RICE ENERGY INC CANONSBURG, Pa., May 4, 2016 /PRNewswire/ -- Rice Midstream Partners LP (NYSE: RMP) ("RMP" or the "Partnership") today reported first quarter 2016 financial and operating results. Highlights to date include:
-- First quarter average throughput of 835 MDth/d, a 50% increase over the
prior year quarter and a 19% increase relative to fourth quarter 2015
-- Increased Adjusted EBITDA((1)) by 239% over the prior year quarter to
$42.2 million and by 122% as compared to fourth quarter 2015
-- Distributable cash flow ("DCF")((1)) of $38.4 million for the first
quarter, resulting in DCF coverage ratio of 2.58x
-- Raised first quarter distribution to $0.2100 per common unit, an
increase of 12% over the prior year quarter and 7% relative to fourth
quarter 2015
-- Maintained strong liquidity position of $301 million and LTM net debt to
Adjusted EBITDA((1)) ratio of 1.7x for the first quarter
Commenting on the results, Daniel J. Rice IV, Chief Executive Officer, said, "Our continued strong performance and consistent execution demonstrates the stability of our business, which is driven by a disciplined and aligned sponsor, excellent third party dedications, and a concentrated footprint in the core of Appalachia."
1. Please see "Supplemental Non-GAAP
Financial Measure" for a
description of Adjusted EBITDA and
Distributable cash flow.
First Quarter 2016 Results
Gathering volumes for the first quarter averaged 835 MDth/d, a 50% increase over the prior year quarter and a 19% increase relative to fourth quarter 2015, with 26% attributable to third-party volumes. Fresh water delivery volumes were 463 million gallons, or an average of 5.1 MMgal/d during the first quarter, a 150% increase over the prior year quarter and a 129% increase relative to fourth quarter 2015, with 4% attributable to third-party volumes.
We reported operating revenues of $54.5 million, comprised of $26.8 million in revenues from our gathering and compression segment and $27.7 million in revenues from our water services segment. Operation and maintenance expenses totaled $8.6 million, including $1.8 million for gathering and compression and $6.8 million for water services. We reported net income of $34.4 million, or $0.49 per limited partner unit. Adjusted EBITDA was $42.2 million and, after giving effect to $2.8 million of estimated maintenance capital expenditures, DCF was $38.4 million, resulting in a DCF coverage ratio of 2.58x. Cash interest expense was $1.0 million.
During the first quarter 2016, we invested approximately $30 million to develop gas gathering and compression assets, and $2 million to develop our water services assets.
Average Daily Throughput (MDth/d)
---------------------------------
Three Months Ended
Gathering Assets March 31, 2016
--------------
Washington County System 720
Greene County System 115
Total 835
---
% Third-party 26%
Average Daily Volumes (MMgal/d)
Three Months Ended
Water Services Assets March 31, 2016
--------------
Pennsylvania Water 2.1
Ohio Water 3.0
Total 5.1
Financial Position and Liquidity
As of March 31, 2016, we had $291 million of capacity on our revolving credit facility and $10 million of cash on hand, resulting in $301 million of total liquidity.
Quarterly Cash Distribution
On April 22, 2016, we declared a quarterly distribution of $0.2100 per unit for the first quarter 2016, an increase of $0.0135 per unit, or 7%, relative to fourth quarter 2015. The distribution will be payable on May 12, 2016 to unitholders of record as of May 3, 2016.
Board of Director Appointment
As previously announced, Ms. Stephanie C. Hildebrandt was appointed to the Board of Directors of RMP's general partner, effective March 16, 2016, where she will also serve on the Conflicts Committee. Ms. Hildebrandt, who currently serves as a partner with the international law firm Norton Rose Fulbright US LLP, brings over 25 years of energy experience, with a particular focus on master limited partnerships ("MLPs"). Prior to joining Norton Rose Fulbright, Ms. Hildebrandt served as the Senior Vice President, General Counsel and Secretary of Enterprise Products Partners L.P., one of the largest publicly-traded midstream MLPs, managing legal issues related to securities, litigation, employment, mergers and acquisitions, commercial transactions and corporate governance. Ms. Hildebrandt holds a Bachelor of Science in Foreign Service from Georgetown University and a Juris Doctorate, cum laude, from Tulane University Law School. She is admitted to the state bars of Texas and Louisiana.
Conference Call
RMP will host a conference call on May 5, 2016 at 11:00 a.m. Eastern time (10:00 a.m. Central time) to discuss first quarter 2016 financial and operating results. To listen to a live audio webcast of the conference call, please visit RMP's website at www.ricemidstream.com. A replay of the conference call will be available following the call for two weeks and can be accessed from www.ricemidstream.com.
Rice Energy will host a conference call on May 5, 2016 at 9:30 a.m. Eastern time (8:30 a.m. Central time) to discuss first quarter 2016 financial and operating results and we encourage RMP investors to listen-in. To listen to a live audio webcast of the conference call, please visit Rice Energy's website at www.riceenergy.com. A replay of the conference call will be available for two weeks and can also be accessed from www.riceenergy.com.
Please visit www.ricemidstream.com to view a presentation containing first quarter 2016 information.
Annual Report
RMP filed its annual report on Form 10-K for the year ended December 31, 2015 (the "2015 Annual Report") with the SEC on February 25, 2016, and a copy of the 2015 Annual Report is available for download at www.ricemidstream.com and on the SEC website at www.sec.gov. RMP's unitholders may receive, free of charge, printed copies of the 2015 Annual Report by writing to RMP Investor Relations at 2200 Rice Drive, Canonsburg, PA 15317.
About Rice Midstream Partners
Rice Midstream Partners LP is a fee-based, growth-oriented limited partnership formed by Rice Energy Inc. (NYSE: RICE) to own, operate, develop and acquire midstream assets in the Appalachian basin. RMP provides midstream services to Rice Energy and third-party companies through its natural gas gathering, compression and water assets in the rapidly developing dry gas cores of the Marcellus and Utica Shales.
For more information, please visit www.ricemidstream.com.
Forward Looking Statements
This release includes forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. All statements, other than historical facts included in this release, that address activities, events or developments that we expect or anticipate will or may occur in the future, including such things as, forecasted gathering volumes, revenues, Adjusted EBITDA, distribution growth, and distributable cash flow, the timing of completion of midstream projects, future capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, competitive strengths, goals, expansion and growth of our business and operations, plans, market conditions, references to future success, references to intentions as to future matters and other such matters are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although we believe that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions or expectations will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.
We caution you that these forward-looking statements are subject to risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to our gathering and compression and water services businesses. These risks include, but are not limited to: commodity price volatility; inflation; environmental risks; regulatory changes; the uncertainty inherent in projecting future throughput volumes, cash flow and access to capital; and the timing of development expenditures of Rice Energy or our other customers. Information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our Forms 10-K, 10-Q and 8-K. Consequently, all of the forward-looking statements made in this news release are qualified by these cautionary statements and there can be no assurances that the actual results or developments anticipated by us will be realized, or even if realized, that they will have the expected consequences to or effects on us, our business or operations. We have no intention, and disclaim any obligation, to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise.
Rice Midstream Partners LP
Statements of Operations
(Unaudited)
Three Months Ended
March 31,
---------
(in thousands,
except unit data) 2016 2015
---- ----
Operating
revenues:
Affiliate $44,385 $23,860
Third-party 10,158 2,651
Total operating
revenues 54,543 26,511
Operating
expenses:
Operation and
maintenance
expense 8,545 2,904
Equity
compensation
expense (1) 986 1,065
General and
administrative
expense 3,756 3,129
Incentive unit
expense (1) - 434
Depreciation
expense 5,370 3,085
Acquisition costs 73 -
Amortization of
intangible assets 408 408
Other income (212) -
---- ---
Total operating
expenses 18,926 11,025
------ ------
Operating income 35,617 15,486
Other income - 9
Interest expense
(1) (1,047) (521)
Amortization of
deferred finance
costs (144) (144)
Income before
income taxes 34,426 14,830
Income tax expense - (1,906)
Net income $34,426 $12,924
======= =======
Calculation of
limited partner
interest in net
income:
Net income $34,426 $12,924
Less: Pre-
acquisition net
income allocated
to general
partner - 3,856
Net income
attributable to
limited partners $34,426 $9,068
======= ======
Weighted average
limited partner
units (in
millions)
Common units
(basic) 42.2 28.8
Common units
(diluted) 42.4 28.8
Subordinated units
(basic and
diluted) 28.8 28.8
Net income
attributable to
RMP per limited
partner unit (2)
Common units
(basic) $0.49 $0.16
Common units
(diluted) $0.48 $0.16
Subordinated units
(basic and
diluted) $0.49 $0.16
Adjusted EBITDA
(3) $42,242 $12,459
Distributable cash
flow (4) $38,395 $10,945
Quarterly
distribution per
unit $0.2100 $0.1875
Distribution
declared:
Limited partner
units -Public $8,854 $5,391
Limited partner
units -RICE 6,039 5,392
-----
Total distribution
declared $14,893 $10,783
DCF coverage ratio 2.58 1.02
1. Prior to their acquisition, the
Water Assets were allocated
incentive unit expense, equity
compensation expense and interest
expense initially recognized by
Rice Energy. These non-cash
charges are described in more
detail in Note 9 to the
consolidated financial statements
in our 10-Q.
2. Net income per limited partner
unit does not include results
attributable to the Water Assets
prior to their acquisition as
these results are not
attributable to our limited
partners.
3. We define Adjusted EBITDA as net
income (loss) before interest
expense, depreciation expense,
amortization expense, non-cash
equity compensation expense,
amortization of deferred
financing costs and other non-
recurring items. Please read
Supplemental "Non-GAAP Financial
Measures."
4. We define distributable cash flow
as Adjusted EBITDA less interest
expense, and estimated
maintenance capital expenditures.
Please read Supplemental "Non-
GAAP Financial Measures."
Rice Midstream Partners LP
Segment Results of Operations
(Unaudited)
Gathering and Compression Segment
Three Months Ended
March 31,
---------
(in thousands) 2016 2015
---- ----
Gathering volumes: (MDth/d)
Affiliate 618 494
Third-party 217 63
--- ---
Total gathering
volumes 835 557
Compression volumes: (MDth/d)
Affiliate 9 38
Third-party 143 26
Total compression
volumes 152 64
Operating results:
Operating revenues:
Affiliate $17,306 $13,515
Third-party 9,494 2,651
Total operating
revenues 26,800 16,166
Operating expenses:
Operation and
maintenance expense 1,791 1,381
Equity compensation
expense 742 996
General and
administrative
expense 2,954 2,331
Depreciation expense 1,935 1,449
Acquisition costs 73 -
Amortization of
intangible assets 408 408
Other income (212) -
Total operating
expenses 7,691 6,565
Operating income $19,109 $9,601
Water Services Segment
Three Months Ended
March 31,
---------
(in thousands) 2016 2015
---- ----
Water services volumes: (MMgal)
Affiliate 445 185
Third-party 18 -
--- ---
Total water services volumes 463 185
Operating results:
Operating revenues:
Affiliate $27,079 $10,345
Third-party 664 -
Total operating revenues 27,743 10,345
Operating expenses:
Operation and maintenance expense 6,754 1,523
Equity compensation expense 244 69
General and administrative expense 802 798
Incentive unit expense - 434
Depreciation expense 3,435 1,636
Total operating expenses 11,235 4,460
Operating income $16,508 $5,885
Rice Midstream Partners LP
Supplemental Non-GAAP Financial Measures
(Unaudited)
Adjusted EBITDA is a supplemental non-GAAP financial measure that is used by management and external users of our consolidated financial statements, such as securities analysts, investors and lenders. We define Adjusted EBITDA as net income (loss) before interest expense, depreciation expense, amortization expense, non-cash stock compensation expense, amortization of deferred financing costs and other non-recurring items. Adjusted EBITDA is not a measure of net income as determined by GAAP.
Distributable cash flow is a supplemental non-GAAP financial measure that is used by management and external users of our consolidated financial statements, such as securities analysts, investors and lenders. We define distributable cash flow as Adjusted EBITDA less cash interest expense, and estimated maintenance capital expenditures. Distributable cash flow does not reflect changes in working capital balances and is not a presentation made in accordance with GAAP.
Adjusted EBITDA and distributable cash flow are non-GAAP supplemental financial measures that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess the financial performance of our assets, without regard to financing methods, capital structure or historical cost basis; our operating performance and return on capital as compared to other companies in the midstream energy sector, without regard to historical cost basis or, in the case of Adjusted EBITDA, financing or capital structure; our ability to incur and service debt and fund capital expenditures; the ability of our assets to generate sufficient cash flow to make distributions to our unitholders; 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 Adjusted EBITDA and distributable cash flow will provide useful information to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to Adjusted EBITDA and distributable cash flow are net income and net cash provided by (used in) operating activities. Our non-GAAP financial measures of Adjusted EBITDA and distributable cash flow should not be considered as an alternative to GAAP net income or net cash provided by operating activities. Each of Adjusted EBITDA and distributable cash flow has important limitations as an analytical tool because it excludes some but not all items that affect net income and net cash provided by operating activities. You should not consider either Adjusted EBITDA or distributable cash flow in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA and distributable cash flow may be defined differently by other companies in our industry, our definitions of Adjusted EBITDA and distributable cash flow may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.
Three Months
Ended
(in thousands) March 31,
2016
----------
Adjusted EBITDA reconciliation to loss
from continuing operations:
Net income $34,426
Interest expense 1,047
Acquisition costs 73
Depreciation expense 5,370
Amortization of intangible assets 408
Non-cash equity compensation expense 986
Amortization of deferred finance costs 144
Other income (212)
Adjusted EBITDA $42,242
=======
Adjusted EBITDA $42,242
Cash interest expense (1,047)
Estimated maintenance capital
expenditures (2,800)
------
Distributable cash flow $38,395
=======
Reconciliation of Adjusted EBITDA to
Cash used in operating activities:
Adjusted EBITDA $42,242
Interest expense (1,047)
Other income 212
Acquisition costs (73)
Changes in operating assets and
liabilities which used cash (4,899)
------
Net cash provided by operating
activities $36,435
=======
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SOURCE Rice Midstream Partners LP
