Crestwood Announces Fourth Quarter and Full Year 2012 Financial and Operating Results and 2013 Outlook
HOUSTON, TX -- (Marketwire) -- 02/26/13 -- Crestwood Midstream Partners LP (CMLP) ("Crestwood" or the "Partnership") reported today its unaudited financial results for the three months and year ended December 31, 2012. Key financial and operating results for 2012 included the following:
2012 Financial Highlights
- Reported adjusted earnings before interest, taxes, depreciation, amortization and accretion ("Adjusted EBITDA") of $119.3 million for the year ended December 31, 2012, a 9% increase compared to the $110.0 million reported for the year ended 2011. Adjusted EBITDA was $30.5 million for the fourth quarter 2012, which was consistent with the fourth quarter 2011;
- Reported adjusted distributable cash flow of $91.2 million for the year ended December 31, 2012, a 4% increase from 2011. Adjusted distributable cash flow was $23.3 million for the fourth quarter 2012, which was consistent with the fourth quarter 2011;
- Improved liquidity through the issuance of additional senior notes, and increased the maximum borrowing capacity and extended the maturity date of its revolving credit facility; and
- Paid total cash distributions of $2.02 per common unit for the year ended 2012; an 8% increase compared to distributions paid for the year ended 2011. The cash distribution of $0.51 per common unit for the fourth quarter 2012 was 4% higher than the distribution paid for the fourth quarter 2011.
2012 Operational Highlights
- Repositioned and further diversified the Partnership with substantial future growth visibility from liquids rich basins through the acquisition of approximately $560 million of gathering, processing and compression assets. Including Crestwood Marcellus Midstream LLC ("CMM"), gathering volumes in rich gas areas represented 62% of Crestwood's total gathering volumes in the fourth quarter 2012, compared to 26% in the fourth quarter 2011;
- Acquired a strong growth position in the rich gas portion of the Marcellus Shale, located in Harrison and Doddridge Counties, West Virginia, through the purchase of midstream assets and a 20 year fixed-fee services contract from Antero Resources Appalachian Corporation ("Antero") in March 2012. Results from Antero in the region vastly exceeded expectations with volumes growing from approximately 200 million cubic feet per day ("MMcf/d"), in early 2012 to approximately 400 MMcf/d at year end 2012. In response to Antero's rapidly expanding activity in the area, Crestwood opened regional operating offices in Clarksburg and Charleston, West Virginia and has increased its Marcellus staff to 20 full time equivalents. By year end 2013, volumes from Crestwood's Marcellus region are expected to surpass its Barnett Shale segment as the largest segment contributor in Crestwood's portfolio and Antero will become Crestwood's largest customer by volume;
- Established a North American business development team in July 2012 to expand Crestwood's ability to source, execute, and finance greenfield development projects in the industry's most prolific rich gas and crude oil plays. This new organic growth strategy is based on the recognition that large scale acquisitions in the current market are becoming prohibitively expensive based upon recent transactions. Crestwood is currently developing or in advanced stages of negotiations for projects in the Niobrara Shale, Avalon Shale/Bone Spring area of the Permian Basin and Utica Shale regions;
- Initiated a "bolt-on" acquisition strategy, focused on acquiring assets near Crestwood's existing assets where significant operating synergies exist, by acquiring the West Johnson County gas gathering and processing system from Devon Energy Corporation ("Devon") in August 2012. During the fourth quarter 2012, Crestwood successfully restarted idled processing capacity at the Cowtown processing plant and shut down the processing plant acquired in the transaction. Crestwood is now diverting approximately 90 MMcf/d of dedicated Devon production to the Cowtown plant, allowing Crestwood to increase system operating efficiencies that enhances natural gas liquids ("NGL") recoveries for Devon and provides lower operating costs to Crestwood. Additionally, Crestwood now has the 100 MMcf/d processing plant acquired from Devon ready to be redeployed to new liquids rich areas where Crestwood's business development team is making progress on greenfield development opportunities;
- Continued the "bolt-on" acquisition strategy with CMM acquiring E. Marcellus Asset Company, LLC ("EMAC") from Enerven Compression LLC ("Enerven") in December 2012. EMAC's assets include four compression and dehydration stations, and the transaction expands Crestwood's "value-chain" of services provided to Antero in the rapidly expanding Marcellus Shale region. The transaction enhances Crestwood's services and margins through an additional source of long-term contracted fee-based revenues, adds a significant component to Crestwood's future growth plans, and most importantly, provided a catalyst for an accelerated drop-down transaction of CMM to Crestwood; and
- Reported consolidated gathering volumes during the fourth quarter 2012 averaged 966 MMcf/d, a 46% increase over the fourth quarter 2011, and an 8% increase over the third quarter 2012.
"When looking back at 2012, we are pleased with the results of several highly successful acquisitions and the continued growth of our organization to strategically reposition Crestwood into high growth rich gas plays," stated Robert G. Phillips, Chairman, President and Chief Executive Officer of Crestwood's general partner. "To counter the impact of declining natural gas prices and the challenge of increasing valuations in the midstream M&A market, our 2012 achievements, including the strong entry into the Marcellus Shale, timely and accretive bolt-on acquisitions and the start-up of a highly talented business development team provided a near-term and long-term pivot opportunity for Crestwood in 2012."
"The immediate result is a dramatic shift to rich gas volume growth in our overall portfolio supported by stronger producer drilling activity in the rich gas plays and improved growth visibility via substantial Marcellus contracted organic capital spending and additional bolt-on acquisition opportunities. With a full year contribution from the 2012 acquisitions and expected volume growth in the Marcellus Shale, we believe 2013 will be another transition year but will likely deliver significant improvement over 2012 as our 2013 guidance reflects. Importantly, Crestwood's record organic capital expenditures forecasted in our 2013 budget should provide substantial earnings growth visibility in 2014 and support a quicker return to our traditional 8-10% per year distribution growth objectives," concluded Phillips.
Fourth Quarter 2012 Financial and Operating Results
Crestwood's Adjusted EBITDA for the fourth quarter 2012 was approximately $31 million, compared to $32 million in the third quarter 2012, and $30 million in the fourth quarter 2011. The decrease in our Adjusted EBITDA from third quarter 2012 reflects the impacts of declining volumes in our Barnett segment, higher than anticipated operating expenses incurred related to the decommissioning of the West Johnson County processing facility and higher general and administrative expenses, primarily related to significant increases in our business development activities. These decreases were partially offset by a full quarter's contribution from our West Johnson County assets acquired in August 2012.
Gathering volumes on Crestwood's 100% owned systems averaged 606 MMcf/d in the fourth quarter 2012, which was consistent with third quarter 2012, but down from the 662 MMcf/d gathered in the fourth quarter 2011 due to lower volumes in the dry gas areas of the Barnett Shale. Fourth quarter 2012 processing volumes increased 48% from the fourth quarter 2011 due to higher volumes in rich gas areas including the West Johnson County system acquired from Devon, which contributed approximately $4 million of operating margin in the fourth quarter 2012. CMM gathering volumes (which Crestwood operates but only held a 35% interest during 2012 prior to consolidating in the drop-down transaction completed in January 2013) totaled 360 MMcf/d during the fourth quarter 2012. CMM contributed $3 million of Adjusted EBITDA to Crestwood's fourth quarter 2012 results (i.e. Crestwood's 35% interest in CMM's $9 million of Adjusted EBITDA), up 32% from third quarter 2012. The Enerven acquisition, completed in late December 2012 had a minimal impact on CMM's fourth quarter results but is expected to contribute approximately $11 million to $12 million of operating margin in 2013.
Marcellus Shale Update
On January 8, 2013, Crestwood completed the consolidation of 100% of CMM's natural gas gathering, compression and dehydration business located largely in the rich gas window of the southwestern core of the Marcellus Shale play. The assets, located in Harrison and Doddridge Counties, West Virginia, consist of approximately 40 miles of low pressure gathering pipeline connected to approximately 120 Marcellus Shale wells and 43,000 horsepower of compression assets acquired from Enerven. The business is supported by long term fixed-fee gathering and compression services contracts with Antero covering approximately 136,000 net acres (the "Eastern Area of Dedication") and include a seven year minimum annual volume guarantee on the Eastern Area of Dedication and the right of first offer to acquire additional Antero midstream assets on approximately 105,000 net acres adjacent to the Eastern Area of Dedication. Antero is currently running 13 rigs across its West Virginia acreage and has announced 4.8 trillion cubic feet equivalent ("Tcfe") of proved reserves at year end 2012 with over 3,000 potential drillable locations.
At year-end 2012, spot volumes on Crestwood's Marcellus Shale gathering systems were approximately 400 MMcf/d and are expected to grow to approximately 500 MMcf/d by the end of 2013 with the connection of approximately 60 to 70 new wells. Based upon Antero's current 2013 drilling and development plans, Crestwood's 2013 Marcellus Shale capital projects in the Eastern Area of Dedication include the installation of an 18 mile expansion of the gathering system and two new compressor stations with nominal capacity of 100 MMcf/d. The projects are expected to be completed and placed in service in phases beginning as early as June 2013 and throughout the remainder of 2013 at an estimated cost of approximately $80 million.
Business Development Update
Crestwood's business development and project management team is focused on greenfield development projects in a number of the most prolific rich gas and crude oil plays in North America. The team has made significant progress and is currently in various stages of discussions, negotiations and project development on opportunities in the Niobrara Shale, Permian Basin and Utica/Point Pleasant Shale unconventional resource plays. While these projects are not currently included in Crestwood's 2013 capital budget or operating guidance, an update on these opportunities is described below.
Niobrara Shale
During the fourth quarter 2012, Crestwood and RKI Exploration & Production LLC ("RKI"), signed a series of letter agreements relating to RKI's interest in a gathering system (the "Jackalope System") and current and future rich natural gas production from the Powder River Basin Niobrara Shale and other high potential proven formations located in Converse County, Wyoming. Among other things, the agreements provide a framework for the potential acquisition by Crestwood of RKI's 50% ownership interest in the Jackalope System and a long term dedication to gathering and processing agreements of potentially all of RKI's 50% interest in approximately 750,000 acres in the area. The agreements also authorize Crestwood to initiate certain development activities with respect to planned processing facilities required for the eventual build-out of the Jackalope System infrastructure, subject to reimbursement by RKI. Crestwood and RKI continue to conduct due diligence on the existing Jackalope System, the ultimate production development scope and corresponding infrastructure build-out plans. A final agreement will be subject to negotiation and execution of definitive documentation which is expected to be completed in the first half of 2013.
RKI, based in Oklahoma City, Oklahoma, is a privately-owned, leading independent exploration and production company focused in the Powder River, Permian and Denver-Julesberg Basins. RKI is developing its interest in the Powder River Basin through a joint development agreement with Chesapeake Energy Corporation. RKI owns 50% of the crude oil, natural gas and NGL production from the joint development area under consideration.
Permian Basin
Due to increased drilling activity for rich natural gas production in the Delaware Sands, Avalon Shale, Bone Spring and Wolfcamp formations in the Delaware Permian, Crestwood is moving forward with plans to convert its Las Animas gathering systems from dry gas to rich gas service. Based on discussions with area producers, during 2013 Crestwood plans to connect the Laguna Grande and Dublin Ranch systems, install JT skid or comparable heavy NGL separation equipment at central locations on the combined system and provide truck or rail NGL takeaway options. Depending upon the results of those activities during 2013, Crestwood will assess whether it will install one of its surplus cryogenic processing facilities in the area.
Utica Shale
Crestwood is developing plans to create a large scale rich gas and condensate gathering system and gas processing facilities targeting rich gas Utica Shale/Point Pleasant producers in northeast Ohio and northwest Pennsylvania. Crestwood is currently in discussions with multiple producers in the Utica Shale/Point Pleasant play for the development of gathering and processing services.
2013 Outlook
Crestwood expects Adjusted EBITDA for the full year 2013 to be in the range of $170 million to $185 million, which represents a 50% increase over 2012. The primary drivers include the consolidation of 100% of CMM, continued volume growth in the Marcellus region and the full year impact of the West Johnson County assets and Enerven operations acquired in August 2012 and December 2012, respectively.
Crestwood anticipates average 2013 gathering volumes in the range of 1,000 MMcf/d to 1,100 MMcf/d, an overall increase of 30% from 2012; average processing volumes of approximately 225 MMcf/d to 240 MMcf/d, a 55% increase from 2012; and compression volumes of approximately 320 MMcf/d to 340 MMcf/d attributable to the recent Enerven acquisition. Gathering volumes in rich gas areas are expected to increase 65% to 75% relative to 2012, primarily the result of increasing drilling activity from Antero in the Marcellus Shale and a full year contribution from the West Johnson County asset acquisition in the Barnett rich gas area.
The Barnett Shale continues to be an important producing area to Crestwood. We anticipate that our 2013 gathering volumes from the Barnett rich gas area will be 32% higher than 2012, which will be partially offset by a 12% decline in the gathering volumes from the Barnett dry gas areas as compared to 2012. Our anticipated 2013 volumes are consistent with those recently forecasted by Quicksilver Resources, Inc. ("Quicksilver"). Our forecasted 2013 net revenues from the rich and dry gas areas of the Barnett Shale are summarized in the table below (in millions):
% of Total
Net Revenues(1) % Increase Net Revenues(2)
----------------- ----------------
2013 2012 (Decrease) 2013 2012
-------- -------- ---------- ------- -------
Barnett Rich - Quicksilver $ 58 $ 58 -- 22% 33%
Barnett Rich - Devon and
Other 33 18 83% 13% 10%
-------- --------
Total Barnett Rich 91 76 20% 35% 43%
Barnett Dry - Quicksilver 46 55 (16%) 18% 31%
Barnett Dry - Other
Producers 3 2 50% 1% 1%
-------- --------
Total Barnett Dry 49 57 (14%) 19% 33%
-------- --------
Total Barnett $ 140 $ 133 5% 54% 76%
======== ========
Total Quicksilver $ 104 $ 113 (8%) 40% 65%
======== ========
(1) Revenue estimates are approximations based on 2013 forecasted volumes.
(2) Excludes revenues related to acquisitions assumed in 2013 forecast.
Capital spending on contracted projects and maintenance capital for the full year 2013 is expected to be in the range of $120 million to $150 million. Additionally, Crestwood maintains a substantial backlog of identified bolt-on acquisition opportunities around its existing asset footprint and expects to execute on approximately $150 million to $250 million of those opportunities in 2013. Following the acquisition of the remaining interest in CMM, Crestwood had approximately $210 million of capacity on its revolving credit facility and approximately $70 million of capacity on the CMM revolving credit facility. Consistent with past practices and its long-term financing strategy, Crestwood will fund future growth capital spending and acquisitions with a balanced mix of debt and equity.
Fourth Quarter and Full Year 2012 Segment Performance
CMM Operations
Equity earnings and Adjusted EBITDA from Crestwood's 35% ownership interest in CMM totaled $1.6 million and $3 million for the fourth quarter 2012, respectively. On a 100% basis, CMM's Adjusted EBITDA was $8.5 million for the fourth quarter 2012, an increase of 33% from $6.4 million of Adjusted EBITDA for the third quarter 2012. Volumes gathered by CMM during the fourth quarter 2012 averaged 360 MMcf/d, a 25% increase over third quarter 2012. Beginning in the first quarter 2013, CMM will be fully consolidated into the operations of Crestwood.
Barnett Segment
Operating revenues, net of product purchases, in the Barnett segment totaled $34 million in the fourth quarter 2012, compared with $33 million in the third quarter 2012 and $37 million in the fourth quarter 2011. Operating revenues, net of product purchases, for the twelve months ended December 31, 2012, totaled $133 million, compared with $140 million of net revenues in 2011. Gathering volumes totaled 442 MMcf/d in the fourth quarter 2012, compared to 438 MMcf/d and 504 MMcf/d of gathering volumes during the third quarter 2012 and fourth quarter of 2011, respectively. For the full year 2012, gathering volumes totaled 432 MMcf/d, compared with 474 MMcf/d during 2011. The decrease from 2011 was primarily due to reduced volumes on our Lake Arlington and Alliance systems. Processing volumes totaled 200 MMcf/d in the fourth quarter 2012, a 25% increase over the third quarter 2012, and a 52% increase over the fourth quarter 2011. For the full year 2012, processing volumes totaled 155 MMcf/d, compared with 132 MMcf/d during 2011. The increases were attributable to the West Johnson County acquisition and increased third party processing volumes on our Cowtown system. Operating and maintenance expenses increased to $8 million during the fourth quarter 2012, $2 million higher than fourth quarter 2011 due to the addition of the acquired West Johnson County assets.
Fayetteville Segment
Operating revenues in the Fayetteville segment, net of product purchases, totaled $7 million in the fourth quarter 2012, which was consistent with third quarter 2012 revenues and 10% higher than fourth quarter 2011. Operating revenues, net of product purchases, for the full year of 2012 totaled $27 million, 38% higher than the year ended December 31, 2011, reflecting the full year of ownership of the Fayetteville system acquired in April 2011, as well as volume growth in the second half of 2012. Gathering volumes totaled 93 MMcf/d during fourth quarter 2012, compared to 91 MMcf/d in the third quarter of 2012, and 90 MMcf/d in fourth quarter 2011. Operating and maintenance expenses totaled $2 million for the fourth quarter 2012, a decrease of $1 million from the fourth quarter 2011, due primarily to lower expenses for leased compression.
Granite Wash
Operating revenues in the Granite Wash segment, net of product purchases, totaled $1.4 million in the fourth quarter 2012, an increase of 11% over the third quarter of 2012, but 10% below fourth quarter 2011 due to lower NGL and natural gas prices. For the year ended December 31, 2012, operating revenues, net of product purchases, totaled $4.9 million, which was consistent with the year ended 2011. Operating and maintenance expenses totaled $0.6 million during the fourth quarter 2012, which was consistent with the fourth quarter 2011.
Other Operations
Operating revenues, net of product purchases, on our other systems (which include the Sabine gathering system in the Haynesville/Bossier Shale and the Las Animas system in the Avalon Shale) totaled $2.3 million for the fourth quarter 2012, compared with $2.0 million in the fourth quarter 2011. For the year ended December 31, 2012, operating revenues, net of product purchases, totaled $10.2 million, compared to $2.5 million for the year ended 2011, reflecting the full year of ownership of the Sabine gathering system acquired in November 2011. Gathering volumes on the Sabine and Las Animas systems totaled 50 MMcf/d during the fourth quarter 2012, compared to 55 MMcf/d during the third quarter of 2012. Operating and maintenance expenses related to these assets totaled $0.7 million during the fourth quarter 2012, which was consistent with third quarter 2012.
General and Administrative Expenses
General and administrative expenses totaled $6.4 million in the fourth quarter 2012, including $1.1 million of transaction and due diligence related expenses compared to $6.2 million in the fourth quarter 2011, including $0.2 million of acquisition related expenses. General and administrative expenses incurred by CMM totaled $1.2 million during the fourth quarter 2012.
Capital Investment and Resources
At December 31, 2012, Crestwood had approximately $557 million of debt outstanding, comprised of $350 million of 7.75% fixed-rate senior notes due 2019, and approximately $207 million of borrowings under its $550 million revolving credit facility. During the fourth quarter 2012, Crestwood issued an additional $150 million of its 7.75% senior notes, increased the maximum borrowing capacity of its revolving credit facility from $500 million to $550 million, and extended the maturity date of the revolver to November 2017. At December 31, 2012, CMM had approximately $127 million of debt outstanding under its $200 million revolving credit facility due March 2017, including approximately $95 million borrowed by CMM to fund the acquisition of the Enerven compression assets on December 28, 2012.
Crestwood capital spending excluding acquisition capital, for the year ended December 31, 2012, totaled $36 million, comprised of $32 million of growth capital and $4 million of maintenance capital. Crestwood's growth capital was primarily related to the construction of pipeline laterals and compression equipment in the Fayetteville Shale and Barnett Shale. Growth capital spending by CMM, which is funded under its revolving credit facility, totaled $17 million since commencing operations in the Marcellus Shale region at the end of March 2012.
Non-GAAP Financial Measures
Adjusted EBITDA and adjusted distributable cash flow are non-generally accepted accounting principles ("non-GAAP") financial measures. 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.
Conference Call
Crestwood will host a conference call for investors and analysts on Tuesday, February 26, 2013, beginning at 10:00 a.m. Central Time, to discuss the fourth quarter 2012 performance and the outlook for 2013. Interested parties may participate by joining the conference call at 888-430-8683 and entering passcode 6909041. 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 6909041.
About Crestwood Midstream Partners LP
Houston, Texas based Crestwood 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 in the Texas Panhandle, the Marcellus Shale in northern West Virginia, the Avalon Shale/Bone Spring in southeastern New Mexico, and the Haynesville/Bossier Shale in western Louisiana. For more information about Crestwood, 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's 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's financial condition, results of operations and cash flows including, without limitation, changes in general economic conditions; fluctuations in oil, natural gas and NGL prices; the extent and success of drilling efforts, as well as the extent and quality of natural gas volumes produced within proximity of our assets; failure or delays by our customers in achieving expected production in their natural gas projects; competitive conditions in our industry and their impact on our ability to connect natural gas supplies to our gathering and processing assets or systems; actions or inactions taken or non-performance by third parties, including suppliers, contractors, operators, processors, transporters and customers; our ability to consummate acquisitions, successfully integrate the acquired businesses, realize any cost savings and other synergies from any acquisition; changes in the availability and cost of capital; operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control; timely receipt of necessary government approvals and permits, our ability to control the costs of construction, including costs of materials, labor and right-of-way and other factors that may impact our ability to complete projects within budget and on schedule; the effects of existing and future laws and governmental regulations, including environmental and climate change requirements; the effects of existing and future litigation; and risks related to our substantial indebtedness, as well as other factors disclosed in Crestwood's filings with the U.S. Securities and Exchange Commission. You should read our filings with the U.S. Securities and Exchange Commission, including our latest Annual Report on Form 10-K, and our most recent Quarterly Reports and Current Reports for a more extensive list of factors that could affect results.
CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except for per unit data)
(Unaudited)
Three Months
Three Months Ended Year Ended Ended
December 31, December 31, September 30,
-------------------- -------------------- -------------
2012 2011 2012 2011 2012
--------- --------- --------- --------- -------------
Operating
revenues
Gathering
revenue -
related party $ 20,971 $ 26,721 $ 88,091 $ 102,427 $ 21,658
Gathering
revenue 13,110 10,620 49,420 28,528 13,739
Processing
revenue -
related party 6,033 7,075 25,652 28,798 6,298
Processing
revenue 3,816 847 8,481 2,714 2,271
Product sales 13,059 14,027 42,317 43,353 11,071
--------- --------- --------- --------- -------------
Total
operating
revenues 56,989 59,290 213,961 205,820 55,037
--------- --------- --------- --------- -------------
Operating
expenses
Product
purchases (2,902) 12,777 23,853 38,787 10,341
Product
purchases -
related party 15,152 - 15,152 - -
Operations and
maintenance 11,892 10,138 40,617 36,303 10,127
General and
administrative 6,439 6,157 25,890 24,153 5,777
Depreciation,
amortization
and accretion 13,299 9,831 45,726 33,812 10,943
--------- --------- --------- --------- -------------
Total
operating
expenses 43,880 38,903 151,238 133,055 37,188
--------- --------- --------- --------- -------------
Gain from
exchange of
property, plant
and equipment - - - 1,106 -
--------- --------- --------- --------- -------------
Operating income 13,109 20,387 62,723 73,871 17,849
Earnings from
unconsolidated
affiliate 1,642 - 3,847 - 1,764
Interest and debt
expense (9,573) (7,692) (33,618) (27,617) (8,202)
--------- --------- --------- --------- -------------
Income before
income taxes 5,178 12,695 32,952 46,254 11,411
Income tax
expense 322 353 1,206 1,251 306
--------- --------- --------- --------- -------------
Net income $ 4,856 $ 12,342 $ 31,746 $ 45,003 $ 11,105
========= ========= ========= ========= =============
General
partner's
interest in net
income $ 4,131 $ 2,792 $ 15,075 $ 7,735 $ 4,240
Limited
partners'
interest in net
income $ 725 $ 9,550 $ 16,671 $ 37,268 $ 6,865
Basic income per
unit:
Net income per
limited
partner unit $ 0.01 $ 0.24 $ 0.37 $ 1.00 $ 0.15
Diluted income
per unit:
Net income per
limited
partner unit $ 0.01 $ 0.24 $ 0.37 $ 1.00 $ 0.15
Weighted-average
number of
limited partner
units:
Basic 48,252 39,527 45,223 37,206 46,564
Diluted 48,475 39,641 45,420 37,320 46,767
Distributions
declared per
limited partner
unit
(attributable
to the period
ended) $ 0.51 $ 0.49 $ 2.02 $ 1.87 $ 0.51
CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(In thousands, except for unit data)
(Unaudited)
December 31, December 31,
2012 2011
-------------- --------------
ASSETS
Current assets
Cash and cash equivalents $ 21 $ 797
Accounts receivable - related party 23,863 27,312
Accounts receivable 15,123 11,926
Insurance receivable 2,920 -
Prepaid expenses and other 1,941 1,935
-------------- --------------
Total current assets 43,868 41,970
Investment in unconsolidated affiliate 128,646 -
Property, plant and equipment, net of
accumulated depreciation of $126,524 in 2012 784,371 746,045
and $89,860 in 2011
Intangible assets, net of accumulated
amortization of $10,138 in 2012 and $2,440 163,021 127,760
in 2011
Goodwill 95,031 93,628
Deferred financing costs, net 17,149 16,699
Other assets 1,321 790
-------------- --------------
Total assets $ 1,233,407 $ 1,026,892
============== ==============
LIABILITIES AND PARTNERS' CAPITAL
Current liabilities
Accrued additions to property, plant and
equipment 3,829 7,500
Capital leases 3,862 2,693
Accounts payable - related party 3,088 1,308
Accounts payable, accrued expenses and
other liabilities 27,423 31,794
-------------- --------------
Total current liabilities 38,202 43,295
Long-term debt 558,161 512,500
Long-term capital leases 3,161 3,929
Asset retirement obligations 13,188 11,545
Commitments and contingent liabilities
Partners' capital
Common unitholders (41,164,737 and
32,997,696 units issued andoutstanding at
December 31, 2012 and 2011) 442,348 286,945
Class C unitholders (7,165,819 and
6,596,635 units issued andoutstanding at
December 31, 2012 and 2011) 159,908 157,386
General partner (979,614 and 763,892 units
issued andoutstanding at December 31, 2012
and 2011) 18,439 11,292
-------------- --------------
Total partners' capital 620,695 455,623
-------------- --------------
Total liabilities and partners' capital $ 1,233,407 $ 1,026,892
============== ==============
CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Year Ended December 31,
------------------------
2012 2011
----------- -----------
Cash flows from operating activities
Net income $ 31,746 $ 45,003
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, amortization and accretion 45,726 33,812
Equity-based compensation 1,877 916
Gain from exchange of property, plant and
equipment - (1,106)
Other non-cash income items 4,284 3,473
Changes in assets and liabilities:
Accounts receivable - related party 3,449 (4,309)
Accounts receivable (3,197) (7,348)
Insurance receivable (1,251) -
Prepaid expenses and other assets 2,113 249
Accounts payable - related party 1,780 (2,959)
Accounts payable, accrued expenses and
other liabilities 2,740 18,600
----------- -----------
Net cash provided by operating activities 89,267 86,331
----------- -----------
Cash flows from investing activities
Acquisitions, net of cash acquired (87,247) (414,073)
Capital expenditures (35,493) (48,405)
Proceeds from exchange of property, plant
and equipment - 5,943
Investment in unconsolidated affiliate (131,250) -
Capital distributions from unconsolidated
affiliate 2,604 -
Proceeds from sale of property, plant and
equipment 20 -
----------- -----------
Net cash used in investing activities (251,366) (456,535)
----------- -----------
Cash flows from financing activities
Proceeds from issuance of senior notes 151,500 200,000
Proceeds from credit facility 411,700 215,200
Repayments of credit facility (517,500) (186,204)
Payment of Tristate Acquisition deferred
payment (7,839) -
Payments on capital leases (2,993) (1,966)
Deferred financing costs paid (4,994) (6,982)
Proceeds from issuance of Class C units,
net - 152,671
Proceeds from issuance of common units,
net 217,483 53,550
Contributions from partners 5,930 8,741
Distributions to partners (91,558) (64,011)
Taxes paid for equity-based compensation
vesting (406) -
----------- -----------
Net cash provided by financing activities 161,323 370,999
----------- -----------
Change in cash and cash equivalents (776) 795
Cash and cash equivalents at beginning of period 797 2
----------- -----------
Cash and cash equivalents at end of period $ 21 $ 797
=========== ===========
Supplemental cash flow information:
Interest paid, net of amounts capitalized $ 26,948 20,281
CRESTWOOD MIDSTREAM PARTNERS LP
OPERATING STATISTICS
(In thousands)
(Unaudited)
Three Months
Three Months Ended Year Ended Ended
December 31, December 31, September 30,
--------------------- --------------------- -------------
2012 2011 2012 2011 2012
---------- ---------- ---------- ---------- -------------
Barnett:
Gathering revenues $ 24,322 $ 28,813 $ 98,889 $ 108,705 $ 24,737
Processing
revenues 9,847 7,826 34,003 31,379 8,540
Product sales 72 - 141 - 69
---------- ---------- ---------- ---------- -------------
Total operating
revenues $ 34,241 $ 36,639 $ 133,033 $ 140,084 $ 33,346
Product purchases 65 - 125 - 60
Operations and
maintenance
expense 8,443 6,619 26,881 25,147 6,963
---------- ---------- ---------- ---------- -------------
EBITDA $ 25,733 $ 30,020 $ 106,027 $ 114,937 $ 26,323
========== ========== ========== ========== =============
Gathering volumes
(in MMcf) 40,653 46,367 158,087 172,838 40,252
Processing volumes
(in MMcf) 18,351 12,084 56,844 48,112 14,671
Fayetteville:
Gathering revenues $ 6,949 $ 6,326 $ 26,986 $ 19,421 $ 7,043
Product sales 181 310 512 1,379 131
---------- ---------- ---------- ---------- -------------
Total operating
revenues $ 7,130 $ 6,636 $ 27,498 $ 20,800 $ 7,174
Product purchases 180 290 523 1,302 137
Operations and
maintenance
expense 2,138 2,636 8,537 8,992 1,855
---------- ---------- ---------- ---------- -------------
EBITDA $ 4,812 $ 3,710 $ 18,438 $ 10,506 $ 5,182
========== ========== ========== ========== =============
Gathering volumes
(in MMcf) 8,568 8,275 31,617 23,421 8,403
Granite Wash:
Gathering revenues $ 560 $ 138 $ 1,434 $ 346 $ 465
Processing
revenues 2 96 130 133 29
Product sales 11,973 12,769 38,992 37,734 10,208
---------- ---------- ---------- ---------- -------------
Total operating
revenues $ 12,535 $ 13,003 $ 40,556 $ 38,213 $ 10,702
Product purchases 11,181 11,506 35,695 33,245 9,481
Operations and
maintenance
expense 631 501 2,250 1,499 560
---------- ---------- ---------- ---------- -------------
EBITDA $ 723 $ 996 $ 2,611 $ 3,469 $ 661
========== ========== ========== ========== =============
Gathering volumes
(in MMcf) 1,864 1,544 6,440 4,555 1,856
Processing volumes
(in MMcf) 1,854 1,560 6,420 4,501 1,859
Other:
Gathering revenues $ 2,250 $ 2,064 $ 10,202 $ 2,483 $ 3,152
Product sales 833 948 2,672 4,240 663
---------- ---------- ---------- ---------- -------------
Total operating
revenues $ 3,083 $ 3,012 $ 12,874 $ 6,723 $ 3,815
Product purchases 824 981 2,662 4,240 663
Operations and
maintenance
expense 680 382 2,949 665 749
---------- ---------- ---------- ---------- -------------
EBITDA $ 1,579 $ 1,649 $ 7,263 $ 1,818 $ 2,403
========== ========== ========== ========== =============
Gathering volumes
(in MMcf) 4,622 4,677 21,770 7,332 5,041
CRESTWOOD MIDSTREAM PARTNERS LP
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
(In thousands, except for per unit data)
(Unaudited)
Three Months
Three Months Ended Year Ended Ended
December 31, December 31, September 30,
-------------------- -------------------- -------------
2012 2011 2012 2011 2012
--------- --------- --------- --------- -------------
Net income $ 4,856 $ 12,342 $ 31,746 $ 45,003 $ 11,105
Items impacting
net income:
Significant
transaction-
related
expenses 1,095 219 3,805 3,385 932
Gain from
exchange of
property,
plant and
equipment - - - (1,106) -
Non-cash
interest
expense
(write-off of
deferred
financing
costs) - - 370 - -
Interest
expense
(bridge loan
fees) - - - 2,500 -
--------- --------- --------- --------- -------------
Adjusted net
income $ 5,951 $ 12,561 $ 35,921 $ 49,782 $ 12,037
========= ========= ========= ========= =============
Net income per
limited partner
unit (diluted
basis) $ 0.01 $ 0.24 $ 0.37 $ 1.00 $ 0.15
Items impacting
net income 0.02 0.01 0.09 0.13 0.02
--------- --------- --------- --------- -------------
Adjusted net
income per
limited partner
unit (diluted
basis) $ 0.03 $ 0.25 $ 0.46 $ 1.13 $ 0.17
========= ========= ========= ========= =============
Three Months
Three Months Ended Year Ended Ended
December 31, December 31, September 30,
-------------------- -------------------- ---------------
2012 2011 2012 2011 2012
--------- --------- --------- --------- ---------------
Net income $ 4,856 $ 12,342 $ 31,746 $ 45,003 $ 11,105
Depreciation,
amortization
and accretion
expense 13,299 9,831 45,726 33,812 10,943
Income tax
expense 322 353 1,206 1,251 306
Amortization of
deferred
financing fees 1,250 931 4,506 3,473 931
Non-cash equity
compensation 349 65 1,877 916 534
Maintenance
capital
expenditures (1,212) (384) (4,084) (1,409) (1,279)
--------- --------- --------- --------- ---------------
Distributable
cash flow 18,864 23,138 80,977 83,046 22,540
Add:
Significant
transaction-
related
expenses 1,095 219 3,805 3,385 932
Add:
Significant
minimum volume
deficiency
payment 1,292 - 2,718 - 1,426
Add: Interest
expense
(bridge loan
fees) - - - 2,500 -
Less: Gain from
exchange of
property,
plant and
equipment - - - (1,106) -
Less: Equity
earnings from
unconsolidated
affiliate (1,642) - (3,847) - (1,764)
Add: Adjusted
DCF from
unconsolidated
affiliate 3,688 - 7,500 - 2,062
--------- --------- --------- --------- ---------------
Adjusted
distributable
cash flow $ 23,297 $ 23,357 $ 91,153 $ 87,825 $ 25,196
========= ========= ========= ========= ===============
Three Months
Three Months Ended Year Ended Ended
December 31, December 31, September 30,
-------------------- -------------------- ---------------
2012 2011 2012 2011 2012
--------- --------- --------- --------- ---------------
Total operating
revenues $ 56,989 $ 59,290 $ 213,961 $ 205,820 $ 55,037
Product
purchases 12,250 12,777 39,005 38,787 10,341
Operations and
maintenance
expense 11,892 10,138 40,617 36,303 10,127
General and
administrative
expense 6,439 6,157 25,890 24,153 5,777
Gain from
exchange of
property,
plant and
equipment - - - 1,106 -
Earnings from
unconsolidated
affiliate 1,642 - 3,847 - 1,764
--------- --------- --------- --------- ---------------
EBITDA 28,050 30,218 112,296 107,683 30,556
Items impacting
EBITDA:
Add:
Significant
transaction-
related
expenses 1,095 219 3,805 3,385 932
Less: Gain from
exchange of
property,
plant and
equipment - - - (1,106) -
Less: Equity
earnings from
unconsolidated
affiliate (1,642) - (3,847) - (1,764)
Add: Adjusted
earnings from
unconsolidated
affiliate 2,961 - 7,074 - 2,237
--------- --------- --------- --------- ---------------
Adjusted
EBITDA 30,464 30,437 119,328 109,962 31,961
Less:
Depreciation,
amortization
and accretion
expense 13,299 9,831 45,726 33,812 10,943
Interest and
debt expense 9,573 7,692 33,618 27,617 8,202
Income tax
expense 322 353 1,206 1,251 306
Items
impacting
EBITDA 2,414 219 7,032 2,279 1,405
--------- --------- --------- --------- ---------------
Net income $ 4,856 $ 12,342 $ 31,746 $ 45,003 $ 11,105
========= ========= ========= ========= ===============
CRESTWOOD MARCELLUS MIDSTREAM LLC
OPERATING STATISTICS
(In thousands)
(Unaudited)
Three Months Three Months Year to Date
Ended Ended (from inception
September 30, December 31, of February 23,
2012 2012 2012)
--------------- --------------- ---------------
Operating revenue
Gathering revenue $ 7,976 $ 10,499 $ 25,502
--------------- --------------- ---------------
Total operating
revenue 7,976 10,499 25,502
--------------- --------------- ---------------
Operating expenses
Operations and
maintenance 815 1,163 2,491
General and
administrative 793 1,178 3,692
Depreciation,
amortization and
accretion 625 2,700 6,182
--------------- --------------- ---------------
Total operating
expenses 2,233 5,041 12,365
--------------- --------------- ---------------
Operating income 5,743 5,458 13,137
Interest and debt expense (703) (767) (2,147)
--------------- --------------- ---------------
Net income $ 5,040 $ 4,691 $ 10,990
--------------- --------------- ---------------
Add:
Interest and debt expense 703 767 2,147
Depreciation,
amortization and
accretion 625 2,700 6,182
--------------- --------------- ---------------
EBITDA $ 6,368 $ 8,158 $ 19,319
Significant transaction-
related expenses 22 302 892
--------------- --------------- ---------------
Adjusted EBITDA $ 6,390 $ 8,460 $ 20,211
=============== =============== ===============
Net income $ 5,040 $ 4,691 $ 10,990
Depreciation,
amortization and
accretion expense 625 2,700 6,182
Non-cash interest 317 316 949
Maintenance capital
expenditures (115) (103) (218)
--------------- --------------- ---------------
Distributable cash flow 5,867 7,604 17,903
Add: Significant
transaction-related
expenses 22 302 892
Add: Significant minimum
volume deficiency
payment - 2,634 2,634
--------------- --------------- ---------------
Adjusted distributable
cash flow $ 5,889 $ 10,540 $ 21,429
=============== =============== ===============
Volumes:
Gathering volumes (in
MMcf) 26,585 33,138 83,147
CMLP's 35% interest in
Crestwood Marcellus
Midstream LLC:
Equity earnings $ 1,764 $ 1,642 $ 3,847
EBITDA $ 2,229 $ 2,855 $ 6,762
Adjusted EBITDA $ 2,237 $ 2,961 $ 7,074
Distributable cash flow $ 2,053 $ 2,661 $ 6,266
Adjusted distributable
cash flow $ 2,062 $ 3,688 $ 7,500
Gathering volumes (in
MMcf) 9,305 11,598 29,101
CRESTWOOD MIDSTREAM PARTNERS LP
Full Year 2013 Adjusted EDITDA Guidance
Reconciliation to Net Income
Adjusted EBITDA $170 million to $185 million
Depreciation, amortization and accretion
expense $80 million
Interest expense, net $50 million
Income tax provision $2 million
Net income $38 million to $53 million
Investor Contact:
Mark Stockard
832-519-2207
mstockard@crestwoodlp.com
Source: Crestwood Midstream Partners LP
