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STAR GAS PARTNERS, L.P. REPORTS FISCAL 2007 SEASONAL and FOURTH QUARTER LOSS AND FISCAL 2007 RESULTS

STAR GAS PARTNERS, L.P. REPORTS FISCAL 2007 SEASONAL and FOURTH QUARTER LOSS AND FISCAL 2007 RESULTS

STAMFORD, CT (December 7, 2007) -- Star Gas Partners, L.P. (the "Partnership" or "Star") (NYSE: SGU), a home energy distributor and services provider specializing in heating oil, today announced financial results for the fiscal year ended September 30, 2007 and its fiscal 2007 fourth quarter, a non-heating season period.  In addition, Star announced that it completed two acquisitions during the fiscal 2007 fourth quarter.  During the full fiscal 2007 period, Star acquired seven retail heating oil dealers with approximately 19,400 home heating oil customers and several thousand plumbing customers.  Because these acquisitions were completed after the heating season, they did not affect fiscal year 2007 results in a material way.

For the fiscal year ended September 30, 2007, compared to the fiscal year ended September 30, 2006  
Star reported a 2.3 percent decrease in revenues to $1,267.2 million, compared to $1,296.5 million, as increases in selling prices were more than offset by a decline in product sales due to lower volume.

Home heating oil volume declined 13.3 million gallons, or 3.4 percent, to 376.6 million gallons, as 3.1 percent colder temperatures were more than offset by the impact of net customer attrition and other factors.  For fiscal 2007, Star lost (excluding gains from acquisitions) 5.0 percent of its home heating oil customer base, an improvement from fiscal 2006 in which Star lost 6.6 percent of its home heating oil customer base.

Total gross profit increased by $3.7 million, as the impact of an expansion in home heating oil margins of 2.8 cents and an improvement in service and installation profitability of $3.7 million more than offset the impact of lower sales volume.
Total operating expenses (delivery, branch, general and administrative) decreased by $9.9 million, or 4.3 percent, largely due to lower insurance expense of $4.7 million and other expense reductions of $5.0 million.

Operating income increased $78.3 million to $55.1 million.  The majority of this increase relates to the favorable non-cash change in the fair value of derivative instruments of $61.3 million.  The balance of the change, or $17.0 million, was largely due to lower operating costs of $9.9 million, an improvement in service and installation profitability of $3.7 million and lower depreciation and amortization expense of $3.4 million.

For fiscal 2006, Star recorded a $6.6 million non-cash loss on the early redemption and conversion of our 10.25% senior notes.  

Net interest expense decreased $9.7 million, or 45.6 percent, to $11.5 million due to lower average debt outstanding of approximately $63.3 million and higher invested cash balances.

Net income increased $92.5 million to $38.2 million, due to a $78.3 million increase in operating income, lower net interest expense of $9.7 million and the non-recurrence of a $6.6 million loss on the redemption of debt recorded in fiscal 2006, reduced by higher income tax expense of $1.5 million and a $1.1 million charge relating to the sale of the propane segment in fiscal 2005.

Adjusted EBITDA increased by $13.5 million to $68.4 million, as an increase in Adjusted EBITDA in the base business was slightly reduced by the expected summertime losses from acquisitions.  In fiscal 2007, we were able to increase our per gallon margins and reduce our operating expenses, which more than offset the impact of lower sales volume and resulted in an increase in Adjusted EBITDA.  Adjusted EBITDA is a non-GAAP financial measure (see below reconciliation) that should not be considered as an alternative to net income (as an indicator of operating performance) or as an alternative to cash flow (as a measure of liquidity or ability to service debt obligations).  Management believes the presentation of Adjusted EBITDA is relevant and useful because it allows investors to view the Partnership's performance in a manner similar to the method management uses, adjusted for non- cash items (such as changes in the fair value of derivative instruments and losses on redemption of debt) and makes it easier to compare its results with other companies that have different financing and capital structures.  In addition, certain of Star's financial covenants in its material debt documents are calculated using Adjusted EBITDA.

Star Gas Partners Chief Executive Officer Dan Donovan, stated, "We are pleased with the recent success of our acquisition program, which added 19,400 home heating oil customers in fiscal 2007, and almost totally offset customers lost through net attrition."  

Mr. Donovan, continued, "We have seen all-time record home heating oil prices since the end of fiscal 2007.  To counteract this challenging industry environment, our entire organization continues to focus on offering our valued customers excellence in all facets of our service and also keeping the Partnership's operating expenses under control.  The difficult market conditions may also present increased opportunities for Star to make additional acquisitions."

For the three months ended September 30, 2007, compared to the three months ended September 30, 2006
Star reported a 9.2 percent decrease in total revenues to $137.6 million, compared to total revenues of $151.5 million in the year-ago period, as the impact of higher selling prices was more than offset by a 15.9 percent reduction in home heating oil volume.  Selling prices were higher during the quarter due to the increase in the wholesale cost of home heating oil.  The home heating oil volume decline was due to warmer temperatures in September and other factors.   

Total gross profit declined by $7.8 million due to a reduction in home heating oil margins of 9.9 cents per gallon, lower sales volume and lower service and installation gross profit.  During the fourth quarter of fiscal 2006, Star took advantage of favorable conditions in the home heating oil spot market, which resulted in an expansion of its per gallon margin.  Star's management believes the home heating oil margins realized in the fourth quarter of fiscal 2007 are more representative of typical summertime margins.

Total operating expenses (delivery, branch, general and administrative) decreased by $2.8 million, or 6.1 percent, to $42.8 million.

The Partnership's operating loss decreased by $12.7 million to a $30.0 million loss, as compared to an operating loss of $42.7 million, as a favorable change in the fair value of derivatives of $17.3 million and lower operating costs (including depreciation and amortization) of $3.3 million, were partially offset by lower gross profit of $7.8 million.

The net loss decreased by $12.8 million to a $33.1 million loss, as compared to a net loss of $45.9 million, primarily due to a $12.7 million increase in operating income, lower net interest expense of $0.8 million and an increase in the income tax benefit of $0.4 million, reduced by a $1.1 million adjustment to sale of discontinued operations.

The Adjusted EBITDA loss increased by $5.0 million to $21.6 million, due to lower per gallon gross profit margins ($2.5 million), an expected loss from acquisitions ($0.8 million) and the impact of lower volume and other factors ($1.7 million).  Adjusted EBITDA is a non-GAAP financial measure (see below reconciliation) that should not be considered as an alternative to net income (as an indicator of operating performance) or as an alternative to cash flow (as a measure of liquidity or ability to service debt obligations).  Management believes the presentation of Adjusted EBITDA is relevant and useful because it allows investors to view the Partnership's performance in a manner similar to the method management uses, adjusted for non cash items (such as changes in the fair value of derivative instruments and losses on redemption of debt) and makes it easier to compare its results with other companies that have different financing and capital structures.  In addition, certain of Star's financial covenants in its material debt documents are calculated using Adjusted EBITDA.

REMINDER: Star Gas management will host a conference call and webcast today at 11:00 a.m. (ET).  Conference call dial-in is 800/603-3143 or 706/634-8769 (international callers).  Please note the conference ID# is 26522078.  A webcast is also available at www.star-gas.com/MediaList.cfm and at www.vcall.com.

Star Gas Partners, L.P., is the nation's largest retail distributor of home heating oil.  Additional information is available by obtaining the Partnership's SEC filings and by visiting Star's website at www.star-gas.com.

Forward Looking Information
This news release includes "forward-looking statements" which represent the Partnership's expectations or beliefs concerning future events that involve risks and uncertainties, including those associated with the effect of weather conditions on our financial performance, the price and supply of home heating oil, the consumption patterns of our customers, our ability to obtain satisfactory gross profit margins, our ability to obtain new accounts and retain existing accounts, our ability to effect strategic acquisitions or redeploy assets, the impact of litigation, the continuing residual impact of the business process redesign project and our ability to address issues related to that project, our ability to contract for our current and future supply needs, natural gas conversions, future union relations and the outcome of current and future union negotiations, the impact of current and future environmental, health and safety regulations, the ability to attract and retain employees, customer credit worthiness, counter party credit worthiness and marketing plans.  All statements other than statements of historical facts included in this news release are forward-looking statements.  Although the Partnership believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct.  Important factors that could cause actual results to differ materially from the Partnership's expectations ("Cautionary Statements") are disclosed in this news release and in the Partnership's Annual Report on Form 10-K for the year ended September 30, 2007, including without limitation and in conjunction with the forward-looking statements included in this news release. All subsequent written and oral forward-looking statements attributable to the Partnership or persons acting on its behalf are expressly qualified in their entirety by the Cautionary Statements. Unless otherwise required by law, the Partnership undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise after the date of this news release.

(financials follow)

CONTACT:
Star Gas Partners
Investor Relations
203/328-7310

Robert Rinderman, Steven Hecht
Jaffoni & Collins Incorporated
212/835-8500 or SGU@jcir.com

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