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, 2017.
First Quarter 2017 Highlights1
-
First quarter 2017 net loss of $19.4 million, compared to a net loss
of $93.7 million in first quarter 2016; Net loss for the first quarter
2017 included $37.3 million of expense related to the early redemption
of Senior Notes; Net loss for the first quarter 2016 included $109.7
million of non-cash charges for goodwill impairments
-
First quarter 2017 Adjusted EBITDA of $90.9 million, compared to
$120.0 million in the first quarter 2016; Adjusted EBITDA for the
first quarter 2017 reflects the deconsolidation of Stagecoach Gas
Services compared to the first quarter 2016 which included 100%
contribution
-
First quarter 2017 distributable cash flow of $59.4 million, compared
to $78.8 million in first quarter 2016. The first quarter 2017
coverage ratio was approximately 1.4x
-
First quarter 2017 O&M and G&A expenses, net of non-cash unit based
compensation, were reduced by $7.5 million, or 12% from first quarter
2016
-
Declared first quarter 2017 cash distribution of $0.60 per common
unit, or $2.40 per common unit on an annualized basis, to be paid on
May 15, 2017 to unitholders of record as of May 8, 2017
-
Completed a $500 million 5.75% unsecured Senior Note offering due 2025
and retired all outstanding 6.00% Senior Notes due 2020 and 6.125%
Senior Notes due 2022; Extends debt maturity schedule and saves
approximately $6 million of annual interest expense
Capital Project Announcements & Guidance Update
-
Bakken: During the first quarter, Crestwood initiated
construction of a new 30 million cubic feet per day (“MMcf/d”)
processing plant (“Bear Den Plant”) and associated pipeline (“Bear Den
West pipeline”) to meet increasing production volumes from producers
on the Arrow system and acreage surrounding the Fort Berthold Indian
Reservation (“FBIR”). These projects are in addition to previously
announced projects to expand Arrow gathering system capacities and
market connections. The first phase of the Bear Den Plant, which is
similar in design to the Willow Lake plant Crestwood installed in the
Delaware Permian in 2014, and Bear Den West pipeline connecting the
plant to the Arrow gas gathering system are expected to cost
approximately $115 million and are targeted to be in-service by early
fourth quarter 2017. Additionally, as gas and oil volumes on the Arrow
system are expected to continue to increase throughout 2017 and 2018,
Crestwood is currently finalizing plans to add an additional train of
processing capacity at the Bear Den Plant by the end of the fourth
quarter 2018. During the first quarter 2017, Arrow completed its
previously announced Phase 1A project, increasing gathering system
capacity for oil, gas and water from the area of the FBIR largely
being developed by WPX Energy, Inc., Crestwood’s largest producer by
volume, and completed the previously announced connection to Dakota
Access Pipeline (“DAPL”) which is expected to commence operations in
the second quarter 2017. The Arrow/DAPL connection pipeline is
supported by new oil service agreements with XTO Energy Inc., Oasis
Petroleum Inc. and Hess Corporation.
-
Delaware Permian: Crestwood Permian Basin, a 50%/50% joint
venture with First Reserve (“CPJV”), is nearing completion of the
initial build-out of the Nautilus gas gathering system and expects to
complete the project prior to its planned in-service date of July 1,
2017 for less than the original budget of $90 million. SWEPI, a
subsidiary of Royal Dutch Shell and Crestwood’s primary customer on
Nautilus, continues to develop the approximately 100,000 acres
dedicated to the system in Loving and Ward counties, Texas and
currently has five rigs running near the system. Additionally,
Crestwood and First Reserve continue to pursue multiple additional
growth projects in and around the Nautilus system. Crestwood is also
pursuing a number of growth opportunities in and around Crestwood’s
existing Willow Lake assets in Eddy and Lea counties, New Mexico,
which includes approximately 100,000 dedicated acres in the northern
Delaware Permian.
-
Revised FY 2017 Capital Budget: Crestwood's revised FY 2017 net
growth capital budget is expected to be $225 million to $250 million
including the new expansion projects in the Bakken. Crestwood remains
confident in previously provided FY 2017 guidance ranges for Adjusted
EBITDA and Distributable Cash Flow and expects current capital
projects to begin generating meaningful cash flow contributions
beginning in 2018.
Management Commentary
“While our first quarter 2017 results were in-line with our budget and
we maintained a solid leverage ratio and distribution coverage ratio at
3.9x and 1.4x, respectively, the real story is the strengthening of
fundamentals across our entire portfolio,” stated Robert G. Phillips,
Chairman, President and Chief Executive Officer of Crestwood’s general
partner. “We delivered strong performance from our Gathering and
Processing and Storage and Transportation segments, particularly around
our Bakken assets. Increased producer activity and better well
performance led to record oil, gas and water volumes on the Arrow
gathering system and set the stage for the new Bakken growth projects we
announced today. The new gas processing facility will improve market
access, net-back gas prices and flow assurance for our Arrow producers
who are ramping up their activity levels.”
Mr. Phillips added, “Equally exciting is the progress that our project
management and commercial teams have made in the Delaware Permian on our
Nautilus gas gathering system and Willow Lake gathering and processing
opportunities. We continue to work closely with First Reserve on new
expansion opportunities for existing and new customers that will
significantly expand our Delaware Permian presence and drive meaningful
cash flow growth beginning in 2018 and 2019. Taken together with our
expanded 100% owned Bakken operations and the expected rebound of
activity in the Marcellus associated with higher gas prices and
improving basis differentials around our Stagecoach joint venture with
Con Edison, we remain focused on positioning Crestwood for resumption in
distribution growth in 2018.”
First Quarter 2017 Segment Results
Gathering and Processing segment EBITDA totaled $66.5 million in the
first quarter 2017, compared to $66.9 million in the first quarter 2016,
exclusive of 2016 non-cash goodwill impairments noted below. First
quarter 2017 G&P segment EBITDA excludes $3.5 million of cash received
from the Jackalope joint venture under the new minimum revenue agreement
that went effective in January 2017 that is currently accounted for as
deferred revenue. During the first quarter 2017, average natural gas
gathering volumes were 889 MMcf/d, crude oil gathering volumes were 69
thousand barrels per day (“MBbls/d”), processing volumes were 208 MMcf/d
and compression volumes were 467 MMcf/d. The G&P segment during the
quarter benefited from record gathering volumes on the Bakken system and
volume stabilization across the SW Marcellus and Barnett systems
compared to the fourth quarter 2016. Crestwood expects growth in
gathering volumes in the coming quarters as development activity is
accelerated in the Bakken, Delaware Permian and Powder River Basin,
additional drilled-but-uncompleted (“DUC”) completions come on-line in
the Southwest Marcellus, and volume declines in the Barnett continue to
be significantly mitigated by continued well workover activity.
Storage and Transportation segment EBITDA totaled $17.2 million in the
first quarter 2017, compared to $51.1 million in the first quarter 2016,
exclusive of 2016 non-cash goodwill impairments noted below. The S&T
segment reflects lower EBITDA primarily as a result of deconsolidated
operating results related to the formation of the Stagecoach Gas
Services joint venture in June 2016. During the first quarter 2017,
natural gas storage and transportation volumes averaged 2.0 Bcf/d,
compared to 1.7 Bcf/d in the first quarter 2016. During the first
quarter 2017, Stagecoach Gas Services successfully re-contracted
approximately 20% of its storage capacity at attractive rates in-line
with management’s expectations. Supply fundamentals in the Northeast
Marcellus continue to strengthen due to increased producer production
forecasts and there continues to be positive momentum to the regulatory
environment that should facilitate further development of critical
Northeast pipeline infrastructure. In the Bakken, the COLT Hub
contributed EBITDA of $9.6 million as a result of increased spot market
business that led to average rail loading of approximately 58 MBbls/d at
the facility, or 45% above the current take-or-pay contract levels of 40
MBbls/d. The DAPL connection at COLT Hub is complete, line fill
operations have begun, and Crestwood expects incremental pipeline
volumes through the facility beginning in the second or third quarter
2017.
Marketing, Supply and Logistics segment EBITDA totaled $16.7 million in
the first quarter 2017, compared to $16.6 million in the first quarter
2016, exclusive of non-cash goodwill impairments and changes in the fair
value of commodity inventory-related derivative contracts. During the
first quarters of 2017 and 2016, respectively, segment EBITDA was
negatively impacted by unseasonably warm weather adversely impacting
propane and transportation related demand and backwardated NGL pricing
on propane inventory. Crestwood remains on schedule to complete the
construction of the new rail-to-truck NGL terminal in Montgomery, NY by
the summer of 2017, which will increase propane supply reliability into
high demand regions of New York. Additionally, several new producer and
refinery “keep-dry” agreements were executed during the quarter, which
became effective April 1, 2017.
Combined O&M and G&A expenses, net of non-cash unit based compensation,
in the first quarter 2017 were reduced by 12%, or $7.5 million, compared
to the first quarter 2016.
First Quarter 2017 Business Update
Bakken - Arrow Gathering System
On the Arrow system, average crude oil, natural gas and produced water
volumes increased 7%, 9% and 5%, respectively, in the first quarter 2017
compared to volumes in the fourth quarter 2016. During the first quarter
2017, crude oil volumes achieved record daily volumes exceeding 83
MBbls/d as producers accelerated development schedules and connected 26
wells to the system. Crestwood expects to connect an additional 40 to 45
wells to the system during the second quarter 2017. During the first
quarter Crestwood spent approximately $10 million of capital to expand
natural gas and water handling capabilities. Crestwood expects system
upgrades to be complete during the third quarter 2017 to increase
capacity and allow producers to maintain completion schedules of
approximately 90 – 100 well completions on the Arrow system in 2017,
versus 70 well completions in Crestwood’s 2017 guidance range.
Crestwood has commenced construction of the 30 MMcf/d Bear Den Plant
that will provide firm processing capacity to Arrow’s customers. The
Bear Den Plant, which is targeted to be in-service in the fourth
quarter of 2017, offers greater flow assurance and competitive netbacks
for increasing production volumes from producers on the Arrow system and
acreage surrounding the Fort Berthold Indian Reservation. The project is
expected to cost approximately $115 million.
Delaware Permian Update
Crestwood is nearing completion of the Nautilus natural gas gathering
system for a subsidiary of Royal Dutch Shell (SWEPI) in Loving and Ward
counties, Texas. Crestwood expects to complete the project ahead of
schedule and under budget, which will enable Shell to accelerate its
production plans and drive enhanced project returns for Crestwood. The
Nautilus system is owned by the 50%/50% joint venture with First
Reserve. The joint venture expects to invest approximately $90 million
($45 million net to Crestwood) for the initial Nautilus system build-out
this year. When completed, Crestwood’s total Delaware Permian gathering
footprint will include more than 200,000 dedicated acres, 300 miles of
gathering lines, and approximately 300 MMcf/d of gathering capacity.
Additionally, increasing activity levels from current Crestwood
customers and new producer entrants into the Northern Delaware Basin in
New Mexico are driving increasing needs for expansion of Crestwood’s
existing 55 MMcf/d of processing capacity on the Willow Lake system, and
Crestwood is actively pursuing opportunities to leverage its existing
footprint for the benefit of producers in the area.
Capitalization and Liquidity Update
As of March 31, 2017, Crestwood had approximately $1.6 billion of debt
outstanding, comprised of $1.2 billion of fixed-rate senior notes and
$382 million outstanding under its $1.5 billion revolving credit
facility. In March 2017, Crestwood issued $500 million of 5.75%
unsecured Senior Notes due 2025 in a private offering. The net proceeds
from the offering, along with borrowings under Crestwood’s credit
facility, were used to redeem outstanding 6.00% Senior Notes due 2020
and 6.125% Senior Notes due 2022. This issuance allowed Crestwood to
extend its nearest senior note maturity to 2023 and will result in
approximately $6 million of annual interest expense savings. Crestwood’s
leverage ratio was approximately 3.9x as of March 31, 2017.
Crestwood currently has 68.1 million preferred units outstanding (par
value of $9.13 per unit) which pay an annual distribution of 9.25%
payable quarterly in cash or through the issuance of additional
preferred units. On May 15, 2017, holders of the preferred units will
receive 1.6 million additional preferred units related to the first
quarter 2017 distribution declared.
Upcoming Conference Participation
Crestwood Management will participate in the following conferences
during the second quarter 2017. Prior to the each conference
presentation materials will be posted to the Investors section of
Crestwood’s website at www.crestwoodlp.com.
-
MLPA 2017 Annual Investor Conference on May 31 – June 2, 2017 at the
Hyatt Regency in Orlando, Florida. Robert G. Phillips, Chairman,
President and Chief Executive Officer, will make a formal presentation
at approximately 8:40 a.m. Eastern Time on Friday, June 2, 2017
-
Bank of America Merrill Lynch Energy Credit Conference on June 6 – 7,
2017, in New York, NY
-
JPMorgan Energy Equity Conference on June 26 – 28, 2017, in New York,
NY
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.
First Quarter 2016 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. As a result of its goodwill assessment for
the first quarter of 2016, Crestwood recorded impairments of $109.7
million, related to its southwest Marcellus, 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 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 during the first
quarter 2016.
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. Financial results reflect Crestwood’s
contribution of its Northeast Storage and Transportation assets to
Stagecoach Gas Services JV (“Stagecoach”) and its 35% share of
Stagecoach’s earnings beginning June 2016.
|
CRESTWOOD EQUITY PARTNERS LP
|
Consolidated Statements of Operations
|
(in millions, except unit and per unit data)
|
(unaudited)
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2017
|
|
|
2016
|
Revenues:
|
|
|
|
|
|
|
Gathering and processing
|
|
|
$
|
368.1
|
|
|
|
$
|
238.2
|
|
Storage and transportation
|
|
|
10.0
|
|
|
|
59.4
|
|
Marketing, supply and logistics
|
|
|
449.5
|
|
|
|
237.7
|
|
Related party
|
|
|
0.5
|
|
|
|
0.7
|
|
Total revenues
|
|
|
828.1
|
|
|
|
536.0
|
|
|
|
|
|
|
|
|
Costs of product/services sold:
|
|
|
|
|
|
|
Gathering and processing
|
|
|
312.5
|
|
|
|
175.5
|
|
Storage and transportation
|
|
|
—
|
|
|
|
2.9
|
|
Marketing, supply and logistics
|
|
|
366.9
|
|
|
|
180.7
|
|
Related party
|
|
|
4.1
|
|
|
|
4.3
|
|
Total costs of products/services sold
|
|
|
683.5
|
|
|
|
363.4
|
|
|
|
|
|
|
|
|
Expenses:
|
|
|
|
|
|
|
Operations and maintenance
|
|
|
33.7
|
|
|
|
41.8
|
|
General and administrative
|
|
|
26.4
|
|
|
|
23.0
|
|
Depreciation, amortization and accretion
|
|
|
48.4
|
|
|
|
62.3
|
|
|
|
|
108.5
|
|
|
|
127.1
|
|
Other operating expenses:
|
|
|
|
|
|
|
Goodwill impairment
|
|
|
—
|
|
|
|
(109.7
|
)
|
Operating income (loss)
|
|
|
36.1
|
|
|
|
(64.2
|
)
|
Earnings from unconsolidated affiliates, net
|
|
|
8.1
|
|
|
|
6.5
|
|
Interest and debt expense, net
|
|
|
(26.5
|
)
|
|
|
(36.1
|
)
|
Loss on modification/extinguishment of debt
|
|
|
(37.3
|
)
|
|
|
—
|
|
Other income, net
|
|
|
0.1
|
|
|
|
0.1
|
|
Loss before income taxes
|
|
|
(19.5
|
)
|
|
|
(93.7
|
)
|
Benefit for income taxes
|
|
|
0.1
|
|
|
|
—
|
|
Net loss
|
|
|
(19.4
|
)
|
|
|
(93.7
|
)
|
Net income attributable to non-controlling partners
|
|
|
6.1
|
|
|
|
5.9
|
|
Net loss attributable to Crestwood Equity Partners LP
|
|
|
(25.5
|
)
|
|
|
(99.6
|
)
|
Net income attributable to preferred units
|
|
|
17.8
|
|
|
|
1.6
|
|
Net loss attributable to partners
|
|
|
$
|
(43.3
|
)
|
|
|
$
|
(101.2
|
)
|
|
|
|
|
|
|
|
Subordinated unitholders' interest in net loss
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
Common unitholders' interest in net loss
|
|
|
$
|
(43.3
|
)
|
|
|
$
|
(101.2
|
)
|
|
|
|
|
|
|
|
Net loss per limited partner unit:
|
|
|
|
|
|
|
Basic
|
|
|
$
|
(0.62
|
)
|
|
|
$
|
(1.47
|
)
|
Diluted
|
|
|
$
|
(0.62
|
)
|
|
|
$
|
(1.47
|
)
|
|
|
|
|
|
|
|
Weighted-average limited partners’ units outstanding (in thousands):
|
|
|
|
|
|
|
Basic
|
|
|
69,697
|
|
|
|
68,912
|
|
Dilutive units
|
|
|
—
|
|
|
|
—
|
|
Diluted
|
|
|
69,697
|
|
|
|
68,912
|
|
|
CRESTWOOD EQUITY PARTNERS LP
Selected Balance Sheet Data
(in millions)
|
|
|
|
March 31, 2017
|
|
|
December 31, 2016
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
|
$
|
1.0
|
|
|
|
$
|
1.6
|
|
|
|
|
|
|
|
Outstanding debt:
|
|
|
|
|
|
|
Crestwood Midstream Partners LP (a)
|
|
|
|
|
|
|
Revolving Credit Facility
|
|
|
$
|
381.7
|
|
|
|
$
|
77.0
|
Senior Notes
|
|
|
1,213.8
|
|
|
|
1,475.2
|
Other
|
|
|
3.4
|
|
|
|
5.5
|
Subtotal
|
|
|
1,598.9
|
|
|
|
1,557.7
|
Less: deferred financing costs, net
|
|
|
33.8
|
|
|
|
34.0
|
Total debt
|
|
|
$
|
1,565.1
|
|
|
|
$
|
1,523.7
|
|
|
|
|
|
|
|
Total partners' capital
|
|
|
$
|
2,477.3
|
|
|
|
$
|
2,539.0
|
|
|
|
|
|
|
|
Crestwood Equity Partners LP partners'
capital
|
|
|
|
|
|
|
Common units outstanding
|
|
|
70.1
|
|
|
|
69.5
|
|
|
|
(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,
|
|
|
|
2017
|
|
|
2016
|
EBITDA
|
|
|
|
|
|
|
Net loss
|
|
|
$
|
(19.4
|
)
|
|
|
$
|
(93.7
|
)
|
Interest and debt expense, net
|
|
|
26.5
|
|
|
|
36.1
|
|
Loss on modification/extinguishment of debt
|
|
|
37.3
|
|
|
|
—
|
|
Benefit for income taxes
|
|
|
(0.1
|
)
|
|
|
—
|
|
Depreciation, amortization and accretion
|
|
|
48.4
|
|
|
|
62.3
|
|
EBITDA (a)
|
|
|
$
|
92.7
|
|
|
|
$
|
4.7
|
|
Significant items impacting EBITDA:
|
|
|
|
|
|
|
Unit-based compensation charges
|
|
|
7.3
|
|
|
|
4.5
|
|
Goodwill impairment
|
|
|
—
|
|
|
|
109.7
|
|
Earnings from unconsolidated affiliates, net
|
|
|
(8.1
|
)
|
|
|
(6.5
|
)
|
Adjusted EBITDA from unconsolidated affiliates, net
|
|
|
15.6
|
|
|
|
9.1
|
|
Change in fair value of commodity inventory-related derivative
contracts
|
|
|
(18.6
|
)
|
|
|
(2.7
|
)
|
Significant transaction and environmental related costs and other
items
|
|
|
2.0
|
|
|
|
1.2
|
|
Adjusted EBITDA (a)
|
|
|
$
|
90.9
|
|
|
|
$
|
120.0
|
|
|
|
|
|
|
|
|
Distributable Cash Flow
|
|
|
|
|
|
|
Adjusted EBITDA (a)
|
|
|
$
|
90.9
|
|
|
|
$
|
120.0
|
|
Cash interest expense (b)
|
|
|
(25.0
|
)
|
|
|
(34.4
|
)
|
Maintenance capital expenditures (c)
|
|
|
(2.3
|
)
|
|
|
(4.5
|
)
|
Benefit for income taxes
|
|
|
0.1
|
|
|
|
—
|
|
Deficiency payments
|
|
|
(0.5
|
)
|
|
|
1.5
|
|
Distributable cash flow attributable to CEQP
|
|
|
63.2
|
|
|
|
82.6
|
|
Distributions to Niobrara Preferred
|
|
|
(3.8
|
)
|
|
|
(3.8
|
)
|
Distributable cash flow attributable to CEQP common (d)
|
|
|
$
|
59.4
|
|
|
|
$
|
78.8
|
|
|
|
|
(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. Adjusted EBITDA considers the adjusted
earnings impact of our unconsolidated affiliates by adjusting our
equity earnings or losses from our unconsolidated affiliates to
reflect our proportionate share (based on the distribution
percentage) of their EBITDA, excluding impairments. Adjusted EBITDA
also considers the impact of certain significant items, such as
unit-based compensation charges, losses on long-lived assets,
impairments of goodwill, third party costs incurred related to
potential and completed acquisitions, certain environmental
remediation costs, 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 GAAP 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,
|
|
|
|
2017
|
|
|
2016
|
EBITDA
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
$
|
58.9
|
|
|
|
$
|
134.3
|
|
Net changes in operating assets and liabilities
|
|
|
15.2
|
|
|
|
(50.6
|
)
|
Amortization of debt-related deferred costs, discounts and premiums
|
|
|
(1.8
|
)
|
|
|
(1.7
|
)
|
Interest and debt expense, net
|
|
|
26.5
|
|
|
|
36.1
|
|
Unit-based compensation charges
|
|
|
(7.3
|
)
|
|
|
(4.5
|
)
|
Goodwill impairment
|
|
|
—
|
|
|
|
(109.7
|
)
|
Earnings from unconsolidated affiliates, net, adjusted for cash
distributions received
|
|
|
0.3
|
|
|
|
0.8
|
|
Deferred income taxes
|
|
|
0.6
|
|
|
|
0.1
|
|
Benefit for income taxes
|
|
|
(0.1
|
)
|
|
|
—
|
|
Other non-cash (income) expense
|
|
|
0.4
|
|
|
|
(0.1
|
)
|
EBITDA (a)
|
|
|
$
|
92.7
|
|
|
|
$
|
4.7
|
|
Unit-based compensation charges
|
|
|
7.3
|
|
|
|
4.5
|
|
Goodwill impairment
|
|
|
—
|
|
|
|
109.7
|
|
Earnings from unconsolidated affiliates, net
|
|
|
(8.1
|
)
|
|
|
(6.5
|
)
|
Adjusted EBITDA from unconsolidated affiliates, net
|
|
|
15.6
|
|
|
|
9.1
|
|
Change in fair value of commodity inventory-related derivative
contracts
|
|
|
(18.6
|
)
|
|
|
(2.7
|
)
|
Significant transaction and environmental related costs and other
items
|
|
|
2.0
|
|
|
|
1.2
|
|
Adjusted EBITDA (a)
|
|
|
$
|
90.9
|
|
|
|
$
|
120.0
|
|
|
|
|
(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. Adjusted EBITDA considers the adjusted
earnings impact of our unconsolidated affiliates by adjusting our
equity earnings or losses from our unconsolidated affiliates to
reflect our proportionate share (based on the distribution
percentage) of their EBITDA, excluding impairments. Adjusted EBITDA
also considers the impact of certain significant items, such as
unit-based compensation charges, losses on long-lived assets,
impairments of goodwill, third party costs incurred related to
potential and completed acquisitions, certain environmental
remediation costs, 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,
|
|
|
|
2017
|
|
|
2016
|
Gathering and Processing
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
398.9
|
|
|
|
$
|
259.4
|
|
Costs of product/services sold
|
|
|
316.6
|
|
|
|
179.8
|
|
Operations and maintenance expense
|
|
|
17.4
|
|
|
|
17.8
|
|
Goodwill impairment
|
|
|
—
|
|
|
|
(8.6
|
)
|
Earnings from unconsolidated affiliate, net
|
|
|
1.6
|
|
|
|
5.1
|
|
EBITDA
|
|
|
$
|
66.5
|
|
|
|
$
|
58.3
|
|
|
|
|
|
|
|
|
Storage and Transportation
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
11.8
|
|
|
|
$
|
59.8
|
|
Costs of product/services sold
|
|
|
—
|
|
|
|
2.9
|
|
Operations and maintenance expense
|
|
|
1.1
|
|
|
|
7.2
|
|
Goodwill impairment
|
|
|
—
|
|
|
|
(13.7
|
)
|
Earnings from unconsolidated affiliates, net
|
|
|
6.5
|
|
|
|
1.4
|
|
EBITDA
|
|
|
$
|
17.2
|
|
|
|
$
|
37.4
|
|
|
|
|
|
|
|
|
Marketing, Supply and Logistics
|
|
|
|
|
|
|
Revenues
|
|
|
$
|
417.4
|
|
|
|
$
|
216.8
|
|
Costs of product/services sold
|
|
|
366.9
|
|
|
|
180.7
|
|
Operations and maintenance expense
|
|
|
15.2
|
|
|
|
16.8
|
|
Goodwill impairment
|
|
|
—
|
|
|
|
(87.4
|
)
|
EBITDA
|
|
|
$
|
35.3
|
|
|
|
$
|
(68.1
|
)
|
|
|
|
|
|
|
|
Total Segment EBITDA
|
|
|
$
|
119.0
|
|
|
|
$
|
27.6
|
|
Corporate
|
|
|
(26.3
|
)
|
|
|
(22.9
|
)
|
EBITDA
|
|
|
$
|
92.7
|
|
|
|
$
|
4.7
|
|
|
CRESTWOOD EQUITY PARTNERS LP Operating Statistics
(unaudited)
|
|
|
|
Three Months Ended March 31,
|
|
|
|
2017
|
|
|
2016
|
Gathering and Processing (MMcf/d)
|
|
|
|
|
|
|
Bakken - Arrow
|
|
|
49.2
|
|
|
|
44.0
|
|
Marcellus
|
|
|
359.9
|
|
|
|
463.6
|
|
Barnett
|
|
|
331.1
|
|
|
|
299.7
|
|
Permian
|
|
|
38.9
|
|
|
|
27.1
|
|
PRB Niobrara - Jackalope Gas Gathering (a)
|
|
|
47.3
|
|
|
|
68.9
|
|
Other
|
|
|
62.1
|
|
|
|
88.0
|
|
Total gas gathering volumes
|
|
|
888.5
|
|
|
|
991.3
|
|
Processing volumes
|
|
|
208.2
|
|
|
|
212.6
|
|
Compression volumes
|
|
|
466.5
|
|
|
|
516.7
|
|
Arrow Midstream
|
|
|
|
|
|
|
Bakken Crude oil (MBbls/d)
|
|
|
68.6
|
|
|
|
68.0
|
|
Bakken Water (MBbls/d)
|
|
|
31.5
|
|
|
|
26.6
|
|
|
|
|
|
|
|
|
Storage and Transportation
|
|
|
|
|
|
|
Northeast Storage - firm contracted capacity (Bcf) (a)
|
|
|
35.8
|
|
|
|
34.4
|
|
% of operational capacity contracted
|
|
|
100
|
%
|
|
|
99
|
%
|
Firm storage services (MMcf/d) (a)
|
|
|
286.0
|
|
|
|
288.1
|
|
Interruptible storage services (MMcf/d) (a)
|
|
|
1.0
|
|
|
|
22.7
|
|
Northeast Transportation - firm contracted capacity (MMcf/d) (a)
|
|
|
1,412.1
|
|
|
|
1,353.0
|
|
% of operational capacity contracted
|
|
|
80
|
%
|
|
|
87
|
%
|
Firm services (MMcf/d) (a)
|
|
|
1,318.7
|
|
|
|
1,028.4
|
|
Interruptible services (MMcf/d) (a)
|
|
|
75.9
|
|
|
|
117.5
|
|
Gulf Coast Storage - firm contracted capacity (Bcf) (a)
|
|
|
31.1
|
|
|
|
29.2
|
|
% of operational capacity contracted
|
|
|
81
|
%
|
|
|
76
|
%
|
Firm storage services (MMcf/d) (a)
|
|
|
295.8
|
|
|
|
167.6
|
|
Interruptible services (MMcf/d) (a)
|
|
|
37.9
|
|
|
|
99.4
|
|
COLT Hub
|
|
|
|
|
|
|
Rail loading (MBbls/d)
|
|
|
57.9
|
|
|
|
83.5
|
|
Outbound pipeline (MBbls/d) (b)
|
|
|
9.5
|
|
|
|
18.5
|
|
|
|
|
|
|
|
|
Marketing, Supply and Logistics
|
|
|
|
|
|
|
Crude barrels trucked (MBbls/d)
|
|
|
7.1
|
|
|
|
13.0
|
|
NGL Operations
|
|
|
|
|
|
|
Supply & Logistics volumes sold (MBbls/d)
|
|
|
93.0
|
|
|
|
88.1
|
|
West Coast volumes sold or processed (MBbls/d)
|
|
|
26.3
|
|
|
|
20.3
|
|
NGL volumes trucked (MBbls/d)
|
|
|
64.2
|
|
|
|
59.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
|
Represents 50% owned joint venture, operational data reported is at
100%.
|
|
|
|
|
|
|
|
|
(b)
|
|
Represents only throughput leaving the terminal. Total outbound
pipeline throughput and receivables were 12.2 MBbls/d and 45.7
MBbls/d for the three months ended March 31, 2017 and 2016.
|
View source version on businesswire.com: http://www.businesswire.com/news/home/20170502005605/en/
Source: Crestwood Equity Partners LP