CANONSBURG, Pa., Feb. 22, 2017 /PRNewswire/ -- Rice Midstream Partners LP (NYSE: RMP) ("RMP" or the "Partnership") today reported fourth quarter and full-year 2016 financial and operating results. Highlights to date include:
-- Fourth quarter average daily throughput of 1,203 MDth/d -- 2016 average daily throughput of 983 MDth/d, 3% above guidance -- Net income of $34.3 million and $121.6 million for the fourth quarter and full year, respectively -- Fourth quarter Adjusted EBITDA((1)) of $46.2 million driven by accelerated Rice Energy (NYSE: RICE) water volumes -- 2016 Adjusted EBITDA((1) )of $158.4 million, 6% above the high end of guidance -- Distributable cash flow ("DCF")((1)) of $41.9 million and $143.2 million for the fourth quarter and full year, respectively -- DCF coverage ratio((1)) of 1.58x and 1.70x for the fourth quarter and full-year, respectively -- Raised fourth quarter distribution to $0.2505 per common unit, an increase of 27% over the prior year quarter and 6% relative to third quarter 2016 -- 2016 expansion capital of $104 million, 23% below guidance resulting from a combination of projects under budget and shifted into 2017 -- Acquired Vantage Energy's midstream assets for $600 million including an acreage dedication covering 85,000 core dry gas Marcellus acres in Greene County, Pennsylvania -- Exited the quarter with strong liquidity of $682 million and leverage of 1.1x net debt to 2016 Adjusted EBITDA((1))
Commenting on the results, Daniel J. Rice IV, Chief Executive Officer, said, "We delivered another outstanding quarter of meeting or exceeding expectations, as our sponsor's reliable production growth has allowed Rice Midstream Partners to spend its capital effectively and grow distributions at top-tier rates while maintaining ample coverage. Additionally, the acquisition of Vantage Energy provides a longer, more visible runway for our talented team to execute and deliver top-tier distribution growth at healthy coverage levels."
1. Please see "Supplemental Non-GAAP Financial Measures" for a description of Adjusted EBITDA, distributable cash flow, DCF coverage ratio and related reconciliations to comparable GAAP financial measures.
Fourth Quarter 2016 Financial Results
For the three months ended December 31, 2016, gathering volumes averaged 1,203 MDth/d, a 71% increase over the prior year quarter and a 26% increase relative to third quarter 2016, with 24% attributable to third-party volumes. Compression volumes averaged 825 MDth/d, a 778% increase over the prior year quarter and an 11% increase relative to third quarter 2016, with 36% attributable to third-party volumes. Fresh water delivery volumes were 321 MMgal, or an average of 3.5 MMgal/d, a 59% increase relative to the prior year quarter and a 138% increase relative to third quarter 2016.
Operating revenues were $59.5 million, comprised of $41.8 million in revenues from our gathering and compression segment and $17.7 million in revenues from our water services segment. Operation and maintenance expense totaled $7.3 million, including $2.9 million for gathering and compression and $4.4 million for water services. Net income was $34.3 million, or $0.33 per limited partner unit. Adjusted EBITDA((1)) was $46.2 million and, after giving effect to $2.8 million of estimated maintenance capital expenditures and cash interest expense of $1.6 million, DCF((1)) was $41.9 million, resulting in a DCF coverage ratio of 1.58x.
We invested approximately $22 million of net expansion capital, excluding acquisitions, including $17 million to develop gas gathering and compression assets and $5 million to develop our water services assets.
1. Please see "Supplemental Non-GAAP Financial Measures" for a description of Adjusted EBITDA, distributable cash flow and related reconciliations to comparable GAAP financial measures.
Full-Year 2016 Financial Results
For the year ended December 31, 2016, gathering volumes averaged 983 MDth/d, a 52% increase over the the prior year, with 27% attributable to third-party volumes. Compression volumes averaged 572 MDth/d, a 794% increase relative to the prior year, with 43% attributable to third-party volumes. Fresh water delivery volumes were 1,253 MMgal, or an average of 3.4 MMgal/d, with 11% attributable to third-party volumes.
Operating revenues were $201.6 million, comprised of $132.1 million in revenues from our gathering and compression segment and $69.5 million in revenues from our water services segment. Operation and maintenance expense totaled $24.6 million, including $8.0 million for gathering and compression and $16.6 million for water services. Net income was $121.6 million, or $1.46 per limited partner unit. Adjusted EBITDA((1)) was $158.4 million and, after giving effect to $11.2 million of estimated maintenance capital expenditures and cash interest expense of $3.9 million, DCF((1)) was $143.2 million, resulting in a DCF coverage ratio of 1.70x.
We invested approximately $104 million of net expansion capital, excluding acquisitions, including $99 million to develop gas gathering and compression assets and $5 million to develop our water services assets.
Average Daily Throughput (MDth/d) --------------------------------- Three Months Ended Year Ended Gathering Assets December 31, 2016 December 31, 2016 ---------------- ----------------- ----------------- Affiliate 910 714 Third-party 293 269 ----------- --- Total 1,203 983 ----- ----- % Third-party 24% 27% Average Daily Compression Volumes (MDth/d) Three Months Ended Year Ended Compression Assets December 31, 2016 December 31, 2016 ------------------ ----------------- ----------------- Affiliate 531 327 Third-party 294 245 ----------- Total 825 572 ----- % Third-party 36% 43% Average Water Volumes (MMGal) Three Months Ended Year Ended Water Services Assets December 31, 2016 December 31, 2016 --------------------- ----------------- ----------------- Pennsylvania Water 149 521 Ohio Water 172 732 ---------- --- --- Total 321 1,253 ----- --- ----- % Third-party -% 11%
On October 19, 2016, concurrent with Rice Energy's acquisition of Vantage Energy, we purchased entities owning the Vantage Energy midstream assets from Rice Energy for $600 million. The assets are located in Greene County, Pennsylvania and include 30 miles of dry gas gathering and compression assets. In connection with the acquisition, Rice Energy dedicated the acquired 85,000 net acres to RMP to provide gas gathering, compression and freshwater distribution services.
1. Please see "Supplemental Non-GAAP Financial Measures" for a description of Adjusted EBITDA, distributable cash flow and related reconciliations to comparable GAAP financial measures.
Financial Position and Liquidity
As of December 31, 2016, we had $660 million of availability on our revolving credit facility and $22 million of cash on hand, resulting in $682 million of total liquidity to fund our 2017 capital budget. We exited the year with a low leverage of 1.1x net debt to 2016 Adjusted EBITDA((1)).
1. Please see "Supplemental Non-GAAP Financial Measures" for a description of Adjusted EBITDA and related reconciliations to comparable GAAP financial measures.
Quarterly Cash Distribution
On January 20, 2017, we declared a quarterly distribution of $0.2505 per unit for the fourth quarter 2016, an increase of $0.0135 per unit relative to third quarter 2016. The distribution was payable on February 16, 2017 to unitholders of record as of February 7, 2017.
Conference Call
RMP will host a conference call on February 23, 2017 at 11:00 a.m. Eastern time (10:00 a.m. Central time) to discuss fourth quarter and full-year 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 RMP's homepage.
Rice Energy will host a conference call on February 23, 2017 at 10:00 a.m. Eastern time (9:00 a.m. Central time) to discuss fourth quarter and full-year 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 be accessed from Rice's homepage.
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 our website at 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 Year Ended December 31, December 31, (in thousands, except per unit data) 2016 2015 2016 2015 ---- ---- ---- ---- Operating revenues: Affiliate $46,993 $21,379 $152,260 $93,668 Third-party 12,473 7,935 49,363 20,791 Total operating revenues 59,466 29,314 201,623 114,459 Operating expenses: Operation and maintenance expense 7,297 4,882 24,589 14,910 General and administrative expense 6,022 3,072 18,759 13,394 Incentive unit (income) expense (1) - (4) - 1,044 Equity compensation expense (1) 145 1,185 2,873 4,501 Depreciation expense 7,456 5,944 25,170 16,399 Acquisition costs 52 - 125 - Amortization of intangible assets 412 408 1,634 1,632 Other expense 1,292 51 1,531 543 ----- --- ----- --- Total operating expenses 22,676 15,538 74,681 52,423 ------ ------ ------ ------ Operating income (loss) 36,790 13,776 126,942 62,036 Other (expense) income 78 - 78 11 Interest expense (1) (1,562) (1,094) (3,931) (3,164) Amortization of deferred finance costs (1,046) (144) (1,479) (576) Income (loss) before income taxes 34,260 12,538 121,610 58,307 Income tax expense - (17) - (5,812) Net income $34,260 $12,521 $121,610 $52,495 ======= ======= ======== ======= Net income $34,260 $12,521 $121,610 $52,495 Less: Pre-acquisition net income (loss) allocated to general partner - 992 - 7,296 Less: General partner interest in net income attributable to incentive distribution rights 888 - 1,428 - --- Net income attributable to limited partners $33,372 $11,529 $120,182 $45,199 ======= ======= ======== ======= Weighted average limited partner units (in millions) Common units (basic) 72.0 36.5 52.8 30.7 Common units (diluted) 72.2 36.7 53.1 30.8 Subordinated units (basic and diluted) 28.8 28.8 28.8 28.8 Net income attributable to RMP per limited partner unit (2) Common units (basic) $0.33 $0.18 $1.46 $0.76 Common units (diluted) $0.33 $0.18 $1.45 $0.76 Subordinated units (basic and diluted) $0.33 $0.18 $1.50 $0.76 Adjusted EBITDA (3) $46,225 $19,065 $158,353 $63,780 Distributable cash flow (4) $41,863 $16,997 $143,222 $56,944 Quarterly distribution per unit $0.2505 $0.1965 $0.9210 $0.7680 Distribution declared: Limited partner units - Public $18,416 $8,284 $56,371 $24,715 Limited partner units - GP Holdings 7,204 5,651 26,485 22,086 General Partner 888 - 1,429 - Total distributions declared $26,508 $13,935 $84,285 $46,801 DCF coverage ratio (5) 1.58 1.22 1.70 1.22
1. Prior to their acquisition by us, our 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 Form 10-K. 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." 5. We define DCF coverage ratio as distributable cash flow divided by total distributions declared. Please read "Supplemental Non-GAAP Financial Measures."
Rice Midstream Partners LP Segment Results of Operations (Unaudited) Gathering and Compression Segment Three Months Ended Year Ended December 31, 2016 December 31, 2016 (in thousands) 2016 2015 2016 2015 ---- ---- ---- ---- Affiliate gathering volumes (MDth/d) 910 577 714 547 Third-party gathering volumes (MDth/d) 293 126 269 100 --- --- --- Total gathering volumes (MDth/d) 1,203 703 983 647 Affiliate compression volumes (MDth/d) 531 9 327 33 Third-party compression volumes (MDth/d) 294 85 245 31 --- --- --- --- Total compression volumes (MDth/d) 825 94 572 64 Operating revenues: Affiliate $29,286 $16,434 $86,347 $61,180 Third-party 12,473 4,739 45,752 16,031 ------ ----- ------ ------ Total operating revenues 41,759 21,173 132,099 77,211 Operating expenses: Operation and maintenance expense 2,897 2,021 7,987 6,006 General and administrative expense 4,731 2,617 15,044 9,961 Equity compensation expense 128 965 2,270 3,925 Depreciation expense 3,814 1,778 10,840 6,310 Acquisition costs 52 - 125 - Amortization of intangible assets 412 408 1,634 1,632 Other expense 902 - 1,051 492 --- --- ----- Total operating expenses 12,936 7,789 38,951 28,326 Operating income $28,823 $13,384 $93,148 $48,885
Water Services Segment Three Months Ended Year Ended December 31, December 31, (in thousands) 2016 2015 2016 2015 ---- ---- ---- ---- Water service volumes (MMgal) 321 202 1,253 777 Operating revenues: Affiliate $17,707 $4,945 $65,913 $32,488 Third-party - 3,196 3,611 4,760 --- ----- ----- ----- Total operating revenues 17,707 8,141 69,524 37,248 Operating expenses: Operation and maintenance expense 4,400 2,861 16,602 8,904 General and administrative expense 1,291 455 3,714 3,433 Incentive unit (income) expense - (4) - 1,044 Equity compensation expense 17 220 603 576 Depreciation expense 3,642 4,166 14,330 10,089 Other operating expense 390 51 480 51 --- --- --- --- Total operating expenses 9,740 7,749 35,729 24,097 Operating income $7,967 $392 33,795 $13,151
Rice Midstream Partners LP
Supplemental Non-GAAP Financial Measures
(Unaudited)
Adjusted EBITDA, distributable cash flow and DCF coverage ratio 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 define Adjusted EBITDA as net income (loss) before interest expense, depreciation expense, amortization of intangible assets, non-cash equity 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. We define distributable cash flow as Adjusted EBITDA less cash interest expense, and estimated maintenance capital expenditures. We define DCF coverage ratio as distributable cash flow divided by total distributions declared. Distributable cash flow does not reflect changes in working capital balances and is not a presentation made in accordance with GAAP.
We believe that the presentation of Adjusted EBITDA, distributable cash flow and DCF coverage ratio 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 operating activities, respectively. Our non-GAAP financial measures of Adjusted EBITDA and distributable cash flow should not be considered as alternatives 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 they exclude some but not all items that affect net income and net cash provided by operating activities. You should not consider Adjusted EBITDA, distributable cash flow or DCF coverage ratio in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA, distributable cash flow and DCF coverage ratio may be defined differently by other companies in our industry, our definitions of Adjusted EBITDA, distributable cash flow and DCF coverage ratio may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.
Three Months Ended Year Ended (in thousands) December 31, 2016 December 31, 2016 ----------------- ----------------- Adjusted EBITDA reconciliation to loss from continuing operations: Net income $34,260 $121,610 Interest expense 1,562 3,931 Depreciation expense 7,456 25,170 Amortization of intangible assets 412 1,634 Acquisition costs 52 125 Non-cash equity compensation expense 145 2,873 Amortization of deferred financing costs 1,046 1,479 Other expense 1,292 1,531 ----- Adjusted EBITDA $46,225 $158,353 ======= ======== Adjusted EBITDA $46,225 $158,353 Cash interest expense (1,562) (3,931) Estimated maintenance capital expenditures (2,800) (11,200) ------ Distributable cash flow $41,863 $143,222 ======= ======== Total distributions declared $26,508 $84,285 DCF coverage ratio 1.58 1.70 Reconciliation of Adjusted EBITDA to Cash: Adjusted EBITDA $46,225 $158,353 Interest expense (1,562) (3,931) Other income (expense) (1,292) (1,531) Acquisition costs (52) (125) Changes in operating assets and liabilities which used cash 1,295 1,350 ----- Net cash provided by operating activities $44,614 $154,116 Net cash used in investing activities (623,408) (721,087) Net cash provided by financing activities 592,995 581,207 ------- ------- Net (decrease) increase in cash 14,201 14,236 Cash at the beginning of the period 7,634 7,597 ----- ----- Cash at the end of the period $21,835 $21,833 ======= =======
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