NOBLE ENERGY, INC. CANONSBURG, Pa., Aug. 5, 2015 /PRNewswire/ -- CONE Midstream Partners LP (NYSE: CNNX) ("CONE Midstream" or the "Partnership") today reported financial and operational results for the three months ending June 30, 2015.((1))
Second Quarter Results
Highlights of second quarter 2015 results attributable to the Partnership include:
-- Net income of $14.9 million
-- Average daily throughput volumes of 568 billion Btu per day (BBtu/d)
-- EBITDA((2)) of $17.0 million
-- Distributable cash flow (DCF)((2)) of $14.8 million
Management Comment
"Continued volume growth, solid unit operating expenses, and disciplined cost control produced strong second quarter financial and operational results for CONE Midstream," said John T. Lewis, Chairman of the Board and Chief Executive Officer of CONE Midstream GP LLC (the "General Partner"). "We are pleased with our better-than projected results for the quarter, and anticipate continued volume growth from both new well connections and the impact of debottlenecking projects scheduled to come on line in the third and fourth quarters of 2015.
"Although the first year projections in the IPO prospectus did not include any increase in the quarterly cash distributions, in light of our actual performance to date and the outlook for the balance of this year and 2016, the Board felt it was appropriate to make an initial distribution increase earlier than originally anticipated. The announced distribution of $0.22 per unit represents a quarterly increase of 3.5%. This is our first increase, it's earlier than projected, and it should not be viewed as indicative of the rate of future distribution increases. We remain committed to what we have communicated previously, which is to grow cash distributions at annual rate of between 15% and 20%."
Quarterly Distribution
As previously announced, the Board of Directors of the General Partner declared a quarterly cash distribution of $0.22 per unit with respect to the second quarter of 2015. The distribution payment will be made on August 14, 2015 to unitholders of record at the close of business on August 5, 2015. The distribution, which equates to an annual rate of $0.88 per unit, represents an increase of 3.5% over the prior quarter.
Capital Investment and Resources
CONE Midstream's allocated second quarter 2015 share of investment in expansion projects was $29.5 million. Total expansion capital investment at the three development companies in which CONE Midstream holds controlling interests was $72.8 million, with individual development company totals as follows:
-- Anchor Systems (Development Company 1): Expansion investments totaled
approximately$36.9 million and were primarily expended for continued
gathering system extensions to nine well pads in Greene and Washington
Counties (PA), additional compression at McQuay and Majorsville
Stations, along with pipeline expansion and an additional tap to relieve
bottlenecks in the North Nineveh field.
-- Growth Systems (Development Company 2): Expansion investments totaled
approximately$7.0 million and primarily were expended on land and
permitting associated with future development in Harrison and Lewis
Counties (WV).
-- Additional Systems (Development Company 3): Expansion investments
totaled approximately$28.8 million for the continued construction of
Shirley Station, construction of our Sherwood South gathering pipeline
that connects the Oxford field in southern Doddridge County to MarkWest
Sherwood, and additional pipeline construction in the Moundsville field
and Allegheny County Airport project areas.
CONE Midstream's respective share of maintenance capital expenditures for the three development companies for the second quarter 2015 was $2.1 million. Maintenance capital expenditures in the aggregate for the development companies in which CONE Midstream holds controlling interests totaled $3.6 million.
As of June 30, 2015, CONE Midstream had outstanding borrowings of $23.0 million under its $250 million revolving credit facility.
Second Quarter Financial and Operational Results Conference Call
A conference call and webcast, during which management will discuss second quarter 2015 financial and operational results, is scheduled for August 5, 2015 at 11:00 a.m. Eastern Time. Reference material for the call will be available on the "Events" page of our website, www.conemidstream.com, shortly before the start of the call. Prepared remarks by members of management will be followed by a question and answer period. Interested parties may listen via webcast by using the link posted on the "Events" page of our website or at www.webcaster4.com/Webcast/Page/998/9436. Participants who would like to ask questions may join the conference by phone at 888-349-0097 (international 412-902-0126) five to ten minutes prior to the scheduled start time (reference the CONE Midstream call). An on-demand replay of the webcast will be also be available at www.webcaster4.com/Webcast/Page/998/9436 shortly after the conclusion of the conference. A telephonic replay will be available through August 13, 2015 by dialing 877-344-7529 (international: 412-317-0088) and using the conference playback number 10068783.
_______________
((1) )Unless otherwise indicated, the reporting measures included in this news release reflect the unallocated total activity of the three development companies jointly owned by the Partnership and CONE Gathering LLC ("CONE Gathering"). Because the Partnership owns a controlling interest in each of the three development companies, it fully consolidates their financial results. The Partnership's current financial interests in the development companies are: 75% in the Anchor Systems, 5% in the Growth Systems, and 5% in the Additional Systems. CONE Gathering is a midstream joint venture formed by CONSOL Energy Inc. and Noble Energy, Inc. and owns non-controlling interests in the Partnership's development companies.
((2)) EBITDA and DCF are not Generally Accepted Accounting Principles ("GAAP") measures. Definitions and reconciliations of these non-GAAP measures to GAAP reporting measures appear in the financial tables which follow.
Contact: Stephen R. Milbourne
CONE Investor Relations
Phone: 724-485-4408
Email: smilbourne@conemidstream.com
* * * * *
CONE Midstream Partners is a master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) and Noble Energy, Inc. (NYSE: NBL), referred to as our Sponsors, to own, operate, develop and acquire natural gas gathering and other midstream energy assets to service our Sponsors' production in the Marcellus Shale in Pennsylvania and West Virginia. Our assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on our website www.conemidstream.com.
* * * * *
This press release is intended to be a qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of CONE Midstream's distributions to non-U.S. investors as being attributed to income that is effectively connected with a United States trade or business. Accordingly, CONE Midstream's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate. Nominees, and not CONE Midstream, are treated as withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.
* * * * *
This press release contains forward-looking statements within the meaning of the federal securities laws. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words "believe," "expect," "anticipate," "intend," "estimate" and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. Forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, and there can be no assurance that actual outcomes and results will not differ materially from those expected by our management. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include, among others: the effects of changes in market prices of natural gas, NGLs and crude oil on our Sponsors' drilling and development plan on our dedicated acreage and the volumes of natural gas and condensate that are produced on our dedicated acreage; changes in our Sponsors' drilling and development plan in the Marcellus Shale; our Sponsors' ability to meet their drilling and development plan in the Marcellus Shale; the demand for natural gas and condensate gathering services; changes in general economic conditions; competitive conditions in our industry; actions taken by third-party operators, gatherers, processors and transporters; our ability to successfully implement our business plan; and our ability to complete internal growth projects on time and on budget. You should not place undue reliance on our forward-looking statements. Although forward-looking statements reflect our good faith beliefs at the time they are made, forward-looking statements involve known and unknown risks, uncertainties and other factors, including the factors described under "Risk Factors" and "Forward-Looking Statements" in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.
CONE MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
2015 2014 2015 2014
---- ---- ---- ----
Revenue
Gathering Revenue - Related Party $47,717 $27,811 $90,885 $51,917
------- ------- ------- -------
Total Revenue 47,717 27,811 90,885 51,917
Expenses
Operating Expense - Third Party 8,940 6,082 17,470 11,428
Operating Expense - Related Party 6,940 5,893 13,984 12,523
General and Administrative Expense - Third Party 1,223 8 2,565 829
General and Administrative Expense - Related Party 1,995 1,117 3,972 1,358
Depreciation Expense 3,667 1,679 6,661 3,297
Interest Expense 47 - 112 -
--- --- --- ---
Total Expense 22,812 14,779 44,764 29,435
------ ------ ------ ------
Net Income 24,905 13,032 46,121 22,482
Less: Net Income Attributable to Noncontrolling Interest 9,993 - 16,997 -
----- --- ------ ---
Net Income Attributable to General and Limited Partner Ownership $14,912 $13,032 $29,124 $22,482
Interest in CONE Midstream Partners LP
Calculation of Limited Partner Interest in Net Income:
Net Income Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP (1) $14,912 $13,032 $29,124 $22,482
Less: General Partner Interest in Net Income 298 N/A 582 N/A
--- --- --- ---
Limited Partner Interest in Net Income $14,614 N/A $28,542 N/A
======= === ======= ===
Net Income per Limited Partner Unit - Basic $0.25 N/A $0.49 N/A
Net Income per Limited Partner Unit - Diluted $0.25 N/A $0.49 N/A
Limited Partner Units Outstanding - Basic 58,326 N/A 58,326 N/A
Limited Partner Unit Outstanding - Diluted 58,364 N/A 58,365 N/A
Cash Distributions Declared per Unit (2) $0.2200 N/A $0.4325 N/A
(1) ( )Reflective of general and limited partner interest in net income since closing of the IPO.
(2) Represents the cash distributions declared related to the period presented.
CONE MIDSTREAM PARTNERS LP
RECONCILIATION OF NET INCOME TO EBITDA AND DISTRIBUTABLE CASH FLOW
(in thousands)
Definition of Non-GAAP Financial Measures
EBITDA
We define EBITDA as net income (loss) before income taxes, net interest expense, depreciation and amortization. EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:
-- our operating performance as compared to those of other companies in the
midstream energy industry, without regard to financing methods,
historical cost basis or capital structure;
-- the ability of our assets to generate sufficient cash flow to make
distributions to our partners;
-- our ability to incur and service debt and fund capital expenditures; and
-- the viability of acquisitions and other capital expenditure projects and
the returns on investment of various investment opportunities.
We believe that the presentation of EBITDA provides information useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to EBITDA are net income and net cash provided by operating activities. EBITDA should not be considered an alternative to net income, net cash provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA excludes some, but not all, items that affect net income or net cash, and these measures may vary from those of other companies. As a result, EBITDA as presented below may not be comparable to similarly titled measures of other companies.
Distributable Cash Flow
We define distributable cash flow as EBITDA less net cash interest paid and maintenance capital expenditures. Distributable cash flow does not reflect changes in working capital balances.
Distributable cash flow is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:
-- the ability of our assets to generate cash sufficient to support our
indebtedness and make future cash distributions to our unitholders; and
-- the attractiveness of capital projects and acquisitions and the overall
rates of return on alternative investment opportunities.
We believe that the presentation of distributable cash flow in this report provides information useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to distributable cash flow are net income and net cash provided by operating activities. Distributable cash flow should not be considered an alternative to net income, net cash provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Distributable cash flow excludes some, but not all, items that affect net income or net cash, and these measures may vary from those of other companies. As a result, our distributable cash flow may not be comparable to similarly titled measures of other companies.
The following tables present a reconciliation of EBITDA to net income and net cash provided by operating activities, the most directly comparable GAAP financial measures, on a historical basis, for each of the periods indicated.
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
(unaudited) 2015 2014 2015 2014
---- ---- ---- ----
Net Income $24,905 $13,032 $46,121 $22,482
Add:
Interest Expense 47 - 112 -
Depreciation Expense 3,667 1,679 6,661 3,297
EBITDA 28,619 14,711 52,894 25,779
Less: Net Income Attributable to Noncontrolling Interest 9,993 - 16,997 -
Less: Interest Expense Attributable to Noncontrolling Interest 14 - 33 -
Less: Depreciation Expense Attributable to Noncontrolling Interest 1,659 - 2,825 -
----- --- ----- ---
EBITDA Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP $16,953 $14,711 $33,039 $25,779
======= ======= ======= =======
Less: Ongoing Maintenance Capital Expenditures, Net of Expected Reimbursements 2,148 1,399 4,139 2,562
----- ----- -----
Distributable Cash Flow $14,805 $13,312 $28,900 $23,217
======= ======= ======= =======
Net Cash Provided by Operating Activities $50,254 $17,897 $60,460 $38,632
Adjustments:
Less: Interest Expense 47 - 112 -
Less: Other, Including Changes in Working Capital 21,588 3,186 7,454 12,853
EBITDA 28,619 14,711 52,894 25,779
Less: Net Income Attributable to Noncontrolling Interest 9,993 - 16,997 -
Less: Interest Expense Attributable to Noncontrolling Interest 14 - 33 -
Less: Depreciation Expense Attributable to Noncontrolling Interest 1,659 - 2,825 -
EBITDA Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP $16,953 $14,711 $33,039 $25,779
======= ======= ======= =======
Less: Ongoing Maintenance Capital Expenditures, Net of Expected Reimbursements 2,148 1,399 4,139 2,562
Distributable Cash Flow $14,805 $13,312 $28,900 $23,217
======= ======= ======= =======
QTD QTD QTD
December 31,
2014 March 31, 2015 June 30, 2015
------------- -------------- -------------
(unaudited)
Distributable
Cash Flow $14,844 $14,114 $14,805
======= ======= =======
Distributions
Declared (1) $12,784 $12,647 $13,094
======= ======= =======
Distribution
Coverage Ratio -
Declared 1.16 x 1.12 x 1.13 x
Distributable
Cash Flow $14,844 $14,114 $14,805
======= ======= =======
Distributions
Paid $ - $12,784 $12,647
=== === ======= =======
Distribution
Coverage Ratio -
Paid - 1.10 x 1.17 x
((1) )The Partnership's cash distribution for the period ended December 31, 2014 was $0.2148 per unit, which was prorated with respect to the period commencing on September 30, 2014 (the closing date of the Partnership's initial public offering) through December 31, 2014. The prorated amount corresponds to the Partnership's minimum quarterly distribution of $0.2125 per unit, or $0.85 per unit on an annualized basis.
CONE MIDSTREAM PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(in thousands, except number of units)
(unaudited)
June 30, December 31,
2015 2014
---- ----
ASSETS
Current Assets:
Cash $161 $3,252
Receivables - Related Party 26,998 58,749
Inventory 16,632 -
Prepaid Expenses 757 1,280
Other Current Assets 164 164
--- ---
Total Current Assets 44,712 63,445
Property and Equipment:
Property and Equipment 756,489 639,735
Less - Accumulated Depreciation 23,448 16,989
Property and Equipment - Net 733,041 622,746
Other Non-Current Assets 531 613
--- ---
TOTAL ASSETS $778,284 $686,804
======== ========
LIABILITIES AND EQUITY
Current Liabilities:
Accounts Payable $63,955 $70,635
Accounts Payable - Related Party 2,230 2,106
Total Current Liabilities 66,185 72,741
Other Liabilities:
Revolving Credit Facility 23,000 31,300
------ ------
Total Liabilities 89,185 104,041
------ -------
Partners' Capital:
Common Units (29,163,121 Units Issued and Outstanding at June 30, 2015 and 391,614 389,612
December 31, 2014)
Subordinated Units (29,163,121 Units Issued and Outstanding at June 30, 2015 and (90,475) (92,285)
December 31, 2014)
General Partner Interest (3,699) (3,772)
------ ------
Partners' Capital Attributable to CONE Midstream Partners LP 297,440 293,555
Noncontrolling Interest 391,659 289,208
------- -------
Total Partners' Capital 689,099 582,763
------- -------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $778,284 $686,804
======== ========
CONE MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended
June 30, 2015
-------------
2015 2014
---- ----
Cash Flows from Operating
Activities:
Net Income $24,905 $13,032
Adjustments to Reconcile Net
Income to Net Cash Provided By
Operating Activities:
Depreciation and
Amortization 3,708 1,679
Unit Based
Compensation 96 -
Changes in Operating Assets:
Receivables -
Related Party 6,330 5,718
Inventory 2,240 -
Prepaid Expenses 310 -
Changes in Operating
Liabilities:
Accounts Payable 12,051 (414)
Accounts Payable
-Related Party 614 (2,118)
--- ------
Net Cash
Provided by
Operating
Activities 50,254 17,897
------ ------
Cash Flows from Investing
Activities:
Capital
Expenditures (76,363) (70,936)
------- -------
Net Cash Used in
Investing
Activities (76,363) (70,936)
------- -------
Cash Flows from Financing
Activities:
Partners'
Investments 22,957 59,000
Distributions to
Unitholders (12,647) -
Payment of
Revolver 15,500 -
------ ---
Net Cash
Provided By
Financing
Activities 25,810 59,000
------ ------
Net (Decrease)
Increase in
Cash (299) 5,961
Cash at
Beginning of
Period 460 3,407
--- -----
Cash at End of
Period $161 $9,368
==== ======
Development Companies Jointly Owned by CONE Midstream Partners LP and CONE Gathering LLC
Operating Income Summary, Selected Operating Statistics and Capital Investment
(in thousands)
(unaudited)
Three Months Ended June 30, 2015
Development Company
-------------------
Anchor Growth Additional TOTAL
------ ------ ---------- -----
Income Summary
Revenue $35,351 $3,913 $8,453 $47,717
Expenses 15,827 2,980 4,005 22,812
Net Income 19,524 933 4,448 24,905
Less: Net Income Attributable to Noncontrolling Interest 4,881 886 4,226 9,993
Net Income Attributable to General and Limited $14,643 $47 $222 $14,912
Partner Ownership Interest in CONE Midstream
Partners LP
Operating Statistics - Gathered Volumes
Dry Gas (BBtu/d) 395 92 8 495
Wet Gas (BBtu/d) 334 11 163 508
Condensate (MMcfe/d) 9 - 14 23
--- --- --- ---
Total Gathered Volumes 738 103 185 1,026
--- --- --- -----
Total Volumes Net to CONE Midstream Partners LP 554 5 9 568
Capital Investment
Maintenance Capital $2,813 $319 $448 $3,580
Expansion Capital 36,941 7,014 28,828 72,783
------ ----- ------
Total Capital Investment $39,754 $7,333 $29,276 $76,363
======= ====== ======= =======
Capital Investment Net to CONE Midstream Partners LP
Maintenance Capital $2,110 $16 $22 $2,148
Expansion Capital 27,706 351 1,441 29,498
------
Total Capital Investment Net to CONE Midstream Partners LP $29,816 $367 $1,463 $31,646
======= ==== ====== =======
Development Companies Jointly Owned by CONE Midstream Partners LP and CONE Gathering LLC
Operating Income Summary, Selected Operating Statistics and Capital Investment
(in thousands)
(unaudited)
Three Months Ended June 30, 2014
Development Company
-------------------
Anchor Growth Additional TOTAL (1)
------ ------ ---------- --------
Income Summary
Revenue $25,212 $2,211 $ - $27,423
Expenses 12,867 1,531 171 14,569
------ ----- ---
Net Income 12,345 680 (171) 12,854
Less: Net Income Attributable to Noncontrolling Interest - - - -
--- --- --- ---
Net Income Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP $12,345 $680 $(171) $12,854
======= ==== ===== =======
Operating Statistics - Gathered Volumes
Dry Gas (BBtu/d) 318 55 - 373
Wet Gas (BBtu/d) 214 - - 214
Condensate (MMcfe/d) - - - -
Total Gathered Volumes 532 55 - 587
=== === === ===
Total Volumes Net to CONE Midstream Partners LP 399 3 - 402
Capital Investment
Maintenance Capital $1,857 $121 $ - $1,978
Expansion Capital 37,209 2,737 25,965 65,911
Total Capital Investment $39,066 $2,858 $25,965 $67,889
======= ====== ======= =======
Capital Investment Net to CONE Midstream Partners LP
Maintenance Capital $1,393 $6 $ - $1,399
Expansion Capital 27,907 137 1,298 29,342
------
Total Capital Investment Net to CONE Midstream Partners LP $29,300 $143 $1,298 $30,741
======= ==== ====== =======
((1)) Total consists of the 100% activity of the three Development Companies (Anchor, Growth and Additional) which CONE Midstream Partners LP owns a controlling interest of 75%, 5% and 5%, respectively. Other systems that were part of the Predecessor, CONE Gathering LLC, that have been included in the Historical Financial statements as the Predecessor are excluded from the table above, as these systems are not included in the consolidated operations of the Partnership.
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SOURCE CONE Midstream Partners LP
