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CNX Midstream Reports Third Quarter Results

PITTSBURGH, Oct. 30, 2018 /PRNewswire/ -- CNX Midstream Partners LP (CNXM) ("CNXM", "CNX Midstream" or the "Partnership") today reported financial and operational results for the three months ended September 30, 2018(1).

Third Quarter Results
Highlights of third quarter 2018 results attributable to the Partnership as compared to the third quarter of 2017 include:

  • Net Income of $33.6 million as compared to $28.9 million
  • Adjusted EBITDA(2) of $45.0 million as compared to $34.2 million
  • Distributable cash flow (DCF)(2) of $35.0 million as compared to $29.4 million
  • Cash distribution coverage(2) of 1.36x on an as-declared basis

"CNXM continued to deliver strong results for the third quarter," commented Nicholas J. DeIuliis, CEO of CNX Midstream GP LLC (the "General Partner"). "As compared to the third quarter of 2017, Adjusted EBITDA increased by 32% and distributable cash flow was up by 19%. These results have outpaced our original expectations, and as a result, we are modestly increasing full year 2018 EBITDA and DCF guidance. CNXM's focus on operational execution is driving strong financial performance, which continues to organically de-risk the 15% annual distribution growth through 2023, which assumes no drop down transactions or need to access the equity capital markets."

Operations
During the quarter, despite CNXM having its highest monthly man hour rate since the end of 2015, the company had zero reportable injuries or notice of violations (NOVs), highlighting the continued focus on safety and environmental compliance. Also during the quarter, CNXM had record throughput, largely driven by an increase in well turn-in-lines. Operating expenses continued to improve during the quarter, driven largely by reductions to labor costs and continued system optimization.

Updated Guidance

($ in millions)


2018E


2018E



Previous


Updated

Throughput (MMcfe/d)


1,150

-

1,240


1,150

-

1,240

EBITDA


$150

-

$165


$160

-

$170

Distributable Cash Flow


$120

-

$135


$125

-

$135

Capital Expenditures


$100

-

$110


$135

-

$145

Distributable Coverage


1.2x

-

1.4x


1.2x

-

1.4x

LP Distribution Growth Target


15%


15%

The Partnership expects its 2018 EBITDA and DCF to increase, driven primarily by improvements in operating expenses.

The Partnership expects its 2018 capital expenditures to increase to approximately $135-$145 million, compared to the previous guidance of $100-$110 million, due primarily to strategic land acquisitions, system upsizing to accommodate higher throughput levels resulting from CNX's continued well improvements, and the additional acceleration of completing planned projects and construction activity from 2019 into 2018. CNXM reduces its construction and permitting risks by completing projects ahead of schedule.

Quarterly Distribution
As previously announced, the Board of Directors of the General Partner declared a quarterly cash distribution of $0.3479 per unit with respect to the third quarter of 2018. The distribution payment will be made on November 13, 2018 to unitholders of record at the close of business on November 5, 2018. The distribution, which equates to an annual rate of $1.3916 per unit, represents an increase of 3.5% over the prior quarter and an increase of 15% over the distribution paid with respect to the third quarter of 2017.

Capital Investment and Resources
CNX Midstream's allocated third quarter 2018 share of investment in expansion projects was $37.9 million. Total expansion capital investment at the development companies in which CNX Midstream holds controlling interests was $39.8 million. CNX Midstream's respective share of maintenance capital expenditures for the development companies for third quarter 2018 was $4.4 million. Maintenance capital expenditures in the aggregate for the development companies in which CNX Midstream holds controlling interests totaled $4.4 million.

As of September 30, 2018, CNX Midstream had outstanding borrowings of $44 million under its $600 million revolving credit facility.

Third Quarter Financial and Operational Results Conference Call
A conference call and webcast, during which management will discuss third quarter 2018 financial and operational results, is scheduled for October 30, 2018 at 11:00 a.m. Eastern Time. Prepared remarks by members of management will be followed by a question and answer period. Interested parties may listen via webcast at www.cnxmidstream.com. Participants who would like to ask questions may join the conference by phone by dialing 888-349-0097 (international 412-902-0126) five to ten minutes prior to the scheduled start time (reference the CNX Midstream call). An on-demand replay of the webcast will also be available at www.cnxmidstream.com shortly after the conclusion of the conference call.  A telephonic replay will be available through November 6, 2018 by dialing 877-344-7529 (international:412-317-0088) and using the conference playback number 10125066.

(1)    Unless otherwise indicated, the reporting measures included in this news release reflect the unallocated total activity of the three development companies that have been jointly owned by the Partnership and CNX Gathering LLC ("CNX Gathering") since completion of the Partnership's initial public offering ("IPO") in September 2014. Effective November 16, 2016, the Partnership acquired the remaining 25% controlling interest in the Anchor Systems, which brought its controlling interest in that system to 100%. In connection with the transaction with HG Energy, the Partnership agreed to relinquish its 5% interest in the Growth System to CNX Gathering. The Partnership's current financial interests in the development companies are: 100% in the Anchor Systems and 5% in the Additional Systems. Because the Partnership owns a controlling interest in each of these development companies, it fully consolidates their financial results. CNX Gathering, which is wholly owned by CNX Resources Corporation, owns a 95% noncontrolling interest in the Additional Systems of the Partnership.

(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.

* * * * *

CNX Midstream is a growth-oriented master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin 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 at our website www.cnxmidstream.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 CNX 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, CNX 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 CNX 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 "will," "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. You should not place undue reliance on forward-looking statements.  Forward-looking statements include, among others, statements regarding the payment of our quarterly distribution for the quarter ended September 30, 2018 and our anticipated 2018 financial performance.  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.  You should not place undue reliance on forward-looking statements. Although forward-looking statements reflect our good faith beliefs at the time they are made, they involve known and unknown risks, uncertainties and other factors.  While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. These risks, contingencies and uncertainties relate to, among other matters, the following: CNX and HG Energy II Appalachia, LLC currently account for substantially all of our revenue; if either or both of them change their business strategies, or otherwise significantly reduce the volumes of natural gas and condensate transported through our gathering systems, we could be materially and adversely affected; under our gathering agreements, our customers may transfer their leasehold, working and mineral fee interests in their dedicated acreage, and provide for the release of dedicated acreage in certain situations; we may not generate sufficient distributable cash flow to make the payment of the minimum quarterly distribution to our unitholders; our cash flow will depend entirely on the performance of our operating subsidiaries and their ability to distribute cash to us; our midstream systems are exclusively located in the Appalachian Basin, making us vulnerable to risks associated with operating in a single geographic area; we may be unable to grow by acquiring the noncontrolling interests in, or assets of, our operating subsidiaries owned by CNX Gathering, which could limit our ability to increase our distributable cash flow; to maintain and grow our business, we will be required to make substantial capital expenditures and these capital expenditures may not result in revenue increases and may be subject to regulatory, environmental, political, legal and economic risks, which could adversely affect our business and our ability to distribute cash to our unitholders; if we are unable to obtain needed capital or financing on satisfactory terms, our ability to make cash distributions may be diminished or our financial leverage could increase; our exposure to commodity price risk may change over time and we cannot guarantee the terms of any existing or future agreements for our midstream services with third parties or with CNX; restrictions in our revolving credit facility, and other debt agreements that we may enter into in the future, could adversely affect our business, financial condition, liquidity and results of operations, and ability to make quarterly cash distributions to our unitholders; we and our customers may incur significant liability under, or costs and expenditures to comply with, environmental and worker health and safety regulations, which are complex and subject to frequent change; we may not own in fee the land on which our pipelines and facilities are located, which could result in disruptions to our operations; a shortage of equipment and skilled labor could reduce equipment availability and labor productivity and increase labor and equipment costs, which could have a material adverse effect on our business and results of operations; we do not have any officers or employees and rely on officers of our general partner and employees of CNX; terrorist attacks or cyber-attacks could have a material adverse effect on our business, financial condition or results of operations; our general partner and its affiliates, including CNX, have conflicts of interest with us and limited fiduciary duties to us and our unitholders, and they may favor their own interests to our detriment and that of our unitholders; our general partner's discretion in establishing cash reserves may reduce the amount of cash we have available to distribute to unitholders; affiliates of our general partner, including CNX and CNX Gathering, may compete with us, and neither our general partner nor its affiliates have any obligation to present business opportunities to us except with respect to rights of first offer contained in our omnibus agreement; our tax treatment depends on our status as a partnership for federal income tax purposes; as a result of investing in our common units, you may become subject to state and local taxes and return filing requirements in jurisdictions where we operate or own or acquire properties.

Although forward-looking statements reflect our good faith beliefs at the time they are made, they involve known and unknown risks, uncertainties and other factors.  For more information concerning factors that could cause actual results to differ materially from those conveyed in the forward-looking statements, including, among others, that our business plans may change as circumstances warrant, please refer to the "Risk Factors" and "Forward-Looking Statements" sections of our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.  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.

CNX MIDSTREAM PARTNERS LP

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per unit data)

(unaudited)












Three Months Ended
September 30,


Nine Months Ended
September 30,


2018


2017


2018


2017

Revenue








Gathering revenue — related party

$

41,022


$

32,699


$

116,328


$

147,324

Gathering revenue — third party

19,946


23,959


69,523


24,826

Total Revenue

60,968


56,658


185,851


172,150

Expenses








Operating expense — related party

5,131


6,324


14,645


21,041

Operating expense — third party

4,870


6,332


20,744


18,922

General and administrative expense — related party

3,060


2,666


10,292


8,212

General and administrative expense — third party

1,771


1,042


6,639


3,267

Loss on asset sales



2,501


3,914

Depreciation expense

5,306


5,629


16,605


16,975

Interest expense

7,255


1,197


16,863


3,359

Total Expense

27,393


23,190


88,289


75,690

Net Income

33,575


33,468


97,562


96,460

Less: Net (loss) income attributable to noncontrolling interest

(64)


4,554


6,071


8,488

Net Income Attributable to General and Limited Partner Ownership
Interest in CNX Midstream Partners LP

$

33,639


$

28,914


$

91,491


$

87,972









Calculation of Limited Partner Interest in Net Income:








Net Income Attributable to General and Limited Partner Ownership
Interest in CNX Midstream Partners LP

$

33,639


$

28,914


$

91,491


$

87,972

Less: General partner interest in net income, including incentive
distribution rights

3,697


1,504


8,752


3,938

Limited partner interest in net income

$

29,942


$

27,410


$

82,739


$

84,034









Net income per Limited Partner unit - basic

$

0.47


$

0.43


$

1.30


$

1.32

Net Income per Limited Partner unit - diluted

$

0.47


$

0.43


$

1.30


$

1.32









Limited Partner units outstanding - basic

63,638


63,588


63,633


63,580

Limited Partner unit outstanding - diluted

63,709


63,645


63,682


63,631









Cash distributions declared per unit (*)

$

0.3479


$

0.3025


$

1.0085


$

0.8768
















(*)   Represents the cash distributions declared during the month following the end of each respective quarterly period.

 

 

CNX MIDSTREAM PARTNERS LP

CONSOLIDATED BALANCE SHEETS

(in thousands, except number of units)

(unaudited)







September 30,
 2018


December 31,
 2017

ASSETS




Current Assets:




Cash

$

950


$

3,194

Receivables — related party

15,053


13,104

Receivables — third party

7,185


8,251

Other current assets

2,623


2,169

Total Current Assets

25,811


26,718

Property and Equipment:




Property and equipment

926,179


972,841

Less — accumulated depreciation

77,343


73,563

Property and Equipment — Net

848,836


899,278

Other assets

3,404


593

TOTAL ASSETS

$

878,051


$

926,589





LIABILITIES AND EQUITY




Current Liabilities:




Accounts payable and other accrued liabilities

$

53,391


$

23,602

Accounts payable — related party

4,427


2,376

Total Current Liabilities

57,818


25,978

Other Liabilities:




Revolving credit facility

44,000


149,500

Long-term debt

392,978


Total Liabilities

494,796


175,478

Partners' Capital:




Common units (63,638,327 units issued and outstanding at September 30, 2018
and 63,588,152 units issued and outstanding at December 31, 2017)

304,463


389,427

General partner interest

9,803


4,328

Partners' capital attributable to CNX Midstream Partners LP

314,266


393,755

Noncontrolling interest

68,989


357,356

Total Partners' Capital

383,255


751,111

TOTAL LIABILITIES AND PARTNERS' CAPITAL

$

878,051


$

926,589

 

 

CNX MIDSTREAM PARTNERS LP

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)




Three Months Ended
 September 30,


2018


2017

Cash Flows from Operating Activities:





Net Income

$

33,575


$

33,468

Adjustments to reconcile net income to net cash provided by operating activities:





Depreciation expense and amortization of debt issuance costs

5,857


5,671

Unit-based compensation

506


249

Other

1


513

Changes in assets and liabilities:




Receivables — related party

(2,981)


6,628

Receivables — third party

361


(6,892)

Other current and non-current assets

(104)


(2,986)

Accounts payable and other accrued liabilities

(2,766)


1,771

Accounts payable — related party

1,217


(219)

Net Cash Provided by Operating Activities

35,666


38,203





Cash Flows from Investing Activities:




Capital expenditures

(44,241)


(11,490)

Proceeds from sale of assets


7,531

Net Cash Used in Investing Activities

(44,241)


(3,959)





Cash Flows from Financing Activities:




Distributions to general partner and noncontrolling interest holders, net


(11,573)

Vested units withheld for unitholders taxes

(1)


Quarterly distributions to unitholders

(24,176)


(19,698)

Net payment on unsecured $250.0 million credit facility


(4,000)

Net borrowings on secured $600.0 million credit facility

33,000


Debt issuance costs

(5)


Net Cash Provided by (Used in) Financing Activities

8,818


(35,271)





Net Increase (Decrease) in Cash

243


(1,027)

Cash at Beginning of Period

707


4,866

Cash at End of Period

$

950


$

3,839

 

CNX MIDSTREAM PARTNERS LP
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW
(in thousands)

Definition of 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 alternatives to net income, net cash provided by 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, cash interest expense and maintenance capital expenditures, each net to the Partnership. 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 release 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 that other companies may use.

The following table presents a reconciliation of the non-GAAP measures of 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
September 30,


Nine Months Ended
September 30,

(unaudited)


2018


2017


2018


2017

Net Income


$

33,575



$

33,468



$

97,562



$

96,460


Depreciation expense


5,306



5,629



16,605



16,975


Interest expense


7,255



1,197



16,863



3,359


EBITDA


46,136



40,294



131,030



116,794


Non-cash unit-based compensation expense


506



249



1,775



899


Loss on asset sales






2,501



3,914


Adjusted EBITDA


46,642



40,543



135,306



121,607


Less:









Net (loss) income attributable to noncontrolling interest


(64)



4,554



6,071



8,488


Depreciation expense attributable to noncontrolling interest


396



1,736



2,735



5,399


Other expenses attributable to noncontrolling interest


1,280



92



2,940



286


Loss on asset sales attributable to noncontrolling interest






2,375



3,718


Adjusted EBITDA Attributable to General and Limited Partner
Ownership Interest in CNX Midstream Partners LP

$

45,030



$

34,161



$

121,185



$

103,716


Less:  cash interest expense, net to the Partnership


5,593



1,154



13,181



3,233


Less:  maintenance capital expenditures, net to the Partnership


4,449



3,579



12,157



11,175


Distributable Cash Flow


$

34,988



$

29,428



$

95,847



$

89,308











Net Cash Provided by Operating Activities


$

35,666



$

38,203



$

131,207



$

114,637


Interest expense


7,255



1,197



16,863



3,359


Loss on asset sales






2,501



3,914


Other, including changes in working capital


3,721



1,143



(15,265)



(303)


Adjusted EBITDA


46,642



40,543



135,306



121,607


Less:









Net (loss) income attributable to noncontrolling interest


(64)



4,554



6,071



8,488


Depreciation expense attributable to noncontrolling interest


396



1,736



2,735



5,399


Other expenses attributable to noncontrolling interest


1,280



92



2,940



286


Loss on asset sales attributable to noncontrolling interest






2,375



3,718


Adjusted EBITDA Attributable to General and Limited Partner
Ownership Interest in CNX Midstream Partners LP

$

45,030



$

34,161



$

121,185



$

103,716


Less:  cash interest expense, net to the Partnership


5,593



1,154



13,181



3,233


Less:  maintenance capital expenditures, net to the Partnership


4,449



3,579



12,157



11,175


Distributable Cash Flow


$

34,988



$

29,428



$

95,847



$

89,308


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)

Q4 2017


Q1 2018


Q2 2018


Q3 2018


Twelve
Months
Ended
September
30, 2018

Net Income

$

37,602



$

33,705



$

30,282



$

33,575



$

135,164


Depreciation expense

5,717



5,856



5,443



5,306



22,322


Interest expense

1,201



2,489



7,119



7,255



18,064


EBITDA

44,520



42,050



42,844



46,136



175,550


Non-cash unit-based compensation expense

277



579



690



506



2,052


Loss (gain) on asset sales



2,755



(254)





2,501


Adjusted EBITDA

44,797



45,384



43,280



46,642



180,103


Less:










Net income (loss) attributable to noncontrolling interest

10,581



5,858



277



(64)



16,652


Depreciation expense attributable to noncontrolling interest

1,748



1,665



674



396



4,483


Other expenses attributable to noncontrolling interest

108



436



1,224



1,280



3,048


Loss (gain) on asset sales attributable to noncontrolling interest



2,617



(242)





2,375


Adjusted EBITDA Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP

$

32,360



$

34,808



$

41,347



$

45,030



$

153,545


Less:  cash interest expense, net to the Partnership

1,154



2,015



5,573



5,593



14,335


Less:  maintenance capital expenditures, net to the Partnership

3,483



3,583



4,125



4,449



15,640


Distributable Cash Flow

$

27,723



$

29,210



$

31,649



$

34,988



$

123,570












Net Cash Provided by Operating Activities

$

40,913



$

41,867



$

53,674



$

35,666



$

172,120


Interest expense

1,201



2,489



7,119



7,255



18,064


Loss (gain) on asset sales



2,755



(254)





2,501


Other, including changes in working capital

2,683



(1,727)



(17,259)



3,721



(12,582)


Adjusted EBITDA

44,797



45,384



43,280



46,642



180,103


Less:










Net income (loss) attributable to noncontrolling interest

10,581



5,858



277



(64)



16,652


Depreciation expense attributable to noncontrolling interest

1,748



1,665



674



396



4,483


Other expenses attributable to noncontrolling interest

108



436



1,224



1,280



3,048


Loss (gain) on asset sales attributable to noncontrolling interest



2,617



(242)





2,375


Adjusted EBITDA Attributable to General and Limited Partner Ownership Interest in CNX Midstream Partners LP

$

32,360



$

34,808



$

41,347



$

45,030



$

153,545


Less:  cash interest expense, net to the Partnership

1,154



2,015



5,573



5,593



14,335


Less:  maintenance capital expenditures, net to the Partnership

3,483



3,583



4,125



4,449



15,640


Distributable Cash Flow

$

27,723



$

29,210



$

31,649



$

34,988



$

123,570


Distributions Declared

$

21,489



$

22,699



$

24,176



$

25,678



$

94,042


Distribution Coverage Ratio - Declared

1.29

x


1.29

x


1.31

x


1.36

x


1.31

x











Distributable Cash Flow

$

27,723



$

29,210



$

31,649



$

34,988



$

123,570


Distributions Paid

$

20,573



$

21,489



$

22,699



$

24,176



$

88,937


Distribution Coverage Ratio - Paid

1.35

x


1.36

x


1.39

x


1.45

x


1.39

x

The following table presents a reconciliation of the non-GAAP measures of the Partnership's projected adjusted EBITDA and projected distributable cash flow with the most directly comparable GAAP financial measure, which is projected net income. The following projections represent the approximate midpoint of the announced full year 2018 expected guidance ranges of adjusted EBITDA ($160-$170 million) and full year distributable cash flow ($125-$135 million) attributable to the Partnership. CNX Midstream's financial guidance is based on numerous assumptions about future events and conditions and, therefore, could vary materially from actual results.  These estimates are meant to provide guidance only and are subject to revision for acquisitions or operating environment changes.

(unaudited) (in millions)

Forecast 2018
Estimate

Net Income

$

129


Depreciation expense

22


Interest expense

25


EBITDA

176


Non-cash unit-based compensation expense

2


Loss on asset sale

2


Adjusted EBITDA

180


Less:


Net income attributable to noncontrolling interest ("NCI")

6


Depreciation and other expenses attributable to noncontrolling interest

9


Adjusted EBITDA Attributable to General and Limited Partner
Ownership Interest in CNX Midstream Partners LP

$

165


Less:  cash interest expense, net to the Partnership

19


Less:  maintenance capital expenditures, net to the Partnership

16


Distributable Cash Flow

$

130


The Partnership is unable to project net cash provided by operating activities or provide the related reconciliation of projected net cash provided by operating activities to projected distributable cash flow, the most comparable financial measure calculated in accordance with GAAP, because net cash provided by operating activities includes the impact of changes in operating assets and liabilities. Changes in operating assets and liabilities relate to the timing of the Partnership's cash receipts and disbursements that may not relate to the period in which the operating activities occurred, and the Partnership is unable to project these timing differences with any reasonable degree of accuracy.

Development Companies Jointly Owned by CNX Gathering LLC and CNX Midstream Partners LP

Operating Income Summary, Selected Operating Statistics and Capital Investment

(in thousands)

(unaudited)




Three Months Ended September 30, 2018


 Development Company


Anchor


Additional


 TOTAL(*)

Income Summary






Revenue

$

58,457



$

2,511



$

60,968


Expenses

24,814



2,579



27,393


Net Income (Loss)

$

33,643



$

(68)



$

33,575








Operating Statistics - Gathered Volumes






Dry gas (BBtu/d)

689



3



692


Wet gas (BBtu/d)

536



87



623


Other (BBtu/d)

85





85


Total Gathered Volumes

1,310



90



1,400








Capital Investment






Maintenance capital

$

4,421



$

28



$

4,449


Expansion capital

37,826



1,966



39,792


Total Capital Investment

$

42,247



$

1,994



$

44,241








Capital Investment Net to CNX Midstream Partners LP






Maintenance capital

$

4,421



$

1



$

4,422


Expansion capital

37,826



98



37,924


Total Capital Investment Net to CNX Midstream Partners LP

$

42,247



$

99



$

42,346


 

(*)  On March 16, 2018, the Partnership, through its 100% interest in the Anchor Systems, consummated the Shirley-Penns Acquisition. Although the Partnership only held a 5% controlling interest in the earnings and production related to the Shirley-Penns System prior to March 16, 2018, consolidated activity is reflected in the tables above as if the Shirley-Penns Acquisition occurred on January 1, 2017 for comparability purposes.

 

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