HOUSTON--(BUSINESS WIRE)--
Crestwood Equity Partners LP (NYSE:CEQP) (“Crestwood Equity” or
“Crestwood”) reported today its financial and operating results for the
three months ended March 31, 2016.
First Quarter 2016 Highlights1
-
First quarter 2016 Adjusted EBITDA of $120.0 million, compared to
$141.9 million in the first quarter 2015 and $118.9 million in the
fourth quarter 2015
-
First quarter 2016 net loss of $93.7 million, compared to net income
of $18.1 million in first quarter 2015. Net loss for the first quarter
2016 includes $109.7 million of non-cash charges for goodwill
impairments; these non-cash charges resulted from a decline in
Crestwood’s unit price and continued weakness in commodity prices
during the first quarter, which required Crestwood to increase the
discount rates used to determine the fair value of its assets
-
First quarter 2016 distributable cash flow of $78.8 million, compared
to $99.9 million in first quarter 2015 and $71.9 million in the fourth
quarter 2015. The first quarter 2016 coverage ratio was approximately
1.9x and 1.6x including the dilutive impact of preferred units
-
First quarter 2016 O&M and G&A expenses, net of unit based
compensation and other significant costs, were reduced by $8.6
million, or 13% from first quarter 2015
-
Declared first quarter 2016 cash distribution of $0.60 per common
unit, or $2.40 per common unit on an annualized basis, to be paid on
May 13, 2016 to unitholders of record as of May 6, 2016
Recent Announcements
-
Partnership with Consolidated Edison, Inc. (“Con Edison”) to own and
expand Crestwood’s Northeast natural gas pipeline and storage business
through a 50/50 joint venture named Stagecoach Gas Services LLC
(“Stagecoach Gas”); transaction will result in approximately $975
million net proceeds to Crestwood that will substantially reduce debt
and improve liquidity; results in pro forma 1Q 2016 leverage ratio of
approximately 3.8x
-
Reduction of quarterly distributions by 56% to $0.60 per common unit
($2.40 per common unit annually) resulting in estimated retained
annual cash flow of $215 million and a higher distribution coverage
ratio between 1.6x to 1.8x by year-end 2016; retained cash flow to be
used for further debt reduction or investment in higher return
opportunities
-
Revised 2016 Adjusted EBITDA guidance range of $435 million to $465
million and distributable cash flow range of $275 million to $305
million as a result of the Con Edison JV and change in distributions
-
New 10-year contract with BlueStone Natural Resources II (“BlueStone”)
to gather and process natural gas on Crestwood’s Alliance, Lake
Arlington and Cowtown systems in the Barnett Shale, resolving all
outstanding issues related to the 2015 Quicksilver bankruptcy
Management Commentary
“In the recent quarter, we continued to execute on our strategic plan by
delivering the new Barnett contract with BlueStone, the end of the
Quicksilver bankruptcy, the partnership with Con Edison and a reduction
of quarterly distributions which will result in substantially lower debt
and significantly improved leverage ratio and distribution coverage,”
stated Robert G. Phillips, Chairman, President and Chief Executive
Officer of Crestwood’s general partner. “We believe that by year-end
2016, Crestwood’s credit and coverage metrics will be one of the leaders
in our peer group, will drive improved performance in our units and will
largely complete the competitive repositioning strategy we initiated
last year with the cost reduction program, organizational restructuring
and simplification merger.”
Mr. Phillips added, “First quarter 2016 results were largely in-line
with our forecast as better than expected performance in our gathering
and processing segment and continued operating cost reductions offset
the impacts to our business from lower NGL and natural gas demand as a
result of historically warm temperatures during the first quarter 2016.
In the second quarter, Crestwood will work closely with Con Edison to
develop plans for Stagecoach Gas Services and to complete our strategic
partnership as soon as possible. We remain bullish about opportunities
to grow our storage and transportation platform in the Northeast, and we
are excited about working with a partner who shares our desire to grow
these assets safely and responsibly.”
Stagecoach Gas Services – Con Edison Joint Venture
On April 21, 2016, Crestwood announced it has entered into definitive
agreements with Con Edison to form a joint venture to own and further
develop Crestwood’s existing natural gas pipeline and storage business
located in southern New York and northern Pennsylvania. Subject to
customary closing conditions and purchase price adjustments, Crestwood
will contribute its existing natural gas pipeline and storage business
to Stagecoach Gas and a wholly-owned subsidiary of Con Edison will
purchase a 50% equity interest in Stagecoach Gas for approximately $975
million, implying a market value of almost $2 billion. Stagecoach Gas
will thereafter distribute to Crestwood the cash proceeds received from
the Con Edison subsidiary, subject to customary adjustments. The
transaction is expected to be substantially completed in the second
quarter of 2016.
Update on Joint Venture Tax Implications
The transaction will result in an approximate $600 million taxable gain
being allocated among Crestwood’s unitholders during 2016. Based
on management’s projections and assumptions, Crestwood anticipates
unitholders who purchase CEQP units in 2016, and hold such units
throughout the remainder of 2016, will generally not incur any tax
liability with respect to the transaction or its eventual use of
proceeds, considering deductions to be allocated to those unitholders.
For unitholders who are allocated a taxable gain related to the
transaction and its use of proceeds, Crestwood believes that many of
these unitholders may be able to utilize 2016 allocated deductions and
previously allocated passive losses (which total $900 million in
aggregate since 2013 between Crestwood Equity Partners LP and Crestwood
Midstream Partners LP) to offset a substantial portion of that taxable
gain. The ability of each unitholder to offset all or a portion of
taxable gain will depend on their particular situation, including when
and how the unitholder acquired its units and the ability of the
unitholder to utilize passive losses. Unitholders are encouraged to
consult their tax advisors with respect to these matters.
First Quarter 2016 Segment Results
Gathering and Processing segment EBITDA totaled $66.9 million in the
first quarter 2016, exclusive of non-cash goodwill impairments noted
below, compared to $71.8 million in the first quarter 2015. During the
first quarter 2016, average natural gas gathering volumes were 991
million cubic feet per day (“MMcf/d”), crude oil gathering volumes were
68 thousand barrels per day (“MBbls/d”), processing volumes were 213
MMcf/d and compression volumes were 517 MMcf/d. The G&P segment during
the quarter benefited from reduced shut-ins and production interruptions
in the Marcellus and Barnett systems and incremental development
activity in the Bakken and Permian basins as producers continued to
develop the highest return opportunities in their portfolios.
Storage and Transportation segment EBITDA totaled $51.1 million in the
first quarter 2016, exclusive of non-cash goodwill impairments noted
below, compared to $56.1 million in the first quarter 2015. During the
first quarter 2016, natural gas storage and transportation volumes
averaged 1.7 Bcf/d, compared to 2.1 Bcf/d in the first quarter 2015.
Interruptible wheeling volumes were negatively impacted during the
quarter due to unseasonably warm weather and depressed regional natural
gas pricing. The COLT Hub contributed EBITDA of $13.4 million compared
to $17.7 million in the first quarter 2015, primarily as a result of
contract expirations and reduced loading volumes caused by narrowed
WTI/Brent spreads.
Marketing, Supply and Logistics segment EBITDA totaled $19.3 million in
the first quarter 2016, exclusive of non-cash goodwill impairments noted
below, compared to $25.7 million in the first quarter 2015. Segment
EBITDA during the quarter was impacted by unseasonably warm weather in
the northeast US region. This lower demand for NGLs impacted Crestwood’s
trucking, marketing, and storage and terminal operations.
Combined O&M and G&A expenses, net of unit based compensation and other
significant costs, in the first quarter 2016 were reduced by 13%, or
$8.6 million, compared to the first quarter 2015, and reduced 12%, or
$7.7 million, from the fourth quarter 2015. Based upon continued focus
on cost reductions, Crestwood expects it will be able to achieve
additional cost reductions in 2016 of approximately $10 million
(exclusive of the impact of the Con Edison joint venture).
First Quarter 2016 Business Update
Arrow Bakken Gathering System
Arrow averaged crude oil volumes of 68 MBbls/d, natural gas volumes of
44 MMcf/d and water volumes of 27 MBbls/d in the first quarter 2016
compared to average volumes of 66 MBbls/d, 45 MMcf/d and 25 MBbls/d,
respectively in the first quarter 2015. Volumes across the system have
remained steady as continued producer activity offsets natural field
decline. On the Arrow Bakken system, Crestwood’s leading producers have
continued to high-grade their development activities, with drilling and
completions costs declining to approximately $6.0 million per well and
well performance improving with EUR type curves of approximately 750 -
900 MBbls per well. In the first quarter 2016, 13 wells were connected
and an additional 7 wells were connected in April.
Delaware-Permian Gathering and Processing
Crestwood completed and commissioned the expansion of its Willow Lake
gathering and processing system during the first quarter 2016. The
resulting facility can handle approximately 50 MMcf/d of new Wolfcamp
and Bone Spring production being targeted by dedicated area producers
such as Mewbourne Oil Company and Concho Resources in Eddy County, New
Mexico. The expansion project accounted for approximately $22 million of
first quarter 2016 growth capital expenditures. Crestwood continues to
develop additional projects in the Delaware-Permian region, which is
benefitting from stronger drilling economics relative to other basins in
the US.
Crestwood continues to work with a potential anchor shipper to develop
the previously announced 3-phase gathering system in the
Delaware-Permian basin. First Reserve and Crestwood remain committed to
the joint venture structure in which First Reserve will fund initial
capital commitments during the early build-out phase. Both Crestwood and
the shipper continue to assess market conditions and are working
together exclusively to develop the appropriate project scope that will
meet the shipper’s long-term development plans.
Barnett Gathering and Processing
Crestwood entered into agreements with BlueStone to gather and process
natural gas across its Alliance, Lake Arlington and Cowtown systems in
the Barnett Shale. Crestwood will provide services to BlueStone for a
period of 10 years under a fixed-fee and percent of proceeds fee
structure. BlueStone has provided production assurances, will return
currently shut-in wells to production by July 1, 2016 and will not
shut-in or choke back production for economic purposes through the end
of 2018. Additionally, Crestwood largely completed its Devon Energy West
Johnson County compression project accounting for approximately $10
million of first quarter 2016 growth capital expenditures. The project
is designed to lower wellhead operating pressure for dedicated Devon
production resulting in uplift volumes and enhanced reserve recoveries
by the producer.
Marcellus Gathering and Compression
Gathering and compression volumes on Crestwood’s Marcellus rich-gas
systems increased to 464 MMcf/d and 517 MMcf/d, respectively, during the
first quarter 2016, a 7% and 12% increase, respectively, from fourth
quarter 2015 volumes. The higher volumes reflected significantly lower
production shut-ins and curtailments and improved net-back pricing to
Antero Resources, largely as a result of the commissioning of Momentum’s
Stonewall pipeline in December 2015.
Capitalization and Liquidity Update
As of March 31, 2016, Crestwood had approximately $2.6 billion of debt
principal outstanding, composed primarily of $1.8 billion of fixed-rate
senior notes and $763 million outstanding under its $1.5 billion
revolving credit facility. Crestwood anticipates using the net cash
proceeds generated by the Con Edison joint venture to reduce borrowings
under its senior credit facility and to retire senior notes. Pro forma
for the joint venture and anticipated use of proceeds, Crestwood’s
leverage ratio would be approximately 3.8x as of March 31, 2016.
Crestwood currently has 62.1 million preferred units outstanding which
pay an annual distribution of 9.25% payable quarterly in cash or through
the issuance of additional preferred units. On May 13, 2016, holders of
the preferred units will receive 1.4 million additional preferred units
related to the first quarter 2016 distribution declared.
2016 Outlook Affirmed
Crestwood is affirming its guidance for 2016 as previously announced on
April 21, 2016, which reflected the company’s first quarter 2016
financial results and assumed the Con Edison joint venture is
substantially completed on June 1, 2016. The following projections are
subject to risks and uncertainties as described in the “Forward-Looking
Statements” section at the end of this release.
-
Adjusted EBITDA of $435 million to $465 million
-
Distributable cash flow to common unitholders of $275 million to $305
million
-
Cash distributions of $2.40 per common unit resulting in full-year
2016 cash distribution coverage ratio of approximately 1.6x to 1.8x
-
Forecasted year-end 2016 leverage ratio of approximately 3.9x
-
Growth project capital spending in the range of $50 million to $75
million
-
Maintenance capital spending in the range of $16 million to $18 million
Robert T. Halpin, Senior Vice President and Chief Financial Officer,
commented, “In 2016, we have mitigated counterparty risk across our
portfolio, cut substantial costs out of our business, reduced our
distribution and entered into a strategic joint venture with Con Edison,
all of which will enable Crestwood to achieve our 2016 strategy to
significantly improve our balance sheet. With our diversified portfolio
of assets, improved balance sheet, substantial distribution coverage,
and limited capital markets requirements, Crestwood is positioned to
drive substantial value to all stakeholders through prolonged
challenging market conditions.”
Impairments
Generally Accepted Accounting Principles (“GAAP”) require Crestwood to
record the assets and goodwill in business segments at fair value when
acquired, and to continually assess the recoverability of assigned
values, including goodwill. Crestwood’s storage and transportation and
Marketing, Supply and Logistics assets were primarily acquired in 2013
as a result of the Crestwood-Inergy merger. As a result of its goodwill
assessment for the first quarter of 2016, Crestwood recorded impairments
of $109.7 million, primarily related to its COLT Hub and Marketing,
Supply and Logistics assets. These non-cash impairments primarily
resulted from increasing the discount rate utilized in determining the
fair value of these assets when taking into consideration continued
commodity price weakness during the first quarter, anticipated commodity
prices in future periods based on forward commodity markets, the
estimated impact of lower commodity prices on the midstream industry in
general and Crestwood’s customers, and the impact these and other
factors had during the quarter on Crestwood’s common unit price.
Upcoming Conference Participation
Crestwood management will participate in the MLPA 2016 Annual Investor
Conference on June 1-3, 2016 at the Hyatt Regency in Orlando, Florida.
Robert G. Phillips, Chairman, President and Chief Executive Officer,
will make a formal presentation at approximately 1:45 p.m. Eastern Time
on Thursday, June 2, 2016. Prior to the meetings presentation materials
will be posted to the Investors section of Crestwood’s website at www.crestwoodlp.com.
Earnings Conference Call Schedule
Management will host a conference call for investors and analysts of
Crestwood today at 9:00 a.m. Eastern Time (8:00 a.m. Central Time) which
will be broadcast live over the Internet. Participants may connect to
the webcast via the “Presentations” page of Crestwood’s Investor
Relations website at www.crestwoodlp.com.
Please log in at least 10 minutes in advance to register and download
any necessary software. A replay will be available shortly after the
call for 90 days.
Non-GAAP Financial Measures
Adjusted EBITDA and adjusted distributable cash flow are 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 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.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning
of the U.S. Private Securities Litigation Reform Act of 1995 and Section
21E of the Securities and Exchange Act of 1934. The words “expects,”
“believes,” anticipates,” “plans,” “will,” “shall,” “estimates,” and
similar expressions identify forward-looking statements, which are
generally not historical in nature. Forward-looking statements are
subject to risks and uncertainties and are based on the beliefs and
assumptions of management, based on information currently available to
them. Although Crestwood believes that these forward-looking statements
are based on reasonable assumptions, it can give no assurance that any
such forward-looking statements will materialize. Important factors that
could cause actual results to differ materially from those expressed in
or implied from these forward-looking statements include the risks and
uncertainties described in Crestwood’s reports filed with the Securities
and Exchange Commission, including its Annual Report on Form 10-K and
its subsequent reports, which are available through the SEC’s EDGAR
system at www.sec.gov
and on our website. Readers are cautioned not to place undue reliance on
forward-looking statements, which reflect management’s view only as of
the date made, and Crestwood assumes no obligation to update these
forward-looking statements.
About Crestwood Equity Partners LP
Houston, Texas, based Crestwood Equity Partners LP (NYSE: CEQP) is a
master limited partnership that owns and operates midstream businesses
in multiple unconventional shale resource plays across the United
States. Crestwood Equity is engaged in the gathering, processing,
treating, compression, storage and transportation of natural gas;
storage, transportation, terminalling, and marketing of NGLs; and
gathering, storage, terminalling and marketing of crude oil.
1 Please see non-GAAP reconciliation table included at the
end of the press release.
|
|
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CRESTWOOD EQUITY PARTNERS LP
Consolidated Statements of Operations
(in
millions, except unit and per unit data)
(unaudited)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
Three Months
Ended
December 31,
|
|
|
|
2016
|
|
2015
|
|
2015
|
|
Revenues:
|
|
|
|
|
|
|
|
Gathering and processing
|
|
$
|
238.2
|
|
|
$
|
349.3
|
|
|
$
|
327.4
|
|
|
Storage and transportation
|
|
59.4
|
|
|
67.6
|
|
|
65.2
|
|
|
Marketing, supply and logistics
|
|
237.7
|
|
|
313.6
|
|
|
235.6
|
|
|
Related party
|
|
0.7
|
|
|
1.0
|
|
|
0.9
|
|
|
Total revenues
|
|
536.0
|
|
|
731.5
|
|
|
629.1
|
|
|
|
|
|
|
|
|
|
|
Costs of product/services sold:
|
|
|
|
|
|
|
|
Gathering and processing
|
|
175.5
|
|
|
258.4
|
|
|
255.6
|
|
|
Storage and transportation
|
|
2.9
|
|
|
5.3
|
|
|
4.3
|
|
|
Marketing, supply and logistics
|
|
180.7
|
|
|
257.7
|
|
|
179.5
|
|
|
Related party
|
|
4.3
|
|
|
8.3
|
|
|
5.7
|
|
|
Total cost of products/services sold
|
|
363.4
|
|
|
529.7
|
|
|
445.1
|
|
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
|
Operations and maintenance
|
|
41.8
|
|
|
50.6
|
|
|
46.4
|
|
|
General and administrative
|
|
23.0
|
|
|
27.5
|
|
|
25.4
|
|
|
Depreciation, amortization and accretion
|
|
62.3
|
|
|
74.2
|
|
|
75.6
|
|
|
|
|
127.1
|
|
|
152.3
|
|
|
147.4
|
|
|
Other operating expense:
|
|
|
|
|
|
|
|
Loss on long-lived assets, net
|
|
-
|
|
|
(1.0
|
)
|
|
(817.3
|
)
|
|
Goodwill impairment
|
|
(109.7
|
)
|
|
-
|
|
|
(515.4
|
)
|
|
Operating income (loss)
|
|
(64.2
|
)
|
|
48.5
|
|
|
(1,296.1
|
)
|
|
Earnings (loss) from unconsolidated affiliates, net
|
|
6.5
|
|
|
3.4
|
|
|
(72.0
|
)
|
|
Interest and debt expense, net
|
|
(36.1
|
)
|
|
(33.6
|
)
|
|
(35.4
|
)
|
|
Loss on modification/extinguishment of debt
|
|
-
|
|
|
-
|
|
|
(0.2
|
)
|
|
Other income, net
|
|
0.1
|
|
|
0.2
|
|
|
0.1
|
|
|
Income (loss) before income taxes
|
|
(93.7
|
)
|
|
18.5
|
|
|
(1,403.6
|
)
|
|
Provision (benefit) for income taxes
|
|
-
|
|
|
0.4
|
|
|
(1.2
|
)
|
|
Net income (loss)
|
|
(93.7
|
)
|
|
18.1
|
|
|
(1,402.4
|
)
|
|
Net income attributable to non-controlling partners
|
|
5.9
|
|
|
9.8
|
|
|
5.9
|
|
|
Net income (loss) attributable to Crestwood Equity Partners LP
|
|
(99.6
|
)
|
|
8.3
|
|
|
(1,408.3
|
)
|
|
Net income attributable to preferred units
|
|
1.6
|
|
|
-
|
|
|
6.2
|
|
|
Net income (loss) attributable to partners
|
|
$
|
(101.2
|
)
|
|
$
|
8.3
|
|
|
$
|
(1,414.5
|
)
|
|
|
|
|
|
|
|
|
|
Subordinated unitholders' interest in net income
|
|
$
|
-
|
|
|
$
|
0.2
|
|
|
$
|
-
|
|
|
Common unitholders' interest in net income (loss)
|
|
$
|
(101.2
|
)
|
|
$
|
8.1
|
|
|
$
|
(1,414.5
|
)
|
|
|
|
|
|
|
|
|
|
Net income (loss) per limited partner unit:
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(1.47
|
)
|
|
$
|
0.44
|
|
|
$
|
(20.77
|
)
|
|
Diluted
|
|
$
|
(1.47
|
)
|
|
$
|
0.44
|
|
|
$
|
(20.77
|
)
|
|
|
|
|
|
|
|
|
|
Weighted-average limited partners’ units outstanding (in thousands):
|
|
|
|
|
|
|
|
Basic
|
|
68,912
|
|
|
18,280
|
|
|
68,119
|
|
|
Dilutive units
|
|
-
|
|
|
439
|
|
|
-
|
|
|
Diluted
|
|
68,912
|
|
|
18,719
|
|
|
68,119
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRESTWOOD EQUITY PARTNERS LP
Selected Balance Sheet Data
(in millions)
|
|
|
|
|
|
March 31,
2016
|
|
December 31,
2015
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
1.1
|
|
|
$
|
0.5
|
|
|
|
|
|
|
|
Outstanding debt:
|
|
|
|
|
|
Crestwood Equity Partners LP
|
|
|
|
|
|
Other
|
|
$
|
-
|
|
|
$
|
0.2
|
|
|
|
|
|
|
|
Crestwood Midstream Partners LP (a)
|
|
|
|
|
|
Revolving Credit Facility
|
|
$
|
762.8
|
|
|
$
|
735.0
|
|
Senior Notes
|
|
1,800.0
|
|
|
1,800.0
|
|
Other
|
|
8.1
|
|
|
8.6
|
|
Subtotal
|
|
2,570.9
|
|
|
2,543.6
|
|
Less: deferred financing costs
|
|
39.2
|
|
|
40.9
|
|
Total debt
|
|
$
|
2,531.7
|
|
|
$
|
2,502.9
|
|
|
|
|
|
|
|
Total partners' capital
|
|
$
|
2,758.6
|
|
|
$
|
2,946.9
|
|
|
|
|
|
|
|
Crestwood Equity Partners LP partners'
capital
|
|
|
|
|
|
Common units outstanding
|
|
69.5
|
|
|
68.6
|
|
|
|
|
|
|
|
|
(a)
|
|
CEQP and its subsidiaries do not provide credit support or guarantee
any amounts outstanding under the credit facility or senior notes of
Crestwood Midstream.
|
|
|
|
CRESTWOOD EQUITY PARTNERS LP
Reconciliation of Non-GAAP Financial Measures
(in millions)
(unaudited)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
Three Months
Ended
December 31,
|
|
|
|
2016
|
|
2015
|
|
2015
|
|
EBITDA
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(93.7
|
)
|
|
$
|
18.1
|
|
|
$
|
(1,402.4
|
)
|
|
Interest and debt expense, net
|
|
36.1
|
|
|
33.6
|
|
|
35.4
|
|
|
Loss on modification/extinguishment of debt
|
|
-
|
|
|
-
|
|
|
0.2
|
|
|
Provision (benefit) for income taxes
|
|
-
|
|
|
0.4
|
|
|
(1.2
|
)
|
|
Depreciation, amortization and accretion
|
|
62.3
|
|
|
74.2
|
|
|
75.6
|
|
|
EBITDA (a)
|
|
$
|
4.7
|
|
|
$
|
126.3
|
|
|
$
|
(1,292.4
|
)
|
|
Significant items impacting EBITDA:
|
|
|
|
|
|
|
|
Unit-based compensation charges
|
|
4.5
|
|
|
5.8
|
|
|
4.1
|
|
|
Loss on long-lived assets, net
|
|
-
|
|
|
1.0
|
|
|
817.3
|
|
|
Goodwill impairment
|
|
109.7
|
|
|
-
|
|
|
515.4
|
|
|
(Earnings) loss from unconsolidated affiliates, net
|
|
(6.5
|
)
|
|
(3.4
|
)
|
|
72.0
|
|
|
Adjusted EBITDA from unconsolidated affiliates, net
|
|
9.1
|
|
|
6.5
|
|
|
6.9
|
|
|
Change in fair value of commodity inventory-related derivative
contracts
|
|
(2.7
|
)
|
|
1.1
|
|
|
(5.3
|
)
|
|
Significant transaction and environmental related costs and other
items
|
|
1.2
|
|
|
4.6
|
|
|
0.9
|
|
|
Adjusted EBITDA (a)
|
|
$
|
120.0
|
|
|
$
|
141.9
|
|
|
$
|
118.9
|
|
|
|
|
|
|
|
|
|
|
Distributable Cash Flow
|
|
|
|
|
|
|
|
Adjusted EBITDA (a)
|
|
$
|
120.0
|
|
|
$
|
141.9
|
|
|
$
|
118.9
|
|
|
Cash interest expense (b)
|
|
(34.4
|
)
|
|
(31.8
|
)
|
|
(33.5
|
)
|
|
Maintenance capital expenditures (c)
|
|
(4.5
|
)
|
|
(5.4
|
)
|
|
(10.0
|
)
|
|
(Provision) benefit for income taxes
|
|
-
|
|
|
(0.4
|
)
|
|
1.2
|
|
|
Deficiency payments
|
|
1.5
|
|
|
(0.6
|
)
|
|
(0.9
|
)
|
|
Distributable cash flow attributable to CEQP
|
|
82.6
|
|
|
103.7
|
|
|
75.7
|
|
|
Distributions to Niobrara Preferred
|
|
(3.8
|
)
|
|
(3.8
|
)
|
|
(3.8
|
)
|
|
Distributable cash flow attributable to CEQP common (d)
|
|
$
|
78.8
|
|
|
$
|
99.9
|
|
|
$
|
71.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
EBITDA is defined as income before income taxes, plus debt-related
costs (net interest and debt expense and loss on
modification/extinguishment of debt) and depreciation, amortization
and accretion expense. In addition, Adjusted EBITDA considers the
adjusted earnings impact of our unconsolidated affiliates by
adjusting our equity earnings or losses from our unconsolidated
affiliates for our proportionate share of their depreciation and
interest. Adjusted EBITDA also considers the impact of certain
significant items, such as unit-based compensation charges, gains
and impairments of long-lived assets and goodwill, third party costs
incurred related to potential and completed acquisitions, certain
environmental remediation costs, certain costs related to our 2015
cost savings initiatives, the change in fair value of commodity
inventory-related derivative contracts, and other transactions
identified in a specific reporting period. The change in fair value
of commodity inventory-related derivative contracts is considered in
determining Adjusted EBITDA given that the timing of recognizing
gains and losses on these derivative contracts differs from the
recognition of revenue for the related underlying sale of inventory
that these derivatives relate to. Changes in the fair value of other
derivative contracts is not considered in determining Adjusted
EBITDA given the relatively short-term nature of those derivative
contracts. EBITDA and Adjusted EBITDA are not measures calculated in
accordance with GAAP, as they do not include deductions for items
such as depreciation, amortization and accretion, interest and
income taxes, which are necessary to maintain our business. EBITDA
and Adjusted EBITDA should not be considered an alternative to net
income, operating cash flow or any other measure of financial
performance presented in accordance with GAAP. EBITDA and Adjusted
EBITDA calculations may vary among entities, so our computation may
not be comparable to measures used by other companies.
|
|
(b)
|
|
Cash interest expense less amortization of deferred financing costs
plus bond premium amortization.
|
|
(c)
|
|
Maintenance capital expenditures are defined as those capital
expenditures which do not increase operating capacity or revenues
from existing levels.
|
|
(d)
|
|
Distributable cash flow is defined as Adjusted EBITDA, less cash
interest expense, maintenance capital expenditures, income taxes,
and deficiency payments (primarily related to deferred revenue).
Distributable cash flow should not be considered an alternative to
cash flows from operating activities or any other measure of
financial performance calculated in accordance with generally
accepted accounting principles as those items are used to measure
operating performance, liquidity, or the ability to service debt
obligations. We believe that distributable cash flow provides
additional information for evaluating our ability to declare and pay
distributions to unitholders. Distributable cash flow, as we define
it, may not be comparable to distributable cash flow or similarly
titled measures used by other corporations and partnerships.
|
|
|
|
CRESTWOOD EQUITY PARTNERS LP
Reconciliation of Non-GAAP Financial Measures
(in millions)
(unaudited)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
Three Months
Ended
December 31,
|
|
|
|
2016
|
|
2015
|
|
2015
|
|
EBITDA
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
134.3
|
|
|
$
|
156.6
|
|
|
$
|
139.1
|
|
|
Net changes in operating assets and liabilities
|
|
(50.6
|
)
|
|
(59.6
|
)
|
|
(52.4
|
)
|
|
Amortization of debt-related deferred costs, discounts and premiums
|
|
(1.7
|
)
|
|
(2.1
|
)
|
|
(2.3
|
)
|
|
Interest and debt expense, net
|
|
36.1
|
|
|
33.6
|
|
|
35.4
|
|
|
Market adjustment on interest rate swaps
|
|
-
|
|
|
0.3
|
|
|
-
|
|
|
Unit-based compensation charges
|
|
(4.5
|
)
|
|
(5.8
|
)
|
|
(4.1
|
)
|
|
Loss on long-lived assets, net
|
|
-
|
|
|
(1.0
|
)
|
|
(817.3
|
)
|
|
Goodwill impairment
|
|
(109.7
|
)
|
|
-
|
|
|
(515.4
|
)
|
|
Earnings (loss) from unconsolidated affiliates, net, adjusted for
cash distributions
|
|
0.8
|
|
|
3.4
|
|
|
(75.2
|
)
|
|
Deferred income taxes
|
|
0.1
|
|
|
0.9
|
|
|
1.1
|
|
|
Provision (benefit) for income taxes
|
|
-
|
|
|
0.4
|
|
|
(1.2
|
)
|
|
Other non-cash expense
|
|
(0.1
|
)
|
|
(0.4
|
)
|
|
(0.1
|
)
|
|
EBITDA (a)
|
|
$
|
4.7
|
|
|
$
|
126.3
|
|
|
$
|
(1,292.4
|
)
|
|
Unit-based compensation charges
|
|
4.5
|
|
|
5.8
|
|
|
4.1
|
|
|
Loss on long-lived assets, net
|
|
-
|
|
|
1.0
|
|
|
817.3
|
|
|
Goodwill impairment
|
|
109.7
|
|
|
-
|
|
|
515.4
|
|
|
(Earnings) loss from unconsolidated affiliates, net
|
|
(6.5
|
)
|
|
(3.4
|
)
|
|
72.0
|
|
|
Adjusted EBITDA from unconsolidated affiliates, net
|
|
9.1
|
|
|
6.5
|
|
|
6.9
|
|
|
Change in fair value of commodity inventory-related derivative
contracts
|
|
(2.7
|
)
|
|
1.1
|
|
|
(5.3
|
)
|
|
Significant transaction and environmental related costs and other
items
|
|
1.2
|
|
|
4.6
|
|
|
0.9
|
|
|
Adjusted EBITDA (a)
|
|
$
|
120.0
|
|
|
$
|
141.9
|
|
|
$
|
118.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
EBITDA is defined as income before income taxes, plus debt-related
costs (net interest and debt expense and loss on
modification/extinguishment of debt) and depreciation, amortization
and accretion expense. In addition, Adjusted EBITDA considers the
adjusted earnings impact of our unconsolidated affiliates by
adjusting our equity earnings or losses from our unconsolidated
affiliates for our proportionate share of their depreciation and
interest. Adjusted EBITDA also considers the impact of certain
significant items, such as unit-based compensation charges, gains
and impairments of long-lived assets and goodwill, third party costs
incurred related to potential and completed acquisitions, certain
environmental remediation costs, certain costs related to our 2015
cost savings initiatives, the change in fair value of commodity
inventory-related derivative contracts, and other transactions
identified in a specific reporting period. The change in fair value
of commodity inventory-related derivative contracts is considered in
determining Adjusted EBITDA given that the timing of recognizing
gains and losses on these derivative contracts differs from the
recognition of revenue for the related underlying sale of inventory
that these derivatives relate to. Changes in the fair value of other
derivative contracts is not considered in determining Adjusted
EBITDA given the relatively short-term nature of those derivative
contracts. EBITDA and Adjusted EBITDA are not measures calculated in
accordance with GAAP, as they do not include deductions for items
such as depreciation, amortization and accretion, interest and
income taxes, which are necessary to maintain our business. EBITDA
and Adjusted EBITDA should not be considered an alternative to net
income, operating cash flow or any other measure of financial
performance presented in accordance with GAAP. EBITDA and Adjusted
EBITDA calculations may vary among entities, so our computation may
not be comparable to measures used by other companies.
|
|
|
CRESTWOOD EQUITY PARTNERS LP
Segment Data
(in millions)
(unaudited)
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
Three Months
Ended
December 31,
|
|
|
|
2016
|
|
2015
|
|
2015
|
|
Gathering and Processing
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
259.4
|
|
|
$
|
360.4
|
|
|
$
|
340.5
|
|
|
Costs of product/services sold
|
|
179.8
|
|
|
266.7
|
|
|
261.3
|
|
|
Operations and maintenance expense
|
|
17.8
|
|
|
24.1
|
|
|
22.0
|
|
|
Loss on long-lived assets, net
|
|
-
|
|
|
(0.3
|
)
|
|
(786.1
|
)
|
|
Goodwill impairment
|
|
(8.6
|
)
|
|
-
|
|
|
(69.9
|
)
|
|
Earnings (loss) from unconsolidated affiliate
|
|
5.1
|
|
|
2.5
|
|
|
(49.0
|
)
|
|
EBITDA
|
|
$
|
58.3
|
|
|
$
|
71.8
|
|
|
$
|
(847.8
|
)
|
|
|
|
|
|
|
|
|
|
Storage and Transportation
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
59.8
|
|
|
$
|
67.6
|
|
|
$
|
65.2
|
|
|
Costs of product/services sold
|
|
2.9
|
|
|
5.3
|
|
|
4.3
|
|
|
Operations and maintenance expense
|
|
7.2
|
|
|
6.4
|
|
|
8.7
|
|
|
Loss on long-lived assets
|
|
-
|
|
|
(0.7
|
)
|
|
-
|
|
|
Goodwill impairment
|
|
(13.7
|
)
|
|
-
|
|
|
(275.4
|
)
|
|
Earnings (loss) from unconsolidated affiliates
|
|
1.4
|
|
|
0.9
|
|
|
(23.0
|
)
|
|
EBITDA
|
|
$
|
37.4
|
|
|
$
|
56.1
|
|
|
$
|
(246.2
|
)
|
|
|
|
|
|
|
|
|
|
Marketing, Supply and Logistics
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
216.8
|
|
|
$
|
303.5
|
|
|
$
|
168.9
|
|
|
Costs of product/services sold
|
|
180.7
|
|
|
257.7
|
|
|
125.0
|
|
|
Operations and maintenance expense
|
|
16.8
|
|
|
20.1
|
|
|
15.7
|
|
|
Loss on long-lived assets, net
|
|
-
|
|
|
-
|
|
|
(31.2
|
)
|
|
Goodwill impairment
|
|
(87.4
|
)
|
|
-
|
|
|
(170.1
|
)
|
|
EBITDA
|
|
$
|
(68.1
|
)
|
|
$
|
25.7
|
|
|
$
|
(173.1
|
)
|
|
|
|
|
|
|
|
|
|
Total Segment EBITDA
|
|
$
|
27.6
|
|
|
$
|
153.6
|
|
|
$
|
(1,267.1
|
)
|
|
Corporate
|
|
(22.9
|
)
|
|
(27.3
|
)
|
|
(25.3
|
)
|
|
EBITDA
|
|
$
|
4.7
|
|
|
$
|
126.3
|
|
|
$
|
(1,292.4
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CRESTWOOD EQUITY PARTNERS LP
Operating Statistics
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
Three Months
Ended
December 31,
|
|
|
|
|
|
2016
|
|
|
2015
|
|
|
2015
|
|
Gathering and Processing (MMcf/d)
|
|
|
|
|
|
|
|
|
|
|
|
Arrow
|
|
|
|
44.0
|
|
|
|
44.7
|
|
|
|
43.7
|
|
|
Marcellus
|
|
|
|
463.6
|
|
|
|
652.7
|
|
|
|
431.7
|
|
|
Barnett rich
|
|
|
|
108.4
|
|
|
|
148.8
|
|
|
|
114.6
|
|
|
Barnett dry
|
|
|
|
191.3
|
|
|
|
236.3
|
|
|
|
194.6
|
|
|
Fayetteville
|
|
|
|
61.2
|
|
|
|
79.4
|
|
|
|
66.4
|
|
|
PRB Niobrara - Jackalope Gas Gathering (a)
|
|
|
|
68.9
|
|
|
|
77.5
|
|
|
|
78.1
|
|
|
Other
|
|
|
|
53.9
|
|
|
|
46.3
|
|
|
|
50.7
|
|
|
Total gathering volumes
|
|
|
|
991.3
|
|
|
|
1,285.7
|
|
|
|
979.8
|
|
|
Processing volumes
|
|
|
|
212.6
|
|
|
|
202.7
|
|
|
|
220.6
|
|
|
Compression volumes
|
|
|
|
516.7
|
|
|
|
691.7
|
|
|
|
459.7
|
|
|
Arrow Midstream
|
|
|
|
|
|
|
|
|
|
|
|
Crude oil (MBbls/d)
|
|
|
|
68.0
|
|
|
|
66.4
|
|
|
|
69.9
|
|
|
Water (MBbls/d)
|
|
|
|
26.6
|
|
|
|
25.1
|
|
|
|
27.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage and Transportation
|
|
|
|
|
|
|
|
|
|
|
|
Northeast Storage - firm contracted capacity (Bcf)
|
|
|
|
34.4
|
|
|
|
34.8
|
|
|
|
34.4
|
|
|
% of operational capacity contracted
|
|
|
|
99
|
%
|
|
|
100
|
%
|
|
|
99
|
%
|
|
Firm storage services (MMcf/d)
|
|
|
|
288.1
|
|
|
|
414.0
|
|
|
|
277.9
|
|
|
Interruptible storage services (MMcf/d)
|
|
|
|
22.7
|
|
|
|
122.9
|
|
|
|
17.6
|
|
|
Northeast Transportation - firm contracted capacity (MMcf/d)
|
|
|
|
1,353.0
|
|
|
|
1,102.0
|
|
|
|
1,265.0
|
|
|
% of operational capacity contracted
|
|
|
|
87
|
%
|
|
|
100
|
%
|
|
|
87
|
%
|
|
Firm services (MMcf/d)
|
|
|
|
1,028.4
|
|
|
|
1,180.3
|
|
|
|
1,139.7
|
|
|
Interruptible services (MMcf/d)
|
|
|
|
117.5
|
|
|
|
177.4
|
|
|
|
199.8
|
|
|
Gulf Coast Storage - firm contracted capacity (Bcf) (a)
|
|
|
|
29.2
|
|
|
|
23.5
|
|
|
|
28.9
|
|
|
% of operational capacity contracted
|
|
|
|
76
|
%
|
|
|
61
|
%
|
|
|
75
|
%
|
|
Firm storage services (MMcf/d) (a)
|
|
|
|
167.6
|
|
|
|
111.5
|
|
|
|
196.1
|
|
|
Interruptible services (MMcf/d) (a)
|
|
|
|
99.4
|
|
|
|
69.9
|
|
|
|
161.7
|
|
|
COLT Hub
|
|
|
|
|
|
|
|
|
|
|
|
Rail loading (MBbls/d)
|
|
|
|
83.5
|
|
|
|
122.5
|
|
|
|
107.4
|
|
|
Connector pipeline (MBbls/d) (b)
|
|
|
|
18.5
|
|
|
|
4.0
|
|
|
|
13.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketing, Supply and Logistics
|
|
|
|
|
|
|
|
|
|
|
|
Crude barrels trucked (MBbls/d)
|
|
|
|
13.0
|
|
|
|
30.0
|
|
|
|
16.0
|
|
|
NGL Operations
|
|
|
|
|
|
|
|
|
|
|
|
Storage capacity, 100% contracted (MBbls)
|
|
|
|
1,700.0
|
|
|
|
1,700.0
|
|
|
|
1,700.0
|
|
|
Supply & Logistics volumes sold (MBbls/d)
|
|
|
|
88.1
|
|
|
|
118.4
|
|
|
|
81.2
|
|
|
West Coast volumes sold or processed (MBbls/d)
|
|
|
|
20.3
|
|
|
|
36.3
|
|
|
|
23.2
|
|
|
NGL volumes trucked (MBbls/d)
|
|
|
|
59.8
|
|
|
|
77.6
|
|
|
|
65.3
|
|
|
|
|
(a)
|
|
Represents 50% owned joint venture, operational data reported is at
100%.
|
|
(b)
|
|
Represents only throughput leaving the terminal. Total connector
pipeline throughput, including receivables was 45.7 MBbls/d and 33.5
MBbls/d for the three months ended March 31, 2016 and 2015 and 38.2
MBbls/d for the three months ended December 31, 2015.
|
|
|
|
|
|
|
CRESTWOOD EQUITY PARTNERS LP
Full Year 2016 Adjusted EBITDA and Distributable Cash Flow
Guidance
Reconciliation to Net Income
(in millions)
(unaudited)
|
|
|
|
|
|
|
Net income
|
|
|
$15 - $45
|
|
Interest and debt expense, net
|
|
|
126 - 128
|
|
Depreciation, amortization and accretion
|
|
|
260
|
|
Unit-based compensation charges
|
|
|
15
|
|
Earnings from unconsolidated affiliates
|
|
|
(40) - (45)
|
|
Adjusted EBITDA from unconsolidated affiliates
|
|
|
57 - 62
|
|
Adjusted EBITDA
|
|
|
$435 - $465
|
|
|
|
|
|
|
Cash interest expense (a)
|
|
|
(119) - (121)
|
|
Maintenance capital expenditures (b)
|
|
|
(16) - (18)
|
|
Other
|
|
|
(10) - (11)
|
|
Distributable cash flow (c)
|
|
|
$290 - $320
|
|
Distributions to Crestwood Niobrara preferred
|
|
|
(15)
|
|
Distributable cash flow attributable to CEQP common unitholders
|
|
|
$275 - $305
|
|
|
|
(a)
|
|
Cash interest expense less amortization of deferred financing costs
plus bond premium amortization.
|
|
(b)
|
|
Maintenance capital expenditures are defined as those capital
expenditures which do not increase operating capacity or revenues
from existing levels.
|
|
(c)
|
|
Distributable cash flow is defined as Adjusted EBITDA, less cash
interest expense, maintenance capital expenditures, income taxes and
deficiency payments (primarily related to deferred revenue).
Distributable cash flow should not be considered an alternative to
cash flows from operating activities or any other measure of
financial performance calculated in accordance with generally
accepted accounting principles as those items are used to measure
operating performance, liquidity, or the ability to service debt
obligations. We believe that distributable cash flow provides
additional information for evaluating our ability to declare and pay
distributions to unitholders. Distributable cash flow, as we define
it, may not be comparable to distributable cash flow or similarly
titled measures used by other corporations and partnerships.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20160503005645/en/
Source: Crestwood Equity Partners LP