K-Sea Transportation Partners L.P. Announces Record Operating Results for Fourth Quarter and Fiscal Year Ended June 30, 2007

K-Sea Transportation Partners L.P. (NYSE: KSP) today announced record operating results for the fourth fiscal quarter and year ended June 30, 2007. The Company previously announced an increased distribution to unitholders for the fourth quarter, which represented the ninth consecutive quarter of increased distributions and the eleventh such increase since the Company’s IPO in January 2004. The increased distribution of $0.70 per unit, or $2.80 per unit annualized, was paid on July 24, 2007 to unitholders of record on July 18, 2007. The Company continues to work toward closing its previously announced acquisitions of Smith Maritime, Ltd. of Honolulu, Hawaii and Sirius Maritime LLC of Seattle, Washington, and expects these transactions to be completed later this month. Three Months Ended June 30, 2007 For the three months ended June 30, 2007, the Company reported operating income of $7.8 million, an increase of $1.1 million, or 16%, compared to $6.7 million of operating income for the three months ended June 30, 2006. This year-over-year increase resulted from the continuing expansion of the Company’s fleet barrel-carrying capacity, including the addition of four new tank barges since the beginning of the fiscal 2006 fourth quarter. These results were also positively affected by continued strong rates and solid vessel utilization, partially offset by increases of $1.5 million in depreciation and amortization due to the expanded fleet, and $0.5 million in general and administrative expenses in support of the Company’s growth. Operating results were also positively affected by the purchase of five additional tugboats during the year, which reduced reliance on more expensive chartered-in towing. Earnings before interest, taxes, depreciation, amortization, and loss on reduction of debt (EBITDA) increased by $2.6 million, or 18%, to $17.0 million for the three months ended June 30, 2007, compared to $14.4 million for the three months ended June 30, 2006. EBITDA is a non-GAAP financial measure that is reconciled to net income, the most directly comparable GAAP measure, in the table below. Net income for the three months ended June 30, 2007 was $3.8 million, or $0.37 per fully diluted limited partner unit, compared to net income of $3.1 million, or $0.30 per fully diluted limited partner unit, for the three months ended June 30, 2006, an increase of $0.7 million. The fiscal 2007 fourth quarter benefited from the $1.1 million increase in operating income, offset by a $0.7 million increase in interest expense resulting from higher debt balances incurred to finance vessel acquisitions in connection with the Company’s fleet expansion program over the past year, and higher interest rates. The fiscal 2006 fourth quarter had also been adversely impacted by a $0.3 million net loss on reduction of debt resulting from a downsizing of the Company’s revolving credit facility in April 2006. Year Ended June 30, 2007 For the year ended June 30, 2007, the Company reported operating income of $30.7 million, an increase of $7.0 million, or 30%, compared to $23.7 million of operating income for the year ended June 30, 2006. Similar to the fourth fiscal quarter, this increase resulted primarily from the expansion of the Company’s barrel-carrying capacity, including the acquisition of Sea Coast Transportation LLC in October 2005 and the addition of six newbuild tank barges, one purchased tug/barge unit, and the aforementioned tugboats, since July 2005. The additional operating earnings generated by this capacity were partially offset by increases of $6.6 million in depreciation and amortization and $3.2 million in general and administrative expenses in support of the Company’s growth. Of the $3.2 million increase in general and administrative expenses, $2.1 million resulted from the acquisition of Sea Coast, another small operation in Philadelphia acquired in the fall of 2006, and the expanded corporate office in East Brunswick, NJ. The remainder of the increase related to employment costs in support of the Company’s growth. EBITDA increased by $13.6 million, or 27%, to $64.2 million for the year ended June 30, 2007, compared to $50.6 million for the year ended June 30, 2006. Net income was $15.8 million for the year ended June 30, 2007, or $1.55 per fully diluted limited partner unit, an increase of $9.9 million from net income of $5.9 million, or $0.60 per fully diluted limited partner unit, for the year ended June 30, 2006. The $7.0 million of increased operating income for the year ended June 30, 2007 was offset by $4.0 million of increased interest expense, resulting from higher debt balances incurred to finance the fleet expansion over the past year. Additionally, fiscal 2006 was also adversely impacted by $7.2 million in losses on reduction of debt, resulting primarily from retirement of the Company’s Title XI bonds in November 2005 and also from restructuring of the Company’s revolving credit facilities. The Company’s distributable cash flow for the fourth quarter of fiscal 2007 was $9.2 million, or 1.23 times the amount needed to cover the increased cash distribution of $7.5 million declared in respect of the period. The Company’s coverage ratio for the year ended June 30, 2007 was 1.22 times. Distributable cash flow is a non-GAAP financial measure that is reconciled to net income, the most directly comparable GAAP measure, in the table below. President and CEO Timothy J. Casey said "Our operating results for fiscal 2007 were strong, with operating income, EBITDA, and net income per unit all significantly higher than last year. We expect our results to be strengthened further by completion of the Smith and Sirius acquisitions, which should occur by the end of the month, and by our ongoing fleet expansion. We took delivery of another new 28,000 barrel tank barge in June, and a 100,000 barrel tank barge in March, both now working on multi-year time charters. Including our recently announced contract to build four new 50,000 barrel tank barges, we now have ten new tank barges under construction which are scheduled for delivery at intervals of every few months between now and the end of calendar 2010. At our current annualized rate of $2.80 per unit, K-Sea’s distribution is approximately 13% higher than at this time last year. We remain optimistic about continuing our growth in fiscal 2008 and beyond.” Earnings Conference Call The Company has scheduled a conference call for Monday, August 6, 2007, at 9:00 am Eastern time, to review the fiscal 2007 fourth quarter and full year results. Dial-in information for this call is (866) 825-3308 (Domestic) and (617) 213-8062 (International). The Passcode is 67581877. The conference call can also be accessed by webcast, which will be available at www.k-sea.com. Additionally, a replay of the call will be available by telephone until August 13, 2007; the dial in number for the replay is (888) 286-8010 (Domestic) and (617) 801-6888 (International). The Passcode is 18947235. About K-Sea Transportation Partners K-Sea Transportation Partners is the largest coastwise tank barge operator, measured by barrel-carrying capacity, in the United States. The Company provides refined petroleum products transportation, distribution and logistics services in the U.S. domestic marine transportation market, and its common units trade on the New York Stock Exchange under the symbol KSP. For additional information, please visit the Company’s website, including the Investor Relations section, at www.k-sea.com. Use of Non-GAAP Financial Information The Company reports its financial results in accordance with generally accepted accounting principles. However, certain non-GAAP financial measures such as EBITDA and distributable cash flow are also presented. EBITDA is used as a supplemental financial measure by management and by external users of financial statements to assess (a) the financial performance of the Company’s assets and the Company’s ability to generate cash sufficient to pay interest on indebtedness and make distributions to partners, (b) the Company’s operating performance and return on invested capital as compared to other companies in the industry, and (c) compliance with certain financial covenants in the Company’s debt agreements. Management believes distributable cash flow is useful as another measure of the Company’s financial and operating performance, and its ability to declare and pay distributions to partners. Distributable cash flow does not represent the amount of cash required to be distributed under the Company’s partnership agreement. Neither EBITDA nor distributable cash flow should be considered as alternatives to net income, operating income, cash flow from operating activities or any other measure of financial performance or liquidity under GAAP. EBITDA and distributable cash flow as presented herein may not be comparable to similarly titled measures of other companies. A reconciliation of each of these measures to net income, the most directly comparable GAAP measure, is presented in the tables below. Cautionary Statements This press release contains forward-looking statements, which include any statements that are not historical facts, such as the Company’s expectations regarding timing of completion of the Smith and Sirius acquisitions and the benefits to be derived therefrom, business outlook, vessel utilization, delivery and integration of newbuild and acquired vessels (including the cost, timing and effects thereof), growth in earnings and distributable cash flow, and future results of operations. These statements involve risks and uncertainties, including, but not limited to, satisfaction of conditions to the closing of the acquisitions, insufficient cash from operations, a decline in demand for refined petroleum products, a decline in demand for tank vessel capacity, intense competition in the domestic tank barge industry, the occurrence of marine accidents or other hazards, the loss of any of the Company’s largest customers, fluctuations in charter rates, delays or cost overruns in the construction of new vessels, failure to comply with the Jones Act, modification or elimination of the Jones Act and adverse developments in the marine transportation business and other factors detailed in the Company’s Annual Report on Form 10-K and other filings with the Securities and Exchange Commission. If one or more of these risks or uncertainties materialize (or the consequences of such a development changes), or should underlying assumptions prove incorrect, actual outcomes may vary materially from those forecasted or expected. The Company disclaims any intention or obligation to update publicly or revise such statements, whether as a result of new information, future events or otherwise. K-SEA TRANSPORTATION PARTNERS L.P.   CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except for unit and per unit data)     Three months ended Year ended June 30, June 30,   2007   2006   2007   2006     Voyage revenue $ 57,449 $ 49,136 $ 216,924 $ 176,650 Bareboat charter and other revenue   2,554   3,035   9,650   6,118 Total revenues 60,003 52,171 226,574 182,768   Voyage expenses 13,237 10,807 45,875 37,973 Vessel operating expenses 24,630 22,164 96,005 77,325 General and administrative expenses 5,173 4,722 20,472 17,309 Depreciation and amortization 9,198 7,659 33,415 26,810 Net loss (gain) on disposal of vessels   (64)   58   102   (313)   Total operating expenses 52,174 45,410 195,869 159,104 Operating income 7,829 6,761 30,705 23,664 Interest expense, net 3,871 3,194 14,097 10,118 Net loss on reduction of debt - 326 - 7,224 Other expense (income), net   (17)   (32)   (63)   (64)   Income before provision for income taxes 3,975 3,273 16,671 6,386 Provision for income taxes   183   189   851   484 Net income $ 3,792 $ 3,084 $ 15,820 $ 5,902     General partner's interest in net income $ 76 $ 62 $ 316 $ 118 Limited partners' interest in: Net income $ 3,716 $ 3,022 $ 15,504 $ 5,784 Net income per unit - basic $ 0.37 $ 0.30 $ 1.56 $ 0.60 - diluted $ 0.37 $ 0.30 $ 1.55 $ 0.60 Weighted average units outstanding - basic 9,943 9,920 9,936 9,605 - diluted 10,015 10,014 10,015 9,672           Supplemental Operating Statistics Three months ended Year ended June 30, June 30,   2007   2006   2007   2006 Local Trade: Average daily rate (1) $ 7,122 $ 6,328 $ 6,851 $ 5,717 Net utilization (2) 76% 71% 79% 77%   Coastwise Trade: Average daily rate $ 13,048 $ 12,039 $ 12,375 $ 11,967 Net utilization 87% 88% 90% 90%   Total Fleet Average daily rate $ 10,615 $ 9,699 $ 10,097 $ 9,245 Net utilization 82% 80% 85% 83%     (1) Average daily rate is equal to the net voyage revenue earned by a group of tank vessels during the period, divided by the number of days worked by that group of tank vessels during the period. (2) Net utilization is equal to the total number of days worked by a group of tank vessels during the period, divided by total calendar days for that group of tank vessels during the period. K-SEA TRANSPORTATION PARTNERS L.P.   Reconciliation of Unaudited Non-GAAP Financial Measures to GAAP Measures (in thousands)   Distributable Cash Flow (1)     Three months ended Year ended June 30, 2007 June 30, 2007     Net income $ 3,792 $ 15,820 Adjustments to reconcile net income to distributable cash flow :   Depreciation and amortization (2) 9,285 33,721 Non cash compensation cost under long term incentive plan 235 803 Adjust gain/loss on vessel sale to net proceeds 210 841 Deferred income tax expense 174 394 Maintenance capital expenditures (3)   (4,500)   (17,100)   Distributable cash flow   9,196   34,479 Cash distribution in respect of the period $ 7,451 $ 28,213   Distribution coverage 1.23 1.22     (1) Distributable Cash Flow provides additional information for evaluating our operating performance and ability to continue to make quarterly distributions, and is presented solely as a supplemental performance measure.   (2) Including amortization of deferred financing costs.   (3) Maintenance capital expenditures are the estimated cash capital expenditures necessary to maintain the operating capacity of our capital assets over the long term. This amount includes two components: 1) an allowance for future scheduled drydocking costs calculated using annually updated projections of such costs over the next five years. Based on historical results, the difference between cumulative amounts charged and the actual amounts spent are adjusted over the same five-year period; 2) an allowance to replace the operating capacity of vessels which are scheduled to phase out by January 1, 2015 under OPA 90. Earnings before Interest, Taxes, Depreciation and Amortization and Net Loss on Reduction of Debt (EBITDA)   Three months ended Year ended June 30, June 30,   2007   2006   2007   2006   Net income $ 3,792 $ 3,084 $ 15,820 $ 5,902 Adjustments to reconcile net income to EBITDA :   Depreciation and amortization 9,198 7,659 33,415 26,810 Interest expense, net 3,871 3,194 14,097 10,118 Net loss on reduction of debt - 326 - 7,224 Provision for income taxes   183   189   851   484   EBITDA $ 17,044 $ 14,452 $ 64,183 $ 50,538 K-SEA TRANSPORTATION PARTNERS L.P.   CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands)   June 30, June 30,   2007   2006   Assets Current assets: Cash and cash equivalents $ 912 $ 826 Accounts receivable, net 20,664 20,322 Prepaid expenses and other current assets   6,021   8,753 Total current assets 27,597 29,901   Vessels and equipment, net 358,580 316,237 Construction in progress 13,285 5,452 Goodwill 16,385 16,579 Other assets   13,967   14,859 Total assets $ 429,814 $ 383,028   Liabilities and Partners' Capital Current liabilities: Current portion of long-term debt and capital lease obligation $ 9,270 $ 7,745 Accounts payable and accrued expenses   29,135   22,626 Total current liabilities 38,405 30,371   Term loans and capital lease obligation 137,946 131,620 Credit line borrowings 97,071 54,015 Deferred taxes   3,739   3,079 Total liabilities 277,161 219,085 Commitments and contingencies Partners' Capital   152,653   163,943 Total liabilities and partners' capital $ 429,814 $ 383,028