HOUSTON--(BUSINESS WIRE)-- PAA Natural Gas Storage, L.P. (PNG) (NYSE:PNG) today reported net income of $16.0 million, or $0.22 per diluted limited partner unit, for the first quarter of 2012, compared to respective results for the first quarter of 2011 of $6.3 million and $0.10. The Partnership reported earnings before interest, taxes, depreciation, depletion and amortization (EBITDA) of $26.8 million for the first quarter of 2012, compared with EBITDA of $13.6 million for the first quarter of 2011.
The Partnerships reported results include items that affect comparability between reporting periods. These items are excluded from adjusted results, as further described in the second table below. Accordingly, the Partnerships first-quarter 2012 adjusted net income, adjusted net income per diluted limited partner unit and adjusted EBITDA were $17.1 million, $0.23 and $27.8 million, respectively, as compared to first-quarter 2011 respective results of $12.2 million, $0.20 and $19.5 million. (See the section of this release entitled Non-GAAP and Segment Financial Measures and the tables included with this press release for a presentation of adjusted EBITDA and other non-GAAP financial measures, and reconciliations of such measures to the comparable GAAP measures.)
PNGs first-quarter adjusted EBITDA results exceeded mid-point guidance, reflecting our high percentage of contracted firm storage capacity and solid execution of our merchant storage activities, said Dean Liollio, President of PAA Natural Gas Storage. PNG ended the quarter with a solid balance sheet, approximately $131 million in committed liquidity and well positioned to continue delivering results in line with guidance.
The following tables present certain selected financial information for the applicable periods (amounts in thousands):
|
Three Months Ended
March 31, |
|||||||
| 2012 | 2011 | ||||||
| Revenues | |||||||
| Firm storage services | $ | 33,807 | $ | 29,124 | |||
| Hub services and merchant storage (1) | 73,756 | 20,497 | |||||
| Other | 1,159 | 799 | |||||
| Total revenues | 108,722 | 50,420 | |||||
| Storage related costs (2) | (73,855 | ) | (24,501 | ) | |||
| Operating costs | (3,047 | ) | (3,087 | ) | |||
| General and administrative expenses (3) | (5,047 | ) | (9,184 | ) | |||
| Other income / (expense), net | (11 | ) | - | ||||
| EBITDA | $ | 26,762 | $ | 13,648 | |||
| Selected items impacting comparability | 1,053 | 5,852 | |||||
| Adjusted EBITDA | $ | 27,815 | $ | 19,500 | |||
| Reconciliation to net income: | |||||||
| Depreciation, depletion and amortization | (9,076 | ) | (6,469 | ) | |||
| Interest expense, net of capitalized interest | (1,668 | ) | (834 | ) | |||
| Adjusted Net Income | $ | 17,071 | $ | 12,197 | |||
| Selected items impacting comparability | (1,053 | ) | (5,852 | ) | |||
| Net income | $ | 16,018 | $ | 6,345 | |||
| (1) Includes revenues associated with sales of natural gas through commercial marketing activities. | |||||||
| (2) Includes costs associated with natural gas sold through commercial marketing activities. | |||||||
|
(3) Includes equity compensation expense. General and administrative expenses for the three months ended March 31, 2011 include approximately $4 million of acquisition-related costs. |
|||||||
First quarter 2012 adjusted EBITDA increased approximately 43% over the prior-year period. This increase was primarily attributable to additional capacity being placed into service at Pine Prairie, the full-period benefit of the Southern Pines acquisition (which closed on February 9, 2011), and favorable merchant storage revenues partially offset by higher storage related costs.
The following table highlights the selected items that the Partnership believes impact comparability of financial results between reporting periods (amounts in thousands, except per unit amounts):
|
Three Months Ended
March 31, |
||||||||
| Selected Items Impacting Comparability - Income / (Expense): | 2012 | 2011 | ||||||
| Equity compensation expense | $ | (1,039 | ) | $ | (1,396 | ) | ||
|
Acquisition-related expense |
- | (3,995 | ) | |||||
| Mark-to-market of open derivative positions | (14 | ) | 39 | |||||
|
Insurance deductible related to property damage |
- | (500 | ) | |||||
| Selected items impacting comparability | $ | (1,053 | ) | $ | (5,852 | ) | ||
| Selected items impacting comparability | $ | (1,053 | ) | $ | (5,852 | ) | ||
|
Less: GP 2% portion of selected items impacting comparability |
21 | 117 | ||||||
| LP 98% portion of selected items impacting comparability | $ | (1,032 | ) | $ | (5,735 | ) | ||
| Impact to basic net income per limited partner unit (1) | $ |
(0.01 |
) |
$ |
(0.10 |
) |
||
| Impact to diluted net income per limited partner unit (1) | $ |
(0.01 |
) |
$ |
(0.10 |
) |
||
| (1) Includes common units and Series A subordinated units. Series B subordinated units are not entitled to cash distributions unless and until they convert to Series A subordinated units or common units, which conversion is contingent on our meeting both certain distribution levels and certain in-service operational tests at our Pine Prairie facility. As a result, the Series B subordinated units are not included in the calculation of basic or diluted net income per unit amounts. | ||||||||
The Partnerships common units and Series A subordinated units outstanding as of March 31, 2012 totaled 71.1 million. An additional 13.5 million Series B subordinated units (which are not currently entitled to receive distributions) are outstanding and do not convert to Series A subordinated units unless certain performance conditions are met. At March 31, 2012, the Partnership had approximately $316 million of borrowings outstanding on its $450 million unsecured credit facility.
The Partnership has announced a quarterly distribution of $0.3575 ($1.43 on an annualized basis) per unit payable May 15, 2012 on its outstanding common units and Series A subordinated units. This distribution is equal to the quarterly distribution paid in February 2012, and represents an increase of approximately 3.6% over the quarterly distribution of $0.345 per unit ($1.38 per unit on an annualized basis) paid in May 2011.
Prior to its May 8th conference call, the Partnership will furnish a current report on Form 8-K, which will include material in this press release and financial and operational guidance for the second-quarter and full year 2012. A copy of the Form 8-K will be available on the Partnerships website at www.pnglp.com.
Non-GAAP and Segment Financial Measures
In this release, the Partnerships adjusted EBITDA disclosure is not presented in accordance with generally accepted accounting principles and is not intended to be used in lieu of GAAP presentations of net income. Adjusted EBITDA is presented because it is a measure used by management to evaluate segment performance and because we believe it provides additional information with respect to both the performance of our fundamental business activities as well as our ability to meet our future debt service, capital expenditures and working capital requirements. We also believe that adjusted EBITDA is used to assess our operating performance compared to other publicly traded partnerships in the midstream energy industry, without regard to financing methods, capital structure or historical cost basis. In addition, we present selected items that impact the comparability of our operating results as additional information that may be helpful to your understanding of our financial results. We consider an understanding of these selected items impacting comparability to be material to our evaluation of our operating results and prospects. Although we present selected items that we consider in evaluating our performance, you should also be aware that the items presented do not represent all items that affect comparability between the periods presented. Variations in our operating results are also caused by changes in volumes, prices, mechanical interruptions, acquisitions and numerous other factors. These types of variations are not fully identified and discussed in this release, but will be discussed, as applicable, in managements discussion and analysis of operating results in our Quarterly Report on Form 10-Q.
A reconciliation of adjusted EBITDA to net income for the periods presented is included in the tables of this release. In addition, the Partnership maintains on its website (www.pnglp.com) a reconciliation of all non-GAAP financial information, such as adjusted EBITDA, to the most comparable GAAP measures. To access the information, investors should click on the Investor Relations link on the Partnerships home page and then the Non-GAAP Reconciliation link on the Investor Relations page.
Conference Call
The Partnership will host a joint conference call with Plains All American Pipeline, L.P. at 11:00 AM (Eastern) on Tuesday, May 8, 2012 to discuss the following items:
1. The Partnerships first-quarter 2012 performance;
2. The status of expansion projects;
3. Capitalization and liquidity;
4. Financial and operating guidance for the second quarter and full year 2012; and
5. The Partnerships outlook for the future.
Webcast Instructions
To access the Internet webcast, please go to the Partnerships website at www.pnglp.com, choose Investor Relations, and then choose Conference Calls. Following the live webcast, the call will be archived for a period of sixty (60) days on the Partnerships website.
Alternatively, you may access the live conference call by dialing toll free 800-230-1059. International callers should dial 612-234-9960. No password is required. You may access the slide presentation accompanying the conference call a few minutes prior to the call under the Conference Call Summaries portion of the Conference Calls tab of the Investor Relations section of PNG's website at www.pnglp.com.
Telephonic Replay Instructions
To listen to a telephonic replay of the conference call, please dial 800-475-6701, or, for international callers, 320-365-3844, and replay access code 242796. The replay will be available beginning Tuesday, May 8, 2012, at approximately 1:00 PM (Eastern) and continue until 11:59 PM (Eastern) June 8, 2012.
Forward Looking Statements
Except for the historical information contained herein, the matters discussed in this release are forward-looking statements that involve certain risks and uncertainties that could cause actual results to differ materially from results anticipated in the forward looking statements. These risks and uncertainties include, among other things, a continuation of significantly reduced volatility and/or lower spreads in natural gas markets for an extended period of time; factors affecting demand for natural gas storage services and the rates we are able to charge for such services, including the balance between the supply of and demand for natural gas; our ability to maintain or replace expiring storage contracts, or enter into new storage contracts, in either case at attractive rates and on otherwise favorable terms; factors affecting our ability to realize revenues from hub services and merchant storage transactions involving uncontracted or unutilized capacity at our facilities; the effects of competition; the impact of operational, geologic and commercial factors that could result in an inability on our part to satisfy our contractual commitments and obligations, including the impact of equipment performance, cavern operating pressures and cavern temperature variances, salt creep and subsurface conditions or events; risks related to the ownership, development and operation of natural gas storage facilities; failure to implement or execute planned internal growth projects on a timely basis and within targeted cost projections; the effectiveness of our risk management activities; operational, geologic or other factors that affect the timing or amount of crude oil and other liquid hydrocarbons that we are able to produce in conjunction with the operation of our Bluewater facility; market or other factors that affect the prices we are able to realize for crude oil and other liquid hydrocarbons produced in conjunction with the operation of our Bluewater facility; interruptions in service and fluctuations in tariffs or volumes on third-party pipelines; general economic, market or business conditions and the amplification of other risks caused by volatile financial markets, capital constraints and pervasive liquidity concerns; the successful integration and future performance of acquired assets or businesses; our ability to obtain debt or equity financing on satisfactory terms to fund additional acquisitions, expansion projects, working capital requirements and the repayment or refinancing of indebtedness; the impact of current and future laws, rulings, governmental regulations, accounting standards and statements and related interpretations; our ability to obtain and/or maintain all permits, approvals and authorizations that are necessary to conduct our business and execute our capital projects; shortages or cost increases of supplies, materials or labor; weather interference with business operations or project construction; our ability to receive open credit from our suppliers and trade counterparties; continued creditworthiness of, and performance by, our counterparties, including financial institutions and trading companies with which we do business; the availability of, and our ability to consummate, acquisition or combination opportunities; the operations or financial performance of assets or businesses that we acquire; environmental liabilities or events that are not covered by an indemnity, insurance or existing reserves; increased costs or unavailability of insurance; fluctuations in the debt and equity markets, including the price of our units at the time of vesting under our long-term incentive plan; and other factors and uncertainties inherent in the ownership, development and operation of natural gas storage facilities discussed in the Partnerships filings with the Securities and Exchange Commission.
PAA Natural Gas Storage, L.P. is a publicly traded master limited partnership engaged in the development, acquisition, operation and commercial management of natural gas storage facilities. The Partnership currently owns and operates three natural gas storage facilities located in Louisiana, Mississippi and Michigan. The Partnerships general partner, as well as the majority of the Partnerships limited partner interests, is owned by Plains All American Pipeline, L.P. PNG is headquartered in Houston, TX.
| PAA NATURAL GAS STORAGE, L.P. AND SUBSIDIARIES | ||||||||
| FINANCIAL SUMMARY (unaudited) | ||||||||
|
CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||
| (In thousands, except per unit data) | ||||||||
|
Three Months Ended
March 31, |
||||||||
| 2012 | 2011 | |||||||
|
REVENUES (1) |
$ | 108,722 | $ | 50,420 | ||||
| COSTS AND EXPENSES: | ||||||||
| Storage related costs (2) | 73,855 | 24,501 | ||||||
| Other operating costs | 3,047 | 3,087 | ||||||
|
General and administrative expenses (3) |
5,047 | 9,184 | ||||||
| Depreciation, depletion and amortization | 9,076 | 6,469 | ||||||
| Total costs and expenses | 91,025 | 43,241 | ||||||
| Operating income | 17,697 | 7,179 | ||||||
| OTHER INCOME / (EXPENSE): | ||||||||
| Interest expense, net of capitalized interest | (1,668 | ) | (834 | ) | ||||
| Other income / (expense), net | (11 | ) | - | |||||
| Net income | $ | 16,018 | $ | 6,345 | ||||
| CALCULATION OF LIMITED PARTNER NET INCOME: | ||||||||
| Net Income | $ | 16,018 | $ | 6,345 | ||||
| Less: General partner interest in net income | 538 | 208 | ||||||
| Limited partner interest in net income | $ | 15,480 | $ | 6,137 | ||||
| Net income per limited partner unit - basic | $ | 0.22 | $ | 0.10 | ||||
| Net income per limited partner unit - diluted | $ | 0.22 | $ | 0.10 | ||||
| Weighted average limited partner units outstanding - basic (4) | 71,128 | 59,466 | ||||||
| Weighted average limited partner units outstanding - diluted (4) | 71,238 | 59,480 | ||||||
| OPERATING DATA | ||||||||
| (In thousands, except capacity and operating metric data) | ||||||||
|
Three Months Ended
March 31, |
||||||||
| 2012 | 2011 | |||||||
| Net revenue margin (5)(6) | $ | 34,881 | $ | 25,880 | ||||
| Operating costs / G&A / Other | (7,066 | ) | (6,380 | ) | ||||
| Adjusted EBITDA | $ | 27,815 | $ | 19,500 | ||||
| Average working storage capacity (Bcf) | 76 | 59 | ||||||
| Monthly Operating Metrics ($/Mcf): | ||||||||
| Net revenue margin (5)(6) | $ | 0.15 | $ | 0.15 | ||||
| Operating costs / G&A / Other | (0.03 | ) | (0.04 | ) | ||||
| Adjusted EBITDA | $ | 0.12 | $ | 0.11 | ||||
| (1) Includes revenues associated with sales of natural gas through commercial marketing activities. | ||||||||
| (2) Includes costs associated with natural gas sold through commercial marketing activities. | ||||||||
|
(3) Includes equity compensation expense. General and administrative expenses for the three months ended March 31, 2011 include approximately $4 million of acquisition-related costs. |
||||||||
| (4) Includes common units and Series A subordinated units. Series B subordinated units are not entitled to cash distributions unless and until they convert to Series A subordinated units or common units, which conversion is contingent on our meeting both certain distribution levels and certain in-service operational tests at our Pine Prairie facility. As a result, the Series B subordinated units are not included in the calculation of basic or diluted net income per unit amounts. | ||||||||
| (5) Net revenue margin equals total net revenues minus storage related costs. | ||||||||
| (6) Excludes the impact of mark-to-market of open derivative positions. | ||||||||
| PAA NATURAL GAS STORAGE, L.P. AND SUBSIDIARIES | |||||
| FINANCIAL SUMMARY (unaudited) | |||||
|
CONDENSED CONSOLIDATED BALANCE SHEET DATA |
|||||
| (In thousands) | |||||
| March 31, | December 31, | ||||
| 2012 | 2011 | ||||
| ASSETS | |||||
| Current assets | $ | 61,680 | $ | 93,955 | |
| Property and equipment, net | 1,287,077 | 1,280,413 | |||
| Base gas | 48,672 | 48,432 | |||
| Goodwill, intangibles and other assets, net | 421,072 | 427,199 | |||
| Total assets | $ | 1,818,501 | $ | 1,849,999 | |
| LIABILITIES AND PARTNERS' CAPITAL | |||||
| Current liabilities | $ | 69,064 | $ | 110,172 | |
| Note payable to PAA | 200,000 | 200,000 | |||
| Long-term debt under credit facilities | 279,033 | 253,508 | |||
| Other long-term liabilities | 3,698 | 693 | |||
| Total liabilities | 551,795 | 564,373 | |||
| Total partners' capital | 1,266,706 | 1,285,626 | |||
| Total liabilities and partners' capital | $ | 1,818,501 | $ | 1,849,999 | |
| PAA NATURAL GAS STORAGE, L.P. AND SUBSIDIARIES | ||||||||
| FINANCIAL SUMMARY (unaudited) | ||||||||
|
COMPUTATION OF BASIC AND DILUTED EARNINGS PER LIMITED PARTNER UNIT |
||||||||
| (In thousands, except per unit data) | ||||||||
|
Three Months Ended
March 31, |
||||||||
| 2012 | 2011 | |||||||
| Numerator for basic and diluted earnings per limited partner unit: | ||||||||
| Net Income | $ | 16,018 | $ | 6,345 | ||||
| Less: General partner's incentive distribution | (222 | ) | (83 | ) | ||||
| Subtotal | 15,796 | 6,262 | ||||||
| Less: General partner 2% ownership | (316 | ) | (125 | ) | ||||
| Net income available to limited partners | 15,480 | 6,137 | ||||||
| Denominator: | ||||||||
| Basic weighted average number of limited partner units outstanding (1) | 71,128 | 59,466 | ||||||
| Effect of dilutive securities: | ||||||||
| Weighted average LTIP units | 110 | 14 | ||||||
| Diluted weighted average number of limited partner units outstanding (1) | 71,238 | 59,480 | ||||||
| Basic net income per limited partner unit | $ | 0.22 | $ | 0.10 | ||||
| Diluted net income per limited partner unit | $ | 0.22 | $ | 0.10 | ||||
| (1) Includes common units and Series A subordinated units. Series B subordinated units are not entitled to cash distributions unless and until they convert to Series A subordinated units or common units, which conversion is contingent on our meeting both certain distribution levels and certain in-service operational tests at our Pine Prairie facility. As a result, the Series B subordinated units are not included in the calculation of basic or diluted net income per unit amounts. | ||||||||
| PAA NATURAL GAS STORAGE, L.P. AND SUBSIDIARIES | ||||||||
| FINANCIAL SUMMARY (unaudited) | ||||||||
|
FINANCIAL DATA RECONCILIATIONS |
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| (In thousands, except per unit data) | ||||||||
|
Three Months Ended
March 31, |
||||||||
| 2012 | 2011 | |||||||
| Distributable cash flow ("DCF") | ||||||||
| Net Income | $ | 16,018 | $ | 6,345 | ||||
| Depreciation, depletion and amortization | 9,076 | 6,469 | ||||||
| Equity compensation expense, net of cash payments | 947 | 1,377 | ||||||
| Maintenance capital expenditures | (182 | ) | (106 | ) | ||||
| Mark-to-market on open derivative positions | 14 | (39 | ) | |||||
| Acquisition-related expense | - | 3,995 | ||||||
| DCF | $ | 25,873 | $ | 18,041 | ||||
|
Three Months Ended
March 31, |
||||||||
| Net income and earnings per limited partner unit excluding selected items impacting comparability: | 2012 | 2011 | ||||||
| Net Income | $ | 16,018 | $ | 6,345 | ||||
| Selected items impacting comparability | 1,053 | 5,852 | ||||||
| Adjusted Net Income | $ | 17,071 | $ | 12,197 | ||||
| Net income available to limited partners in accordance with application of the two-class method for MLPs | $ | 15,480 | $ | 6,137 | ||||
|
Limited partners' 98% of selected items impacting comparability |
1,032 | 5,735 | ||||||
| Adjusted limited partners' net income | $ | 16,512 | $ | 11,872 | ||||
| Adjusted basic net income per limited partner unit | $ | 0.23 | $ | 0.20 | ||||
| Adjusted diluted net income per limited partner unit | $ | 0.23 | $ | 0.20 | ||||
| Basic weighted average units outstanding (1) | 71,128 | 59,466 | ||||||
| Diluted weighted average units outstanding (1) | 71,238 | 59,480 | ||||||
| (1) Includes common units and Series A subordinated units. Series B subordinated units are not entitled to cash distributions unless and until they convert to Series A subordinated units or common units, which conversion is contingent on our meeting both certain distribution levels and certain in-service operational tests at our Pine Prairie facility. As a result, the Series B subordinated units are not included in the calculation of basic or diluted net income per unit amounts. | ||||||||
PAA Natural Gas Storage, L.P.
Roy I. Lamoreaux, Director, Investor
Relations, 713-646-4222 or 800-564-3036
or
Al Swanson,
Executive Vice President, CFO, 800-564-3036
Source: PAA Natural Gas Storage, L.P.
Copyright Business Wire 2012