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8-K - FORM 8-K - Crestwood Midstream Partners LP | h82179e8vk.htm |
Exhibit 99.1
News Release | ||
CRESTWOOD MIDSTREAM PARTNERS LP | ||
717 Texas Avenue, Suite 3150 | ||
Houston, TX 77002 | ||
www.crestwoodlp.com |
Crestwood Midstream Partners LP Announces
Improved First Quarter 2011 Results and Revised 2011 Outlook
Improved First Quarter 2011 Results and Revised 2011 Outlook
Net Income Increased 51 Percent and Adjusted EBITDA Increased 44 Percent
Over First Quarter 2010
Over First Quarter 2010
HOUSTON, TEXAS, May 10, 2011 Crestwood Midstream Partners LP (NYSE: CMLP) (Crestwood LP or
the Partnership) reported today its first quarter 2011 financial results.
First Quarter Summary Results
Three Months Ended | ||||||||
March 31, | ||||||||
(in thousands, except as noted) | 2011 | 2010 | ||||||
Net income |
$ | 9,376 | $ | 6,189 | ||||
Net income, adjusted |
$ | 11,341 | $ | 6,189 | ||||
Net income per unit (diluted basis) |
$ | 0.27 | $ | 0.20 | ||||
Adjusted net income per unit (diluted basis) |
$ | 0.33 | $ | 0.20 | ||||
Adjusted EBITDA |
$ | 20,594 | $ | 14,285 | ||||
Adjusted distributable cash flow |
$ | 18,126 | $ | 12,088 | ||||
Volumes gathered (MMcf) |
39,401 | 25,797 | ||||||
Volumes processed (MMcf) |
10,960 | 11,244 |
Crestwood LPs adjusted earnings before interest, income taxes, depreciation and accretion
(EBITDA) increased 44 percent to $20.6 million for the three months ended March 31, 2011,
compared to adjusted EBITDA of $14.3 million during the first quarter 2010. Adjusted distributable
cash flow increased 50 percent to $18.1 million in the recent quarter as compared to $12.1 million
in the first quarter 2010. Adjusted net income for the first quarter 2011, increased by 83 percent
to $11.3 million, ($0.33 per unit) from the comparable period in 2010. EBITDA, distributable cash
flow and net income have been adjusted to reflect approximately $2.0 million of non-recurring
transition services, transaction due diligence and advisory expenses incurred during the first
quarter 2011, which are related to the Quicksilver Gas Services (Quicksilver) and Frontier Gas
Services (Frontier) acquisitions completed in October 2010 and April 2011, respectively.
Improved operating results in the first quarter 2011 were primarily driven by increased natural gas
gathering volumes through the
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Partnerships Barnett Shale assets and did not include any results of operations from the assets
acquired from Frontier, which will be reflected in the Partnerships results beginning in the
second quarter 2011. Net income for the first quarter 2011 was $9.4 million, compared to $6.2
million during the first quarter 2010.
We are pleased to announce another strong quarter of year-over-year performance for Crestwood
LP during the first quarter 2011, despite some weather related volume disruptions to our gathering
operations in North Texas, stated Robert G. Phillips, Chairman, President and Chief Executive
Officer of Crestwood LPs general partner. Our Barnett Shale assets benefited from increased
production due to more well completions and connections to our systems, the completion of new
gathering laterals on the Alliance and Lake Arlington systems and improved run times for our
facilities, resulting in a 53 percent increase in gathering volumes from the first quarter 2010,
and a solid 10 percent sequential growth in gathering volumes from the fourth quarter 2010. We
accomplished this volume growth despite a period of severe winter weather in February 2011, which
reduced volumes due to freeze-offs and shut-ins and temporarily delayed ongoing drilling, well
completion and connection work by our customers. Importantly, our operating expense per unit
continues to decline both year-over-year and sequentially, which is an indicator that our assets
are running more efficiently as volumes increase in the Barnett Shale region.
Additionally, on April 1, 2011 we completed a major element of our diversification strategy
with the acquisition of Frontiers gathering, processing and treating assets located in the
Fayetteville Shale in Arkansas and the Granite Wash in the Texas Panhandle. These assets are in
premier natural gas basins and are anchored by long-term agreements with high-quality producers
such as Chesapeake Energy, BHP Billiton, BP Energy and Exxon Mobils XTO subsidiary, continued
Phillips. We are excited about integrating the Frontier assets into our operating platform and
expanding the systems through several organic growth projects which we identified during due
diligence.
To finance the Frontier acquisition and expansion projects which are currently planned for
2011, the Partnership has been active in the capital markets during the first four months of 2011.
Financings completed year to date include more than $200 million of new equity ($153 million in a
privately placed Class C unit offering and $53 million of newly issued common units in a public
offering), $200 million aggregate principal amount of 7.75% Senior Notes due 2019, and an increase
in available borrowing capacity under our revolving credit facility from $400 million to $500
million. We were able to take advantage of some very attractive market conditions to raise more
than $400 million of new, long-term capital to fund the Frontier acquisition, as well as ongoing
organic projects in the Barnett Shale, Fayetteville Shale and Granite Wash areas. These financings
improve our capital liquidity and availability should additional opportunities emerge, stated
Phillips.
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Review
of Operating Performance
Operating revenues, primarily from the Partnerships Barnett Shale assets, totaled $32.4 million
for the first quarter 2011, compared to $24.7 million for the first quarter 2010. The Las Animas
gathering system in Southeastern New Mexico, acquired on February 16, 2011, contributed 1% of the
operating revenues during the quarter. Natural gas volumes gathered during the first quarter 2011
averaged 438 million cubic feet per day (MMcf/d), as compared to 397 MMcf/d and 287 MMcf/d gathered
during the fourth quarter 2010 and first quarter 2010, respectively. The revenue increase resulted
primarily from additional wells connected to the Alliance system through the completion of the
Speedway Lateral project during the first quarter 2011, which added gathered volumes in excess of
30 MMcf/d as compared to the fourth quarter 2010.
Crestwood LPs gathering volumes were negatively impacted by severe weather in North Texas which
affected all of our Barnett Shale systems during early February 2011. Average gathering volumes by
month during the first quarter were: 431 MMcf/d (January); 417 MMcf/d (February); and 464 MMcf/d
(March) highlighting the reduction in average gathered volumes in February and the recovery of
production volumes on our systems during March 2011. Processing volumes at our Cowtown and Corvette
plants were also affected by the weather, declining slightly to 122 MMcf/d compared to 126 MMcf/d
in the fourth quarter 2010, however, natural gas liquids production remained fairly strong at
15,710 barrels per day (Bbls/d) in the first quarter 2011, compared to 16,586 Bbls/d in the fourth
quarter 2010.
Operations and maintenance (O&M) expenses totaled $7.4 million in both the first quarter
2011 and the first quarter 2010. Excluding property taxes and cost of gas purchased of $1.7 million
and $1.5 million in the first quarter 2011 and 2010, respectively, O&M expenses per unit of
throughput on our gathering systems for the first quarter 2011 and 2010 were $0.14 per thousand
cubic feet (Mcf) and $0.23 per Mcf, respectively. The 39 percent reduction in O&M expense per unit
compared to 2010 reflects more efficient operations and the benefit of higher utilization rates on
the Barnett Shale assets in the first quarter 2011.
General and administrative expenses totaled $6.4 million in the first quarter 2011, which included
$0.8 million attributable to Quicksilver transition services costs and $1.2 million of Frontier
transaction related expenses noted above. Excluding these non-recurring expenses, general and
administrative expenses increased $1.3 million, from $3.1 million in the first quarter 2010, due to
increased personnel and office expenses.
At March 31, 2011, Crestwood LP had $292.8 million of debt outstanding, comprised solely of
borrowings under its revolving credit facility, at a weighted average interest rate of 3.1 percent.
Effective April 1, 2011, Crestwood LP expanded the capacity under its revolving credit facility by
$100 million, bringing total availability to $500 million. On April 1, 2011, Crestwood LPs
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outstanding debt increased with the issuance of $200 million aggregate principal amount of 7.75%
Senior Notes. Additionally, on May 4, 2011, the Partnership sold 1.8 million common units in a
public offering for net proceeds of $53.1 million, which were used to reduce amounts outstanding
under the revolver and for general partnership purposes.
Capital spending during the first quarter 2011 totaled $13.1 million, which included $7.6 million
of costs to expand the gathering systems in the Barnett Shale, $5.1 million for the purchase of the
Las Animas gathering system, and $0.4 million to maintain existing facilities and operations.
Adjusted net income, adjusted net income per unit, adjusted EBITDA and adjusted distributable cash
flow are non-generally accepted accounting principles (non-GAAP) financial measures that are
defined and reconciled later in this press release to their most directly comparable U.S. GAAP
financial measures.
Revised 2011 Consolidated Outlook
On February 22, 2011, Crestwood LP announced full year 2011 guidance for its Barnett Shale
operations, with expected average gathering volumes in the range of 465 MMcf/d to 485 MMcf/d, and
resulting adjusted EBITDA in the range of $90 million to $100 million, as compared to actual
average gathering volumes in 2010 of 343 MMcf/d, and actual 2010 adjusted EBITDA of $76.5 million.
Following the Las Animas acquisition in February 2011 and the Frontier acquisition in April 2011,
and in light of current market conditions, Crestwood LP has revised its 2011 consolidated outlook
and expects that full year average gathering volumes will be in the range of 590 MMcf/d to 610
MMcf/d. Adjusted EBITDA for the full year 2011 is expected to be in the range of $110 million to
$120 million, including approximately $6 million of acquisition, unamortized financing and
transition services expense associated with the Quicksilver and Frontier transactions.
Based on actual first quarter 2011 capital expenditures and current planned projects related to the
Frontier and Las Animas acquisitions, total capital expenditures for the full year 2011 are
estimated to be in the range of $80 million to $90 million including approximately $35 million to
$40 million related to the Barnett Shale and Las Animas assets. Maintenance capital spending for
the full year is expected to be $8 million, with approximately $4 million attributable to our
Barnett Shale assets and the remainder attributable to the Frontier assets.
Conference Call
Crestwood LP will host a conference call for investors and analysts on Tuesday, May 10, 2011,
beginning at 10:00 a.m. Central Time, to discuss the first quarter 2011 performance. Interested
parties may participate in the call by calling 800-946-0708 and entering passcode 5512280.
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The conference call will also be webcast live and can be accessed through the Investor Relations
section of our website at www.crestwoodlp.com.
A replay will be available for 30 days following the conference call by dialing 888-203-1112 and
entering the replay passcode 5512280 or through the Investor Relations section of our website at
www.crestwoodlp.com.
Use of Non-GAAP Financial Measures
This news release and the accompanying schedules include the non-GAAP financial measures of
adjusted net income, adjusted net income per unit, EBITDA, adjusted EBITDA, distributable cash flow
and adjusted distributable cash flow. The accompanying schedules of this news release provide
reconciliations of these non-GAAP financial measures to their most directly comparable financial
measures calculated and presented in accordance with generally accepted accounting principles in
the United States of America (GAAP). Our non-GAAP financial measures should not be considered as
alternatives to GAAP measures such as net income or operating income or any other GAAP measure of
liquidity or financial performance.
About Crestwood Midstream Partners LP
Houston, Texas-based Crestwood LP is a growth-oriented, midstream master limited partnership which
owns and operates predominately fee-based gathering, processing, treating and compression assets
servicing natural gas producers in the Barnett Shale in North Texas, the Fayetteville Shale in
Northwest Arkansas, the Granite Wash area in the Texas Panhandle and the Avalon Shale area of
Southeastern New Mexico. For more information about Crestwood LP, visit
www.crestwoodlp.com.
Forward-Looking Statements
The statements in this news release regarding future events, occurrences, circumstances,
activities, performance, outcomes and results are forward-looking statements. Although these
statements reflect the current views, assumptions and expectations of Crestwood LPs management,
the matters addressed herein are subject to numerous risks and uncertainties which could cause
actual activities, performance, outcomes and results to differ materially from those indicated.
Such forward-looking statements include, but are not limited to, statements about the future
financial and operating results, objectives, expectations and intentions and other statements that
are not historical facts. Factors that could result in such differences or otherwise materially
affect Crestwood LPs financial condition, results of operations and cash flows include: changes in
general economic conditions; fluctuations in natural gas prices; failure or delays by our customers
in achieving expected production from natural gas projects; competitive conditions in our industry;
actions or inactions taken or non-performance by third parties, including suppliers, contractors,
operators, processors,
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transporters and customers; our ability to consummate acquisitions and successfully integrate the
acquired business and our ability to realize any cost savings and other synergies from any
acquisition; any disruption from the recent acquisition of midstream assets from Frontier Gas
Services, LLC making it more difficult to maintain relationships with customers, employees or
suppliers; fluctuations in the value of certain of our assets and liabilities; changes in the
availability and cost of capital; operating hazards, natural disasters, weather-related delays,
casualty losses and other matters beyond our control; construction costs or capital expenditures
exceeding estimated or budgeted amounts; the effects of existing and future laws and governmental
regulations, including environmental and climate change requirements; and the effects of existing
and future litigation; risks related to our substantial indebtedness as well as other factors
disclosed in Crestwood LPs filings with the Securities and Exchange Commission. You should read
our filings with the U.S. Securities and Exchange Commission, including our Annual Report on Form
10-K for the year ended December 31, 2010, our subsequently filed Quarterly Reports on Form 10-Q
and our Current Reports on Form 8-K, for a more extensive list of factors that could affect
results. All forward-looking statements in this news release are made as of the date hereof and we
undertake no obligation to publicly update or revise any forward-looking statements, whether as a
result of new information, further events or otherwise.
Investor Contact:
Mark Stockard
832-519-2207
mstockard@crestwoodlp.com
832-519-2207
mstockard@crestwoodlp.com
###
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CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF INCOME
In thousands, except for per unit data - Unaudited
CONSOLIDATED STATEMENTS OF INCOME
In thousands, except for per unit data - Unaudited
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Revenue |
||||||||
Gathering revenue related party |
$ | 23,351 | $ | 16,389 | ||||
Gathering revenue |
1,476 | 1,115 | ||||||
Processing revenue related party |
6,637 | 6,479 | ||||||
Processing revenue |
516 | 756 | ||||||
Gas Sales |
400 | | ||||||
Total revenue |
32,380 | 24,739 | ||||||
Expenses |
||||||||
Operations and maintenance |
7,381 | 7,393 | ||||||
General and administrative |
6,370 | 3,061 | ||||||
Depreciation and accretion |
6,025 | 5,365 | ||||||
Total expenses |
19,776 | 15,819 | ||||||
Operating income |
12,604 | 8,920 | ||||||
Interest expense |
3,006 | 2,678 | ||||||
Income before income taxes |
9,598 | 6,242 | ||||||
Income tax provision |
222 | 53 | ||||||
Net income |
$ | 9,376 | $ | 6,189 | ||||
General partner interest in net income |
$ | 888 | $ | 357 | ||||
Common unitholders interest in net income |
8,488 | 5,832 | ||||||
Basic income (loss) per unit: |
||||||||
Net earnings per common and subordinated unit |
$ | 0.27 | $ | 0.20 | ||||
Diluted income (loss) per unit: |
||||||||
Net earnings per common and subordinated unit |
$ | 0.27 | $ | 0.20 | ||||
Weighted average number of common units outstanding: |
||||||||
Basic |
31,188 | 28,502 | ||||||
Diluted |
31,324 | 29,019 | ||||||
Distributions per unit (attributable to the period ended) |
$ | 0.44 | $ | 0.39 |
NEWS RELEASE
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CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED BALANCE SHEETS
In thousands, except for unit data - Unaudited
CONSOLIDATED BALANCE SHEETS
In thousands, except for unit data - Unaudited
March 31, | December 31, | |||||||
2011 | 2010 | |||||||
ASSETS |
||||||||
Current assets |
||||||||
Cash and cash equivalents |
$ | 11,546 | $ | 2 | ||||
Accounts receivable |
1,383 | 1,679 | ||||||
Accounts receivable related party |
29,177 | 23,003 | ||||||
Prepaid expenses and other |
601 | 1,052 | ||||||
Total current assets |
42,707 | 25,736 | ||||||
Property, plant and equipment, net |
531,526 | 531,371 | ||||||
Other assets |
12,824 | 13,520 | ||||||
Total assets |
$ | 587,057 | $ | 570,627 | ||||
LIABILITIES AND PARTNERS CAPITAL |
||||||||
Current liabilities |
||||||||
Accounts payable related party |
$ | 4,580 | $ | 4,267 | ||||
Accrued additions to property, plant and equipment |
4,209 | 11,309 | ||||||
Accounts payable and other |
21,263 | 2,917 | ||||||
Total current liabilities |
30,052 | 18,493 | ||||||
Long-term debt |
292,800 | 283,504 | ||||||
Asset retirement obligations |
10,081 | 9,877 | ||||||
Partners capital |
||||||||
Common unitholders (31,187,696 units issued and
outstanding at March 31, 2011 and December 31, 2010) |
253,429 | 258,069 | ||||||
General partner |
695 | 684 | ||||||
Total partners capital |
254,124 | 258,753 | ||||||
$ | 587,057 | $ | 570,627 | |||||
NEWS RELEASE
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CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands Unaudited
CONSOLIDATED STATEMENTS OF CASH FLOWS
In thousands Unaudited
Three Months Ended March 31, | ||||||||
2011 | 2010 | |||||||
Operating activities: |
||||||||
Net income |
$ | 9,376 | $ | 6,189 | ||||
Adjustments to reconcile net income to net cash provided by
(used in) operating activities: |
||||||||
Depreciation |
5,890 | 5,250 | ||||||
Accretion of asset retirement obligations |
135 | 115 | ||||||
Deferred income taxes |
| 53 | ||||||
Equity-based compensation |
283 | 667 | ||||||
Non-cash interest expense |
678 | 1,464 | ||||||
Changes in assets and liabilities: |
||||||||
Accounts receivable |
296 | 232 | ||||||
Prepaid expenses and other |
468 | (274 | ) | |||||
Accounts receivable related party |
(6,174 | ) | (16,367 | ) | ||||
Accounts payable related party |
313 | | ||||||
Accounts payable and other |
18,347 | 1,214 | ||||||
Net cash provided by (used in) operating activities |
29,612 | (1,457 | ) | |||||
Investing activities: |
||||||||
Capital expenditures |
(13,076 | ) | (17,163 | ) | ||||
Distribution to Quicksilver for Alliance Midstream Assets |
| (80,276 | ) | |||||
Net cash used in investing activities |
(13,076 | ) | (97,439 | ) | ||||
Financing activities: |
||||||||
Proceeds from credit facility |
38,400 | 112,000 | ||||||
Repayments of credit facility |
(29,104 | ) | (11,600 | ) | ||||
Issuance of common units net of offering costs |
| 11,050 | ||||||
Distributions paid to unitholders |
(14,288 | ) | (11,564 | ) | ||||
Taxes paid for equity-based compensation vesting |
| (1,144 | ) | |||||
Net cash provided by (used in) financing activities |
(4,992 | ) | 98,742 | |||||
Net cash increase (decrease) |
11,544 | (154 | ) | |||||
Cash and cash equivalents at beginning of period |
2 | 746 | ||||||
Cash and cash equivalents at end of period |
$ | 11,546 | $ | 592 | ||||
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CRESTWOOD MIDSTREAM PARTNERS LP
OPERATING STATISTICS
Unaudited
OPERATING STATISTICS
Unaudited
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Volume Data: |
||||||||
Volumes gathered (MMcf) |
39,401 | 25,797 | ||||||
Volumes processed (MMcf) |
10,960 | 11,244 |
CRESTWOOD MIDSTREAM PARTNERS LP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
In thousands, except for per unit data Unaudited
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Net income |
$ | 9,376 | $ | 6,189 | ||||
Items impacting net income attributable to the closing
of the Crestwood acquisition: |
||||||||
Transition related expenses |
1,965 | | ||||||
Adjusted net income |
$ | 11,341 | $ | 6,189 | ||||
Net income per limited partner unit (diluted basis) |
$ | 0.27 | $ | 0.20 | ||||
Items impacting net income attributable to the closing
of the Crestwood acquisition: |
0.06 | | ||||||
Adjusted net income per limited partner unit (diluted basis) |
$ | 0.33 | $ | 0.20 | ||||
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Net income |
$ | 9,376 | $ | 6,189 | ||||
Depreciation and accretion expense |
6,025 | 5,365 | ||||||
Income tax provision (benefit) |
222 | 53 | ||||||
Non-cash interest expense, net of capitalized interest cost paid |
678 | 1,464 | ||||||
Non-cash equity compensation |
283 | 667 | ||||||
Maintenance capital expenditures |
(423 | ) | (1,650 | ) | ||||
Distributable cash flow |
16,161 | 12,088 | ||||||
Add: Non-recurring transaction related expenses |
1,965 | | ||||||
Adjusted distributable cash flow |
$ | 18,126 | $ | 12,088 | ||||
Three Months Ended | ||||||||
March 31, | ||||||||
2011 | 2010 | |||||||
Total revenues |
$ | 32,380 | $ | 24,739 | ||||
Operations and maintenance expense |
7,381 | 7,393 | ||||||
General and administrative expense |
6,370 | 3,061 | ||||||
EBITDA |
18,629 | 14,285 | ||||||
Non-recurring transaction related expenses |
1,965 | | ||||||
Adjusted EBITDA |
20,594 | 14,285 | ||||||
Less: |
||||||||
Depreciation and accretion expense |
6,025 | 5,365 | ||||||
Interest expense |
3,006 | 2,678 | ||||||
Income tax provision (benefit) |
222 | 53 | ||||||
Non-recurring transaction related expenses |
1,965 | | ||||||
Net income |
$ | 9,376 | $ | 6,189 | ||||
NEWS RELEASE
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CRESTWOOD MIDSTREAM PARTNERS LP
Full Year 2011 Adjusted EDITDA Guidance
Reconciliation to Net Income
Full Year 2011 Adjusted EDITDA Guidance
Reconciliation to Net Income
Adjusted EBITDA
|
$110 million to $120 million | |
Depreciation and accretion expense
|
$32 million | |
Interest expense, net
|
$27 million | |
Income tax provision
|
$1 million | |
Net income
|
$50 million to $60 million |
-end-