Crestwood Equity Partners LP (NYSE:CEQP) (“Crestwood”) reported
today its financial and operating results for the three months and
year ended December 31, 2016.
Fourth Quarter and Full-Year 2016 Highlights1
- Fourth quarter 2016 net loss of $64.3
million, compared to a net loss of $1.4 billion in the fourth
quarter 2015; Full-year 2016 net loss of $192.1 million, compared
to a net loss of $2.3 billion in 20152
- Fourth quarter 2016 Adjusted EBITDA of
$125.6 million, compared to $118.9 million in the fourth quarter
2015; Full-year 2016 Adjusted EBITDA of $455.6 million, compared to
$527.4 million in 2015
- Fourth quarter 2016 distributable cash
flow to common unitholders of $77.8 million, compared to $71.9
million in fourth quarter 2015, resulting in a fourth quarter 2016
cash distribution coverage ratio of approximately 1.9x; Full-year
2016 distributable cash flow to common unitholders of $301.9
million, compared to $361.5 million in 2015, resulting in a
full-year 2016 cash distribution coverage ratio of approximately
1.8x
- Ended 2016 with approximately $1.6
billion in total debt and a 3.7x leverage ratio. Crestwood has
substantial liquidity available under its $1.5 billion revolver
with $77 million drawn as of December 31, 2016
- Declared fourth quarter 2016 cash
distribution of $0.60 per common unit, or $2.40 per common unit on
an annualized basis, paid on February 14, 2017 to unitholders of
record as of February 7, 2017
Management Commentary
“Despite record commodity price volatility and challenging
industry conditions in 2016, Crestwood delivered on all of the
strategic initiatives we laid out to investors at the beginning of
the year,” stated Robert G. Phillips, Chairman, President and Chief
Executive Officer of Crestwood’s general partner. “With strong
fourth quarter Adjusted EBITDA of $126 million, Crestwood delivered
full-year 2016 Adjusted EBITDA of $456 million and achieved the
upper end of our 2016 guidance range, resulting in a full-year
distribution coverage ratio of 1.8x and a year-end leverage ratio
of 3.7x. Also during 2016, we favorably resolved longstanding
producer issues on our Barnett and PRB Niobrara gathering systems,
reduced our outstanding debt by $1 billion, reduced operating and
G&A expenses by another 15%, adjusted our common unit
distribution to retain excess cash flow for reinvestment in new
projects during 2016 and 2017, and repositioned Crestwood for
long-term growth through the Nautilus system with Shell, and the
formation of strategic partnerships with Con Edison in the
Northeast and with First Reserve in the fast growing Delaware
Permian.”
Mr. Phillips continued, “Heading into 2017, our commercial teams
are having success expanding assets and services in three core
areas: Delaware Permian, Bakken and Marcellus. Our 2017 capital
budget is currently concentrated on Arrow system expansions and the
Nautilus build-out, and our teams continue to work on developing
several new capital projects that we expect to finalize and
announce later this year. Our 2017 adjusted cash flow guidance is
lower than 2016 due to a full-year deconsolidation of the
Stagecoach assets and contract expirations at the COLT Hub. As
such, we view 2017 as a transition year where system volumes
stabilize, key systems are expanded and overall volumes and cash
flow begin to pick up in the second half of the year with
increasing activity around our Delaware Permian, Bakken, Marcellus,
PRB Niobrara and Barnett systems.”
“We are very pleased with where Crestwood is positioned today
and are very confident in our ability to execute on our
conservative 2017 plan. The improved outlook in our base business,
along with 2017 expansion projects currently underway or in
development in the Delaware Permian and Bakken regions, and
longer-term projects around our Stagecoach assets, should allow
Crestwood to deliver increased cash flows, maintain prudent
leverage targets and potentially lead to a resumption of
distribution growth in 2018,” added Mr. Phillips.
Fourth Quarter and Full-Year 2016 Segment Results
Gathering and Processing (“G&P”) segment EBITDA totaled
$61.9 million in the fourth quarter 2016 compared to $8.2 million
in the fourth quarter 2015, which includes a $51.4 million equity
investment impairment and excludes non-cash goodwill impairments
and losses on long-lived assets in the fourth quarter 2015. During
the fourth quarter 2016, average natural gas gathering volumes were
883 million cubic feet per day (“MMcf/d”), crude oil gathering
volumes were 64 thousand barrels per day (“MBbls/d”), processing
volumes were 217 MMcf/d and compression volumes were 411 MMcf/d.
Segment EBITDA increased quarter-over-quarter as a result of a 5%
reduction in operating expenses and increased EBITDA generated by
the Arrow, Willow Lake and PRB Niobrara systems. Full-year G&P
segment EBITDA totaled $253.7 million compared to $211.4 million in
2015, excluding goodwill impairments and losses on long-lived
assets. For the full-year 2016 compared to 2015, the G&P
segment EBITDA increased primarily due to the equity investment
impairment described above.
Storage and Transportation (“S&T”) segment EBITDA totaled
$33.2 million in the fourth quarter 2016 compared to $29.2 million
in the fourth quarter 2015, excluding goodwill impairments and
gains on long-lived assets. Fourth quarter 2016 segment EBITDA
reflects Crestwood’s 35% share of Stagecoach JV earnings and the
recognition of $14.3 million of deficiency payments at the COLT
Hub. During the fourth quarter 2016, natural gas storage and
transportation volumes averaged 1.9 Bcf/d, compared to 2.0 Bcf/d in
the fourth quarter 2015, and 1.8 Bcf/d in the third quarter 2016.
Fourth quarter 2016 volumes increased 4% sequentially from the
third quarter 2016 primarily as a result of increased Northeast
storage withdrawals offset by lower volumes at the Tres Palacios
storage facility. Full-year S&T segment EBITDA totaled $154.2
million compared to $197.1 million in 2015, excluding goodwill
impairments and losses on long-lived assets. For the full year 2016
compared to 2015, the S&T segment reflects lower EBITDA
primarily as a result of seven months of deconsolidated operating
results related to the formation of the Stagecoach JV in June
2016.
Marketing, Supply and Logistics (“MS&L”) segment EBITDA
totaled $22.1 million in the fourth quarter 2016 compared to $28.2
million in the fourth quarter 2015. Both periods are exclusive of
non-cash goodwill impairments and losses on long-lived assets.
Fourth quarter 2016 segment EBITDA reflects lower activity in
Crestwood’s trucking and terminal business units, offset by higher
margins on NGL marketing volumes in the Northeast, due to more
normalized winter weather related demand, and record product sales
at US Salt due to capital investments in recent years. Full-year
MS&L segment EBITDA totaled $60.9 million compared to $89.8
million in 2015, excluding non-cash goodwill impairments and losses
on long-lived assets. For the full year 2016 compared to 2015, the
MS&L segment was impacted by significantly warmer than normal
winter weather during the first quarter 2016 and a full-year lower
contribution from the trucking business.
Combined O&M and G&A expenses for the full-year 2016,
net of unit based compensation and other significant costs,
decreased by $37.7 million, or 15%, compared to full-year 2015.
Crestwood exceeded its cost reduction goals in 2016 by reducing
employee costs, improving maintenance practices and reducing
expenses by utilizing strategic purchasing and professional service
agreements.
Business Update and Outlook
Bakken - Arrow Gathering System
On the Arrow system, average crude oil, natural gas and produced
water volumes increased 16%, 10% and 12%, respectively, in the
fourth quarter 2016 compared to volumes in the third quarter 2016
despite weather in the region that negatively impacted production
levels and typically strong year-end drilling and completions. In
2016, 48 wells were connected to the Arrow system and it is
expected that approximately 70 wells will be connected in 2017. In
2017, Crestwood plans to invest approximately $55 million on the
Arrow system to expand and upgrade water handling facilities,
increase natural gas gathering capacity and complete an
interconnect with the Dakota Access Pipeline (“DAPL”) which is
expected to provide Arrow producers with access to new crude oil
markets for Bakken production and potentially higher net-back
prices. Additionally, due to the expectation of increasing gas
volumes on the Arrow system, Crestwood is evaluating a long-term
gas processing solution that will lead to increased development
activity, enhanced flow assurance, reduced flaring and improved
producer natural gas net-backs across the Arrow system. This
project is not included in the current capital spending guidance
for 2017.
Delaware Basin Update
In September 2016, Crestwood contracted with a subsidiary of
Royal Dutch Shell (SWEPI) to construct, own and operate the
Nautilus natural gas gathering system in Loving and Ward counties,
Texas. The system is owned by the 50%/50% joint venture with First
Reserve, which expects to invest $90 million, $45 million net to
Crestwood, for the initial system build-out in 2017. Pipeline
engineering and right of way acquisition are substantially
complete, system construction is underway with a targeted
in-service date before July 1, 2017.
During the fourth quarter 2016, the Willow Lake system averaged
gathering volumes of 43 MMcf/d and processing volumes of 38 MMcf/d
compared to volumes of 21 MMcf/d and 11 MMcf/d, respectively, in
the fourth quarter 2015. Additional Wolfcamp and Bone Springs wells
are scheduled to be connected in 2017, bringing the Willow Lake
system and plant to full capacity. Crestwood continues to work with
area producers to evaluate 2017 and 2018 drilling plans which may
result in an expansion of the Willow Lake processing facility or
the construction of the previously proposed Delaware Ranch
processing plant. This project is not included in the current
capital spending guidance for 2017.
Crestwood extended and continues to operate on an exclusive
basis with an anchor shipper to develop the RIGS system located in
Reeves County, Texas in the Delaware Basin. The RIGS system,
located adjacent to the Nautilus system, will be included in the
joint venture with First Reserve. This project is not included in
the current capital spending guidance for 2017.
PRB Niobrara – Jackalope Joint
Venture
On January 1, 2017, Crestwood and Williams Partners L.P.
(50%/50% joint venture) executed a new 20-year gathering and
processing agreement with Chesapeake Energy. The new fixed-fee
contract, which replaces the original cost-of-service agreement,
includes minimum annual revenue guarantees over the next five to
seven years that will provide baseline cash flow to Crestwood.
During the fourth quarter 2016, Chesapeake resumed development
activity on the Jackalope system and is currently running two
drilling rigs. Crestwood expects to connect 20 to 25 wells in 2017.
No additional capital is required on the Jackalope system in 2017
as the system is currently running at 40% of total capacity.
SW Marcellus Gathering System
Crestwood has been notified that Antero Resources is completing
its 22 drilled-but-uncompleted wells on Crestwood’s eastern area of
dedication in 2017. Completion crews are currently onsite with four
wells expected online by the end of the first quarter 2017 and four
additional wells by the end of the second quarter 2017. The
remaining 14 wells are expected to be brought online beginning in
the second half of 2017.
Barnett Shale Gathering Systems
During the fourth quarter 2016, dry and rich gathering volumes
were flat quarter-over-quarter as BlueStone Natural Resources
implemented a workover program to offset natural field decline.
Recently, BlueStone completed seven drilled but uncompleted wells
and is expected to continue workover activity to offset natural
field decline on the Barnett system in 2017.
Stagecoach Gas Services – Con Edison Joint
Venture
Stagecoach Gas Services (50%/50% joint venture) in the fourth
quarter benefited from heavy storage withdrawals driven by colder
winter temperatures. These above average withdrawals reaffirm the
value of Stagecoach assets and their proximity to key East Coast
demand markets. Stagecoach is encouraged by the recent progress in
the Northeast regulatory environment enabling some previously
announced infrastructure projects in the basin to move forward. An
increase in long haul infrastructure projects is expected to
benefit Stagecoach’s base business and prospects for future growth
opportunities.
COLT Hub
On November 30, 2016, contracts for 60 MBbls/d of take-or-pay
rail loading volumes expired reducing the level of remaining
take-or-pay rail loading volumes to 40 MBbls/d at a weighted
average rail loading fee of approximately $1.60 per barrel. Rail
loading volumes for the month of January 2017 averaged
approximately 65 MBbls/d resulting in approximately $4.5 million of
monthly cash flow. Rail loading volumes are exceeding take-or-pay
contracts levels due to increased utilization from daily spot
customers and new short-term contracts. Crestwood connected the
COLT Hub to DAPL in the fourth quarter 2016, which is expected to
attract additional volumes to the facility after DAPL is placed
into service.
NGL Marketing & Logistics
In the fourth quarter 2016, Crestwood expanded its West Coast
NGL business with the acquisition of Turner Gas Company for
approximately $7 million. The acquisition included significant
long-term Western US propane customers, numerous Rocky Mountain
contracts for direct NGL supplies from processing plants and
fractionators, three rail-to-truck terminals located in Nevada and
Wyoming and a truck terminal in Salt Lake City, Utah. The acquired
assets will enhance Crestwood’s ability to provide supply,
transportation and storage services to wholesale customers in the
western and north central regions of the United States and augment
Crestwood’s West Coast refineries services business. Crestwood is
developing a greenfield rail-to-truck NGL terminal in Montgomery,
NY that will increase propane supply reliability across the
Northeast markets. The terminal, which is expected to be placed
into service in the summer of 2017, will be supported by product
controlled by Crestwood from multiple producers in the Marcellus
and Utica regions.
2017 Outlook
Based upon the business update and outlook noted above,
Crestwood’s 2017 guidance is provided below. These projections are
subject to risks and uncertainties as described in the
“Forward-Looking Statements” section at the end of this
release.
- Net income of $0 to $30 million
- Adjusted EBITDA of $360 million to $390
million
- Contribution by operating segment is
set forth below:
$US
millions
Adj. EBITDA Range Operating Segment
Low High Gathering & Processing $265 - $275
Storage & Transportation 80 - 90 Marketing, Supply &
Logistics 80 - 90 Less: Corporate G&A (65) (65)
FY 2017
Totals $360
-
$390
- Distributable cash flow of $200 million
to $230 million
- Cash distributions of $2.40 per common
unit resulting in full-year 2017 cash distribution coverage ratio
of approximately 1.2x to 1.4x
- Targeted 2017 leverage ratio between
4.0x and 4.5x
- Growth project capital spending and
joint venture contributions in the range of $130 million to $150
million
- Maintenance capital spending in the
range of $20 million to $25 million
Robert T. Halpin, Senior Vice President and Chief Financial
Officer, commented, “In 2017, Crestwood plans to fund all currently
budgeted capital requirements through our regional joint ventures
and ample liquidity under our revolving credit facility. Crestwood
remains committed to maintaining our targeted distribution coverage
and leverage goals as we execute our organic growth projects in the
Delaware Permian and Bakken, which will drive growing cash flows
and increased distribution coverage in 2018.”
Capitalization and Liquidity Update
As of December 31, 2016, Crestwood had approximately $1.6
billion of debt outstanding, comprised primarily of $1.5 billion of
fixed-rate senior notes and $77 million outstanding under its $1.5
billion revolving credit facility. Crestwood’s leverage ratio was
3.7x compared to the leverage covenant under its revolving credit
facility of 5.5x. Crestwood currently has 68.0 million preferred
units outstanding which pay an annual distribution of 9.25% payable
quarterly in cash or through the issuance of additional preferred
units.
Goodwill and Long-Lived Asset Charges
Generally Accepted Accounting Principles (“GAAP”) required
Crestwood to record the assets and goodwill in its storage and
transportation segment and marketing, supply and logistics segment
at fair value when the assets were acquired in 2013, and further
require subsequent analysis to assess the recoverability of
assigned values, including goodwill.
As a result of this analysis, Crestwood recorded goodwill and
long-lived asset impairments of $84 million during the fourth
quarter of 2016 ($228 million for full-year 2016), primarily
related to its COLT Hub and trucking assets, and impairments of
$1.3 billion during the fourth quarter of 2015 ($2.2 billion for
full-year 2015), primarily related to its COLT Hub, trucking and
Barnett shale assets. These impairments primarily resulted from
decreasing forecasted cash flows from these assets and increasing
the discount rate utilized in determining the fair value of these
assets when taking into consideration continued commodity price
weakness and its impact on the midstream industry and Crestwood’s
customers in these areas.
Upcoming Conference Participation
Crestwood Management will participate in the following MLP and
energy conferences during the first quarter 2017. Prior to the each
conference presentation materials will be posted to the Investors
section of Crestwood’s website at www.crestwoodlp.com.
- Barclays MLP Corporate Access Day on
February 28 – March 1, in New York, NY
- Morgan Stanley MLP/Diversified Natural
Gas, Utilities & Clean Tech Conference on February 28 – March
1, in New York, NY
- J.P. Morgan 2017 Global High Yield and
Leveraged Finance Conference on February 27 – March 1, in Miami,
FL
- Capital Link 4th Annual MLP Investing
Forum on March 2, in New York, NY
2017 K-1 Tax Packages
Crestwood’s K-1 tax packages are expected to be made available
online and mailed the week of Monday, March 6, 2017.
Earnings Conference Call Schedule
Management will host a conference call for investors and
analysts of Crestwood today at 9:00 a.m. Eastern Time (8:00 a.m.
Central Time) which will be broadcast live over the Internet.
Investors will be able to connect to the webcast via the
“Investors” page of Crestwood’s website at www.crestwoodlp.com.
Please log in at least 10 minutes in advance to register and
download any necessary software. A replay will be available shortly
after the call for 90 days.
Non-GAAP Financial Measures
Adjusted EBITDA and adjusted distributable cash flow are
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 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.
Forward-Looking Statements
This news release contains forward-looking statements within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995 and Section 21E of the Securities and Exchange Act of 1934.
The words “expects,” “believes,” anticipates,” “plans,” “will,”
“shall,” “estimates,” and similar expressions identify
forward-looking statements, which are generally not historical in
nature. Forward-looking statements are subject to risks and
uncertainties and are based on the beliefs and assumptions of
management, based on information currently available to them.
Although Crestwood believes that these forward-looking statements
are based on reasonable assumptions, it can give no assurance that
any such forward-looking statements will materialize. Important
factors that could cause actual results to differ materially from
those expressed in or implied from these forward-looking statements
include the risks and uncertainties described in Crestwood’s
reports filed with the Securities and Exchange Commission,
including its Annual Report on Form 10-K and its subsequent
reports, which are available through the SEC’s EDGAR system at
www.sec.gov and on our website. Readers are cautioned not to place
undue reliance on forward-looking statements, which reflect
management’s view only as of the date made, and Crestwood assumes
no obligation to update these forward-looking statements.
About Crestwood Equity Partners LP
Houston, Texas, based Crestwood Equity Partners LP (NYSE: CEQP)
is a master limited partnership that owns and operates midstream
businesses in multiple unconventional shale resource plays across
the United States. Crestwood Equity is engaged in the gathering,
processing, treating, compression, storage and transportation of
natural gas; storage, transportation, terminalling, and marketing
of NGLs; and gathering, storage, terminalling and marketing of
crude oil.
1 Please see non-GAAP reconciliation table included at the end
of the press release. Financial results reflect Crestwood’s
contribution of its Northeast Storage and Transportation assets to
Stagecoach Gas Services JV (“Stagecoach”) and its 35% share of
Stagecoach’s earnings beginning June 2016.
2 Net loss for the fourth quarter 2016 and 2015 includes $228.2
million and $2.2 billion of non-cash goodwill and long-lived asset
impairment charges resulting from decreasing cash flows due to the
weakness in commodity prices and increased discount rates used to
determine the fair value of its assets during those periods.
CRESTWOOD EQUITY PARTNERS LP
Consolidated Statements of
Operations
(in millions, except unit and per unit
data)
(unaudited)
Three Months EndedDecember
31,
Year Ended December 31, 2016
2015 2016 2015 Revenues:
Gathering and processing $ 330.6 $ 327.4 $ 1,116.2 $ 1,377.1
Storage and transportation 33.8 65.2 165.3 266.3 Marketing, supply
and logistics 430.1 235.6 1,236.4 985.5 Related party 0.5
0.9 2.6 3.9 795.0 629.1 2,520.5 2,632.8 Costs
of product/services sold: Gathering and processing 280.8 255.6
899.3 1,075.0 Storage and transportation 0.2 4.3 5.1 20.1
Marketing, supply and logistics 360.0 179.5 1,003.0 759.5 Related
party 4.0 5.7 17.7 28.9 645.0 445.1
1,925.1 1,883.5 Expenses: Operations and maintenance 38.2 46.4
158.1 190.2 General and administrative 18.0 25.4 88.2 116.3
Depreciation, amortization and accretion 52.6 75.6
229.6 300.1 108.8 147.4 475.9 606.6
Other operating expense:
Loss on long-lived assets, net (30.8 ) (817.3 ) (65.6 ) (821.2 )
Goodwill impairment (52.9 ) (515.4 ) (162.6 ) (1,406.3 )
Operating loss
(42.5 ) (1,296.1 ) (108.7 ) (2,084.8 )
Earnings (loss) from unconsolidated
affiliates, net
5.4 (72.0 ) 31.5 (60.8 ) Interest and debt expense, net (27.2 )
(35.4 ) (125.1 ) (140.1 ) Gain (loss) on
modification/extinguishment of debt
-
(0.2 ) 10.0 (20.0 ) Other income, net 0.1 0.1 0.5
0.6 Loss before income taxes (64.2 ) (1,403.6 )
(191.8 ) (2,305.1 ) (Provision) benefit for income taxes (0.1 ) 1.2
(0.3 ) 1.4 Net loss (64.3 ) (1,402.4 ) (192.1 )
(2,303.7 ) Net income (loss) attributable to non-controlling
partners 6.2 5.9 24.2 (636.8 ) Net loss
attributable to Crestwood Equity Partners LP $ (70.5 ) $ (1,408.3 )
$ (216.3 ) $ (1,666.9 ) Net income attributable to preferred units
12.1 6.2 28.7 6.2 Net loss attributable
to partners $ (82.6 ) $ (1,414.5 ) $ (245.0 ) $ (1,673.1 )
Net loss per limited partner unit: Basic and diluted $ (1.20
) $ (20.77 ) $ (3.55 ) $ (54.00 ) Weighted-average limited
partners’ units outstanding (in thousands): Basic and diluted
69,060 68,119 69,017 30,983
CRESTWOOD EQUITY PARTNERS LP
Selected Balance Sheet Data
(in millions)
(unaudited)
December 31, 2016 2015
Cash
$
1.6
$ 0.5
Outstanding
debt:
Crestwood Equity Partners LP Other $
-
$ 0.2 Crestwood Midstream Partners LP (a) Revolving Credit Facility
$ 77.0 $ 735.0 Senior Notes 1,475.2 1,800.0 Other 5.5
8.6 Subtotal 1,557.7 2,543.6 Less: deferred financing costs, net
34.0 40.9 Total debt $ 1,523.7 $ 2,502.9
Total partners' capital $ 2,539.0 $ 2,946.9
Crestwood Equity
Partners LP partners' capital
Common units outstanding 69.5 68.6
(a) CEQP and its subsidiaries do not
provide credit support or guarantee any amounts outstanding under
the credit facility or senior notes of Crestwood Midstream.
CRESTWOOD EQUITY PARTNERS LP
Reconciliation of Non-GAAP Financial
Measures
(in millions)
(unaudited)
Three Months EndedDecember
31,
Year Ended December 31, 2016
2015 2016 2015
EBITDA
Net loss $ (64.3 ) $ (1,402.4 ) $ (192.1 ) $ (2,303.7 ) Interest
and debt expense, net 27.2 35.4 125.1 140.1 (Gain) loss on
modification/extinguishment of debt
-
0.2 (10.0 ) 20.0 Provision (benefit) for income taxes 0.1 (1.2 )
0.3 (1.4 ) Depreciation, amortization and accretion 52.6
75.6 229.6 300.1
EBITDA (a)
$ 15.6 $ (1,292.4 ) $
152.9 $ (1,844.9 ) Significant items
impacting EBITDA: Unit-based compensation charges 5.8 4.1 19.2 19.7
Loss on long-lived assets, net 30.8 817.3 65.6 821.2 Goodwill
impairment 52.9 515.4 162.6 1,406.3 Earnings (loss) from
unconsolidated affiliates, net (5.4 ) 72.0 (31.5 ) 60.8 Adjusted
EBITDA from unconsolidated affiliates, net 19.7 6.9 61.1 25.3
Change in fair value of commodity inventory-related derivative
contracts 5.8 (5.3 ) 14.1 5.4 Significant transaction and
environmental related costs and other items 0.4 0.9
11.6 33.6
Adjusted EBITDA (a) $
125.6 $ 118.9 $ 455.6 $
527.4
Distributable
Cash Flow
Adjusted EBITDA (a)
$ 125.6 $ 118.9 $ 455.6 $ 527.4 Cash interest expense (b) (25.2 )
(33.5 ) (117.7 ) (132.3 ) Maintenance capital expenditures (c) (4.4
) (10.0 ) (13.3 ) (23.4 ) (Provision) benefit for income taxes (0.1
) 1.2 (0.3 ) 1.4 Deficiency payments (14.3 ) (0.9 ) (7.2 ) 3.6
Distributable cash flow attributable to CEQP 81.6
75.7 317.1 376.7 Distributions to Niobrara Preferred (3.8 ) (3.8 )
(15.2 ) (15.2 )
Distributable cash flow attributable to CEQP
common (d) $ 77.8 $
71.9 $ 301.9 $
361.5 (a)
EBITDA is defined as income before income
taxes, plus debt-related costs (net interest and debt expense and
gain or loss on modification/extinguishment of debt) and
depreciation, amortization and accretion expense. Adjusted EBITDA
considers the adjusted earnings impact of our unconsolidated
affiliates by adjusting our equity earnings or losses from our
unconsolidated affiliates to reflect our proportionate share (based
on the distribution percentage) of their EBITDA, excluding
impairments. Adjusted EBITDA also considers the impact of certain
significant items, such as unit-based compensation charges, gains
and losses on long-lived assets, impairments of long-lived assets
and goodwill, gains and losses on acquisition-related
contingencies, third party costs incurred related to potential and
completed acquisitions, certain environmental remediation costs,
certain costs related to our historical cost savings initiatives,
the change in fair value of commodity inventory-related derivative
contracts, and other transactions identified in a specific
reporting period. The change in fair value of commodity
inventory-related derivative contracts is considered in determining
Adjusted EBITDA given that the timing of recognizing gains and
losses on these derivative contracts differs from the recognition
of revenue for the related underlying sale of inventory that these
derivatives relate to. Changes in the fair value of other
derivative contracts is not considered in determining Adjusted
EBITDA given the relatively short-term nature of those derivative
contracts. EBITDA and Adjusted EBITDA are not measures calculated
in accordance with GAAP, as they do not include deductions for
items such as depreciation, amortization and accretion, interest
and income taxes, which are necessary to maintain our business.
EBITDA and Adjusted EBITDA should not be considered an alternative
to net income, operating cash flow or any other measure of
financial performance presented in accordance with GAAP. EBITDA and
Adjusted EBITDA calculations may vary among entities, so our
computation may not be comparable to measures used by other
companies.
(b) Cash interest expense less amortization of deferred financing
costs plus bond premium amortization. (c) Maintenance capital
expenditures are defined as those capital expenditures which do not
increase operating capacity or revenues from existing levels. (d)
Distributable cash flow is defined as Adjusted EBITDA, less cash
interest expense, maintenance capital expenditures, income taxes
and deficiency payments (primarily related to deferred revenue).
Distributable cash flow should not be considered an alternative to
cash flows from operating activities or any other measure of
financial performance calculated in accordance with GAAP as those
items are used to measure operating performance, liquidity, or the
ability to service debt obligations. We believe that distributable
cash flow provides additional information for evaluating our
ability to declare and pay distributions to unitholders.
Distributable cash flow, as we define it, may not be comparable to
distributable cash flow or similarly titled measures used by other
corporations and partnerships.
CRESTWOOD EQUITY PARTNERS
LP
Reconciliation of Non-GAAP Financial
Measures
(in millions)
(unaudited)
Three Months EndedDecember
31,
Year Ended December 31, 2016
2015 2016 2015
EBITDA
Net cash provided by operating activities $ 96.4 $ 139.1 $ 340.9 $
440.7 Net changes in operating assets and liabilities (11.1 ) (52.4
) (57.9 ) (98.0 ) Amortization of debt-related deferred costs,
discounts and premiums (1.8 ) (2.3 ) (6.9 ) (8.9 ) Interest and
debt expense, net 27.2 35.4 125.1 140.1 Market adjustment on
interest rate swap
-
-
-
0.5 Unit-based compensation charges (5.8 ) (4.1 ) (19.2 ) (19.7 )
Loss on long-lived assets, net (30.8 ) (817.3 ) (65.6 ) (821.2 )
Goodwill impairment (52.9 ) (515.4 ) (162.6 ) (1,406.3 )
Earnings (loss) from unconsolidated
affiliates, net, adjusted for cash distributions
(6.3 ) (75.2 ) (2.4 ) (73.6 ) Deferred income taxes 2.2 1.1 3.1 3.6
Provision (benefit) for income taxes 0.1 (1.2 ) 0.3 (1.4 ) Other
non-cash expense (1.6 ) (0.1 ) (1.9 ) (0.7 )
EBITDA (a)
$ 15.6 $ (1,292.4 ) $
152.9 $ (1,844.9 ) Unit-based
compensation charges 5.8 4.1 19.2 19.7 Loss on long-lived assets,
net 30.8 817.3 65.6 821.2 Goodwill impairment 52.9 515.4 162.6
1,406.3 (Earnings) loss from unconsolidated affiliates, net (5.4 )
72.0 (31.5 ) 60.8 Adjusted EBITDA from unconsolidated affiliates,
net 19.7 6.9 61.1 25.3 Change in fair value of commodity
inventory-related derivative contracts 5.8 (5.3 ) 14.1 5.4
Significant transaction and environmental related costs and other
items 0.4 0.9 11.6 33.6
Adjusted
EBITDA (a) $ 125.6 $
118.9 $ 455.6 $
527.4 (a) EBITDA is defined as income before
income taxes, plus debt-related costs (net interest and debt
expense and gain or loss on modification/extinguishment of debt)
and depreciation, amortization and accretion expense. Adjusted
EBITDA considers the adjusted earnings impact of our unconsolidated
affiliates by adjusting our equity earnings or losses from our
unconsolidated affiliates to reflect our proportionate share (based
on the distribution percentage) of their EBITDA, excluding
impairments. Adjusted EBITDA also considers the impact of certain
significant items, such as unit-based compensation charges, gains
and losses on long-lived assets, impairments of long-lived assets
and goodwill, gains and losses on acquisition-related
contingencies, third party costs incurred related to potential and
completed acquisitions, certain environmental remediation costs,
certain costs related to our historical cost savings initiatives,
the change in fair value of commodity inventory-related derivative
contracts, and other transactions identified in a specific
reporting period. The change in fair value of commodity
inventory-related derivative contracts is considered in determining
Adjusted EBITDA given that the timing of recognizing gains and
losses on these derivative contracts differs from the recognition
of revenue for the related underlying sale of inventory that these
derivatives relate to. Changes in the fair value of other
derivative contracts is not considered in determining Adjusted
EBITDA given the relatively short-term nature of those derivative
contracts. EBITDA and Adjusted EBITDA are not measures calculated
in accordance with GAAP, as they do not include deductions for
items such as depreciation, amortization and accretion, interest
and income taxes, which are necessary to maintain our business.
EBITDA and Adjusted EBITDA should not be considered an alternative
to net income, operating cash flow or any other measure of
financial performance presented in accordance with GAAP. EBITDA and
Adjusted EBITDA calculations may vary among entities, so our
computation may not be comparable to measures used by other
companies.
CRESTWOOD EQUITY PARTNERS LP
Segment Data
(in millions)
(unaudited)
Three Months EndedDecember
31,
Year Ended December 31, 2016
2015 2016 2015
Gathering and
Processing
Revenues $ 363.8 $ 340.5 $ 1,227.4 $ 1,447.7 Costs of
product/services sold 284.8 261.3 917.0 1,103.9 Operations and
maintenance expense 20.9 22.0 77.0 89.0 Loss on long-lived assets,
net
-
(786.1 ) (2.0 ) (787.3 ) Goodwill impairment
-
(69.9 ) (8.6 ) (329.7 )
Earnings (loss) from unconsolidated
affiliates
3.8 (49.0 ) 20.3 (43.4 ) EBITDA $ 61.9 $ (847.8 ) $
243.1 $ (905.6 )
Storage and
Transportation
Revenues $ 35.0 $ 65.2 $
169.5
$ 266.3 Costs of product/services sold 0.2 4.3 5.1 20.1 Operations
and maintenance expense 3.2 8.7 21.4 31.7 Gain (loss) on long-lived
assets 0.6
-
(32.2 ) (1.6 ) Goodwill impairment (31.2 ) (275.4 ) (44.9 ) (623.4
) Earnings (loss) from unconsolidated affiliates 1.6 (23.0 )
11.2 (17.4 ) EBITDA $ 2.6 $ (246.2 ) $ 77.1 $ (427.9 )
Marketing, Supply
and Logistics
Revenues $ 396.2 $ 168.9 $ 1,123.6 $ 918.8 Costs of
product/services sold 360.0 125.0 1,003.0 759.5 Operations and
maintenance expense 14.1 15.7 59.7 69.5 Loss on long-lived assets
(31.4 ) (31.2 ) (31.4 ) (32.3 ) Goodwill impairment (21.7 ) (170.1
) (109.1 ) (453.2 ) EBITDA $ (31.0 ) $ (173.1 ) $ (79.6 ) $ (395.7
) Total Segment EBITDA $ 33.5 $ (1,267.1 ) $ 240.6 $
(1,729.2 ) Corporate (17.9 ) (25.3 ) (87.7 ) (115.7 )
EBITDA
$ 15.6 $ (1,292.4 ) $ 152.9 $ (1,844.9 )
CRESTWOOD EQUITY PARTNERS LP
Operating Statistics
(unaudited)
Three Months EndedDecember
31,
Year Ended December 31, 2016
2015 2016 2015
Gathering and
Processing (MMcf/d)
Arrow 45.2 43.7 43.3 43.0 Marcellus 362.1 431.7 406.7 550.1
Barnett rich 126.8 114.6 118.6 128.0 Barnett dry 192.8 194.6 192.3
213.3 Fayetteville 51.3 66.4 55.8 72.5 PRB Niobrara - Jackalope Gas
Gathering (a) 49.0 78.1 60.3 79.7 Other 55.8 50.7
59.5 49.7 Total gathering volumes 883.0 979.8 936.5
1,136.3 Processing volumes 217.0 220.6 218.8 216.5 Compression
volumes 410.6 459.7 463.0 579.0 Arrow Midstream Crude oil (MBbls/d)
64.1 69.9 61.6 65.7 Water (MBbls/d) 30.0 27.9 27.8 26.4
Storage and
Transportation
Northeast Storage - firm contracted capacity (Bcf) (a) 35.8 34.4
35.5 34.4 % of operational capacity contracted 100 % 99 % 100 % 99
% Firm storage services (MMcf/d) (a) 242.3 277.9 215.5 336.7
Interruptible storage services (MMcf/d) (a) 1.4 17.6 11.5 71.2
Northeast Transportation - firm contracted capacity (MMcf/d) (a)
1,438.4 1,265.0 1,385.2 1,214.8 % of operational capacity
contracted 81 % 87 % 81 % 87 % Firm services (MMcf/d) (a) 1,316.0
1,139.7 1,154.4 1,209.7 Interruptible services (MMcf/d) (a) 69.7
199.8 101.3 190.2 Gulf Coast Storage - firm contracted capacity
(Bcf) (a) 30.4 28.9 30.1 26.4 % of operational capacity contracted
79 % 75 % 78 % 69 % Firm storage services (MMcf/d) (a) 227.8 196.1
193.1 161.2
Interruptible storage services (MMcf/d)
(a)
26.8 161.7 60.9 137.3 COLT Hub Rail loading (MBbls/d) 84.8 107.4
89.6 117.3 Connector pipeline (MBbls/d) (b) 9.1 13.1 11.4 7.5
Marketing, Supply
and Logistics
Crude barrels trucked (MBbls/d) 4.3 16.0 8.4 24.1 NGL Operations
Supply & Logistics volumes sold (MBbls/d) 94.1 81.2 87.4 95.4
West Coast volumes sold or processed (MBbls/d) 20.7 23.2 22.0 26.3
NGL volumes trucked (MBbls/d) 64.4 65.3 52.4 64.0 (a)
Represents 50% owned joint venture, operational data reported at
100%. (b) Represents only throughput leaving the terminal. Total
connector pipeline throughput, including receivables was 34.9
MBbls/d and 40.3 MBbls/d for the three and twelve months ended
December 31, 2016, and 38.2 MBbls/d and 33.7 MBbls/d for the three
and twelve months ended December 31, 2015.
CRESTWOOD
EQUITY PARTNERS LP
Full Year 2017 Adjusted EBITDA and
Distributable Cash Flow Guidance
Reconciliation to Net Income
(in millions)
(unaudited)
Expected 2017 Range Low - High Net
income $0 - $30 Interest and debt expense, net 110 Depreciation,
amortization and accretion 195 Unit-based compensation charges 25
Earnings from unconsolidated affiliates (50) - (55) Adjusted EBITDA
from unconsolidated affiliates 80 - 85
Adjusted EBITDA
$360 - $390 Cash interest expense (a) (105)
Maintenance capital expenditures (b) (20) - (25) Cash distributions
to preferred unitholders (c) (30)
Distributable cash flow
attributable to CEQP (d) $200 - $230 (a)
Cash interest expense less amortization of deferred financing costs
plus bond premium amortization plus or minus fair value adjustment
of interest rate swaps. (b) Maintenance capital expenditures are
defined as those capital expenditures which do not increase
operating capacity or revenues from existing levels. (c) Includes
cash distributions to Crestwood Niobrara preferred unitholders and
cash distributions to Class A preferred unit holders. (d)
Distributable cash flow is defined as Adjusted EBITDA, less cash
interest expense, maintenance capital expenditures, income taxes,
deficiency payments (primarily related to deferred revenue), and
public Crestwood Midstream LP unitholders interest in CMLP
distributable cash flow. Distributable cash flow should not be
considered an alternative to cash flows from operating activities
or any other measure of financial performance calculated in
accordance with generally accepted accounting principles as those
items are used to measure operating performance, liquidity, or the
ability to service debt obligations. We believe that distributable
cash flow provides additional information for evaluating our
ability to declare and pay distributions to unitholders.
Distributable cash flow, as we define it, may not be comparable to
distributable cash flow or similarly titled measures used by other
corporations and partnerships.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170221005602/en/
Crestwood Equity Partners LPInvestor ContactJosh
Wannarka, 713-380-3081Vice President, Investor
Relationsjosh.wannarka@crestwoodlp.com
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