PVR Partners Posts Weak 4Q
PVR Partners, L.P. (PVR) announced its fourth-quarter 2012 loss per unit of 23 cents, comparing unfavorably with the Zacks Consensus Estimate of 18 cents and the year-ago earnings of 24 cents.
The weak performance was attributable to a weakening coal market condition, decreasing natural gas and natural gas liquid prices as well as higher operating costs.
Operational Update
PVR Partners posted fourth-quarter 2012 revenues of $270 million, down 6.3% year over year, primarily due to lower contribution from natural gas and natural gas liquids businesses and decline in coal royalties. It also lagged the Zacks Consensus Estimate of $274 million.
In the quarter under review, PVR Partners’ total expenses inched up 0.2% year over year to $253 million. An increase in operating costs, general and administrative expenses and depreciation, depletion and amortization led to the overall increase.
The partnership’s fourth-quarter 2012 earnings before interest, tax, depreciation and amortization (:EBITDA) increased 15.1% year over year to $67.8 million.
Decline in revenue coupled with increase in expenses led to a 24% year-over-year decrease in total operating income to $16.1 million in the fourth quarter.
Segmental Highlights
Eastern Midstream Segment: Revenue surged 316.7% year over year to nearly $40 million, in the reported quarter. This can be attributed to an increase in average production volumes by 724 million cubic feet per day (“MMcfd”) owing to an expansion of PVR Partners’ Lycoming and Wyoming systems, and the acquisition of Chief Gathering LLC.
Midcontinent Midstream Segment: In the fourth quarter of 2012, revenue from this segment witnessed a 14.1% year-over-year decline to $200.7 million. The year-over-year decline in revenue was primarily due to soft natural gas and natural gas liquids prices and sale of the Crossroads system in July 2012.
Coal and Natural Resource Management Segment: This division posted fourth-quarter 2012 revenues of nearly $30 million, dropping 35% year over year. This was primarily due to a decline in coal royalty revenues as well as coal royalty volume.
Financial Condition
Cash and cash equivalents of the partnership as of Dec 31, 2012, were $14.7 million, up from $8.6 million as of Dec 31, 2011.
Cash flow from operating activities of the partnership in 2012 was $145.3 million, lower than $190.3 million in 2011.
Update on Capital Investment
During the quarter, PVR Partners invested $209.4 million in its internal growth projects, primarily in the Eastern Midstream Segment. Full-year internal growth project investment totaled $528.8 million.
Guidance
PVR Partners projects adjusted EBITDA for the Eastern Midstream Segment in the range of $190–$230 million, for the Midcontinent Midstream Segment in the range of $70–$80 million and for the Coal and Natural Resource Management Segment in the range of $75–$85 million.
It estimates capital expenditures for 2013 between $14 to $18 million and internal growth capital between $350 and $400 million.
Quarterly Distribution
The board of directors approved a quarterly distribution of 55 cents per unit to unitholders of record as on Feb 8, 2013. This equates to an annual rate of $2.20 per unit.
Zacks Rank
PVR Partners, L.P. currently carries a Zacks Rank #5 (Strong Sell). MPLX LP (MPLX) reported fourth quarter earnings of 18 cents per share, lagging the Zacks Consensus Estimate of 24 cents. SemGroup Corporation (SEMG) and Crestwood Midstream Partners LP (CMLP), carrying a Zacks Rank #1 (Strong Buy), are yet to report the fourth-quarter results.
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