NOBLE ENERGY, INC. CANONSBURG, Pa., May 5, 2016 /PRNewswire/ -- CONE Midstream Partners LP (NYSE: CNNX) ("CONE Midstream" or the "Partnership") today reported financial and operational results for the three months ended March 31, 2016.((1))
First Quarter Results
Highlights of first quarter 2016 results attributable to the Partnership as compared to the first quarter of 2015 include:
-- Net income of $24.8 million as compared to $14.2 million
-- Average daily throughput volumes of 850 billion Btu per day (BBtu/d) as
compared to 549 BBtu/d
-- Adjusted EBITDA((2)) of $27.7 million as compared to $16.2 million
-- Distributable cash flow (DCF)((2)) of $24.6 million as compared to $14.1
million
-- Cash distribution coverage of 1.69x on an as declared basis
Management Comment
"CONE Midstream is pleased to report very strong financial and operational results for the first quarter," said John T. Lewis, Chairman of the Board and Chief Executive Officer of CONE Midstream GP LLC (the "General Partner"). "Net throughput volumes increased by 55% from the first quarter of 2015, and net income attributable to the partnership grew by 75% from a year ago. Adjusted EBITDA and distributable cash flow increased by 71% and 74%, respectively, as compared to first quarter last year.
"We view our strong balance sheet and distribution coverage as positive differentiators for CNNX," continued Mr. Lewis. "With a debt to trailing-twelve months EBITDA ratio of 0.8x, we have the financial capacity to sustain our growth through an appropriate combination of investment in organic projects, third party business development, and asset dropdowns or acquisitions. I'd also like to point out that we were free-cash-flow positive during the first quarter, as cash from operations exceeded our total capital investments and cash distribution payments. Our balance sheet and robust distribution coverage have us well positioned for the future."
Quarterly Distribution
As previously announced, the Board of Directors of the General Partner declared a quarterly cash distribution of $0.245 per unit with respect to the first quarter of 2016. The distribution payment will be made on May 13, 2016 to unitholders of record at the close of business on May 4, 2016. The distribution, which equates to an annual rate of $0.98 per unit, represents an increase of 3.7% over the prior quarter and an increase of 15.3% over the distribution paid with respect to the first quarter of 2015.
Capital Investment and Resources
CONE Midstream's allocated first quarter 2016 share of investment in expansion projects was $9.0 million. Total expansion capital investment at the three development companies in which CONE Midstream holds controlling interests was $19.6 million. CONE Midstream's respective share of maintenance capital expenditures for the three development companies for the first quarter 2016 was $2.8 million. Maintenance capital expenditures in the aggregate for the development companies in which CONE Midstream holds controlling interests totaled $4.8 million.
As of March 31, 2016, CONE Midstream had outstanding borrowings of $74.0 million under its $250 million revolving credit facility and a cash balance of $14.3 million.
First Quarter Financial and Operational Results Conference Call
A conference call and webcast, during which management will discuss first quarter 2016 financial and operational results, is scheduled for May 5, 2016 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/998/14490. 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/998/14490 shortly after the conclusion of the conference call. A telephonic replay will be available through May 12, 2016 by dialing 877-344-7529 (international: 412-317-0088) and using the conference playback number 10084060.
_______________
(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
economic 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) Adjusted EBITDA and DCF are not
measures that are recognized under
accounting principles generally
accepted in the U.S. ("GAAP").
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 and Utica Shale; our Sponsors' ability to meet their drilling and development plan in the Marcellus Shale and Utica 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
March 31,
---------
2016 2015
---- ----
Revenue
Gathering revenue -
related party $62,248 $43,168
------- -------
Total Revenue 62,248 43,168
Expenses
Operating expense -
third party 8,674 8,530
Operating expense -
related party 8,344 7,044
General and
administrative
expense -third
party 993 1,342
General and
administrative
expense -related
party 1,684 1,977
Depreciation expense 4,839 2,994
Interest expense 419 65
--- ---
Total Expense 24,953 21,952
------ ------
Net Income 37,295 21,216
Less: Net income
attributable to
noncontrolling
interest 12,505 7,004
------ -----
Net Income
Attributable to
General and Limited
Partner Ownership
Interest in CONE
Midstream Partners
LP $24,790 $14,212
======= =======
Calculation of Limited Partner
Interest in Net Income:
Net Income
Attributable to
General and Limited
Partner Ownership
Interest in CONE
Midstream Partners
LP $24,790 $14,212
Less: General
partner interest in
net income 496 284
--- ---
Limited partner
interest in net
income $24,294 $13,928
======= =======
Net income per
Limited Partner
unit -Basic $0.42 $0.24
Net Income per
Limited Partner
unit -Diluted $0.42 $0.24
Limited Partner
units outstanding -
Basic 58,343 58,326
Limited Partner unit
outstanding -
Diluted 58,365 58,360
Cash distributions
declared per unit
(*) $0.2450 $0.2125
(*) Represents the cash distributions declared in April of each year relating to the period presented.
CONE MIDSTREAM PARTNERS LP
RECONCILIATION OF NET INCOME TO EBITDA AND DISTRIBUTABLE CASH FLOW
(in thousands)
Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
We define EBITDA as net income (loss) before net interest expense, depreciation and amortization, and Adjusted EBITDA as EBITDA adjusted for non-cash items which should not be included in the calculation of distributable cash flow. EBITDA and Adjusted EBITDA are used as supplemental financial measures 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 and Adjusted EBITDA provides information that is useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to EBITDA and Adjusted EBITDA are net income and net cash provided by operating activities. EBITDA and Adjusted 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 and Adjusted EBITDA exclude 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 and Adjusted EBITDA as presented below may not be comparable to similarly titled measures of other companies.
Distributable Cash Flow
We define distributable cash flow as Adjusted EBITDA less net income attributable to noncontrolling interest, 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 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 table presents a reconciliation of the non-GAAP measures of EBITDA, Adjusted EBITDA and distributable cash flow to the most directly comparable GAAP financial measures of net income and net cash provided by operating activities.
Three Months Ended
March 31,
---------
(unaudited) 2016 2015
---- ----
Net Income $37,295 $21,216
Interest expense 419 65
Depreciation expense 4,839 2,994
----- -----
EBITDA 42,553 24,275
Non-cash unit-based
compensation expense 136 96
Adjusted EBITDA 42,689 24,371
Less:
Net income attributable to
noncontrolling interest 12,505 7,004
Interest expense
attributable to
noncontrolling interest 189 20
Depreciation expense
attributable to
noncontrolling interest 2,286 1,166
----- -----
Adjusted EBITDA
Attributable to General
and Limited Partner
Ownership Interest in
CONE Midstream Partners
LP $27,709 $16,181
======= =======
Less: cash interest paid,
net 230 45
Less: ongoing maintenance
capital expenditures, net
of expected
reimbursements 2,839 1,991
-----
Distributable Cash Flow $24,640 $14,145
======= =======
Net Cash Provided by
Operating Activities $41,180 $10,206
Interest expense 419 65
Other, including changes
in working capital 1,090 14,100
Adjusted EBITDA 42,689 24,371
Less:
Net income attributable to
noncontrolling interest 12,505 7,004
Interest expense
attributable to
noncontrolling interest 189 20
Depreciation expense
attributable to
noncontrolling interest 2,286 1,166
----- -----
Adjusted EBITDA
Attributable to General
and Limited Partner
Ownership Interest in
CONE Midstream Partners
LP $27,709 $16,181
======= =======
Less: cash interest paid,
net 230 45
Less: ongoing maintenance
capital expenditures, net
of expected
reimbursements 2,839 1,991
Distributable Cash Flow $24,640 $14,145
======= =======
The following table presents a reconciliation of the non-GAAP measures adjusted EBITDA and distributable cash flow by quarter and for the most recently completed twelve month period with the most directly comparable GAAP financial measures, which are net income and net cash provided by operating activities.
(unaudited) Q2 2015 Q3 2015 Q4 2015 Q1 2016 Twelve
Months
Ended
March 31,
2016
----
Net Income $24,905 $33,614 $35,796 $37,295 $131,610
Interest expense 47 158 565 419 1,189
Depreciation expense 3,667 3,769 4,623 4,839 16,898
----- ----- ----- ----- ------
EBITDA 28,619 37,541 40,984 42,553 149,697
Non-cash unit-based compensation expense 96 118 92 136 442
--- --- --- --- ---
Adjusted EBITDA 28,715 37,659 41,076 42,689 150,139
Less:
Net income attributable to noncontrolling interest 9,993 13,957 13,330 12,505 49,785
Interest expense attributable to noncontrolling interest 14 63 331 189 597
Depreciation expense attributable to noncontrolling interest 1,659 1,728 2,246 2,286 7,919
----- ----- ----- ----- -----
Adjusted EBITDA Attributable to General and Limited $17,049 $21,911 $25,169 $27,709 $91,838
Partner Ownership Interest in CONE Midstream Partners LP
Less: cash interest paid, net 33 95 234 230 592
Less: ongoing maintenance capital expenditures, net of 2,148 2,291 2,554 2,839 9,832
expected reimbursements
Distributable Cash Flow $14,868 $19,525 $22,381 $24,640 $81,414
======= ======= ======= ======= =======
Net Cash Provided by Operating Activities $50,254 $38,808 $16,749 $41,180 $146,991
Interest expense 47 158 565 419 1,189
Other, including changes in working capital (21,586) (1,307) 23,762 1,090 1,959
------- ------
Adjusted EBITDA 28,715 37,659 41,076 42,689 150,139
Less:
Net income attributable to noncontrolling interest 9,993 13,957 13,330 12,505 49,785
Interest expense attributable to noncontrolling interest 14 63 331 189 597
Depreciation expense attributable to noncontrolling interest 1,659 1,728 2,246 2,286 7,919
----- ----- ----- ----- -----
Adjusted EBITDA Attributable to General and Limited $17,049 $21,911 $25,169 $27,709 $91,838
Partner Ownership Interest in CONE Midstream Partners LP
Less: cash interest paid, net 33 95 234 230 592
Less: ongoing maintenance capital expenditures, net of 2,148 2,291 2,554 2,839 9,832
expected reimbursements
Distributable Cash Flow $14,868 $19,525 $22,381 $24,640 $81,414
======= ======= ======= ======= =======
Distributions Declared $13,094 $13,570 $14,062 $14,591 $55,317
======= ======= ======= ======= =======
Distribution Coverage Ratio - Declared 1.14 x 1.44 x 1.59 x 1.69 x 1.47 x
Distributable Cash Flow $14,868 $19,525 $22,381 $24,640 $81,414
======= ======= ======= ======= =======
Distributions Paid $12,647 $13,094 $13,570 $14,062 $53,373
======= ======= ======= ======= =======
Distribution Coverage Ratio - Paid 1.18 x 1.49 x 1.65 x 1.75 x 1.53 x
CONE MIDSTREAM PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(in thousands, except number of units)
(unaudited)
March 31, December 31,
2016 2015
---- ----
ASSETS
Current Assets:
Cash $14,273 $217
Receivables - related party 21,847 36,418
Inventory 18,916 18,916
Other current assets 1,669 2,037
-----
Total Current Assets 56,705 57,588
Property and Equipment:
Property and equipment 914,470 897,918
Less - accumulated depreciation 36,337 31,609
Property and Equipment - Net 878,133 866,309
Other non-current assets 487 528
--- ---
TOTAL ASSETS $935,325 $924,425
======== ========
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable $29,158 $46,155
Accounts payable - related party 1,574 1,628
Total Current Liabilities 30,732 47,783
Other Liabilities:
Revolving credit facility 74,000 73,500
------ ------
Total Liabilities 104,732 121,283
------- -------
Partners' Capital:
Common units (29,180,217 units issued and outstanding at March 31, 2016 and 404,767 399,399
29,163,121 units issued and outstanding at December 31, 2015)
Subordinated units (29,163,121 units issued and outstanding at March 31, 2016 and December 31, 2015) (77,641) (82,900)
General partner interest (3,171) (3,389)
------ ------
Partners' capital attributable to CONE Midstream Partners LP 323,955 313,110
Noncontrolling interest 506,638 490,032
------- -------
Total Partners' Capital 830,593 803,142
------- -------
TOTAL LIABILITIES AND PARTNERS' CAPITAL $935,325 $924,425
======== ========
CONE MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Months Ended March 31,
----------------------------
2016 2015
---- ----
Cash Flows from Operating Activities:
Net Income $37,295 $21,216
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense and amortization of debt issuance costs 4,880 2,994
Unit-based compensation 136 96
Changes in operating assets:
Receivables - related party 7,851 3,462
Other current and non-current assets 369 253
Changes in operating liabilities:
Accounts payable (9,188) (17,616)
Accounts payable - related party (163) (199)
---- ----
Net Cash Provided by Operating Activities 41,180 10,206
------ ------
Cash Flows from Investing Activities:
Capital expenditures (24,386) (61,806)
------- -------
Net Cash Used in Investing Activities (24,386) (61,806)
------- -------
Cash Flows from Financing Activities:
Contributions by general & limited partners and noncontrolling interest holders 10,823 85,392
Distributions to unitholders (14,061) (12,784)
Net proceeds from (payment on) revolver 500 (23,800)
Net Cash Provided By Financing Activities (2,738) 48,808
------ ------
Net Increase (Decrease) in Cash 14,056 (2,792)
Cash at Beginning of Period 217 3,252
--- -----
Cash at End of Period $14,273 $460
======= ====
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 March 31, 2016
Development Company
-------------------
Anchor Growth Additional TOTAL
------ ------ ---------- -----
Income Summary
Revenue $50,290 $2,891 $9,067 $62,248
Expenses 17,539 1,954 5,460 24,953
Net Income 32,751 937 3,607 37,295
Less: Net income attributable to noncontrolling interest 8,188 890 3,427 12,505
Net Income Attributable to General and Limited $24,563 $47 $180 $24,790
Partner Ownership Interest in CONE Midstream
Partners LP
Operating Statistics - Gathered Volumes
Dry gas (BBtu/d) 650 68 24 742
Wet gas (BBtu/d) 457 6 176 639
Condensate (MMcfe/d) 7 - 7 14
--- --- --- ---
Total Gathered Volumes 1,114 74 207 1,395
----- --- --- -----
Total Volumes Net to CONE Midstream Partners LP 836 4 10 850
Capital Investment
Maintenance capital $3,710 $69 $1,057 $4,836
Expansion capital 11,461 - 8,089 19,550
------ --- -----
Total Capital Investment $15,171 $69 $9,146 $24,386
======= === ====== =======
Capital Investment Net to CONE Midstream Partners LP
Maintenance capital $2,783 $3 $53 $2,839
Expansion capital 8,596 - 404 9,000
-----
Total Capital Investment Net to CONE Midstream $11,379 $3 $457 $11,839
Partners LP
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 March 31, 2015
Development Company
-------------------
Anchor Growth Additional TOTAL
------ ------ ---------- -----
Income Summary
Revenue $34,533 $2,975 $5,660 $43,168
Expenses 15,746 2,174 4,032 21,952
------ ----- -----
Net Income 18,787 801 1,628 21,216
Less: Net income attributable to noncontrolling interest 4,697 761 1,546 7,004
----- --- ----- -----
Net Income Attributable to General and Limited $14,090 $40 $82 $14,212
Partner Ownership Interest in CONE Midstream
Partners LP
Operating Statistics - Gathered Volumes
Dry gas (BBtu/d) 381 77 12 470
Wet gas (BBtu/d) 326 3 109 438
Condensate (MMcfe/d) 11 - 2 13
--- --- ---
Total Gathered Volumes 718 80 123 921
=== === === ===
Total Volumes Net to CONE Midstream Partners LP 539 4 6 549
Capital Investment
Maintenance capital $2,619 $258 $273 $3,150
Expansion capital 26,680 11,379 20,597 58,656
Total Capital Investment $29,299 $11,637 $20,870 $61,806
======= ======= ======= =======
Capital Investment Net to CONE Midstream Partners LP
Maintenance capital $1,964 $13 $14 $1,991
Expansion capital 20,010 569 1,030 21,609
------
Total Capital Investment Net to CONE Midstream $21,974 $582 $1,044 $23,600
Partners LP
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SOURCE CONE Midstream Partners LP
