Crestwood Announces Third Quarter 2012 Results

Reports Record Adjusted EBITDA and Adjusted Distributable Cash Flow on Higher Gathering Volumes

Marketwired

HOUSTON, TX--(Marketwire - Nov 6, 2012) - Crestwood Midstream Partners LP (NYSE: CMLP) ("Crestwood" or the "Partnership") reported today its unaudited financial results for the three months ended September 30, 2012. Key financial and operating results with respect to the third quarter 2012 included the following:

Third Quarter 2012 Financial Highlights

  • Reported record adjusted earnings before interest, taxes, depreciation, amortization and accretion ("Adjusted EBITDA") of $32.0 million, up 12% from the $28.5 million reported in the second quarter 2012, on 9% higher gathering volumes on Crestwood's 100% owned gathering systems and 13% higher gathering volumes on Crestwood's 35% owned Marcellus Shale pipelines.
  • Reported record adjusted distributable cash flow of $25.2 million, up 22% from the $20.6 million reported for the second quarter 2012.
  • Announced a quarterly distribution increase with respect to the third quarter 2012 of $0.51 per common unit (equivalent to $2.04 per common unit on an annualized basis), representing a 6.3% increase compared to the distribution paid with respect to the third quarter 2011.
  • Crestwood's third quarter 2012 performance resulted in an improvement in distribution coverage ratio to 1.0x for the current quarter compared to 0.85x in the second quarter 2012.
  • Reported adjusted net income of $12.0 million, or $0.17 of adjusted earnings per limited partner unit, compared to analyst consensus estimates of $0.18 per limited partner unit.

Third Quarter 2012 Operational Highlights

  • In the rich gas portion of the Barnett Shale, Crestwood completed the acquisition of Devon Energy Corporation's ("Devon") West Johnson County gas gathering system and processing plant for $87 million. Crestwood is currently connecting the acquired system to its Cowtown rich gas gathering system and processing plants which will make the acquired processing plant available in the fourth quarter 2012 for redeployment in other rich gas areas where Crestwood is developing projects. In conjunction with the transaction, Crestwood entered into a 20 year gathering and processing agreement with Devon.
  • In the Marcellus Shale region, Crestwood continued to expand its operations group and completed its first major gathering system expansion since taking over operations from Antero Resources Appalachian Corporation ("Antero") in the second quarter 2012. During the third quarter 2012, gathering volumes increased to 289 million cubic feet per day ("MMcf/d") compared to 257 MMcf/d in the second quarter 2012, based on increased drilling activity by Antero and improved results from completed wells. October 2012 volumes averaged 362 MMcf/d and November 1, 2012 spot volumes totaled 376 MMcf/d.
  • Other activities impacting Crestwood's volumes during the third quarter 2012 compared to the second quarter 2012 were a 26% increase in processing volumes, 21% higher gathering volumes in the Fayetteville and Granite Wash segments and 10% higher volumes in the Barnett Shale segment despite lower volumes on the Lake Arlington system and a temporary shut-in of volumes on the Cowtown system due to a fire at our Corvette processing plant.

"We are pleased to deliver record Adjusted EBITDA and adjusted distributable cash flow in the third quarter as each of our business segments showed improvement over the second quarter of 2012," stated Robert G. Phillips, Chairman, President and Chief Executive Officer of Crestwood's general partner. "In general, we saw increased drilling activity in all of our operating areas except the dry gas areas of the Barnett Shale and the Haynesville/Bossier Shale. Our 2012 rich gas acquisitions, the Antero Marcellus assets and the Devon Barnett assets, added significantly to our third quarter results and should continue to contribute sequential growth in future quarters based on current producer drilling and development plans. We continue to look for bolt-on acquisitions around our existing assets and opportunities to expand our rich gas exposure through organic development projects or diversifying acquisitions," stated Phillips.

Summary Third Quarter 2012 Financial and Operating Results

Crestwood's Adjusted EBITDA for the third quarter 2012 totaled $32.0 million, a 10% increase from Adjusted EBITDA of $29.1 million in the third quarter 2011. The increase in Adjusted EBITDA was primarily attributable to the contribution from Crestwood Marcellus Midstream ("CMM") due to growth of our rich gas volumes in the Marcellus Shale and assets acquired from Devon in the rich gas area of the Barnett Shale in the third quarter 2012. Also contributing to the increase was a 23% increase in Crestwood's Barnett and Granite Wash processing volumes, higher volumes in the Fayetteville segment and the contribution from our Haynesville assets which were acquired in the fourth quarter 2011.

Volumes on Crestwood's 100% owned gathering systems averaged 604 MMcf/d in the third quarter 2012, down 2% from 619 MMcf/d gathered in the third quarter 2011, but 8% higher than the 561 MMcf/d gathered in the second quarter 2012. Gathered volumes on the newly acquired assets in the rich gas area of the Barnett averaged 78 MMcf/d since closing on August 24, 2012, and contributed approximately $2.0 million of revenue during the quarter. Volumes gathered on the CMM systems (35% owned and operated by Crestwood) totaled 289 MMcf/d during the third quarter 2012. CMM had 100% Adjusted EBITDA of $6.4 million and contributed Adjusted EBITDA of $2.2 million to Crestwood during the third quarter 2012, up 19% from the second quarter 2012. Total gathering volumes for all systems operated by Crestwood for the third quarter 2012 were 893 MMcf/d.

Third Quarter 2012 Segment Performance

Barnett Segment

Operating revenues, net of product purchases, in the Barnett segment totaled $33.3 million in the third quarter 2012, compared with $36.9 million in the third quarter 2011, but 6% higher than the $31.5 million reported in the second quarter 2012. Gathering volumes totaled 438 MMcf/d in 2012, compared with 507 MMcf/d in 2011, but 9% over the 401 MMcf/d reported in the second quarter 2012. The year-to-year gathering volume decrease was primarily due to lower drilling activity on the Lake Arlington and Alliance systems but was partially offset by a 23% increase in higher margin processing volumes which totaled 160 MMcf/d, compared with 130 MMcf/d in the prior year and 129 MMcf/d in the second quarter of 2012. Third quarter 2012 revenues were negatively impacted by approximately $0.5 million due to system down-time following a compressor fire at the Corvette facility in September 2012. Operating and maintenance expenses totaled $7.0 million, an increase of $1.0 million from the third quarter 2011 which was primarily attributable to the addition of the new Devon assets and $0.5 million of additional clean-up expenses at the Corvette facility during the third quarter 2012.

Fayetteville Segment

Operating revenues in the Fayetteville segment, net of product purchases, totaled $7.0 million in the third quarter 2012, compared with $6.6 million in the third quarter 2011, but 13% higher than the $6.2 million reported in the second quarter 2012. Gathering volumes totaled 91 MMcf/d during the third quarter 2012, compared to 85 MMcf/d in the third quarter 2011 and 78 MMcf/d in the second quarter 2012. Crestwood connected 9 new wells from 3 new pads in the third quarter 2012 and new wells continue to show improved initial production performance. Operating and maintenance expenses totaled $1.9 million for the third quarter 2012, a decrease of $2.1 million from 2011 due primarily to lower expenses for leased compression and decreased costs for right-of-way maintenance.

Granite Wash

Operating revenues in the Granite Wash segment, net of product purchases, totaled $1.2 million in the third quarter 2012, compared to $1.4 million in the third quarter 2011, but 23% higher than the second quarter 2012. The year-to-year decrease reflects lower resale prices due to lower gas and NGL prices in 2012 despite higher volumes. Compared to the second quarter 2012, gathering and processing volumes were up 5 MMcf/d to 20 MMcf/d due to increased drilling by LeNorman Operating LLC in the area of our Indian Creek assets. Operating and maintenance expenses totaled $0.6 million, an increase of $0.1 million from the third quarter 2011.

Other Operations

Other operating revenues, net of product purchases, totaled $3.2 million and include the Sabine gathering system in the Haynesville/Bossier Shale, which was acquired in the fourth quarter 2011, and the Las Animas system in the Avalon Shale trend acquired in the first quarter 2011. Gathering volumes on the Sabine and Las Animas systems totaled 45 MMcf/d and 9 MMcf/d, respectively, during the third quarter 2012. Operating and maintenance expenses related to these assets totaled $0.7 million during the third quarter 2012.

CMM Contribution

Equity earnings from Crestwood's investment in CMM totaled $1.8 million for the third quarter 2012, which represents a 35% ownership interest in CMM. Crestwood's pro-rata portion of CMM's Adjusted EBITDA totaled $2.2 million. Volumes gathered by CMM during the third quarter 2012 averaged 289 MMcf/d, an increase of 12% over the second quarter 2012. During the third quarter 2012, Antero had an average of 6 drilling rigs running on acreage dedicated to CMM and completed 16 new Marcellus Shale wells which were connected to the CMM gathering systems. Wells added during the third quarter 2012 have ramped up to an October 2012 average of 362 MMcf/d and a November 1, 2012 spot volume of 376 MMcf/d indicating the prolific nature of the Antero wells after system debottlenecking and the addition of system compression.

General and Administrative Expenses

General and administrative expenses totaled $5.8 million in the third quarter 2012 (including $0.5 million of non-recurring costs primarily related to the acquisition of assets from Devon), compared to $5.6 million in the third quarter 2011. General and administrative expenses incurred by CMM totaled $0.8 million during the third quarter 2012.

Capital Investment and Resources

At September 30, 2012, Crestwood had approximately $533 million of debt outstanding, comprised of $200 million principal amount of 7.75 percent fixed-rate senior notes and approximately $333 million of borrowings under its $500 million revolving credit facility. During the third quarter 2012, Crestwood issued 4.6 million common units in an underwritten public offering. Net proceeds of approximately $115 million were used to fund the Devon acquisition, with the remaining proceeds used to reduce the outstanding balance of the revolving credit facility. In addition, CMM (which is an unconsolidated affiliate) had $19.5 million of debt outstanding under its $200 million revolving credit facility at September 30, 2012.

Capital spending for the nine months ended September 30, 2012, totaled $29.0 million (excluding acquisition capital), comprised of $26.1 million of growth capital and $2.9 million of maintenance capital. Growth capital was used to construct pipeline laterals and compression equipment in the Fayetteville and Barnett segments. Total capital spending for the full year 2012 is expected to be approximately $35 million, comprised of $30 million for growth projects and $5 million on maintenance. Growth capital spending by CMM, which is funded under its revolving credit facility, totaled $5.4 million since commencing operations at the end of March 2012. Growth capital spending by CMM for the full year 2012 is expected to total approximately $20 million.

Non-GAAP Financial Measures

Adjusted net income, adjusted net income per unit, Adjusted EBITDA and adjusted distributable cash flow are non-generally accepted accounting principles ("non-GAAP") financial measures. The accompanying schedules of this news release provide reconciliations of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles in the United States of America ("GAAP"). Our non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income or operating income or any other GAAP measure of liquidity or financial performance.

Conference Call

Crestwood will host a conference call for investors and analysts on Tuesday, November 6, 2012, beginning at 10:00 a.m. Central Time, to discuss the third quarter 2012 performance. Interested parties may participate by joining the conference call at 888-600-4861 and entering passcode 8380645. The conference call will also be webcast live and can be accessed through the Investor Relations section of our website at www.crestwoodlp.com. A replay will be available for 30 days following the conference call by dialing 888-203-1112 and entering the replay passcode 8380645.

About Crestwood Midstream Partners LP

Houston, Texas based Crestwood is a growth-oriented, midstream master limited partnership which owns and operates predominately fee-based gathering, processing, treating and compression assets servicing natural gas producers in the Barnett Shale in north Texas, the Fayetteville Shale in northwest Arkansas, the Granite Wash in the Texas Panhandle, the Marcellus Shale in northern West Virginia, the emerging Avalon Shale trend in southeastern New Mexico, and the Haynesville/Bossier Shale in western Louisiana. For more information about Crestwood, visit www.crestwoodlp.com.

Forward-Looking Statements

The statements in this news release regarding future events, occurrences, circumstances, activities, performance, outcomes and results are forward-looking statements. Although these statements reflect the current views, assumptions and expectations of Crestwood's management, the matters addressed herein are subject to numerous risks and uncertainties which could cause actual activities, performance, outcomes and results to differ materially from those indicated. Such forward-looking statements include, but are not limited to, statements about the future financial and operating results, objectives, expectations and intentions and other statements that are not historical facts. Factors that could result in such differences or otherwise materially affect Crestwood's financial condition, results of operations and cash flows including, without limitation, changes in general economic conditions; fluctuations in oil, natural gas and NGL prices; the extent and success of drilling efforts, as well as the extent and quality of natural gas volumes produced within proximity of our assets; failure or delays by our customers in achieving expected production in their natural gas projects; competitive conditions in our industry and their impact on our ability to connect natural gas supplies to our gathering and processing assets or systems; actions or inactions taken or non-performance by third parties, including suppliers, contractors, operators, processors, transporters and customers; our ability to consummate acquisitions, successfully integrate the acquired businesses, realize any cost savings and other synergies from any acquisition; changes in the availability and cost of capital; operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control; timely receipt of necessary government approvals and permits, our ability to control the costs of construction, including costs of materials, labor and right-of-way and other factors that may impact our ability to complete projects within budget and on schedule; the effects of existing and future laws and governmental regulations, including environmental and climate change requirements; the effects of existing and future litigation; and risks related to our substantial indebtedness, as well as other factors disclosed in Crestwood's filings with the U.S. Securities and Exchange Commission. You should read our filings with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2011, and our most recent Quarterly Reports and Current Reports for a more extensive list of factors that could affect results.

 
CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except for per unit data)
(Unaudited)
 
    Three Months Ended     Nine Months Ended     Three Months Ended
    September 30,     September 30,     June 30,
    2012     2011     2012     2011     2012
Operating revenues                                      
  Gathering revenue - related party   $ 21,658     $ 27,840     $ 67,120     $ 75,706     $ 21,616
  Gathering revenue     13,739       8,007       36,310       17,908       10,734
  Processing revenue - related party     6,298       7,183       19,619       21,723       6,550
  Processing revenue     2,271       692       4,665       1,867       1,198
  Product sales     11,071       14,893       29,258       29,326       8,104
    Total operating revenues     55,037       58,615       156,972       146,530       48,202
                                       
Operating expenses                                      
  Product purchases     10,341       13,482       26,755       26,010       7,441
  Operations and maintenance     10,127       10,573       28,725       26,165       8,887
  General and administrative     5,777       5,566       19,451       17,996       6,936
  Depreciation, amortization and accretion     10,943       9,595       32,427       23,981       10,838
    Total operating expenses     37,188       39,216       107,358       94,152       34,102
                                       
Gain from exchange of property, plant and equipment     -       1,106       -       1,106       -
                                       
Operating income     17,849       20,505       49,614       53,484       14,100
                                       
Earnings from unconsolidated affiliate     1,764       -       2,205       -       441
                                       
Interest and debt expense     (8,202 )     (7,100 )     (24,045 )     (19,925 )     (8,286)
                                       
Income before income taxes     11,411       13,405       27,774       33,559       6,255
                                       
Income tax expense     306       347       884       898       275
                                       
Net income   $ 11,105     $ 13,058     $ 26,890     $ 32,661     $ 5,980
                                       
  General partner's interest in net income   $ 4,240     $ 2,426     $ 10,944     $ 4,942     $ 3,336
  Limited partners' interest in net income   $ 6,865     $ 10,632     $ 15,946     $ 27,719     $ 2,644
                                       
  Basic income per unit:                                      
    Net income per limited partner unit   $ 0.15     $ 0.27     $ 0.36     $ 0.76     $ 0.06
                                       
  Diluted income per unit:                                      
    Net income per limited partner unit   $ 0.15     $ 0.27     $ 0.36     $ 0.76     $ 0.06
                                       
Weighted-average number of limited partner units:                                      
  Basic     46,564       39,388       44,206       36,424       43,333
  Diluted     46,767       39,504       44,395       36,540       43,534
Distributions declared per limited partner unit (attributable to the period ended)   $ 0.51     $ 0.48     $ 1.51     $ 1.38     $ 0.50
 
 
 
CRESTWOOD MIDSTREAM PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(In thousands, except for unit data)
(Unaudited)
 
    September 30,   December 31,
    2012   2011
ASSETS            
Current assets            
  Cash and cash equivalents   $ 12   $ 797
  Accounts receivable - related party     22,632     27,312
  Accounts receivable     14,063     11,926
  Prepaid expenses and other     5,567     1,935
    Total current assets     42,274     41,970
             
Investment in unconsolidated affiliate     129,603     -
Property, plant and equipment, net of accumulated depreciation of $116,486 in 2012 and $89,860 in 2011     785,404     746,045
Intangible assets, net of accumulated amortization of $7,342 in 2012 and $2,440 in 2011     165,839     127,760
Goodwill     95,031     93,628
Deferred financing costs, net     13,604     16,699
Other assets     694     790
    Total assets   $ 1,232,449   $ 1,026,892
             
LIABILITIES AND PARTNERS' CAPITAL            
Current liabilities            
  Accrued additions to property, plant and equipment     1,899     7,500
  Capital leases     3,658     2,693
  Accounts payable - related party     408     1,308
  Accounts payable, accrued expenses and other liabilities     36,280     31,794
    Total current liabilities     42,245     43,295
             
Long-term debt     533,200     512,500
Long-term capital leases     3,429     3,929
Asset retirement obligations     13,002     11,545
Commitments and contingent liabilities            
             
Partners' capital            
  Common unitholders (41,158,228 and 32,997,696 units issued and outstanding at September 30, 2012 and December 31, 2011)     462,377     286,945
  Class C unitholders (6,991,589 and 6,596,635 units issued and outstanding at September 30, 2012 and December 31, 2011)     159,800     157,386
  General partner     18,396     11,292
    Total partners' capital     640,573     455,623
    Total liabilities and partners' capital   $ 1,232,449   $ 1,026,892
   
   
   
CRESTWOOD MIDSTREAM PARTNERS LP  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
(In thousands)  
(Unaudited)  
   
    Nine Months Ended  
    September 30,  
    2012     2011  
Cash flows from operating activities                
  Net income   $ 26,890     $ 32,661  
    Adjustments to reconcile net income to net cash provided by operating activities:                
      Depreciation, amortization and accretion     32,427       23,981  
      Equity-based compensation     1,528       851  
      Amortization/accretion of deferred financing costs and capital lease obligations     3,110       2,542  
      Gain from exchange of property, plant and equipment     -       (1,106 )
    Changes in assets and liabilities:                
      Accounts receivable - related party     4,680       (5,675 )
      Accounts receivable     (2,137 )     (5,359 )
      Prepaid expenses and other assets     783       (447 )
      Accounts payable - related party     (900 )     (2,349 )
      Accounts payable, accrued expenses and other liabilities     3,758       23,366  
Net cash provided by operating activities     70,139       68,465  
                 
Cash flows from investing activities                
      Capital expenditures     (28,968 )     (31,256 )
      Acquisitions, net of cash acquired     (87,269 )     (349,662 )
      Proceeds from exchange of property, plant and equipment     -       5,943  
      Investment in unconsolidated affiliate     (131,250 )     -  
      Capital distributions from unconsolidated affiliate     1,647       -  
Net cash used in investing activities     (245,840 )     (374,975 )
                 
Cash flows from financing activities                
      Proceeds from issuance of senior notes     -       200,000  
      Proceeds from credit facility     350,200       100,200  
      Repayments of credit facility     (329,500 )     (155,704 )
      Payments on capital leases     (2,155 )     -  
      Deferred financing costs paid     (161 )     (6,982 )
      Proceeds from issuance of Class C units, net     -       152,671  
      Proceeds from issuance of common units, net     217,508       53,550  
      Contributions from partners     5,930       8,741  
      Distributions to partners     (66,500 )     (45,910 )
      Taxes paid for equity-based compensation vesting     (406 )     -  
Net cash provided by financing activities     174,916       306,566  
                 
Change in cash and cash equivalents     (785 )     56  
                 
Cash and cash equivalents at beginning of period     797       2  
Cash and cash equivalents at end of period   $ 12     $ 58  
 
 
 
CRESTWOOD MIDSTREAM PARTNERS LP
OPERATING STATISTICS
(In thousands)
(Unaudited)
 
    Three Months Ended   Nine Months Ended   Three Months Ended
    September 30,   September 30,   June 30,
    2012   2011   2012   2011   2012
Barnett:                              
Gathering revenues   $ 24,737   $ 29,042   $ 74,567   $ 79,892   $ 23,771
Processing revenues     8,540     7,842     24,156     23,553     7,732
Product sales     69     -     69     -     -
  Total operating revenues   $ 33,346   $ 36,884   $ 98,792   $ 103,445   $ 31,503
Product purchases     60     -     60     -     -
Operations and maintenance expense     6,963     6,015     18,438     18,528     5,345
  EBITDA   $ 26,323   $ 30,869   $ 80,294   $ 84,917   $ 26,158
                               
Gathering volumes (in MMcf)     40,252     46,642     117,434     126,471     36,529
Processing volumes (in MMcf)     14,671     11,975     38,493     36,028     11,765
                               
Fayetteville:                              
Gathering revenues   $ 7,043   $ 6,534   $ 20,037   $ 13,095   $ 6,228
Product sales     131     547     331     1,069     102
  Total operating revenues   $ 7,174   $ 7,081   $ 20,368   $ 14,164   $ 6,330
Product purchases     137     454     343     1,012     124
Operations and maintenance expense     1,855     3,965     6,399     6,356     2,231
  EBITDA   $ 5,182   $ 2,662   $ 13,626   $ 6,796   $ 3,975
                               
Gathering volumes (in MMcf)     8,403     7,813     23,049     15,146     7,112
                               
Granite Wash:                              
Gathering revenues   $ 465   $ 113   $ 874   $ 208   $ 270
Processing revenues     29     33     128     37     16
Product sales     10,208     12,529     27,019     24,965     7,436
  Total operating revenues   $ 10,702   $ 12,675   $ 28,021   $ 25,210   $ 7,722
Product purchases     9,481     11,264     24,514     21,739     6,732
Operations and maintenance expense     560     499     1,619     998     541
  EBITDA   $ 661   $ 912   $ 1,888   $ 2,473   $ 449
                               
Gathering volumes (in MMcf)     1,856     1,473     4,576     3,011     1,367
Processing volumes (in MMcf)     1,859     1,475     4,566     2,941     1,362
                               
Other:                              
Gathering revenues   $ 3,152   $ 158   $ 7,952   $ 419   $ 2,081
Product sales     663     1,817     1,839     3,292     566
  Total operating revenues   $ 3,815   $ 1,975   $ 9,791   $ 3,711   $ 2,647
Product purchases     663     1,764     1,838     3,259     585
Operations and maintenance expense     749     94     2,269     283     770
  EBITDA   $ 2,403   $ 117   $ 5,684   $ 169   $ 1,292
                               
Gathering volumes (in MMcf)     5,041     1,037     17,148     2,655     6,044
   
   
   
CRESTWOOD MIDSTREAM PARTNERS LP  
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES  
(In thousands, except for per unit data)  
(Unaudited)  
   
    Three Months Ended     Nine Months Ended     Three Months Ended  
    September 30,     September 30,     June 30,  
    2012     2011     2012     2011     2012  
                                         
Net income   $ 11,105     $ 13,058     $ 26,890     $ 32,661     $ 5,980  
Items impacting net income:                                        
  Non-recurring expenses     932       129       2,710       3,166       1,727  
  Gain from exchange of property, plant and equipment     -       (1,106 )     -       (1,106 )     -  
  Non-cash interest expense (write-off of deferred financing costs)     -       -       370       -       -  
  Interest expense (bridge loan fees)     -       -       -       2,500       -  
  Adjusted net income   $ 12,037     $ 12,081     $ 29,970     $ 37,221     $ 7,707  
                                         
Net income per limited partner unit (diluted basis)   $ 0.15     $ 0.27     $ 0.36     $ 0.76     $ 0.06  
Items impacting net income     0.02       (0.03 )     0.07       0.12       0.04  
  Adjusted net income per limited partner unit (diluted basis)   $ 0.17     $ 0.24     $ 0.43     $ 0.88     $ 0.10  
                                         
    Three Months Ended     Nine Months Ended     Three Months Ended  
    September 30,     September 30,     June 30,  
    2012     2011     2012     2011     2012  
                                         
Net income   $ 11,105     $ 13,058     $ 26,890     $ 32,661     $ 5,980  
Depreciation, amortization and accretion expense     10,943       9,595       32,427       23,981       10,838  
Income tax expense     306       347       884       898       275  
Amortization of deferred financing fees     931       932       3,256       2,542       1,023  
Non-cash equity compensation     534       286       1,528       851       500  
Maintenance capital expenditures     (1,279 )     (320 )     (2,872 )     (1,025 )     (1,079 )
  Distributable cash flow     22,540       23,898       62,113       59,908       17,537  
Add: Non-recurring expenses     932       129       2,710       3,166       1,727  
Add: Non-recurring deficiency payment     1,426       -       1,426       -       -  
Add: Interest expense (bridge loan fees)     -       -       -       2,500       -  
Less: Gain from exchange of property, plant and equipment     -       (1,106 )     -       (1,106 )     -  
Less: Equity earnings from unconsolidated affiliate     (1,764 )     -       (2,205 )     -       (441 )
Add: Adjusted DCF from unconsolidated affiliate     2,062       -       3,812       -       1,750  
  Adjusted distributable cash flow   $ 25,196     $ 22,921     $ 67,856     $ 64,468     $ 20,573  
                                         
    Three Months Ended     Nine Months Ended     Three Months Ended  
    September 30,     September 30,     June 30,  
    2012     2011     2012     2011     2012  
                                         
Total operating revenues   $ 55,037     $ 58,615     $ 156,972     $ 146,530     $ 48,202  
Product purchases     10,341       13,482       26,755       26,010       7,441  
Operations and maintenance expense     10,127       10,573       28,725       26,165       8,887  
General and administrative expense     5,777       5,566       19,451       17,996       6,936  
Gain from exchange of property, plant and equipment     -       1,106       -       1,106       -  
Earnings from unconsolidated affiliate     1,764       -       2,205       -       441  
  EBITDA     30,556       30,100       84,246       77,465       25,379  
Items impacting EBITDA:                                        
Add: Non-recurring expenses     932       129       2,710       3,166       1,727  
Less: Gain from exchange of property, plant and equipment     -       (1,106 )     -       (1,106 )     -  
Less: Equity earnings from unconsolidated affiliate     (1,764 )     -       (2,205 )     -       (441 )
Add: Adjusted earnings from unconsolidated affiliate     2,237       -       4,113       -       1,876  
  Adjusted EBITDA     31,961       29,123       88,864       79,525       28,541  
Less:                                        
  Depreciation, amortization and accretion expense     10,943       9,595       32,427       23,981       10,838  
  Interest and debt expense     8,202       7,100       24,045       19,925       8,286
  Income tax expense     306       347       884       898       275  
  Items impacting EBITDA     1,405       (977 )     4,618       2,060       3,162  
    Net income   $ 11,105     $ 13,058     $ 26,890     $ 32,661     $ 5,980  
   
   
   
CRESTWOOD MARCELLUS MIDSTREAM LLC  
OPERATING STATISTICS  
(In thousands)  
(Unaudited)  
   
    Three Months Ended     Three Months Ended     Year to Date
(from inception
 
    June 30,
2012
    September 30, 2012     of February 23, 2012)  
Operating revenue                        
  Gathering revenue   $ 7,027     $ 7,976     $ 15,003  
    Total operating revenue     7,027       7,976       15,003  
                         
Operating expenses                        
  Operations and maintenance     513       815       1,328  
  General and administrative     1,721       793       2,514  
  Depreciation, amortization and accretion     2,857       625       3,482  
    Total operating expenses     5,091       2,233       7,324  
                         
Operating income     1,936       5,743       7,679  
                         
Interest and debt expense     (677 )     (703 )     (1,380 )
                         
                         
Net income   $ 1,259     $ 5,040     $ 6,299  
                         
Add:                        
Interest and debt expense     677       703       1,380  
Depreciation, amortization and accretion     2,857       625       3,482  
                         
EBITDA   $ 4,793     $ 6,368     $ 11,161  
                         
Non-recurring expenses     568       22       590  
                         
Adjusted EBITDA   $ 5,361     $ 6,390     $ 11,751  
                         
Volumes:                        
Gathering volumes (in MMcf)     23,424       26,585       50,009  
                         
CMLP's 35% Interest in Crestwood Marcellus Midstream LLC:                        
                         
Equity earnings   $ 441     $ 1,764     $ 2,205  
EBITDA   $ 1,678     $ 2,229     $ 3,907  
Adjusted EBITDA   $ 1,876     $ 2,237     $ 4,113  
Gathering volumes (in MMcf)     8,198       9,305       17,503  
Contact:
Investor

Mark Stockard
832-519-2207
mstockard@crestwoodlp.com

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