CHKM Access Midstream Partners L.P.

Chesapeake Midstream Partners, L.P. (NYSE:CHKM) today announced financial results for the 2011 third quarter. Net income for the quarter totaled $48.2 million, an increase of $14.8 million, or 44%, versus the 2010 third quarter. Net income available to limited partners for the 2011 third quarter was $47.2 million, or $0.34 per limited partner unit. The Partnership’s adjusted ebitda for the 2011 third quarter was $88.1 million, up $29.2 million, or 50%, from 2010 third quarter adjusted ebitda of $58.9 million. Distributable cash flow (DCF) totaled $65.6 million, an increase of $25.6 million, or 64%, compared to the 2010 third quarter. Adjusted DCF for the 2011 third quarter was $67.8 million. Financial terms are defined on pages two and three of this release.

Total throughput for the 2011 third quarter was 204.8 billion cubic feet (bcf) of natural gas, or 2.23 bcf per day, an increase of 41% from 2010 third quarter throughput of 1.58 bcf per day. The increase in throughput was driven by the Haynesville Springridge gas gathering system acquired in December 2010 and strong well-connect performance in both the Barnett Shale and Mid-Continent regions. The Partnership connected 146 new wells to its gathering systems during the 2011 third quarter, an increase of 21% compared to the 2010 third quarter. Partnership revenue for the 2011 third quarter was $140.1 million, an increase of $40.0 million, or 40%, from 2010 third quarter revenue of $100.1 million. Capital expenditures during the 2011 third quarter totaled approximately $110.4 million, including maintenance capital expenditures of approximately $18.5 million.

Partnership Increases Cash Distribution

On October 28, 2011, the Board of Directors of the Partnership’s general partner declared a quarterly cash distribution of $0.375 per unit for the 2011 third quarter, a $0.0125, or 3.4%, increase over the 2011 second quarter distribution. The annualized distribution represents an 11% increase compared to the annualized distribution in the 2010 third quarter. The distribution will be paid on November 14, 2011 to unitholders of record at the close of business on November 7, 2011. Adjusted DCF for the 2011 third quarter of $67.8 million provided distribution coverage of 1.28 times the amount required for the Partnership to fund the distribution to both the general and limited partners.

Partnership Updates 2011 Financial Outlook

The Partnership is increasing its outlook of ebitda for the 12 months ending December 31, 2011 to $340 million from $332 million due to both volume and operating expense performance. The Partnership’s projections of growth capital expenditures and maintenance capital expenditures for 2011 remain unchanged at $366 million and $74 million, respectively.

Management Comments

J. Mike Stice, Chesapeake Midstream Partners’ Chief Executive Officer, commented, “We have delivered another outstanding quarter across the board. We are seeing the benefits of organic growth from increased well-connects resulting in solid volume growth in all regions. Combining organic growth and continued positive performance from our Springridge acquisition with enhanced operating expense productivity, we are able to deliver impressive bottom line performance to unitholders. As a result, I’m pleased that these operational successes are giving us the opportunity to make a positive adjustment to our 2011 ebitda outlook.”

Conference Call Information

A conference call to discuss this release of financial results has been scheduled for Wednesday morning, November 9, 2011 at 9:00 a.m. EST. The telephone number to access the conference call is 719-325-2306 or toll-free 800-575-5790. The passcode for the call is 1424647. We encourage those who would like to participate in the call to dial the access number between 8:50 and 9:00 a.m. EST. For those unable to participate in the conference call, a replay will be available for audio playback from 12:00 p.m. EST on November 9, 2011 through 12:00 p.m. EST on November 23, 2011. The number to access the conference call replay is 719-457-0820 or toll-free 888-203-1112. The passcode for the replay is 1424647. The conference call will also be webcast live on the Internet and can be accessed by going to the Partnership’s website at www.chkm.com in the "Events" subsection of the "Investors" section of the website. An archive of the conference call webcast will also be available on the website.

Use of Non-GAAP Financial Measures

This press release and accompanying schedules include the non-GAAP financial measures of adjusted ebitda, DCF and adjusted DCF. The accompanying schedules provide reconciliations of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with GAAP. Non-GAAP financial measures should not be considered as an alternative to GAAP measures such as net income, net cash provided by operating activities or any other measure of liquidity or financial performance calculated and presented in accordance with GAAP. Investors should not consider adjusted ebitda, DCF or adjusted DCF in isolation or as a substitute for analysis of the Partnership’s results as reported under GAAP. Because these non-GAAP financial measures may be defined differently by other companies in our industry, the Partnership’s definition of adjusted ebitda, DCF and adjusted DCF may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

Adjusted Ebitda. The Partnership defines adjusted ebitda as net income (loss) before income tax expense, interest expense, depreciation and amortization expense and certain other items management believes affect the comparability of operating results. Adjusted ebitda is a non-GAAP financial measure that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:

• The Partnership’s operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to capital structure, historical cost basis or financing methods;
• The Partnership’s ability to incur and service debt and fund capital expenditures;
• The ability of the Partnership’s assets to generate sufficient cash flow to make distributions to unitholders; and
• The viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

Management believes it is appropriate to exclude certain items from ebitda because management believes these items affect the comparability of operating results. The Partnership believes that the presentation of adjusted ebitda in this press release provides information useful to investors in assessing its financial condition and results of operations. The GAAP measure most directly comparable to adjusted ebitda is net income.

Distributable Cash Flow. The Partnership defines DCF as adjusted ebitda attributable to the Partnership adjusted for:

• Addition of interest income;
• Subtraction of net cash paid for interest expense;
• Subtraction of maintenance capital expenditures; and
• Subtraction of income taxes.

Management compares the DCF the Partnership generates to the cash distributions it expects to pay its partners. Using this metric, management computes a distribution coverage ratio. DCF is an important non-GAAP financial measure for our limited partners since it serves as an indicator of our success in providing a cash return on investment. Specifically, this financial measure indicates to investors whether or not the Partnership is generating cash flows at a level that can sustain or support an increase in its quarterly cash distributions. DCF is also a quantitative standard used by the investment community with respect to publicly traded partnerships because the value of a partnership unit is in part measured by its yield, which is based on the amount of cash distributions a partnership can pay to a unitholder. The GAAP measure most directly comparable to DCF is net cash provided by operating activities.

Adjusted Distributable Cash Flow. The Partnership includes the quarterly impact of contractual minimum volume commitments that are not recognized until the fourth quarter of each year in its calculation of adjusted DCF for the purpose of calculating the distribution coverage ratio.

This press release includes forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. They include but are not limited to throughput volumes, revenues, net income, capital expenditures, adjusted ebitda and distributable cash flow, as well as other statements concerning our business strategy and plans and objectives for future operations. We caution you not to place undue reliance on our forward-looking statements, which speak only as of the date of this release, and we undertake no obligations to update this information. Although we believe the expectations and forecasts reflected in these and other forward-looking statements are reasonable, we can give no assurance they will prove to be correct. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Factors that could cause actual results to differ materially from expected results are described under “Risk Factors” in our 2010 Annual Report on Form 10-K.

Chesapeake Midstream Partners, L.P. is one of the industry’s largest midstream master limited partnerships and owns, operates, develops and acquires natural gas gathering systems and other midstream energy assets. Headquartered in Oklahoma City, the Partnership's operations are focused on the Barnett Shale, Haynesville Shale and Mid-Continent regions of the U.S. The Partnership’s common units are listed on the New York Stock Exchange under the symbol CHKM. Further information is available at www.chkm.com, where the Partnership routinely posts announcements, updates, events, investor information and presentations and all recent press releases.

    CHESAPEAKE MIDSTREAM PARTNERS, L.P. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ($ in thousands, except per unit data) (unaudited)       Three Months Ended

September 30,

  2011         2010   Revenues, including revenue from affiliates (1) $ 140,105 $ 100,060   Operating Expenses Operating expenses, including expenses from affiliates 43,233 34,094 Depreciation and amortization expense 35,021 22,407

General and administrative expense, including expenses from affiliates

8,940 7,098 Other operating (income) expense   (40 )   323     Total operating expenses   87,154     63,922     Operating income 52,951 36,138   Other Income (Expense) Interest expense (4,250 ) (2,059 ) Other income   137     34     Income before income tax expense 48,838 34,113 Income tax expense   665     699     Net income $ 48,173   $ 33,414     Limited partner interest in net income Net income 48,173

19,514

(2)

Less general partner interest in net income   (964 )   (390 )   Limited partner interest in net income   47,209     19,124     Net income per limited partner unit – basic and diluted Common units 0.34 0.14 Subordinated units 0.34 0.14   Weighted average limited partner units outstanding used for net income per unit calculation – basic and diluted (in thousands) Common units 69,359 69,083 Subordinated units 69,076 69,076

(1) If either Chesapeake Energy Corporation (“Chesapeake”) or Total E&P USA, Inc. (“Total”) does not meet its minimum volume commitment to the Partnership in the Barnett Shale region or Chesapeake does not meet its minimum volume commitment in the Haynesville Shale region under the relevant gas gathering agreement for specified annual periods, Chesapeake or Total is obligated to pay the Partnership a fee equal to the applicable fee for each mcf by which the applicable party’s minimum volume commitment for the year exceeds the actual volumes gathered on the Partnership’s systems. Should payments be due under the minimum volume commitment with respect to any year, the Partnership recognizes the associated revenue in the fourth quarter of that year.

(2) Reflective of general and limited partner interest in net income from closing of the Partnership’s initial public offering on August 3, 2010 through September 30, 2010.

    CHESAPEAKE MIDSTREAM PARTNERS, L.P. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS ($ in thousands, except per unit data) (unaudited)       Nine Months Ended

September 30,

  2011         2010   Revenues, including revenue from affiliates (1) $ 396,851 $ 296,685   Operating Expenses Operating expenses, including expenses from affiliates 130,078 97,172 Depreciation and amortization expense 98,706 65,119

General and administrative expense, including expenses from affiliates

27,545 21,221 Other operating expense   823     256     Total operating expenses   257,152     183,768     Operating income 139,699 112,917   Other Income (Expense) Interest expense (9,527 ) (5,876 ) Other income   221     76     Income before income tax expense 130,393 107,117 Income tax expense   2,361     1,772     Net income $ 128,032   $ 105,345     Limited partner interest in net income Net income 128,032

19,514

(2)

Less general partner interest in net income   (2,560 )   (390 )   Limited partner interest in net income   125,472     19,124     Net income per limited partner unit – basic and diluted Common units 0.91 0.14 Subordinated units 0.91 0.14   Weighted average limited partner units outstanding used for net income per unit calculation – basic and diluted (in thousands) Common units 69,268 69,083 Subordinated units 69,076 69,076

(1) If either Chesapeake Energy Corporation (“Chesapeake”) or Total E&P USA, Inc. (“Total”) does not meet its minimum volume commitment to the Partnership in the Barnett Shale region or Chesapeake does not meet its minimum volume commitment in the Haynesville Shale region under the relevant gas gathering agreement for specified annual periods, Chesapeake or Total is obligated to pay the Partnership a fee equal to the applicable fee for each mcf by which the applicable party’s minimum volume commitment for the year exceeds the actual volumes gathered on the Partnership’s systems. Should payments be due under the minimum volume commitment with respect to any year, the Partnership recognizes the associated revenue in the fourth quarter of that year.

(2) Reflective of general and limited partner interest in net income from closing of the Partnership’s initial public offering on August 3, 2010 through September 30, 2010.

    CHESAPEAKE MIDSTREAM PARTNERS, L.P. CONDENSED CONSOLIDATED BALANCE SHEETS ($ in thousands) (unaudited)       As of

September 30,

2011

    As of

December 31,

2010

Assets   Total current assets $ 59,203   $ 131,487     Property, plant and equipment Gathering systems 2,873,485 2,544,053 Other fixed assets 48,504 41,125 Less: Accumulated depreciation   (446,496 )   (358,269 )   Total property, plant and equipment, net   2,475,493     2,226,909     Intangible assets 161,446 172,481 Deferred loan costs, net   21,672     15,039     Total assets $ 2,717,814   $ 2,545,916     Liabilities and Partners’ Capital   Total current liabilities $ 122,414   $ 97,991     Long-term liabilities Long-term debt 417,300 249,100 Other liabilities   3,911     4,257     Total long-term liabilities   421,211     253,357     Partners’ capital Partners' capital   2,174,189     2,194,568     Total partners’ capital   2,174,189     2,194,568     Total liabilities and partners’ capital $ 2,717,814   $ 2,545,916       CHESAPEAKE MIDSTREAM PARTNERS, L.P. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS ($ in thousands) (unaudited)       Nine Months Ended

September 30,

2011

    Nine Months Ended

September 30,

2010

Cash flows from operating activities Net income $ 128,032 $ 105,345 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 98,706 65,119 Other non-cash items 5,177 4,413 Changes in assets and liabilities Decrease in accounts receivable 54,579 129,592 Increase in other assets (87 ) (1,608 ) Increase in accounts payable 2,395 10,129 Increase (decrease) in accrued liabilities   9,692     (45,870 )   Net cash provided by operating activities   298,494     267,120     Cash flows from investing activities Additions to property, plant and equipment (326,603 ) (156,463 ) Proceeds from sale of assets   1,522     4,416     Net cash used in investing activities   (325,081 )   (152,047 )   Cash flows from financing activities Proceeds from credit facility borrowings 331,400 252,300 Payments on credit facility borrowings (513,200 ) (296,400 ) Proceeds from issuance of common units, net of offering costs –- 475,009 Proceeds from issuance of senior notes, net of offering costs 343,000 –- Distribution to unitholders (148,029 ) –- Initial public offering costs (1,280 ) –- Debt issuance costs (3,101 ) (5,113 ) Distribution to partners –- (231,919 ) Contribution from predecessor –- 177 Other adjustments   4     –-     Net cash provided by (used in) financing activities   8,794     (194,054 )  

Net increase (decrease) in cash and cash equivalents

(17,793 ) 309,127   Cash and cash equivalents Beginning of period   17,816     3     End of period $ 23   $ 309,130       CHESAPEAKE MIDSTREAM PARTNERS, L.P. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ($ in thousands) (unaudited)       Three Months Ended

September 30,

  2011         2010     Net Income $ 48,173 $ 33,414   Adjusted for: Interest expense 4,250 2,059 Income tax expense 665 699 Depreciation and amortization expense 35,021 22,407 (Gain) loss on sale of assets   (40 )   323     Adjusted EBITDA $ 88,069   $ 58,902       Cash provided by operating activities $ 92,506 69,711   Adjusted for: Changes in assets and liabilities (7,906 ) (12,048 ) Maintenance capital expenditures (18,500 ) (17,500 ) Other non-cash items   (512 )   (141 )   Distributable cash flow   65,588     40,022     Adjusted for: Implied minimum volume commitment   2,211     16,406     Adjusted distributable cash flow $ 67,799   $ 56,428     Cash distribution Limited partner units ($0.375 x 138,161,160 units) $ 51,811 General partner units ($0.375 x 2,819,606 units)   1,057     Total cash distribution $ 52,868     Distribution coverage ratio   1.28       CHESAPEAKE MIDSTREAM PARTNERS, L.P. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES ($ in thousands) (unaudited)       Nine Months Ended

September 30,

  2011         2010     Net Income $ 128,032 $ 105,345   Adjusted for: Interest expense 9,527 5,876 Income tax expense 2,361 1,772 Depreciation and amortization expense 98,706 65,119 Loss on sale of assets   823     256     Adjusted EBITDA $ 239,449   $ 178,368       Cash provided by operating activities $ 298,494 267,120   Adjusted for: Changes in assets and liabilities (66,579 ) (92,243 ) Maintenance capital expenditures (55,500 ) (52,500 ) Other non-cash items   (883 )   (99 )   Distributable cash flow   175,532     122,278     Adjusted for:

 

Implied minimum volume commitment   7,479     47,801     Adjusted distributable cash flow $ 183,011   $ 170,079     Full Year

2011 Outlook

  Net Income $ 202,000   Adjusted for: Interest expense 14,000 Income tax expense 3,000 Depreciation and amortization expense   121,000     EBITDA $ 340,000       CHESAPEAKE MIDSTREAM PARTNERS, L.P. OPERATING STATISTICS (unaudited)       Three Months Ended

September 30,

2011     2010   Barnett Shale Wells connected during period 96 86 Total wells connected 2,102 1,771 Throughput, bcf per day 1.075 1.030 Approximate miles of pipe at end of period 855 700 Gas compression (horsepower) at end of period 156,260 136,565     Haynesville Shale Wells connected during period 12 –- Total wells connected 213 –- Throughput, bcf per day 0.578 –- Approximate miles of pipe at end of period 254 –- Gas compression (horsepower) at end of period 21,970 –-     Mid-Continent Wells connected during period 38 35 Total wells connected 2,484 2,294 Throughput, bcf per day 0.573 0.554 Approximate miles of pipe at end of period 2,402 2,190 Gas compression (horsepower) at end of period 93,656 83,335     Total Wells connected during period 146 121 Total wells connected 4,799 4,065 Throughput, bcf per day 2.226 1.584 Approximate miles of pipe at end of period 3,511 2,890 Gas compression (horsepower) at end of period 271,886 219,900     CHESAPEAKE MIDSTREAM PARTNERS, L.P. OPERATING STATISTICS (unaudited)       Nine Months Ended

September 30,

2011     2010   Barnett Shale Wells connected during period 267 206 Total wells connected 2,102 1,771 Throughput, bcf per day 1.030 1.023 Approximate miles of pipe at end of period 855 700 Gas compression (horsepower) at end of period 156,260 136,565     Haynesville Shale Wells connected during period 49 –- Total wells connected 213 –- Throughput, bcf per day 0.545 –- Approximate miles of pipe at end of period 254 –- Gas compression (horsepower) at end of period 21,970 –-     Mid-Continent Wells connected during period 128 95 Total wells connected 2,484 2,294 Throughput, bcf per day 0.553 0.557 Approximate miles of pipe at end of period 2,402 2,190 Gas compression (horsepower) at end of period 93,656 83,335     Total Wells connected during period 444 301 Total wells connected 4,799 4,065 Throughput, bcf per day 2.128 1.580 Approximate miles of pipe at end of period 3,511 2,890 Gas compression (horsepower) at end of period 271,886 219,900