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Atlas Pipeline Partners, L.P. Reports Fourth Quarter And Full Year 2012 Results
-- Adjusted EBITDA for fourth quarter 2012 was $64.1 million, a 30% increase year-over-year
By: PR Newswire
Feb. 18, 2013 07:12 PM
PHILADELPHIA, Feb. 18, 2013 /PRNewswire/ -- Atlas Pipeline Partners, L.P. (NYSE: APL) ("APL", "Atlas Pipeline", or the "Partnership") today reported adjusted earnings before interest, income taxes, depreciation and amortization ("Adjusted EBITDA"), of $64.1 million for the fourth quarter of 2012, driven by a continued increase in volumes across the Partnership's gathering and processing systems. Processed natural gas volumes averaged 1,002 million cubic feet per day ("MMCFD"), a 67% increase over the fourth quarter of 2011. Distributable Cash Flow was $40.4 million for the fourth quarter of 2012, or $0.72 per average common limited partner unit, compared to $36.0 million for the prior year fourth quarter. These results include one month of operations for the Partnership's newly acquired Arkoma assets, which were purchased on December 20, 2012 and have an effective date as of December 1, 2012. Net loss was $6.9 million for the fourth quarter of 2012, which in accordance with GAAP includes eleven days of earnings from the Arkoma assets, compared with net loss of $5.3 million for the prior year fourth quarter.
For the full year 2012, Adjusted EBITDA was $220.2 million, compared to full year 2011 Adjusted EBITDA of $181.0 million, a 22% increase from prior year. Net income was $68.1 million for the full year 2012, compared to net income of $295.4 million for the prior year, which included a $256.3 million gain on the sale of the Partnership's remaining interest in the Laurel Mountain joint venture. For the full year 2012, Distributable Cash Flow was $146.0 million, an increase of approximately 12% over the full year 2011 Distributable Cash Flow of $129.9 million. Distributable Cash Flow per average common limited partner unit for the full year 2012 was $2.69.
Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures, which are reconciled to their most directly comparable GAAP measures in the tables included at the end of this news release. The Partnership believes these measures provide a more accurate comparison of the operating results for the periods presented.
On January 23, 2013, the Partnership declared a distribution for the fourth quarter of 2012 of $0.58 per common limited partner unit to holders of record on February 7, 2013, which was paid on February 14, 2013. This distribution represents Distributable Cash Flow coverage per limited partner unit of approximately 1.0x on a fully diluted basis for the fourth quarter of 2012, however coverage would have been 1.1x pro forma if the operating results for the Arkoma assets had been included for the entire quarter.
"This has been a very successful year for the Partnership. Even with weaker natural gas and NGL pricing, not having full NGL takeaway at our two largest systems, and various 3rd party disruptions of operations both upstream and downstream, we still managed to increase our distribution three out of four quarters, paying out 16% more in cash flow than we did for 2011. Additionally, in the face of those headwinds, we managed to expand two out of our three legacy processing systems and purchase a fourth system for $600 million in December, most of which is fixed-fee cash flow, reducing our commodity exposure. With another legacy expansion coming this spring, coupled with much needed NGL takeaway at our two largest systems, plus the addition of a previously announced expansion at our new Arkoma system, we have plenty of catalysts to take the distribution even higher in 2013 and beyond. We expect to continue to announce opportunities this year to add to our expanding portfolio of growth and wish to thank all of our supporters in our efforts," stated Eugene Dubay, Chief Executive Officer of the Partnership.
2013 Forecasted Guidance
The Partnership is forecasting Adjusted EBITDA for 2013 between $320 million and $360 million based on current commodity pricing curves for natural gas, natural gas liquids component products, and crude oil. The resulting forecasted Distributable Cash Flow for 2013 would range from $200 million to $240 million based on the same assumptions. Based on the Partnership's distribution coverage targets, the forecasted distributions for 2013 would be between $2.50 and $2.60 per limited partner unit. The Partnership is currently expecting growth capital expenditures for the year to total approximately $350 million, based on previously announced expansion projects, including completion of the Driver and Stonewall facilities, as well as new infrastructure and projected well connections to support further volume growth on our existing systems. It is important to note that the range of guidance for 2013 is based information that has been publicly announced to date. The Partnership expects to update guidance as future growth projects are announced this year. The Partnership's management team will address the 2013 outlook on the earnings conference call tomorrow morning.
These forecasted amounts are based on various assumptions, including, among others, the Partnership's expected cost and timing for completion of its announced capital expenditure program, timing of incremental volumes on its gathering and processing systems, known contract structures, scheduled maintenance of facilities including those of third-parties that impact the Partnership's operations, estimated interest rates, and budgeted operating and general administrative costs. Management does not forecast certain items, including GAAP revenues, depreciation, amortization, and non-cash changes in derivatives, and therefore is unable to provide forecasted Net Income, a comparable GAAP measure, for the periods presented. The reconciling items between these non-GAAP measures and Net Income are expected to be similar to those for the current periods presented and are not expected to be significant to the Partnership's cash flows.
Capitalization and Liquidity
The Partnership had total liquidity (cash plus available capacity on its revolving credit facility) of $310.3 million as of December 31, 2012. Pro forma for the recently completed senior notes offering and tender offer, total liquidity would have been approximately $551 million at December 31, 2012. Total debt outstanding was $1,179.9 million at December 31, 2012, compared to $524.1 million at December 31, 2011, an increase of $655.8 million. Based upon total debt outstanding at December 31, 2012, total leverage was approximately 4.5x, including historical earnings from the Arkoma acquisition, and debt to capital was 43%. Total leverage was approximately 4.0x for purposes of calculations under our revolving credit facility.
The Partnership continued enhancement of its risk management portfolio, adding further protection for 2013 through 2015. As of February 15, 2013, the Partnership has natural gas, natural gas liquids and condensate protection in place for the full years of 2013 and 2014 for approximately 78% and 56%, respectively, of associated margin value (exclusive of ethane). The Partnership has also added protection into 2015 covering approximately 24% of associated margin value (exclusive of ethane). Counterparties to the Partnership's risk management activities consist of investment grade commercial banks that are lenders under the Partnership's credit facility, or affiliates of those banks. A table summarizing our risk management portfolio is included in this release.
The Partnership continues to report record volumes, and with the addition of the Arkoma assets, is now processing, on average, over 1.0 BCFD of natural gas. Gross margin from operations was $79.5 million for the fourth quarter 2012 and $278.1 for the full year 2012, compared to $69.6 million and $264.9 million for the prior year periods, respectively. Gross margin, a non-GAAP financial measure, includes natural gas and liquids sales and transportation, processing and other fees, less purchased product costs and non-cash gains (or losses) included in these items. The higher gross margin for the quarter was primarily due to the increased volumes, partially offset by decreased NGL prices. The gross margin for the quarter does not include approximately $3.9 million of realized derivative settlement gains, which are excluded in the calculation of gross margin, compared to $1.7 million realized derivative settlement losses excluded from gross margin in the fourth quarter of 2011.
The WestTX system's average natural gas processed volume was 271.6 MMCFD and 249.2 MMCFD for the fourth quarter and full year 2012, respectively, compared to 220.5 MMCFD and 196.4 MMCFD for prior year comparable periods. Increased volumes are primarily due to increased production in the Spraberry and Wolfberry Trends of the Permian basin. Average NGL production volumes were 34,913 barrels per day ("BPD") and 32,314 BPD for the fourth quarter and full year 2012, respectively, an 8.5% and 11.2% increase from prior year comparable periods. The Partnership expects processed volumes on this system to continue to increase as producers continue to pursue their drilling plans over the coming years. The construction of the previously announced Driver plant, which will increase processing capacity by 200 MMCFD, is expected to be completed by the end of the first quarter or beginning of the second quarter of 2013.
The WestOK system had average natural gas processed volume of 412.7 MMCFD and 348.0 MMCFD for the fourth quarter and full year 2012, respectively, a 49.7% and 36.8% increase from the prior year comparable periods. Average NGL production was 16,576 BPD and 14,505 BPD, respectively, for the fourth quarter and full year 2012, respectively, a 15.5% increase and 6.4% increase from the prior year comparable periods, due to increased production on the gathering systems and the start-up of the Waynoka II plant in September 2012. The Partnership expects volumes to continue to increase as producers in Oklahoma and Kansas, continue to add to the system via development in the oil-rich Mississippian Limestone formation.
The Velma system's average natural gas processed volume was 106.6 MMCFD and 114.4 MMCFD for the fourth quarter and full year 2012, respectively, a 1.4% and 16.6% increase from the prior year comparable periods. The increase is primarily due to additional production gathered on the Madill to Velma pipeline system from continued producer activity in the liquids-rich portion of the Woodford Shale. Average NGL production increased to 12,493 BPD and 13,850 BPD for the fourth quarter and full year 2012, respectively, up approximately 3.4% and 21.1% compared to the prior year comparable periods, due to the increased processed volumes. In June 2012, the Partnership completed the previously announced plans to expand the Velma system by adding a 60 MMCFD cryogenic plant (the "V-60 plant"), which supports the additional volumes from XTO Energy, Inc ("XTO"). Volumes on the Velma system were lower than the third quarter of 2012 primarily due to XTO diverting gas to a third party during the period. The Partnership expects these volumes to return in 2013 and has a fee-based commitment from XTO on the V-60 plant that commences in mid-2013.
On December 20, 2012, the Partnership acquired 100% of the equity interests held by Cardinal Midstream in three wholly-owned subsidiaries for $598.5 million in cash, including preliminary purchase price adjustments. The assets of these companies include gas gathering, processing and treating facilities in Arkansas, Louisiana, Oklahoma and Texas, including a 60% interest in a joint venture with MarkWest Energy Partners, L.P., known as Centrahoma Processing, LLC ("Centrahoma"). The Arkoma gathering and processing system is located in the Arkoma Basin in southeastern Oklahoma and had average natural gas processed volumes of 211.0 MMCFD and produced 16,138 BPD of NGLs during the effective period it was owned by the Partnership. Centrahoma is in the process of constructing a new processing facility, the Stonewall plant, which is expected to be complete in early 2014, with anticipated initial processing capacity of 120 MMCFD.
Corporate and Other
Net of deferred financing costs, interest expense increased to $14.1 million and $41.8 million for the fourth quarter and full year 2012, respectively, up 135.0% and 54.2% as compared with the fourth quarter and full year 2011. This increase was due to financing the Partnership's $600 million capital expenditure program during 2011 and 2012, including the issuance of senior unsecured notes in November 2011, as well as the issuance of additional senior unsecured notes in September and December 2012.
Interested parties are invited to access the live webcast of an investor call with management regarding the Partnership's fourth quarter 2012 results on Tuesday, February 19, 2013 at 10:00 am ET by going to the Investor Relations section of the Partnership's website at www.atlaspipeline.com. An audio replay of the conference call will also be available beginning at 12:00 pm ET on Tuesday, February 19, 2013. To access the replay, dial 1-888-286-8010 and enter conference code 61912389.
Atlas Pipeline Partners, L.P. (NYSE: APL) is active in the gathering and processing segments of the midstream natural gas industry. In Oklahoma, southern Kansas, northern and western Texas, and Tennessee, APL owns and operates 12 active gas processing plants, 18 gas treating facilities, as well as approximately 10,100 miles of active intrastate gas gathering pipeline. APL also has a 20% interest in West Texas LPG Pipeline Limited Partnership, which is operated by Chevron Corporation. For more information, visit the Partnership's website at www.atlaspipeline.com or contact IR@atlaspipeline.com.
Atlas Energy, L.P. (NYSE: ATLS) is a master limited partnership which owns and operates the general partner of its midstream oil & gas subsidiary, Atlas Pipeline Partners, L.P., through all of the general partner interest, all the incentive distribution rights and an approximate 9% limited partner interest. Additionally, Atlas Energy owns all of the general partner Class A units and incentive distribution rights and an approximate 44% limited partner interest in its upstream oil & gas subsidiary, Atlas Resource Partners, L.P. For more information, please visit the Partnership's website at www.atlasenergy.com, or contact Investor Relations at InvestorRelations@atlasenergy.com.
Certain matters discussed within this press release are forward-looking statements. Although Atlas Pipeline Partners, L.P. believes the expectations reflected in such forward-looking statements are based on reasonable assumptions, it can give no assurance that its expectations will be attained. Atlas Pipeline does not undertake any duty to update any statements contained herein (including any forward-looking statements), except as required by law. Factors that could cause actual results to differ materially from expectations include general industry considerations, regulatory changes, changes in commodity process and local or national economic conditions and other risks detailed from time to time in Atlas Pipeline's reports filed with the SEC, including quarterly reports on Form 10-Q, current reports on Form 8-K and annual reports on Form 10-K.
Contact: Matthew Skelly
ATLAS PIPELINE PARTNERS, L.P. AND SUBSIDIARIES
Note: The natural gas, natural gas liquid and condensate price risk management positions shown below represent the contracts in place through December 31, 2015. APL's price risk management position in its entirety will be disclosed in the Partnership's Form 10-K. NGL contracts are traded at Mt. Belvieu unless otherwise disclosed.
NATURAL GAS HEDGES
NATURAL GAS LIQUIDS HEDGES
SOURCE Atlas Pipeline Partners, L.P.
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