Release Details

STAMFORD, CT (January 21, 2003) -- Star Gas Partners, L.P. (the "Partnership" or "Star") (NYSE: SGU, SGH), a diversified home energy distributor and services provider specializing in heating oil, propane, natural gas and electricity, today reported record results for the fiscal 2003 first quarter ended December 31, 2002. Star also declared its $0.575 per unit Minimum Quarterly Distribution on its Common Units (SGU) and a $0.25 per unit distribution on its Senior Subordinated Units (SGH) for the quarter ended December 31, 2002, payable on February 14, 2003 to unitholders of record on February 7, 2003.

For the three months ended December 31, 2002, Star's sales increased 34.5% to a record $385 million, from $286 million in the first quarter of fiscal 2002. Net income for the period increased to $16.0 million. Excluding the cumulative effect of the change in accounting principle for the adoption of SFAS No.142 relating to accounting for goodwill and other intangibles, net income increased 73% to a record $19.9 million, from $11.5 million in the first quarter of fiscal 2002. Diluted net income per limited partner unit increased to $0.49 per limited partner unit. Excluding the cumulative effect of the change in accounting principle for the adoption of SFAS No 142, net income per unit increased 45.2%, or $0.19 per unit to $0.61 per unit, versus $0.42 per unit in the comparable period in fiscal 2002.

Operating Income for the three months ended December 31, 2002 increased 33.1% to $29.4 million, from $22.1 million in the fiscal 2002 first quarter. The Partnership's strong operating performance was primarily due to the impact on volume of 35% colder than prior year temperatures, 2.0 cents per gallon improved gross profit margins, a 16.0% decline in per unit operating costs as well as the contributions from the 14 acquisitions made since October 1, 2001. These factors were partially offset, however, by the inter-quarter impact of SFAS No.133 related to the accounting for inventory risk management activities. This accounting statement had a $6.2 million positive effect in the first quarter of fiscal 2002, but a $2.6 million negative impact in the same period in fiscal 2003. In addition, the quarterly increase was mitigated by a) a rescheduling of the home heating oil segment's fuel deliveries, which, while improving efficiency, reduced first quarter volume and, b) the impact of weather insurance, which provided the Partnership with $7.0 million of proceeds in the warm first quarter of fiscal 2002. EBITDA for the three months ended December 31, 2002 increased to $42.3 million from $36.6 million in the fiscal 2002 first quarter, without adjusting for the effect of SFAS No. 133.

As a Master Limited Partnership, cash distributions to limited partners are largely determined based on Distributable Cash Flow ("DCF"). For the three months ended December 31, 2002, DCF increased 75.6% or $14.7 million to $34.2 million from $19.5 million in the comparable fiscal 2002 period. This DCF increase was primarily attributable to the improvement in Star's operating performance as well as its lower interest expense.

In commenting on Star's strong fiscal first quarter performance, Chairman Irik P. Sevin indicated: "We are extremely pleased with this quarter's results. While last year's very warm conditions make comparisons easy, it is gratifying that the Partnership was able to translate the colder temperatures into very attractive financial results. It is worth noting that while weather was significantly colder than last year, the quarter's temperatures were only 7.5% colder than normal.

"In addition to the favorable weather conditions at the start of the heating season, we are especially pleased with Star's excellent underlying fundamental business performance this past quarter. First, the Partnership was able to continue to improve gross profit margins despite the impact on consumers of generally higher energy costs and the cold weather. Second, Star continued to realize significant operating expense improvements. The cost savings measures instituted in reaction to last year's aberrational warm weather have been sustained and the heating oil segment is beginning to achieve very tangible benefits from its Business Process Improvement Program, demonstrated by the success of its oil delivery scheduling initiative. Third, Star's internal marketing programs and customer-oriented philosophy have resulted in the colder temperatures being translated commensurately into significantly higher volumes. Fourth, the Partnership's disciplined acquisition program continued to positively impact both operating profits and be DCF accretive."

Star Gas Partners, L.P., is a leading distributor of home heating oil, propane and deregulated natural gas and electricity. The Partnership is the nation's largest retail distributor of home heating oil and the nation's seventh largest retail propane distributor. Star, through its wholly owned subsidiary Total Gas & Electric, also sells natural gas and electricity in the Northeast, Mid-Atlantic and Florida.

This news announcement contains certain forward-looking information that is subject to certain risks and uncertainties as indicated from time to time in the Partnership's 10-K, 10-Q, 8-K and other filings with the Securities and Exchange Commission. Included risks and uncertainties are the effects of the weather on the Partnership's financial results, competitive and propane and heating oil pricing pressures and other factors impacting the propane, home heating oil, natural gas and electricity distribution industries.