CPLP Research Summary
[source: U]

2010 Recontracting Risks More Concerning

�� Earnings per unit (EPU) roughly in line

CPLP realized recurring 3Q09 diluted EPU of $0.28 vs $0.56 in 3Q08. Results were shy of UBS’s $0.29 EPU estimate and below the consensus est of $0.33. Earnings were again impacted by increased vessel opex, interest expenses (due to
loan amendments made last qtr), and the lack of any profit sharing (vs $6.6mm in 3Q08) as the spot market remains challenging due to depressed product demand.
�� Recontracting concerns remain
CPLP was unable to recontract the Attikos tanker at acceptable rates when its previous contract ended mid Oct and is currently modifying the tanker to carry alternative products and will reassess any contracting possibilities after. CPLP has 6 other tankers (representing 1/3 of the fleet) that will come up for recontracting in 1H10, if current weak market conditions continue into 2010 we anticipate CPLP will face further difficulties negotiating new contract terms, potentially causing tankers to enter the weak spot mkt and placing significant pressure on cash flow.

�� Distribution concerns loom
CPLP’s distribution run-rate of $1.64 is flat vs. both 3Q08 & 2Q09. We forecast no distribution growth for the remainder of ‘09 or in ‘10. While we anticipate total coverage of >1x in 2009, we believe CPLP may consider cutting the distribution should current market conditions continue into the recontracting period.

�� Valuation: Maintaining price target of $12.50
Our $12.50 12-month price target implies a 13.1% yield on our 3Q10 target distribution run-rate of $1.64/unit, vs. the peer average of 13.3%.