Sanchez Midstream Partners LP (NYSE American:SNMP) (“SNMP” or the
“Partnership”) today reported third quarter 2017 results.
Highlights from the report include:
- The Partnership has declared a third quarter 2017 cash
distribution on common units of $0.4508 per unit ($1.8032 per unit
annualized), which represents the eighth consecutive 1.5 percent
increase since the Partnership’s third quarter 2015 cash
distribution on common units, for a 6.2 percent annualized rate of
increase;
- The SECO Pipeline was completed in August, with a partial
quarter of operations reflected in third quarter 2017 results;
- The Raptor Gas Processing Facility expansion project, completed
after the end of the third quarter 2017, recently increased the
facility’s processing capacity from 200 million cubic feet per day
(‘’MMcfe/d”) of natural gas to 260 MMcfe/d;
- With the SECO Pipeline and the Raptor Gas Processing Facility
expansion projects now complete, the Partnership has funded the
vast majority of its 2017 capital spending and expects to generate
free cash flow in the fourth quarter 2017;
- In addition to closing the sale of its remaining operated
Oklahoma production assets in July 2017 for approximately $5.5
million, the Partnership closed the sale of non-core, non-operated
production assets in Texas for approximately $6.3 million on Nov.
13, 2017;
- The Partnership reported net income of $3.8 million for the
third quarter 2017, which compares to net income of $0.6 million in
the second quarter 2017, and Adjusted EBITDA (a non-GAAP financial
measure) of $17.8 million for the third quarter 2017, up
approximately 16 percent when compared to the second quarter 2017;
and
- The Partnership’s third quarter 2017 cash available for
distribution was $6.4 million.
MANAGEMENT COMMENTARY“The
Partnership’s third quarter 2017 results reflect the successful
culmination of years of strategic planning and investment in South
Texas,” said Gerry Willinger, Chief Executive Officer of the
general partner of SNMP. “The Raptor Gas Processing Facility,
a 50 percent joint venture with Targa Resources Corp. (“Targa”)
that was conceived in 2015, had its first full quarter of
operations and was consistently operating at or near its capacity
by the end of the quarter. During the third quarter 2017, we
also completed construction of our wholly owned SECO Pipeline,
which started delivering dry gas to multiple markets in South Texas
beginning in August 2017. These midstream assets, along with
the Carnero Gathering Line and Western Catarina Midstream system,
provide a stable stream of fee-based cash flows to the Partnership,
form the basis of our midstream growth strategy in South Texas, and
complete our transformation to a midstream-focused master limited
partnership.
“As Targa recently announced, expansion of the
Raptor Gas Processing Facility from 200 MMcfe/d to 260 MMcfe/d of
processing capacity was completed after the end of the third
quarter 2017. We anticipate that the utilization of the
higher capacity will positively impact the Partnership’s fourth
quarter 2017 operating results. More importantly, with the
SECO Pipeline and the Raptor Gas Processing Facility expansion
project now complete, the Partnership has funded the vast majority
of its 2017 capital spending and expects to generate free cash flow
in the fourth quarter 2017.
“In conjunction with our focus on midstream
activities, we continued to divest certain of our non-core
production assets in the third quarter 2017. In July 2017, we
closed the sale of our remaining operated Oklahoma production
assets for approximately $5.5 million. More recently, on Nov.
13, 2017, we closed the sale of certain non-operated production
assets in Texas for approximately $6.3 million. In
anticipation of closing the latest sale, we repositioned certain of
our oil and natural gas hedges during the third quarter 2017 and,
in the process, received $3.6 million in net proceeds from the
counterparties on those hedges. With the increase in
operating margins from midstream activities, we anticipate that the
asset sales will have no impact on our borrowing capacity, which is
currently based on lender commitments totaling $200 million.
“Given the transitional nature of our business
in the early part of this year, during which a number of key
projects were in various phases of completion, we fully anticipated
the first half of 2017 would be challenging in terms of our use of
capital resources and financial results. While we have
successfully completed several projects and divestitures since the
middle of this year, the third quarter 2017 was not without its
challenges. Operationally, we faced unprecedented levels of
rainfall and flooding along the Gulf Coast, due to Hurricane
Harvey, as well as major flooding from localized storms in the
Western Eagle Ford late in the quarter.
Notwithstanding, since the first quarter of 2017 we have grown our
quarterly Adjusted EBITDA by approximately 68 percent, or roughly
$7.2 million. With the additional cash flow expected
from the Raptor Gas Processing Facility expansion and SECO
Pipeline, we currently forecast a distribution coverage ratio in
excess of 1.0x in the fourth quarter 2017.
“Additionally, our South Texas assets are
strategically positioned to capture upside related to production
from the Comanche and Catarina assets operated by Sanchez Energy
Corporation (“Sanchez Energy”), and we anticipate greater volumes
through our midstream facilities in the years to come. We
continue to evaluate opportunities to secure additional midstream
capacity to accommodate production from
the Comanche asset, and look forward to growing along
with Sanchez Energy as they continue to execute their
strategy in the Western Eagle Ford.”
OPERATING AND FINANCIAL
RESULTSThe Partnership’s revenue totaled $18.6 million
during the third quarter 2017. Included in total revenue for
the third quarter 2017 is revenue from the Western Catarina
Midstream system of $14.2 million and $6.0 million from production
activities. The balance of the Partnership’s third quarter
2017 total revenue came from hedge settlements ($5.3 million, which
includes $3.6 million related to hedge repositioning in August
2017) and a loss on mark-to-market activities ($7.0 million), which
is a non-cash item.
Total operating expenses during the third
quarter 2017 totaled $15.5 million, which includes $2.8 million in
operating expenses related to the Western Catarina Midstream system
and $1.9 million in production-related operating expenses and
taxes. Third quarter 2017 general and administrative and
unit based compensation expenses of $6.2 million
include $2.1 million in unit-based asset management fees,
which is a non-cash item.
On a GAAP basis, the Partnership recorded net
income of $3.8 million for the third quarter 2017, which compares
to net income of $0.6 million in the second quarter 2017.
Adjusted EBITDA (a non-GAAP financial measure) for the third
quarter 2017 was approximately $17.8 million, which is up
approximately 16 percent when compared to the second quarter 2017
Adjusted EBITDA of $15.3 million. The Partnership’s
calculation of Adjusted EBITDA is discussed in further detail
below.
LIQUIDITY UPDATEAs of Sept. 30,
2017, the Partnership had $189 million in debt outstanding under
its credit facility, which had a borrowing base of $215.6 million
and an elected commitment amount of $200 million. With the
increase in operating margins from midstream activities, the
Partnership anticipates that its sale of operated and non-operated
production assets during the quarter will have no impact on its
borrowing capacity, which is currently based on lender commitments
totaling $200 million.
The Partnership had approximately $0.4 million
in cash and cash equivalents at Sept. 30, 2017.
HEDGE UPDATEFor the
period Oct. 1, 2017 through Dec. 31, 2017, the
Partnership has hedged approximately 0.12 billion cubic feet of its
natural gas production at an effective NYMEX fixed price of
approximately $3.79 per million British thermal units and
approximately 65 thousand barrels of its crude oil production at an
effective NYMEX fixed price of approximately $59.83 per
barrel. The Partnership has additional hedges covering a
portion of its production in 2018 through 2020. More
information on the Partnership’s hedge positions can be found in
the SNMP Investor Presentation posted at
www.sanchezmidstream.com.
COMMON UNITSThe Partnership had
14,778,192 common units issued and outstanding as of Nov. 14,
2017.
DISTRIBUTIONSOn Nov. 7, 2017,
the Partnership declared a third quarter 2017 cash distribution on
its common units of $0.4508 per unit ($1.8032 per unit annualized),
which represents the eighth consecutive 1.5 percent increase since
the Partnership’s third quarter 2015 cash distribution on common
units, for a 6.2 percent annualized rate of increase. The
Partnership also declared a third quarter 2017 distribution to the
holders of its Class B preferred units equal to $0.28225 per Class
B preferred unit.
Based on third quarter 2017 Adjusted EBITDA of
$17.8 million, cash interest expense of $2.0 million, maintenance
capital of $0.6 million, and $8.8 million in preferred
distributions, the Partnership generated approximately $6.4 million
in cash available for distribution during the third quarter
2017.
CONFERENCE CALL INFORMATIONThe
Partnership will host a conference call at 10:00 a.m. Central Time
(11:00 a.m. Eastern Time) on Tuesday, Nov. 14, 2017 to discuss
third quarter 2017 results.
To participate in the conference call, analysts,
investors, media and the public in the U.S. may dial (844) 824-3837
shortly before 10:00 a.m. Central Time (11:00 a.m. Eastern
Time). The international phone number is (412)
317-5161. Callers should request the “Sanchez Midstream
Partners Third Quarter 2017 Conference Call” once reaching the
operator.
A live audio webcast of the conference call and
the earnings release will be available on the Partnership’s website
(www.sanchezmidstream.com) under the Investor Relations page.
A replay will be available approximately one hour after the
call through Nov. 21, 2017, at 10:59 p.m. Central
Time (11:59 p.m. Eastern Time). The replay may be accessed by
dialing (844) 512-2921 (U.S.) or (412) 317-6671 (International),
and referencing the replay passcode: 10113660.
ABOUT THE PARTNERSHIPSanchez
Midstream Partners LP (NYSE American:SNMP) is a growth-oriented
publicly-traded limited partnership focused on the acquisition,
development, ownership and operation of midstream assets in North
America. The Partnership has ownership stakes in oil and
natural gas gathering systems, natural gas pipelines, and a natural
gas processing facility, all located in the Western Eagle Ford in
South Texas.
ADDITIONAL
INFORMATIONAdditional information about SNMP can be found
in the Partnership’s documents on file with the U.S. Securities and
Exchange Commission (www.sec.gov) and in the “Investor
Presentation” available on the Partnership’s website
(www.sanchezmidstream.com).
NON-GAAP MEASURESWe present
Adjusted EBITDA and Cash available for distribution, non-GAAP
financial measures, in addition to our reported net income (loss),
the most comparable GAAP financial measure, in this news
release.
Adjusted EBITDA is a non-GAAP financial measure
that is defined as net income (loss) adjusted by: (i) interest
(income) expense, net, which includes interest expense, interest
expense net (gain) loss on interest rate derivative contracts, and
interest (income); (ii) income tax expense (benefit);
(iii) depreciation, depletion and amortization;
(iv) asset impairments; (v) accretion expense;
(vi) (gain) loss on sale of assets; (vii) unit-based
compensation programs; (viii) unit-based asset management
fees; (ix) distributions in excess of equity earnings;
(x) (gain) loss on mark-to-market activities; (xi) commodity
derivatives settlements applied to future positions;
(xii) (gain) loss on embedded derivatives; and (xiii)
acquisition and divestiture costs. For a reconciliation of
Adjusted EBITDA to Net Income (Loss), the most directly comparable
GAAP measure, see the tables at the end of this release. Cash
available for distribution is defined as Adjusted EBITDA less cash
interest expense; distributions on preferred units; and maintenance
capital. For a reconciliation of Cash available for
distribution to Net Income (Loss), the most directly comparable
GAAP measure, see the tables at the end of this release.
Adjusted EBITDA and Cash available for
distribution are significant performance metrics used by our
management to indicate (prior to the establishment of any cash
reserves by the board of directors of our general partner) the
distributions that we would expect to pay to our unitholders.
Specifically, these financial measures indicate to investors
whether or not we are generating cash flow at a level that can
sustain or support a quarterly distribution or any increase in our
quarterly distribution rates. Adjusted EBITDA and Cash available
for distribution are also used as a quantitative standard by our
management and by external users of our financial statements such
as investors, research analysts, our lenders and others to assess:
(i) the financial performance of our assets without regard to
financing methods, capital structure or historical cost basis;
(ii) the ability of our assets to generate cash sufficient to
pay interest costs and support our indebtedness; and (iii) our
operating performance and return on capital as compared to those of
other companies in our industry, without regard to financing or
capital structure.
We believe that the presentation of Adjusted
EBITDA and Cash available for distribution provides useful
information to investors in assessing our financial condition and
results of operations. The GAAP measure most directly comparable to
Adjusted EBITDA and Cash available for distribution is net income
(loss). Our non-GAAP financial measures of Adjusted EBITDA and Cash
available for distribution should not be considered as an
alternative to GAAP net income (loss). Adjusted EBITDA and Cash
available for distribution have important limitations as analytical
tools because they exclude some but not all items that affect net
income. Adjusted EBITDA and Cash available for distribution should
not be considered in isolation or as a substitute for analysis of
our results as reported under GAAP. Because Adjusted EBITDA and
Cash available for distribution may be defined differently by other
companies in our industry, our definition of Adjusted EBITDA and
Cash available for distribution may not be comparable to similarly
titled measures of other companies, thereby diminishing its
utility. For reconciliations of Adjusted EBITDA and Cash available
for distribution to net income (loss), the most comparable GAAP
financial metric, please see the tables below.
FORWARD-LOOKING
STATEMENTS This press release contains, and the
officers and representatives of the Partnership and its general
partner may from time to time make, statements that are considered
forward–looking statements within the meaning of the Securities Act
of 1933 and the Securities Exchange Act of 1934. These
forward-looking statements are subject to a number of risks and
uncertainties, many of which are beyond our control, which may
include statements about our: business strategy; acquisition
strategy; financing strategy; ability to make, maintain and grow
distributions; the ability of our customers to meet their drilling
and development plans on a timely basis or at all and perform under
gathering and processing agreements; future operating results;
future capital expenditures; the Partnership’s well-positioned
assets in the Eagle Ford Shale; and plans, objectives,
expectations, forecasts, outlook and intentions. All of these
types of statements, other than statements of historical fact
included in this press release, are forward-looking
statements. In some cases, forward-looking statements
can be identified by terminology such as “may,” “could,” “should,”
“expect,” “plan,” “project,” “intend,” “anticipate,” “believe,”
“estimate,” “predict,” “potential,” “pursue,” “target,” “continue,”
the negative of such terms or other comparable terminology.
The forward-looking statements contained in this
press release are largely based on our expectations, which reflect
estimates and assumptions made by the management of our general
partner. These estimates and assumptions reflect our best
judgment based on currently known market conditions and other
factors. Although we believe such estimates and assumptions
to be reasonable, they are inherently uncertain and involve a
number of risks and uncertainties that are beyond our
control. In addition, management’s assumptions about future
events may prove to be inaccurate. Management cautions all readers
that the forward-looking statements contained in this press release
are not guarantees of future performance, and we cannot assure any
reader that such statements will be realized or the forward-looking
events and circumstances will occur. The forward-looking
statements speak only as of the date made, and other than as
required by law, we do not intend to publicly update or revise any
forward-looking statements as a result of new information, future
events or otherwise. These cautionary statements qualify
all forward-looking statements attributable to us or persons acting
on our behalf.
Sanchez
Midstream Partners LP |
|
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in thousands) |
|
|
|
|
|
|
|
|
|
Oil, liquids, and gas
sales |
|
$ |
11,362 |
|
|
$ |
13,395 |
|
|
$ |
30,984 |
|
|
$ |
37,091 |
|
Gathering and
transportation sales |
|
|
14,234 |
|
|
|
12,997 |
|
|
|
39,621 |
|
|
|
41,130 |
|
Gain (loss) on
mark-to-market activities |
|
|
(7,000 |
) |
|
|
(6,538 |
) |
|
|
(1,173 |
) |
|
|
(22,852 |
) |
Total
revenues |
|
|
18,596 |
|
|
|
19,854 |
|
|
|
69,432 |
|
|
|
55,369 |
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
Lease
operating expenses |
|
|
1,735 |
|
|
|
2,767 |
|
|
|
10,599 |
|
|
|
11,918 |
|
Transportation operating expenses |
|
|
2,661 |
|
|
|
3,111 |
|
|
|
8,989 |
|
|
|
9,179 |
|
Cost of
sales |
|
|
— |
|
|
|
99 |
|
|
|
77 |
|
|
|
292 |
|
Production taxes |
|
|
340 |
|
|
|
290 |
|
|
|
1,166 |
|
|
|
837 |
|
General
and administrative |
|
|
5,614 |
|
|
|
6,286 |
|
|
|
17,576 |
|
|
|
16,983 |
|
Unit-based compensation expense |
|
|
631 |
|
|
|
90 |
|
|
|
1,951 |
|
|
|
1,619 |
|
(Gain)
loss on sale of assets |
|
|
(2,546 |
) |
|
|
219 |
|
|
|
(2,546 |
) |
|
|
219 |
|
Depreciation, depletion and amortization |
|
|
6,899 |
|
|
|
7,507 |
|
|
|
28,017 |
|
|
|
20,824 |
|
Asset
impairments |
|
|
— |
|
|
|
— |
|
|
|
4,688 |
|
|
|
1,309 |
|
Accretion
expense |
|
|
149 |
|
|
|
271 |
|
|
|
647 |
|
|
|
901 |
|
Total
operating expenses |
|
|
15,483 |
|
|
|
20,640 |
|
|
|
71,164 |
|
|
|
64,081 |
|
|
|
|
|
|
|
|
|
|
Other expenses
(income): |
|
|
|
|
|
|
|
|
Interest
expense |
|
|
2,215 |
|
|
|
1,543 |
|
|
|
5,994 |
|
|
|
3,545 |
|
Gain on
embedded derivatives |
|
|
— |
|
|
|
(30,012 |
) |
|
|
— |
|
|
|
(43,204 |
) |
Earnings
from equity investments |
|
|
(2,873 |
) |
|
|
(1,124 |
) |
|
|
(4,397 |
) |
|
|
(1,136 |
) |
Other
income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(49 |
) |
Total
expenses, net |
|
|
14,825 |
|
|
|
(8,953 |
) |
|
|
72,761 |
|
|
|
23,237 |
|
Income (loss) before
income taxes |
|
|
3,771 |
|
|
|
28,807 |
|
|
|
(3,329 |
) |
|
|
32,132 |
|
Income
tax expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net income (loss) |
|
|
3,771 |
|
|
|
28,807 |
|
|
|
(3,329 |
) |
|
|
32,132 |
|
Less: |
|
|
|
|
|
|
|
|
Preferred
unit distributions paid in common units |
|
|
— |
|
|
|
— |
|
|
|
(2,625 |
) |
|
|
— |
|
Preferred
unit distributions |
|
|
(8,750 |
) |
|
|
(12,250 |
) |
|
|
(24,500 |
) |
|
|
(29,750 |
) |
Preferred
unit amortization |
|
|
(463 |
) |
|
|
(6,608 |
) |
|
|
(1,300 |
) |
|
|
(20,379 |
) |
Net income (loss)
attributable to common unitholders |
|
$ |
(5,442 |
) |
|
$ |
9,949 |
|
|
$ |
(31,754 |
) |
|
$ |
(17,997 |
) |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
17,751 |
|
|
$ |
14,851 |
|
|
$ |
43,623 |
|
|
$ |
42,997 |
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
unit |
|
|
|
|
|
|
|
|
Common
units - Basic |
|
$ |
(0.38 |
) |
|
$ |
2.49 |
|
|
$ |
(2.29 |
) |
|
$ |
(5.06 |
) |
Common
units - Diluted |
|
$ |
(0.38 |
) |
|
$ |
1.21 |
|
|
$ |
(2.29 |
) |
|
$ |
(5.06 |
) |
Weighted Average Units
Outstanding |
|
|
|
|
|
|
|
|
Common
units - Basic |
|
|
14,313,999 |
|
|
|
3,998,209 |
|
|
|
13,888,057 |
|
|
|
3,556,675 |
|
Common
units -Diluted |
|
|
14,313,999 |
|
|
|
23,771,370 |
|
|
|
13,888,057 |
|
|
|
3,556,675 |
|
|
|
|
|
|
|
|
|
|
Sanchez
Midstream Partners LP |
|
|
|
|
Condensed
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
Sep. 30, |
|
Dec. 31, |
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
($ in thousands) |
|
|
|
|
|
Current assets |
|
$ |
12,330 |
|
|
$ |
14,765 |
Midstream and
production assets, net |
|
|
221,749 |
|
|
|
222,820 |
Other assets |
|
|
299,605 |
|
|
|
302,120 |
Total
assets |
|
$ |
533,684 |
|
|
$ |
539,705 |
|
|
|
|
|
Current
liabilities |
|
$ |
7,233 |
|
|
$ |
9,443 |
Long-term debt, net of
debt issuance costs |
|
|
187,686 |
|
|
|
151,322 |
Other long-term
liabilities |
|
|
11,867 |
|
|
|
19,205 |
Total
liabilities |
|
|
206,786 |
|
|
|
179,970 |
|
|
|
|
|
Mezzanine equity |
|
|
343,416 |
|
|
|
342,991 |
|
|
|
|
|
Partners' capital
(deficit) |
|
|
(16,518 |
) |
|
|
16,744 |
Total partners' capital
(deficit) |
|
|
(16,518 |
) |
|
|
16,744 |
Total
liabilities and partners' capital |
|
$ |
533,684 |
|
|
$ |
539,705 |
|
|
|
|
|
Sanchez
Midstream Partners LP |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Net Income (Loss) to Adjusted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA and Cash Available for Distribution |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September
30, |
|
Nine Months Ended September 30, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in thousands) |
|
|
|
|
|
|
|
|
|
Reconciliation
of Net Income (Loss) to Adjusted |
|
|
|
|
|
|
|
|
EBITDA and Cash Available for Distribution |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
3,771 |
|
|
$ |
28,807 |
|
|
$ |
(3,329 |
) |
|
$ |
32,132 |
|
Add: |
|
|
|
|
|
|
|
|
Interest
expense, net |
|
|
2,215 |
|
|
|
1,543 |
|
|
|
5,994 |
|
|
|
3,545 |
|
Depreciation, depletion and amortization |
|
|
6,899 |
|
|
|
7,507 |
|
|
|
28,017 |
|
|
|
20,824 |
|
Asset
impairments |
|
|
— |
|
|
|
— |
|
|
|
4,688 |
|
|
|
1,309 |
|
Accretion
expense |
|
|
149 |
|
|
|
271 |
|
|
|
647 |
|
|
|
901 |
|
(Gain)
loss on sale of assets |
|
|
(2,546 |
) |
|
|
219 |
|
|
|
(2,546 |
) |
|
|
219 |
|
Unit-based compensation programs |
|
|
631 |
|
|
|
90 |
|
|
|
2,648 |
|
|
|
1,619 |
|
Unit-based asset management fees |
|
|
2,103 |
|
|
|
1,991 |
|
|
|
6,478 |
|
|
|
4,903 |
|
Distributions in excess of equity earnings |
|
|
517 |
|
|
|
1,094 |
|
|
|
2,288 |
|
|
|
1,094 |
|
Loss on
mark-to-market activities |
|
|
7,000 |
|
|
|
6,538 |
|
|
|
1,173 |
|
|
|
22,852 |
|
Commodity
derivatives settled early |
|
|
(3,602 |
) |
|
|
(3,197 |
) |
|
|
(3,602 |
) |
|
|
(3,197 |
) |
Gain on
embedded derivatives |
|
|
— |
|
|
|
(30,012 |
) |
|
|
— |
|
|
|
(43,204 |
) |
Acquisition and divestiture costs |
|
|
614 |
|
|
|
— |
|
|
|
1,167 |
|
|
|
— |
|
Adjusted EBITDA
(1) |
|
|
17,751 |
|
|
|
14,851 |
|
|
|
43,623 |
|
|
|
42,997 |
|
|
|
|
|
|
|
|
|
|
Maintenance capital expenditures(2) |
|
|
(600 |
) |
|
|
(600 |
) |
|
|
(1,800 |
) |
|
|
(1,800 |
) |
Cash
interest expense |
|
|
(2,013 |
) |
|
|
(1,290 |
) |
|
|
(5,394 |
) |
|
|
(2,792 |
) |
Preferred
unit distributions |
|
|
(8,750 |
) |
|
|
(12,250 |
) |
|
|
(24,500 |
) |
|
|
(29,750 |
) |
Cash available for
distribution |
|
$ |
6,388 |
|
|
$ |
711 |
|
|
$ |
11,929 |
|
|
$ |
8,655 |
|
|
|
|
|
|
|
|
|
|
(1) To
supplement our financial results and guidance presented in
accordance with U.S. generally accepted accounting principles
(“GAAP”), we use Adjusted EBITDA, a non-GAAP financial measure, in
this quarterly report. We believe that non-GAAP financial measures
are helpful in understanding our past financial performance and
potential future results, particularly in light of the effect of
various transactions effected by us. We define Adjusted EBITDA as
net income (loss) adjusted by: (i) interest (income) expense, net,
which includes interest expense, interest expense net, (gain) loss
on interest rate derivative contracts, and interest (income); (ii)
income tax expense (benefit); (iii) depreciation, depletion and
amortization; (iv) asset impairments; (v) accretion expense; (vi)
(gain) loss on sale of assets; (vii) unit-based compensation
programs; (viii) unit-based asset management fees; (ix)
distributions in excess of equity earnings; (x) (gain) loss on
mark-to-market activities; (xi) commodity derivatives settlements
applied to future positions; (xii) (gain) loss on embedded
derivatives; and (xiii) acquisition and divestiture costs. |
(2)
Represents estimated maintenance capital expenditures attributable
to our controlling interest in our midstream and production assets.
Maintenance capital expenditures are cash expenditures made to
maintain, over the long-term, our operating capacity, operating
income or asset base. Examples of maintenance capital expenditures
are expenditures to develop and replace our oil and natural gas
reserves as well as the repair, refurbishment and replacement of
gathering and transportation assets, to maintain equipment
reliability, integrity and safety and to address environmental laws
and regulations. |
|
|
|
|
|
|
|
|
|
Sanchez
Midstream Partners LP |
|
|
|
|
|
|
Reconciliation
of Net Income (Loss) to |
|
|
|
|
|
|
Adjusted EBITDA |
|
Three Months |
|
Three Months |
|
Three Months |
|
|
Ended |
|
Ended |
|
Ended |
|
|
March 31, |
|
June 30, |
|
September 30, |
|
|
|
2017 |
|
|
|
2017 |
|
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($ in thousands) |
|
|
|
|
|
|
|
Reconciliation
of Net Income (Loss) to |
|
|
|
|
|
|
Adjusted EBITDA: |
|
|
|
|
|
|
Net income (loss) |
|
$ |
(7,659 |
) |
|
$ |
559 |
|
|
$ |
3,771 |
|
Add: |
|
|
|
|
|
|
Interest
expense, net |
|
|
1,883 |
|
|
|
1,896 |
|
|
|
2,215 |
|
Depreciation, depletion and amortization |
|
|
12,181 |
|
|
|
8,937 |
|
|
|
6,899 |
|
Asset
impairments |
|
|
4,688 |
|
|
|
— |
|
|
|
— |
|
Accretion
expense |
|
|
258 |
|
|
|
240 |
|
|
|
149 |
|
Gain on
sale of assets |
|
|
— |
|
|
|
— |
|
|
|
(2,546 |
) |
Unit-based compensation programs |
|
|
540 |
|
|
|
1,479 |
|
|
|
631 |
|
Unit-based asset management fees |
|
|
2,030 |
|
|
|
2,345 |
|
|
|
2,103 |
|
Distributions in excess of equity earnings |
|
|
968 |
|
|
|
803 |
|
|
|
517 |
|
(Gain)
loss on mark-to-market activities |
|
|
(4,480 |
) |
|
|
(1,347 |
) |
|
|
7,000 |
|
Commodity
derivatives settled early |
|
|
— |
|
|
|
— |
|
|
|
(3,602 |
) |
Acquisition and divestiture costs |
|
|
129 |
|
|
|
424 |
|
|
|
614 |
|
Adjusted EBITDA
(1) |
|
$ |
10,538 |
|
|
$ |
15,336 |
|
|
$ |
17,751 |
|
|
|
|
|
|
|
|
(1) To
supplement our financial results and guidance presented in
accordance with U.S. generally accepted accounting principles
(“GAAP”), we use Adjusted EBITDA, a non-GAAP financial measure, in
this quarterly report. We believe that non-GAAP financial measures
are helpful in understanding our past financial performance and
potential future results, particularly in light of the effect of
various transactions effected by us. We define Adjusted EBITDA as
net income (loss) adjusted by: (i) interest (income) expense, net,
which includes interest expense, interest expense net, (gain) loss
on interest rate derivative contracts, and interest (income); (ii)
income tax expense (benefit); (iii) depreciation, depletion and
amortization; (iv) asset impairments; (v) accretion expense; (vi)
(gain) loss on sale of assets; (vii) unit-based compensation
programs; (viii) unit-based asset management fees; (ix)
distributions in excess of equity earnings; (x) (gain) loss on
mark-to-market activities; (xi) commodity derivatives settlements
applied to future positions; (xii) (gain) loss on embedded
derivatives; and (xiii) acquisition and divestiture costs. |
|
|
|
|
|
|
|
Sanchez
Midstream Partners LP |
|
|
|
|
|
|
|
|
Operating
Statistics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
Gathering and
Transportation Throughput: |
|
|
|
|
|
|
|
|
Oil
(MBbls) |
|
|
984 |
|
|
1,114 |
|
|
3,049 |
|
|
3,667 |
Gas
(MMcf) |
|
|
14,952 |
|
|
16,156 |
|
|
44,040 |
|
|
50,822 |
Total throughput
(MBOE)(1) |
|
|
3,476 |
|
|
3,807 |
|
|
10,389 |
|
|
12,137 |
Average daily
throughput (BOE/D) |
|
|
38 |
|
|
42 |
|
|
57 |
|
|
67 |
|
|
|
|
|
|
|
|
|
(1) Excludes water
throughput. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
Net Production
in MBOE: |
|
|
|
|
|
|
|
|
Total production
(MBOE) |
|
|
188 |
|
|
264 |
|
|
788 |
|
|
871 |
Average daily
production (BOE/D) |
|
|
2,043 |
|
|
2,870 |
|
|
2,886 |
|
|
3,179 |
|
|
|
|
|
|
|
|
|
Average Sales
Price per BOE: |
|
|
|
|
|
|
|
|
BOE Net realized price,
including hedges (1) |
|
$60.39 |
|
$52.45 |
|
$39.44 |
|
$43.18 |
BOE Net realized price,
excluding hedges (2) |
|
$32.12 |
|
$23.63 |
|
$28.32 |
|
$20.00 |
|
|
|
|
|
|
|
|
|
(1) Excludes impact of
mark-to-market gains (losses). |
|
|
|
|
|
|
|
|
(2) Excludes the impact
of all hedging gains (losses). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PARTNERSHIP CONTACT
Charles C. Ward
Chief Financial Officer
Sanchez Midstream Partners GP LLC
(877) 847-0009
General Inquiries: (877) 847-0008
www.sanchezenergycorp.com
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