accounting Developments
 Consolidation of Variable Interest Entities (VIEs)
 Fair Value Measurements
 
 2. ACQUISITION AND DISPOSITION
 Refined Petroleum Products Terminals and Pipeline Assets Acquisition
  7




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Inventory
    
    $
    7,287Property, plant and equipment
    
    
    44,400Intangible assets
    
    
    4,580Environmental and other liabilities
    
    
    (1,834
    )Allocated purchase price
    
    $
    54,433
 Sale of Buckeye NGL Pipeline
  
 3. COMMITMENTS AND CONTINGENCIES
 Claims and Proceedings
   Environmental Contingencies
 .
 Ammonia Contract Contingencies
  8




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
   Customer Bankruptcy
  
 4. INVENTORIES
  March 31,
    
    
    December 31,2010
    
    
    2009Refined petroleum products (1)
    
    $
    235,696
    
    
    $
    299,473Materials and supplies
    
    
    10,534
    
    
    
    10,741Total inventories
    
    $
    246,230
    
    
    $
    310,214
 
 (1)
    
    Ending inventory was 109.3 million and 141.7 million gallons of refined petroleum
products at March 31, 2010 and December 31, 2009, respectively.  9




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 5. PREPAID AND OTHER CURRENT ASSETS
 Prepaid and other current assets consist of the following at the dates indicated:
 March 31,
    
    
    December 31,2010
    
    
    2009Prepaid insurance
    
    $
    5,013
    
    
    $
    7,088Insurance receivables
    
    
    12,948
    
    
    
    13,544Ammonia receivable
    
    
    7,005
    
    
    
    7,429Margin deposits
    
    
    5,731
    
    
    
    21,037Prepaid services
    
    
    21,267
    
    
    
    21,571Unbilled revenue
    
    
    3,087
    
    
    
    13,201Tax receivable
    
    
    7,162
    
    
    
    7,162Prepaid taxes
    
    
    4,226
    
    
    
    2,213Other
    
    
    12,645
    
    
    
    11,006Total prepaid and other current assets
    
    $
    79,084
    
    
    $
    104,251
 
 6. EQUITY INVESTMENTS
  March 31,
    
    
    December 31,Ownership
    
    
    2010
    
    
    2009Muskegon Pipeline LLC
    
    
    40.0
    %
    
    $
    15,617
    
    
    $
    15,273Transport4, LLC
    
    
    25.0
    %
    
    
    418
    
    
    
    379West Shore Pipe Line Company
    
    
    24.9
    %
    
    
    31,526
    
    
    
    30,320West Texas LPG Pipeline Limited Partnership
    
    
    20.0
    %
    
    
    51,942
    
    
    
    50,879Total equity investments
    
    
    
    
    
    $
    99,503
    
    
    $
    96,851
  Three Months EndedMarch 31,2010
    
    
    2009Muskegon Pipeline LLC
    
    $
    344
    
    
    $
    365Transport4, LLC
    
    
    39
    
    
    
    29West Shore Pipe Line Company
    
    
    1,207
    
    
    
    1,103West Texas LPG Pipeline Limited Partnership
    
    
    1,062
    
    
    
    585Total earnings from equity investments
    
    $
    2,652
    
    
    $
    2,082
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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Three Months EndedMarch 31,2010
    
    
    2009Revenues
    
    $
    31,545
    
    
    $
    31,567Costs and expenses
    
    
    15,901
    
    
    
    16,053Non-operating expense
    
    
    3,577
    
    
    
    2,890Net income
    
    
    12,067
    
    
    
    12,624
 
 7. INTANGIBLE ASSETS
  March 31,
    
    
    December 31,2010
    
    
    2009Customer relationships
    
    $
    38,300
    
    
    $
    38,300Accumulated amortization
    
    
    (6,373
    )
    
    
    (5,631
    )Net carrying amount
    
    
    31,927
    
    
    
    32,669Customer contracts
    
    
    16,380
    
    
    
    16,380Accumulated amortization
    
    
    (4,263
    )
    
    
    (3,892
    )Net carrying amount
    
    
    12,117
    
    
    
    12,488Total intangible assets
    
    $
    44,044
    
    
    $
    45,157
  
 8. OTHER NON CURRENT ASSETS
 Other non current assets consist of the following at the dates indicated:
 March 31,
    
    
    December 31,2010
    
    
    2009Prepaid services
    
    $
    8,799
    
    
    $
    11,640Long-term derivative assets
    
    
    15,900
    
    
    
    17,204Debt issuance costs
    
    
    10,123
    
    
    
    11,058Insurance receivables
    
    
    7,057
    
    
    
    7,265Other
    
    
    9,707
    
    
    
    9,693Total other non-current assets
    
    $
    51,586
    
    
    $
    56,860
 11




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 9. ACCRUED AND OTHER CURRENT LIABILITIES
  March 31,
    
    
    December 31,2010
    
    
    2009Taxes-other than income
    
    $
    18,880
    
    
    $
    15,487Accrued employee benefit liability
    
    
    3,287
    
    
    
    3,287Environmental liabilities
    
    
    10,746
    
    
    
    10,799Accrued interest
    
    
    18,572
    
    
    
    30,613Payable for ammonia purchase
    
    
    7,056
    
    
    
    7,015Deferred revenue
    
    
    18,501
    
    
    
    6,829Compensation and vacation
    
    
    6,886
    
    
    
    11,385Accrued capital expenditures
    
    
    256
    
    
    
    1,611Reorganization
    
    
    854
    
    
    
    2,133Deferred consideration
    
    
    2,010
    
    
    
    1,675Other
    
    
    27,345
    
    
    
    22,640Total accrued and other current liabilities
    
    $
    114,393
    
    
    $
    113,474
 
 10. DEBT OBLIGATIONS
  March 31,
    
    
    December 31,2010
    
    
    2009BGH:BGH Credit Agreement
    
    $
    
    
    
    $
    Services Company:3.60% ESOP Notes due March 28, 2011
    
    
    6,204
    
    
    
    7,790Retirement premium
    
    
    (58
    )
    
    
    (87
    )Buckeye:4.625% Notes due July 15, 2013 (1)
    
    
    300,000
    
    
    
    300,0005.300% Notes due October 15, 2014 (1)
    
    
    275,000
    
    
    
    275,0005.125% Notes due July 1, 2017 (1)
    
    
    125,000
    
    
    
    125,0006.050% Notes due January 15, 2018 (1)
    
    
    300,000
    
    
    
    300,0005.500% Notes due August 15, 2019 (1)
    
    
    275,000
    
    
    
    275,0006.750% Notes due August 15, 2033 (1)
    
    
    150,000
    
    
    
    150,000Credit Facility
    
    
    20,000
    
    
    
    78,000BES Credit Agreement
    
    
    183,500
    
    
    
    239,800Total debt
    
    
    1,634,646
    
    
    
    1,750,503Other, including unamortized discounts and fair value hedges
    
    
    (3,924
    )
    
    
    (4,030
    )Subtotal debt
    
    
    1,630,722
    
    
    
    1,746,473Less:
Current portion of long-term debt
    
    
    (189,646
    )
    
    
    (245,978
    )Total long-term debt
    
    $
    1,441,076
    
    
    $
    1,500,495
 
 (1)
    
    We make semi-annual interest payments on these notes based on the rates noted above
with the principal balances outstanding to be paid on or before the due dates as shown
above. 12




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  BGH
    Services Company ESOP Notes
  13




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Credit Facility
     BES Credit Agreement
  14




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Borrowings
    
    Minimum
    
    Minimum
    
    Maximumoutstanding on
    
    Consolidated Tangible
    
    Consolidated Net
    
    ConsolidatedBES Credit Agreement
    
    Net Worth
    
    Working Capital
    
    Leverage Ratio$150
    
    $
    40
    
    
    $
    30
    
    
    7.0 to 1.0Above $150 up to $200
    
    $
    50
    
    
    $
    40
    
    
    7.0 to 1.0Above $200 up to $250
    
    $
    60
    
    
    $
    50
    
    
    7.0 to 1.0
   
 11. OTHER NON-CURRENT LIABILITIES
  March 31,
    
    
    December 31,2010
    
    
    2009Accrued employee benefit liabilities (see Note 13)
    
    $
    44,772
    
    
    $
    45,837Accrued environmental liabilities
    
    
    18,687
    
    
    
    19,053Deferred consideration
    
    
    17,923
    
    
    
    18,425Deferred rent
    
    
    10,217
    
    
    
    9,158Deferred revenue
    
    
    6,762
    
    
    
    1,532Other
    
    
    8,020
    
    
    
    8,937Total other non-current liabilities
    
    $
    106,381
    
    
    $
    102,942
 
 12. DERIVATIVE INSTRUMENTS, HEDGING ACTIVITIES AND FAIR VALUE MEASUREMENTS
   15




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Interest Rate Derivatives
     Commodity Derivatives
  16




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
     Volume (1)
    
    
    AccountingDerivative Purpose
    
    Current
    
    
    Long-Term(2)
    
    
    TreatmentDerivatives NOT designated as hedging
instruments:Fixed-price sales contracts
    
    
    18,417
    
    
    
    210
    
    
    Mark-to-marketFutures contracts for fixed-price sales contracts
    
    
    11,844
    
    
    
    210
    
    
    Mark-to-marketFutures contracts for inventory
    
    
    5,586
    
    
    
    
    
    
    Mark-to-marketDerivatives designated as hedging instruments:Futures contracts for inventory
    
    
    90,426
    
    
    
    
    
    
    Fair Value HedgeFutures contracts for natural gas (BBtu) (3)
    
    
    360
    
    
    
    120
    
    
    Cash Flow Hedge
 
 (1)
    
    Volume represents net notional position.(2)
    
    The maximum term for derivatives included in the long-term column is August 2011.(3)
    
    BBtu represents one billion British thermal units. 17




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  March 31, 2010
    
    
    December 31, 2009Derivative
    
    
    
    
    
    
    
    
    
    
    DerivativeAssets
    
    
    (Liabilities)
    
    
    Net Carrying
    
    
    Assets
    
    
    (Liabilities)
    
    
    Net CarryingFair value
    
    
    Fair value
    
    
    Value
    
    
    Fair value
    
    
    Fair value
    
    
    ValueDerivatives NOT designated as hedging instruments:Fixed-price sales contracts
    
    $
    1,906
    
    
    $
    (1,217
    )
    
    $
    689
    
    
    $
    4,959
    
    
    $
    (3,662
    )
    
    $
    1,297Futures contracts for fixed-price
sales contracts
    
    
    4,817
    
    
    
    (13
    )
    
    
    4,804
    
    
    
    7,594
    
    
    
    (384
    )
    
    
    7,210Futures contracts for inventory
    
    
    1,749
    
    
    
    (1,443
    )
    
    
    306
    
    
    
    
    
    
    
    
    
    
    
    Derivatives designated as hedging instruments:Futures contracts for inventory
    
    
    1,277
    
    
    
    (7,616
    )
    
    
    (6,339
    )
    
    
    1,992
    
    
    
    (20,517
    )
    
    
    (18,525
    )Futures contracts for natural gas
    
    
    
    
    
    
    (327
    )
    
    
    (327
    )
    
    
    312
    
    
    
    
    
    
    
    312Interest rate contracts
    
    
    15,900
    
    
    
    
    
    
    
    15,900
    
    
    
    17,204
    
    
    
    
    
    
    
    17,204Total
    
    
    
    
    
    
    
    
    
    $
    15,033
    
    
    
    
    
    
    
    
    
    
    $
    7,498March 31,
    
    
    December 31,Balance Sheet Locations:
    
    2010
    
    
    2009Derivative assets
    
    $
    1,964
    
    
    $
    4,959Other non-current assets
    
    
    15,900
    
    
    
    17,204Derivative liabilities
    
    
    (2,831
    )
    
    
    (14,665
    )Total
    
    $
    15,033
    
    
    $
    7,498
  18




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Gain (Loss) Recognized inIncome on DerivativesThree Months EndedMarch 31,Location
    
    2010
    
    2009Derivatives NOT designated as hedging instruments:Fixed-price sales contracts
    
    Product sales
    
    $
    2,410
    
    
    $
    13,295Futures contracts for
fixed-price sales contracts
    
    Cost of product sales and natural gas
storage services
    
    
    (602
    )
    
    
    (7,546
    )Futures contracts for inventory
    
    Cost of product sales and natural gas
storage services
    
    
    246
    
    
    
    Derivatives designated as fair value hedging instruments:Futures contracts for inventory
    
    Cost of product sales and natural gas
storage services
    
    $
    (4,910
    )
    
    $
    27,648
  Gain (Loss) Reclassified fromAOCI to IncomeThree Months EndedMarch 31,Location
    
    2010
    
    2009Derivatives designated as cash flow hedging instruments:Futures contracts for natural gas
    
    Cost of product sales and natural gas
storage services
    
    $
    (72
    )
    
    $
    (53
    )Interest rate contracts
    
    Interest and debt expense
    
    
    (240
    )
    
    
    (602
    )
 Change in Value Recognizedin OCI on DerivativesThree Months EndedMarch 31,2010
    
    2009Derivatives designated as cash flow hedging instruments:Futures contracts for natural gas
    
    $
    (696
    )
    
    $
    116Futures contracts for refined petroleum products
    
    
    
    
    
    
    (233
    )Interest rate contracts
    
    
    (1,304
    )
    
    
    (108
    )
 19




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Fair Value Measurements
   
    
    Level 1 inputs are based on quoted prices, which are available in active markets for
identical assets or liabilities as of the reporting date. Active markets are defined
as those in which transactions for identical assets or liabilities occur with
sufficient frequency and volume to provide pricing information on an ongoing basis.
    
    Level 2 inputs are based on pricing inputs other than quoted prices in active
markets and are either directly or indirectly observable as of the measurement date.
Level 2 fair values include instruments that are valued using financial models or other
appropriate valuation methodologies and include the following:
 
    
    Quoted prices in active markets for similar assets or liabilities.
    
    Quoted prices in markets that are not active for identical or similar assets or
liabilities.
    
    Inputs other than quoted prices that are observable for the asset or liability.
    
    Inputs that are derived primarily from or corroborated by observable market data
by correlation or other means.
 
    
    Level 3 inputs are based on unobservable inputs for the asset or liability.
Unobservable inputs are used to measure fair value to the extent that observable inputs
are not available, thereby allowing for situations in which there is little, if any,
market activity for the asset or liability at the measurement date. Unobservable
inputs reflect the reporting entitys own ideas about the assumptions that market
participants would use in pricing an asset or liability (including assumptions about
risk). Unobservable inputs are based on the best information available in the
circumstances, which might include the reporting entitys internally developed data.
The reporting entity must not ignore information about market participant assumptions
that is reasonably available without undue cost and effort. Level 3 inputs are
typically used in connection with internally developed valuation methodologies where
management makes its best estimate of an instruments fair value.
 20




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 Recurring
  March 31, 2010
    
    
    December 31, 2009Significant
    
    
    
    
    
    
    SignificantQuoted Prices
    
    
    Other
    
    
    Quoted Prices
    
    
    Otherin Active
    
    
    Observable
    
    
    in Active
    
    
    ObservableMarkets
    
    
    Inputs
    
    
    Markets
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 1)
    
    
    (Level 2)Financial assets:Fixed-price sales contracts
    
    $
    
    
    
    $
    1,906
    
    
    $
    
    
    
    $
    4,959Futures contracts for inventory
and fixed-price sales contracts
    
    
    58
    
    
    
    
    
    
    
    
    
    
    
    Asset held in trust
    
    
    
    
    
    
    
    
    
    
    1,793
    
    
    
    Interest rate derivatives
    
    
    
    
    
    
    15,900
    
    
    
    
    
    
    
    17,204Financial liabilities:Fixed-price sales contracts
    
    
    
    
    
    
    (1,217
    )
    
    
    
    
    
    
    (3,662
    )Futures contracts for inventory
and fixed-price sales contracts
    
    
    (1,614
    )
    
    
    
    
    
    
    (11,003
    )
    
    
    Total
    
    $
    (1,556
    )
    
    $
    16,589
    
    
    $
    (9,210
    )
    
    $
    18,501
   Non-Recurring
  21




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
 13. PENSIONS AND OTHER POSTRETIREMENT BENEFITS
    RIGP
    
    
    Retiree Medical PlanThree Months Ended
    
    
    Three Months EndedMarch 31,
    
    
    March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Service cost
    
    $
    68
    
    
    $
    208
    
    
    $
    30
    
    
    $
    105Interest cost
    
    
    232
    
    
    
    371
    
    
    
    205
    
    
    
    492Expected return on plan assets
    
    
    (88
    )
    
    
    (191
    )
    
    
    
    
    
    
    Amortization of prior service benefit
    
    
    (12
    )
    
    
    (117
    )
    
    
    (307
    )
    
    
    (860
    )Amortization of unrecognized losses
    
    
    248
    
    
    
    357
    
    
    
    93
    
    
    
    261Net periodic benefit costs
    
    $
    448
    
    
    $
    628
    
    
    $
    21
    
    
    $
    (2
    )
  
 14. UNIT-BASED COMPENSATION PLANS
  22




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 BGH GPs Override Units
  Number of Override UnitsTotal Number ofValue A Units
    
    
    Value B Units
    
    
    Operating Units
    
    
    Units AwardedUnvested at December 31, 2009
    
    
    1,699
    
    
    
    1,699
    
    
    
    812
    
    
    
    4,210Vested
    
    
    
    
    
    
    
    
    
    
    (48
    )
    
    
    (48
    )Unvested at March 31, 2010
    
    
    1,699
    
    
    
    1,699
    
    
    
    764
    
    
    
    4,162
 Compensation Costs for Override UnitsValue A Units
    
    
    Value B Units
    
    
    Operating Units
    
    
    TotalsTotal fair value of all outstanding override units
    
    $
    3,587
    
    
    $
    2,179
    
    
    $
    5,808
    
    
    $
    11,574Less: Expense recorded from plan inception to
March 31, 2010
    
    
    
    
    
    
    
    
    
    
    (3,666
    )
    
    
    (3,666
    )Estimated future compensation costs at March 31, 2010
    
    $
    3,587
    
    
    $
    2,179
    
    
    $
    2,142
    
    
    $
    7,908
 Buckeyes Long-Term Incentive Plan
   Awards under the Buckeye LTIP
  23




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  WeightedAverageGrant DateNumber of
    
    
    Fair ValueLP Units
    
    
    per LP Unit (1)
    
    
    Total ValueUnvested at January 1, 2010
    
    
    140,095
    
    
    $
    39.81
    
    
    $
    5,577Granted
    
    
    246,416
    
    
    
    56.42
    
    
    
    13,903Forfeited
    
    
    (1,307
    )
    
    
    39.06
    
    
    
    (51
    )Unvested at March 31, 2010
    
    
    385,204
    
    
    $
    50.44
    
    
    $
    19,429
 
 (1)
    
    Determined by dividing the aggregate grant date fair value of awards by the number of
awards issued. The weighted-average grant date fair value per LP Unit for forfeited and
vested awards is determined before an allowance for forfeitures.  Buckeyes Unit Option and Distribution Equivalent Plan
   
 15. RELATED PARTY TRANSACTIONS
    
 16. CASH DISTRIBUTIONS
  24




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
   
 17. EARNINGS PER PARTNERSHIP UNIT
   Three Months EndedMarch 31,2010
    
    
    2009Basic:Weighted average common units outstanding
    
    
    27,774
    
    
    
    27,770Weighted average management units outstanding
    
    
    526
    
    
    
    530Units for basic
    
    
    28,300
    
    
    
    28,300Diluted:Units used for basic calculation
    
    
    28,300
    
    
    
    28,300Dilutive effect of additional management units
    
    
    
    
    
    
    Units for diluted
    
    
    28,300
    
    
    
    28,300
 
 18. BUSINESS SEGMENTS
   25




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Three Months EndedMarch 31,2010
    
    
    2009Revenue:Pipeline Operations
    
    $
    96,537
    
    
    $
    99,195Terminalling & Storage
    
    
    42,371
    
    
    
    30,643Natural Gas Storage
    
    
    25,406
    
    
    
    15,077Energy Services
    
    
    568,202
    
    
    
    268,480Development & Logistics
    
    
    7,515
    
    
    
    9,125Intersegment
    
    
    (8,857
    )
    
    
    (5,680
    )Total revenue
    
    $
    731,174
    
    
    $
    416,840Operating income (loss):Pipeline Operations
    
    $
    45,365
    
    
    $
    44,448Terminalling & Storage
    
    
    23,125
    
    
    
    10,657Natural Gas Storage
    
    
    3,451
    
    
    
    6,164Energy Services
    
    
    (3,397
    )
    
    
    6,215Development & Logistics
    
    
    947
    
    
    
    1,381Total operating income
    
    $
    69,491
    
    
    $
    68,865Depreciation and amortization:Pipeline Operations
    
    $
    8,953
    
    
    $
    8,839Terminalling & Storage
    
    
    2,316
    
    
    
    1,722Natural Gas Storage
    
    
    1,641
    
    
    
    1,459Energy Services
    
    
    1,195
    
    
    
    977Development & Logistics
    
    
    423
    
    
    
    367Total depreciation and amortization
    
    $
    14,528
    
    
    $
    13,364Capital additions:(1)Pipeline Operations
    
    $
    4,833
    
    
    $
    6,634Terminalling & Storage
    
    
    2,581
    
    
    
    5,641Natural Gas Storage
    
    
    1,399
    
    
    
    6,375Energy Services
    
    
    618
    
    
    
    730Development & Logistics
    
    
    177
    
    
    
    74Total capital additions
    
    $
    9,608
    
    
    $
    19,454
 
 (1)
    
    Amount includes ($1.4) million and ($1.5) million of non-cash changes in accruals for
capital expenditures for the three months ended March 31, 2010 and 2009, respectively. 26




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BUCKEYE GP HOLDINGS L.P.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 March 31,
    
    
    December 31,2010
    
    
    2009Total Assets:Pipeline Operations (1)
    
    $
    1,592,916
    
    
    $
    1,592,916Terminalling & Storage
    
    
    532,971
    
    
    
    532,971Natural Gas Storage
    
    
    573,261
    
    
    
    573,261Energy Services
    
    
    482,025
    
    
    
    482,025Development & Logistics
    
    
    74,476
    
    
    
    74,476Consolidating level
    
    
    99,430
    
    
    
    230,922Total assets
    
    $
    3,355,079
    
    
    $
    3,486,571Goodwill:Pipeline Operations
    
    $
    198,632
    
    
    $
    198,632Terminalling & Storage
    
    
    49,618
    
    
    
    49,618Natural Gas Storage
    
    
    169,560
    
    
    
    169,560Energy Services
    
    
    1,132
    
    
    
    1,132Development & Logistics
    
    
    13,182
    
    
    
    13,182Total goodwill
    
    $
    432,124
    
    
    $
    432,124
 
 (1)
    
    All equity investments are included in the assets of the Pipeline Operations segment. 
 19. SUPPLEMENTAL CASH FLOW INFORMATION
  Three Months EndedMarch 31,2010
    
    
    2009Cash paid for interest (net of capitalized interest)
    
    $
    32,351
    
    
    $
    25,866Cash paid for income taxes
    
    
    165
    
    
    
    547Capitalized interest
    
    
    529
    
    
    
    1,281Non-cash changes in assets and liabilities:Change in capital expenditures in accounts payable
    
    $
    (1,355
    )
    
    $
    (1,522
    )
 27




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
   Cautionary Note Regarding Forward-Looking Statements
 This discussion contains various forward-looking statements and information that are based on
our beliefs, as well as assumptions made by us and information currently available to us. When
used in this document, words such as proposed, anticipate, project, potential, could,
should, continue, estimate, expect, may, believe, will, plan, seek, outlook and
similar expressions and statements regarding our plans and objectives for future operations are
intended to identify forward-looking statements. Although we believe that such expectations
reflected in such forward-looking statements are reasonable, we cannot give any assurances that
such expectations will prove to be correct. Such statements are subject to a variety of risks,
uncertainties and assumptions as described in more detail in Item 1A Risk Factors included in our
Annual Report on Form 10-K for the year ended December 31, 2009. If one or more of these risks or
uncertainties materialize, or if underlying assumptions prove incorrect, our actual results may
vary materially from those anticipated, estimated, projected or expected. You should not put undue
reliance on any forward-looking statements. The forward-looking statements in this Quarterly
Report speak only as of the date hereof. Except as required by federal and state securities laws,
we undertake no obligation to publicly update or revise any forward-looking statements, whether as
a result of new information, future events or any other reason.
 Overview of Critical Accounting Policies and Estimates
  Overview of BGH
 we us our BGH Buckeye
 28




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
    
    the incentive distribution rights in Buckeye;
    
    the indirect ownership of the general partner interests in certain of Buckeyes
operating subsidiaries (representing an approximate 1% interest in each of such
operating subsidiaries);
    
    the general partner interests in Buckeye (representing 243,914 general partner units
(the GP Units), or an approximate 0.5% interest in Buckeye); and
    
    80,000 of Buckeyes LP Units.
    Three Months EndedMarch 31,2010
    
    
    2009Incentive payments from Buckeye
    
    $
    12,314
    
    
    $
    10,505Distributions from the indirect 1% ownership in
certain of Buckeyes operating subsidiaries
    
    
    403
    
    
    
    362Distributions from the ownership of 243,914 of
Buckeyes GP Units
    
    
    229
    
    
    
    216Distributions from the ownership of 80,000 of
Buckeyes LP Units
    
    
    75
    
    
    
    71Cash received
    
    $
    13,021
    
    
    $
    11,154
 Overview of Buckeye Partners, L.P.
   29




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##### Table of Contents



Recent Developments
 Sale of Buckeye NGL Pipeline
  Results of Operations
  
    
    Interest of noncontrolling partners in Buckeye  Our condensed consolidated balance
sheets include a noncontrolling interests capital account that reflects the proportion of
Buckeye owned by its partners other than us. Similarly, the ownership interests in Buckeye
held by its partners other than us are reflected in our condensed consolidated statements
of operations as income attributable to noncontrolling interests. These noncontrolling
interest accounts are not reflected in Buckeyes condensed consolidated financial
statements.
    
    Our capital structure  In addition to incorporating the assets and liabilities of
Buckeye, our condensed consolidated balance sheets include our own indebtedness and related
debt placement costs, and the partners capital on our condensed consolidated balance
sheets represent our partners capital as opposed to the capital reflected in Buckeyes
condensed consolidated balance sheets, which reflects the ownership interest of all its
partners, including its owners other than us or Services Company. Consequently, our
condensed consolidated statements of operations reflect additional interest expense,
interest income and debt amortization expense that is not reflected in Buckeyes condensed
consolidated financial statements.
    
    Inclusion of Services Company  The financial statements of Services Company, which
employs the employees who manage and operate our assets, are consolidated into our
financial statements. The condensed consolidated financial statements of Buckeye do not
include the financial statements of Services Company.
    
    Our general and administrative expenses  We incur general and administrative expenses
that are independent from Buckeyes operations and are not reflected in Buckeyes condensed
consolidated financial statements.
    
    Elimination of intercompany transactions  Intercompany obligations and payments among
Buckeye and its consolidated subsidiaries, us and Services Company are reflected in
Buckeyes condensed consolidated financial statements but are eliminated in our condensed
consolidated financial statements.
 30




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##### Table of Contents



Segment Results
  Three Months EndedMarch 31,2010
    
    
    2009Revenues:Pipeline Operations
    
    $
    96,537
    
    
    $
    99,195Terminalling & Storage
    
    
    42,371
    
    
    
    30,643Natural Gas Storage
    
    
    25,406
    
    
    
    15,077Energy Services
    
    
    568,202
    
    
    
    268,480Development & Logistics
    
    
    7,515
    
    
    
    9,125Intersegment
    
    
    (8,857
    )
    
    
    (5,680
    )Total revenues
    
    $
    731,174
    
    
    $
    416,840Total costs and expenses: (1)Pipeline Operations
    
    $
    51,172
    
    
    $
    54,747Terminalling & Storage
    
    
    19,246
    
    
    
    19,986Natural Gas Storage
    
    
    21,955
    
    
    
    8,913Energy Services
    
    
    571,599
    
    
    
    262,265Development & Logistics
    
    
    6,568
    
    
    
    7,744Intersegment
    
    
    (8,857
    )
    
    
    (5,680
    )Total costs and expenses
    
    $
    661,683
    
    
    $
    347,975Depreciation and amortization:Pipeline Operations
    
    $
    8,953
    
    
    $
    8,839Terminalling & Storage
    
    
    2,316
    
    
    
    1,722Natural Gas Storage
    
    
    1,641
    
    
    
    1,459Energy Services
    
    
    1,195
    
    
    
    977Development & Logistics
    
    
    423
    
    
    
    367Total depreciation and amortization
    
    $
    14,528
    
    
    $
    13,364Operating income (loss):Pipeline Operations
    
    $
    45,365
    
    
    $
    44,448Terminalling & Storage
    
    
    23,125
    
    
    
    10,657Natural Gas Storage
    
    
    3,451
    
    
    
    6,164Energy Services
    
    
    (3,397
    )
    
    
    6,215Development & Logistics
    
    
    947
    
    
    
    1,381Total operating income
    
    $
    69,491
    
    
    $
    68,865
 
 (1)
    
    Includes depreciation and amortization. 31




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##### Table of Contents



Three Months EndedMarch 31,2010
    
    
    2009Attributable to Buckeye
    
    $
    660,154
    
    
    $
    346,737Elimination of Buckeye deferred charge
    
    
    (1,174
    )
    
    
    (1,174
    )Net effect of ESOP charges
    
    
    875
    
    
    
    399Attributable to BGH
    
    
    1,828
    
    
    
    2,013Total costs and expenses
    
    $
    661,683
    
    
    $
    347,975
  Three Months EndedMarch 31,2010
    
    
    2009Payroll and payroll benefits
    
    $
    1,116
    
    
    $
    1,187Professional fees
    
    
    121
    
    
    
    297Other
    
    
    591
    
    
    
    529Total
    
    $
    1,828
    
    
    $
    2,013
   Three Months EndedMarch 31,2010
    
    
    2009Pipeline Operations:(average barrels per day)Gasoline
    
    
    608,900
    
    
    
    632,400Jet fuel
    
    
    322,300
    
    
    
    333,300Diesel fuel
    
    
    227,500
    
    
    
    222,000Heating oil
    
    
    113,900
    
    
    
    131,100LPGs
    
    
    20,500
    
    
    
    14,400NGLs
    
    
    
    
    
    
    21,300Other products
    
    
    800
    
    
    
    13,400Total Pipeline Operations
    
    
    1,293,900
    
    
    
    1,367,900Terminalling & Storage:(average barrels per day)Products throughput (1)
    
    
    556,300
    
    
    
    480,800Energy Services:(in thousands of gallons)Sales volumes
    
    
    266,900
    
    
    
    205,200
 
 (1)
    
    Reported quantities exclude transfer volumes, which are non-revenue generating
transfers among our various terminals. For the three months ended March 31, 2009, we
previously reported 521.0 thousand, which included transfer volumes. 32




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##### Table of Contents



Three Months Ended March 31, 2010 Compared to Three Months Ended March 31, 2009
 Consolidated
     33




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Pipeline Operations
    Terminalling & Storage
  34




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Natural Gas Storage
    Energy Services
  35




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Development & Logistics
    Liquidity and Capital Resources
 BGH
    36




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##### Table of Contents



Services Company
  Buckeye
     
    
    $300.0 million of 4.625% Notes due 2013 (the 4.625% Notes);
    
    $275.0 million of 5.300% Notes due 2014 (the 5.300% Notes);
    
    $125.0 million of 5.125% Notes due 2017 (the 5.125% Notes);
    
    $300.0 million of 6.050% Notes due 2018 (the 6.050% Notes);
    
    $275.0 million of 5.500% Notes due 2019 (the 5.500% Notes);
 37




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##### Table of Contents




    
    $150.0 million of 6.750% Notes due 2033 (the 6.750% Notes);
    
    $20.0 million outstanding under its Credit Facility; and
    
    $183.5 million outstanding under the BES Credit Agreement.
   Registration Statement
  Credit Ratings
  Cash Flows from Operating, Investing and Financing Activities
  Three Months EndedMarch 31,2010
    
    
    2009Cash provided by (used in):Operating activities
    
    $
    144,048
    
    
    $
    78,773Investing activities
    
    
    11,211
    
    
    
    (21,018
    )Financing activities
    
    
    (172,679
    )
    
    
    (98,089
    )
 Operating Activities
  
    
    The net change in fair values of derivatives was a decrease of $19.2 million to cash
flows from operating activities for the three months ended March 31, 2010, resulting
from the increase in value related to fixed-price sales contracts compared to a lower
level of opposite fluctuations in futures contracts purchased to hedge such
fluctuations.
    
    The net impact of working capital changes was an increase of $90.4 million to cash
flows from operating activities for the three months ended March 31, 2010. The
principal factors affecting the working capital changes were:
 38




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##### Table of Contents




    
    Inventories decreased by $73.7 million due to a decrease in
volume of hedged inventory stored by the Energy Services segment. From time to
time, the Energy Services segment stores hedged inventory to attempt to capture
value when market conditions are economically favorable.
    
    Trade receivables increased by $10.4 million primarily due to
increased activity from our Energy Services segment due to higher volumes and
higher commodity prices in the 2010 period.
    
    Prepaid and other current assets decreased by $26.2 million
primarily due to a decrease in margin deposits on futures contracts in our
Energy Services segment as a result of increased commodity prices during the
first quarter of 2010 (increased commodity prices result in an increase in our
broker equity account and therefore less margin deposit is required), a
decrease in unbilled revenue within our Natural Gas Storage segment reflecting
billings to counterparties in accordance with terms of their storage agreements
and a decrease in prepaid insurance due to continued amortization of the
balance over the policy period.
    
    Accrued and other current liabilities increased by $1.3 million
primarily due to increases in unearned revenue primarily in the Natural Gas
Storage segment as a result of increased hub services contracts during the
first quarter of 2010 for which the customer is billed up front for services
provided over the entire term of the contract, an increase in accrued property
taxes for the Natural Gas Storage segment as a result of the Kirby Hills II
expansion project and an increase in accrued excise taxes for the Energy
Services segment due to higher revenues, largely offset by a reduction in
accrued interest resulting from interest payments made during the three months
ended March 31, 2010 and a reduction in the reorganization accrual.
    
    Accounts payable decreased by $3.1 million primarily due to
lower payable balances at March 31, 2010 as a result of lower outside services
and project work performed in the first quarter of 2010.
    
    Construction and pipeline relocation receivables decreased by
$2.7 million primarily due to a decrease in construction activity in the 2010
period.
 Investing Activities
  
    
    Capital expenditures decreased by $10.0 million for the three months ended March 31,
2010 compared with the three months ended March 31, 2009. See below for a discussion
of capital spending.
    
    Cash proceeds from the sale of the Buckeye NGL Pipeline were $22.0 million during
the three months ended March 31, 2010.
  Three Months EndedMarch 31,2010
    
    
    2009Sustaining capital expenditures
    
    $
    3,270
    
    
    $
    4,883Expansion and cost reduction
    
    
    7,693
    
    
    
    16,093Total capital expenditures
    
    $
    10,963
    
    
    $
    20,976
  39




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##### Table of Contents



Financing Activities
  
    
    Buckeye borrowed $59.5 million and $30.0 million and repaid $117.5 million and
$120.3 million under its Credit Facility during the three months ended March 31, 2010
and 2009, respectively.
    
    Net repayments under the BES Credit Agreement were $56.3 million and $46.0 million
during the three months ended March 31, 2010 and 2009, respectively.
    
    We received $2.4 million in net proceeds from the exercise of Buckeyes LP Unit
options during the first quarter of 2010. We received $91.0 million in net proceeds
from an underwritten equity offering in March 2009 for Buckeyes public issuance of 2.6
million LP Units.
    
    Cash distributions paid to our partners increased by $2.3 million period-to-period
due to an increase in the number of Common Units outstanding and an increase in our
quarterly cash distribution rate per Common Unit. We paid cash distributions of $11.6
million ($0.41 per Common Unit) and $9.3 million ($0.33 per Common Unit) during the
three months ended March 31, 2010 and 2009, respectively.
 Derivatives
  Other Considerations
 Contractual Obligations
   Off-Balance Sheet Arrangements
  40




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##### Table of Contents



Related Party Transactions
  Recent Accounting Pronouncements
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
 Market Risk  Trading Instruments
  Market Risk  Non-Trading Instruments
  Commodity Risk
 Natural Gas Storage
   March 31,2010Assets:Hub service agreements
    
    $
    32,780Liabilities:Hub service agreements
    
    
    (24,284
    )Total
    
    $
    8,496
 Energy Services
  41




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##### Table of Contents



March 31,2010Assets:Fixed-price sales contracts
    
    $
    1,964Liabilities:Fixed-price sales contracts
    
    
    (1,217
    )Futures contracts for inventory and fixed-price sales
contracts
    
    
    (1,614
    )Total
    
    $
    (867
    )
   CommodityFinancialInstrumentResulting
    
    PortfolioScenario
    
    Classification
    
    Fair ValueFair value assuming
no change in underlying
commodity prices (as is)
    
    Liability
    
    $
    (867
    )Fair value assuming 10%
increase in underlying
commodity prices
    
    Liability
    
    $
    (22,720
    )Fair value assuming 10%
decrease in underlying
commodity prices
    
    Asset
    
    $
    20,986
  Interest Rate Risk
  42




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43




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##### Table of Contents



FinancialInstrumentResulting
    
    PortfolioScenario
    
    Classification
    
    Fair ValueFair value assuming no
change in underlying
interest rates (as is)
    
    Asset
    
    $
    15,900Fair value assuming 10%
increase in underlying
interest rates
    
    Asset
    
    $
    28,824Fair value assuming 10%
decrease in underlying
interest rates
    
    Asset
    
    $
    2,242
 
 Item 4. Controls and Procedures
   (b)
    
    Change in Internal Control Over Financial Reporting.
  
 PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  44




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##### Table of Contents



Item 6. Exhibits
  10.1
    
    Buckeye Partners, L.P. Annual Incentive Compensation Plan, as amended and
restated, effective as of January 1, 2010 (Incorporated by reference to
Exhibit 10.13 of Buckeye Partners, L.P.s Annual Report on Form 10-K for the
year ended December 31, 2009).*31.1
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14 (a) under the
Securities Exchange Act of 1934.*31.2
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a) under the
Securities Exchange Act of 1934.*32.1
    
    Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350.*32.2
    
    Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
 
 *
    
    Filed herewith. 45




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##### Table of Contents



SIGNATURES
  By:
    BUCKEYE GP HOLDINGS L.P.(Registrant)By:
    MainLine Management LLC,as General PartnerDate:  May 7, 2010
    By:
    /s/ Keith E. St.ClairKeith E. St.ClairSenior Vice President and Chief Financial Officer(Principal Accounting Officer and Principal
Financial Officer) 46