COPANO ENERGY, L.L.C. 
By HOUSTON, Nov. 7, 2012 /PRNewswire/ -- Copano Energy, L.L.C. (NASDAQ: CPNO) today announced its financial results for the three months ended September 30, 2012.
Third Quarter 2012 Highlights:
-- Fee-based Texas segment rich natural gas volumes drive third quarter
performance
-- Total distributable cash flow of $57.1 million, a 55% increase from
third quarter 2011
-- Total segment gross margin of $75.1 million, a 16% increase from the
prior year period
-- Adjusted EBITDA of $73.0 million, a 41% increase from the prior year
period
-- Volumes gathered from the Eagle Ford Shale play averaged 567,000
MMBtu/d, a 248% increase from the prior year period
-- Texas segment NGL production of over 54,000 Bbls/d, a 75% increase from
third quarter 2011
"Our third quarter results highlight our strengthening operational performance and continued progress in executing on our Eagle Ford strategy," said R. Bruce Northcutt, Copano's President and Chief Executive Officer. "Despite lower NGL prices compared to the second quarter of this year, fee-based volumes from the Eagle Ford have continued to grow, delivering strong gross margins for our Texas business segment.
"Our organic growth projects in the play remain on track and we look forward to the positive impact they will have on total distributable cash flow as our Eagle Ford strategy continues to develop," Northcutt added.
Third Quarter Financial Results
Total distributable cash flow was $57.1 million, a 55% increase from the third quarter of 2011, and a 45% increase from the second quarter of 2012. The increase from the prior-year period was primarily due to:
-- increased throughput from the Eagle Ford Shale, north Barnett Shale
Combo and Woodford Shale plays, and
-- a $9.7 million gain related to the sale of the Lake Charles plant in
Louisiana.
These benefits were partially offset by lower natural gas liquids (NGL) prices and higher interest and operating expenses.
Third-quarter 2012 total distributable cash flow represents 124% coverage of the third-quarter distribution of $0.575 per unit, based on common units outstanding on the distribution record date, which included an additional 6,526,078 common units issued in our equity offering that closed in late October 2012. Excluding the gain on the sale of the Lake Charles plant, third-quarter 2012 total distributable cash flow coverage was approximately 103%. Excluding the newly issued units and the gain on sale of the Lake Charles plant, third-quarter 2012 total distributable cash flow coverage was approximately 112%.
Revenue for the third quarter of 2012 increased 4% from the third quarter of 2011 to $366.4 million, and 15% from the second quarter of 2012. Total segment gross margin increased 16% from the third quarter of 2011 to $75.1 million, and 3% from the second quarter of 2012. Adjusted EBITDA increased 41% from the third quarter of 2011 to $73.0 million, and 25% from the second quarter of 2012. Net income to common units was $19.8 million for the third quarter of 2012 compared to net loss of $166.0 million for the third quarter of 2011.
Corporate and other activities, which include Copano's commodity risk management efforts, resulted in a loss of $3.7 million for the third quarter of 2012, consisting of $5.9 million in non-cash amortization expense and $2.6 million of unrealized losses on commodity derivative instruments, offset by $4.8 million of net cash settlements received. Corporate and other activities resulted in a $8.0 million loss for the third quarter of 2011 consisting of $7.4 million of non-cash amortization expense and $2.9 million of net cash settlements paid, offset by $2.3 million of unrealized gain on commodity derivative instruments. Corporate and other activities resulted in a $3.4 million gain for the second quarter of 2012 consisting of $3.4 million of net cash settlements received and $5.0 million of unrealized gains on commodity derivative instruments, offset by $5.0 million of non-cash amortization expense.
Total distributable cash flow, total segment gross margin, adjusted EBITDA and segment gross margin are non-GAAP financial measures, which are reconciled to their most directly comparable GAAP measures at the end of this news release. Please read "Use of Non-GAAP Financial Measures" beginning on page 5 of this news release.
Third Quarter Operating Results by Segment
Texas
Segment gross margin for Texas increased 24% from the third quarter of 2011 to $55.2 million, and increased 12% from the second quarter of 2012. The increase from the prior year was primarily a result of volume growth from the Eagle Ford Shale and north Barnett Shale Combo plays, partially offset by a decline in leaner gas volumes at the Houston Central complex, which were displaced to accommodate richer Eagle Ford Gathering fee-based gas volumes.
During the third quarter of 2012, Texas segment service throughput volumes averaged 897,601 MMBtu/d of natural gas, an increase of 17% from the third quarter of 2011. The Texas segment gathered an average of 557,457 MMBtu/d of natural gas, an increase of 20% over the third quarter of 2011, primarily due to increased volumes from the Eagle Ford Shale and north Barnett Shale Combo plays. Volumes processed at Copano's plants and third-party plants in Texas averaged 824,196 MMBtu/d during the third quarter of 2012, an increase of 20% over the third quarter of 2011 primarily due to increased volumes from the north Barnett Shale Combo play and at the Lake Charles plant. Third-quarter NGL production averaged 54,142 Bbls/d at Copano-owned plants and third-party plants, an increase of 75% from the third quarter of 2011, reflecting a substantial increase in the NGL content of volumes at the Houston Central complex, and increased volumes at the Saint Jo plant in the north Barnett Shale Combo play.
Eagle Ford Gathering, Copano's unconsolidated joint venture with Kinder Morgan, has been in full service since December 2011 and provided gathering services for an average of 319,919 MMBtu/d during the third quarter of 2012. Texas segment gross margin results do not include the financial results and volumes associated with Copano's interest in Eagle Ford Gathering, which is accounted for under the equity method of accounting and shown in Copano's financial statements under "Equity in (earnings) loss from unconsolidated affiliates." For the third quarter of 2012, equity earnings and distributions from Eagle Ford Gathering totaled $9.2 million and $6.3 million, respectively.
Oklahoma
Segment gross margin for Oklahoma was $22.9 million for the third quarter of 2012, a decrease of 18% compared to the third quarter of last year and an increase of 14% from the second quarter of 2012. The year-over-year decrease was due primarily to lower NGL and natural gas prices, which resulted in a 24% decrease in realized margins on service throughput compared to the third quarter of 2011 ($0.80 per MMBtu in 2012 compared to $1.05 per MMBtu in 2011). This decrease was partially offset by an increase in service throughput attributable to lean gas volume growth from the Woodford Shale play.
The Oklahoma segment gathered an average of 313,414 MMBtu/d of natural gas, an increase of 9% compared to the third quarter of 2011, due primarily to lean gas from the Woodford Shale area, which increased 20% compared to the third quarter of 2011. Volumes processed at wholly owned and third-party plants in Oklahoma were flat compared to the third quarter of 2011, averaging 157,775 MMBtu/d. Third-quarter NGL production at Copano-owned plants and third-party plants averaged 16,207 Bbls/d, a decrease of 7% from the third quarter of 2011.
Rocky Mountains
Segment gross margin for the Rocky Mountains segment totaled $0.6 million in the third quarter of 2012 compared to $0.4 million for the third quarter of 2011 and $0.2 million for the second quarter of 2012. Rocky Mountains segment gross margin results do not include the financial results and volumes associated with Copano's interest in Bighorn Gas Gathering and Fort Union Gas Gathering, which are accounted for under the equity method of accounting and shown in Copano's financial statements under "Equity in (earnings) loss from unconsolidated affiliates."
Average pipeline throughput for Bighorn and Fort Union on a combined basis increased 4% to 694,961 MMBtu/d in the third quarter of 2012 as compared to 670,543 MMBtu/d in the third quarter of 2011. The volume increase is due primarily to producers increasing volumes on Fort Union to access downstream markets; however, because Fort Union has firm volume commitments from these producers, the increase did not have a material impact on Copano's equity earnings or distributions. For the third quarter of 2012, combined equity earnings for Bighorn and Fort Union totaled $3.0 million compared to equity losses of $164.1 million for the same period in 2011, which included a $165.0 million impairment in 2011. Combined distributions from Bighorn and Fort Union totaled $5.1 million in the third quarter of 2012 compared to $5.0 million in the third quarter of last year.
Cash Distributions
On October 10, 2012, Copano announced its third quarter 2012 cash distribution of $0.575 per unit, or $2.30 per unit on an annualized basis, which will be paid on November 8, 2012 to common unitholders of record at the close of business on October 31, 2012. This distribution is unchanged from the second quarter of 2012.
Conference Call Information
Copano will hold a conference call on November 8, 2012 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time) to discuss its third quarter 2012 financial results. To participate in the call, dial (480) 629-9643 and ask for the Copano call at least 10 minutes prior to the start time, or access it live over the internet at http://www.copano.com on the "Investor Overview" page of the "Investor Relations" section of Copano's website.
A replay of the audio webcast will be available shortly after the call on Copano's website. A telephonic replay will be available through November 15, 2012 by calling (303) 590-3030 and using the pass code 4570334#.
Use of Non-GAAP Financial Measures
This news release and the accompanying schedules include non-generally accepted accounting principles, or non-GAAP, financial measures of total distributable cash flow, total segment gross margin, adjusted EBITDA and segment gross margin. The accompanying schedules provide reconciliations of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States, or GAAP. Non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income (loss), operating income (loss), cash flows from operating activities or any other GAAP measure of liquidity or financial performance. Copano's non-GAAP financial measures may not be comparable to similarly titled measures of other companies, who may not calculate their measures in the same manner.
Copano's management team uses non-GAAP financial measures to evaluate its core profitability and to assess the financial performance of its assets. Subject to the limitations expressed above, Copano believes that investors and other market participants benefit from access to the various financial measures that its management uses in evaluating its performance because it allows them to independently evaluate Copano's performance with the same information used by management.
Copano Energy, L.L.C. is a midstream natural gas company with operations in Texas, Oklahoma and Wyoming. For more information, please visit http://www.copano.com.
This press release includes "forward-looking statements," as defined by the Securities and Exchange Commission. Statements that address activities or events that Copano believes will or may occur in the future are forward-looking statements. These statements include, but are not limited to, statements about future producer activity and Copano's total distributable cash flow and distribution coverage. These statements are based on management's experience and perception of historical trends, current conditions, expected future developments and other factors management believes are reasonable. Important factors that could cause actual results to differ materially from those in forward-looking statements include the following risks and uncertainties, many of which are beyond Copano's control: the volatility of prices and market demand for natural gas and natural gas liquids; Copano's ability to continue to connect new sources of natural gas, crude oil and condensate, and the NGL content of new gas supplies; the impact on volumes and resulting cash flow of technological, economic and other uncertainties inherent in estimating future production; producers' ability to drill and successfully complete and connect new natural gas supplies; Copano's ability to attract and retain key customers; performance by producers, customers and service providers under their contracts with Copano; the availability of downstream transportation and other facilities for natural gas and NGLs; operational risks affecting the performance of Copano or third-party processing, fractionation plants and other facilities; Copano's ability to access or construct new processing, fractionation and transportation capacity; higher construction costs or project delays due to inflation, limited availability of required resources, or the effects of operational, legal or other uncertainties; general economic conditions; the effects of government regulations and policies; and other financial, operational and legal risks and uncertainties detailed from time to time in Copano's quarterly and annual reports filed with the Securities and Exchange Commission. Copano does not undertake to update any forward-looking statement except as provided by law.
Contacts: Carl A. Luna, SVP and CFO
Copano Energy, L.L.C.
713-621-9547
Jack Lascar / jlascar@drg-l.com
Anne Pearson/ apearson@drg-l.com
DRG&L/ 713-529-6600
-financial statements follow -
COPANO ENERGY, L.L.C. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
2012 2011 2012 2011
---- ---- ---- ----
(In thousands, except per unit information)
Revenue:
Natural gas
sales $97,614 $120,815 $253,819 $348,538
Natural gas
liquids sales 205,464 191,370 589,431 521,129
Transportation,
compression
and
processing
fees 49,314 30,337 132,394 82,706
Condensate and
other 14,001 11,169 45,280 37,299
Total revenue 366,393 353,691 1,020,924 989,672
------- ------- --------- -------
Costs and expenses:
Cost of
natural gas
and natural
gas
liquids(1) 284,936 281,858 789,369 779,986
Transportation(1) 6,365 6,991 18,785 19,202
Operations and
maintenance 19,242 16,091 56,171 46,953
Depreciation
and
amortization 19,259 16,911 57,409 51,143
Impairment - 5,000 28,744 5,000
General and
administrative 13,697 10,031 38,939 34,530
Taxes other
than income 1,983 1,502 5,459 4,029
Equity in
(earnings)
loss from
unconsolidated
affiliates (12,558) 161,589 89,733 158,581
Gain on sale
of operating
assets (9,716) - (9,716) -
Total costs and expenses 323,208 499,973 1,074,893 1,099,424
------- ------- --------- ---------
Operating income (loss) 43,185 (146,282) (53,969) (109,752)
Other income (expense):
Interest and
other income 11 16 570 31
Loss on
refinancing
of unsecured
debt - - - (18,233)
Interest and
other
financing
costs (13,797) (11,080) (42,823) (34,450)
Income (loss) before income taxes 29,399 (157,346) (96,222) (162,404)
Provision for income taxes (474) (390) (1,406) (1,161)
---- ---- ------ ------
Net income (loss) 28,925 (157,736) (97,628) (163,565)
Preferred unit distributions (9,138) (8,279) (26,751) (24,235)
------ ------ ------- -------
Net income (loss) to common units $19,787 $(166,015) $(124,379) $(187,800)
======= ========= ========= =========
Basic net income (loss) per common
unit:
Net income
(loss) per
common unit $0.27 $(2.51) $(1.73) $(2.84)
Weighted
average
number of
common units 72,395 66,246 71,887 66,125
Diluted net income (loss) per common
unit:
Net income
(loss) per
common unit $0.23 $(2.51) $(1.73) $(2.84)
Weighted
average
number of
common units 85,682 66,246 71,887 66,125
Distributions declared per common
unit $0.575 $0.575 $1.725 $1.725
=== ====== ====== ====== ======
(1) Exclusive of operations and maintenance, depreciation and amortization and impairment shown separately below.
COPANO ENERGY, L.L.C. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30,
-------------------------------
2012 2011
---- ----
Cash Flows From Operating Activities:
(In thousands)
Net loss $(97,628) $(163,565)
Adjustments to
reconcile net loss
to net cash
provided by
operating
activities:
Depreciation and
amortization 57,409 51,143
Impairment 28,744 5,000
Amortization of
debt issue
costs 2,987 2,855
Equity in loss
from
unconsolidated
affiliates 89,733 158,581
Distributions
from
unconsolidated
affiliates 31,229 17,961
Gain on sale of
operating
assets (9,716) -
Loss on
refinancing of
unsecured debt - 18,233
Non-cash gain
on risk
management
activities, net (4,327) (4,723)
Equity-based
compensation 5,246 7,445
Deferred tax
provision 240 253
Other non-cash
items 5,196 (86)
Changes in
assets and
liabilities,
net of
acquisitions: - -
Accounts
receivable 8,032 (11,132)
Prepayments
and other
current
assets 1,861 (2,952)
Risk
management
activities 8,135 11,353
Accounts
payable (24,371) 17,459
Other current
liabilities 21,010 14,964
------ ------
Net cash provided by
operating activities 123,780 122,789
------- -------
Cash Flows From Investing Activities:
Additions to
property, plant
and equipment (247,179) (175,323)
Additions to
intangible assets (6,869) (5,316)
Acquisitions - (16,084)
Investments in
unconsolidated
affiliates (60,677) (105,111)
Distributions from
unconsolidated
affiliates 3,279 2,368
Escrow cash - 6
Proceeds from sale
of assets 23,850 248
Other 2,604 98
Net cash used in
investing activities (284,992) (299,114)
-------- --------
Cash Flows From Financing Activities:
Proceeds from long-
term debt 420,375 725,000
Repayment of long-
term debt (322,000) (412,665)
Payments of
premiums and
expenses on
redemption of
unsecured debt - (14,572)
Deferred financing
costs (3,539) (15,743)
Distributions to
unitholders (126,090) (114,834)
Proceeds from
public offering of
common units, net
of underwriting
discounts
and commissions
of $7,590 188,083 -
Equity offering
costs (379) (4)
Proceeds from
option exercises 1,284 2,747
Net cash provided by
financing activities 157,734 169,929
------- -------
Net decrease in cash and cash equivalents (3,478) (6,396)
Cash and cash equivalents, beginning of year 56,962 59,930
------ ------
Cash and cash equivalents, end of period $53,484 $53,534
======= =======
COPANO ENERGY, L.L.C. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2012 2011
---- ----
(In thousands, except unit
information)
ASSETS
Current assets:
Cash and cash
equivalents $53,484 $56,962
Accounts
receivable,
net 112,165 119,193
Risk
management
assets 16,420 4,322
Prepayments
and other
current
assets 3,254 5,114
Total current assets 185,323 185,591
------- -------
Property, plant and equipment, net 1,301,813 1,103,699
Intangible assets, net 161,652 192,425
Investments in unconsolidated affiliates 480,118 544,687
Escrow cash 1,848 1,848
Risk management assets 6,941 6,452
Other assets, net 28,163 29,895
------ ------
Total assets $2,165,858 $2,064,597
========== ==========
LIABILITIES AND MEMBERS' CAPITAL
Current liabilities:
Accounts
payable $137,232 $155,921
Accrued
capital
expenditures 9,841 7,033
Accrued
interest 25,022 8,686
Accrued tax
liability 1,148 1,182
Risk
management
liabilities 1,512 3,565
Other current
liabilities 22,974 15,007
Total current liabilities 197,729 191,394
------- -------
1,092,719 994,525
Long term debt (includes $3,194 and $0
bond premium as of September 30, 2012 and
December 31, 2011, respectively)
Deferred tax liability 2,440 2,199
Other noncurrent liabilities 9,893 4,581
Commitments and contingencies
Members' capital:
285,168 285,168
Series A
convertible
preferred
units, no
par value,
12,582,468
units
and11,684,074
units issued
and
outstanding
as of
September
30, 2012 and
December 31,
2011,
respectively
1,353,900 1,164,853
Common units,
no par
value,
72,411,407
units and
66,341,458
units issued
andoutstanding
as of
September
30, 2012 and
December 31,
2011,
respectively
Paid in capital 69,966 62,277
Accumulated deficit (848,066) (624,121)
Accumulated other comprehensive income
(loss) 2,109 (16,279)
----- -------
863,077 871,898
------- -------
Total liabilities and
members' capital $2,165,858 $2,064,597
========== ==========
COPANO ENERGY, L.L.C. AND SUBSIDIARIES
UNAUDITED RESULTS OF OPERATIONS
Three Months Ended September
30, Nine Months Ended September 30,
----------------------------- -------------------------------
2012 2011 2012 2011
---- ---- ---- ----
($ In thousands)
Total segment gross margin(1) $75,092 $64,842 $212,770 $190,484
Operations and maintenance expenses 19,242 16,091 56,171 46,953
Depreciation and amortization 19,259 16,911 57,409 51,143
Impairment - 5,000 28,744 5,000
General and administrative expenses 13,697 10,031 38,939 34,530
Taxes other than income 1,983 1,502 5,459 4,029
Equity in (earnings) loss from
unconsolidated affiliates(2)(3) (12,558) 161,589 89,733 158,581
Gain on sale of operating assets (9,716) - (9,716) -
------ --- ------ ---
Operating income
(loss) 43,185 (146,282) (53,969) (109,752)
Loss on refinancing of unsecured
debt - - - (18,233)
Interest and other financing costs,
net (13,786) (11,064) (42,253) (34,419)
Provision for income taxes (474) (390) (1,406) (1,161)
---- ---- ------ ------
Net income (loss) 28,925 (157,736) (97,628) (163,565)
Preferred unit distributions (9,138) (8,279) (26,751) (24,235)
------ ------ ------- -------
Net income (loss) to common units $19,787 $(166,015) $(124,379) $(187,800)
======= ========= ========= =========
Basic net income (loss) per common
unit $0.27 $(2.51) $(1.73) $(2.84)
===== ====== ====== ======
Weighted average number of common
units -basic 72,395 66,246 71,887 66,125
====== ====== ====== ======
Diluted net income (loss) per
common unit $0.23 $(2.51) $(1.73) $(2.84)
===== ====== ====== ======
Weighted average number of common
units -diluted 85,682 66,246 71,887 66,125
====== ====== ====== ======
Total segment gross margin:
Texas $55,236 $44,540 $149,678 $135,685
Oklahoma 22,948 27,876 67,318 79,623
Rocky
Mountains(4) 624 432 1,169 2,245
Segment gross margin 78,808 72,848 218,165 217,553
Corporate and
other(5) (3,716) (8,006) (5,395) (27,069)
Total segment gross margin(1) $75,092 $64,842 $212,770 $190,484
======= ======= ======== ========
Segment gross margin per unit:
Texas:
Service throughput ($/MMBtu) $0.67 $0.63 $0.59 $0.71
Oklahoma:
Service throughput ($/MMBtu) $0.80 $1.05 $0.77 $1.04
Volumes:
Texas:(6)
Service throughput (MMBtu/d)(7) 897,601 765,744 922,256 694,802
Pipeline throughput (MMBtu/d) 557,457 463,321 563,404 436,210
Plant inlet volumes (MMBtu/d) 824,196 686,398 830,755 612,405
NGLs produced (Bbls/d) 54,142 30,904 46,239 27,040
Oklahoma:(8)
Service throughput (MMBtu/d)(7) 313,414 288,440 318,851 280,689
Plant inlet volumes (MMBtu/d) 157,775 158,070 157,645 154,439
NGLs produced (Bbls/d) 16,207 17,453 16,729 16,945
Capital Expenditures:
Maintenance
capital
expenditures $1,743 $3,510 $7,984 $11,111
Expansion
capital
expenditures 95,869 82,675 259,794 203,576
Total capital expenditures $97,612 $86,185 $267,778 $214,687
======= ======= ======== ========
Operations and maintenance
expenses:
Texas $11,548 $9,082 $33,441 $26,815
Oklahoma 7,649 6,930 22,592 19,943
Rocky Mountains 45 79 138 195
Total operations and maintenance
expenses $19,242 $16,091 $56,171 $46,953
======= ======= ======= =======
(1) Total segment gross margin is a non-
GAAP financial measure. Please read
Unaudited Non-GAAP Financial
Measures" for a reconciliation of
total segment gross margin to its
most directly comparable GAAP
measure of operating income.
(2) During the three months ended March
31, 2012, Copano recorded a $120
million non-cash impairment charge
relating to its investments in
Bighorn and Fort Union.
(3) The following table summarizes the
results and volumes associated with
Copano's unconsolidated affiliates
($ in thousands):
Three Months Ended September 30,
2012 2011
---- ----
Volume Equity (Earnings)/Loss Volume Equity (Earnings)/Loss
------ ---------------------- ------ ----------------------
Eagle Ford Gathering $(9,174) $(2,016)
Pipeline throughput(a) (MMBtu/d) 319,919 38,652
NGLs produced(b) (Bbls/d) 12,526 -
Liberty Pipeline Group(c) (Bbls/d) 25,083 37 2,635 59
Webb Duval(d) (MMBtu/d) 53,483 (65) 48,628 73
Southern Dome (291) (652)
Plant inlet (MMBtu/d) 10,354 11,970
NGLs produced (Bbls/d) 375 429
Bighorn and Fort Union(e) (MMBtu/d) 694,961 (2,970) 670,543 164,136
Nine Months Ended September 30,
2012 2011
---- ----
Volume Equity (Earnings)/Loss Volume Equity (Earnings)/Loss
------ ---------------------- ------ ----------------------
Eagle Ford Gathering $(21,082) $(1,978)
Pipeline throughput(a) (MMBtu/d) 260,212 13,026
NGLs produced(a) (Bbls/d) 10,875 -
Liberty Pipeline Group(c) (Bbls/d) 20,172 311 888 60
Webb Duval(b) (MMBtu/d) 59,517 (255) 48,705 257
Southern Dome (692) (2,023)
Plant inlet (MMBtu/d) 9,245 11,630
NGLs produced (Bbls/d) 329 418
Bighorn and Fort Union(e) (MMBtu/d) 742,937 111,740 595,302 162,302
(a) For the three and nine months ended
September 30, 2011, the volume has been
recast from 58,295 (MMBtu/d), as
previously stated, to show daily flow
averaged over the 92 days and 273 days of
the three and nine month periods,
respectively, instead of the 63 days of
physical flow.
(b) Net of NGLs produced at Copano's Houston
Central complex.
(c) For the three and nine months ended
September 30, 2011, the volume has been
recast from 4,252 (MMBtu/d), as
previously stated, to show daily flow
averaged over the 92 days and 273 days of
the three and nine month periods,
respectively, instead of the 57 days of
physical flow.
(d) Net of intercompany volumes.
(e) Changes in pipeline throughput at Fort
Union did not have a material impact on
gross margin because Fort Union received
payments for additional volumes under
long-term contractual commitments in each
of the periods indicated.
(4) Rocky Mountains segment gross
margin includes results from
producer services, including
volumes purchased for resale,
volumes gathered under firm
capacity gathering agreements
with Fort Union, volumes
transported using Copano's firm
capacity agreements with
Wyoming Interstate Gas Company
and compressor rental services
provided to Bighorn.
(5) Corporate and other includes
results attributable to
Copano's commodity risk
management activities.
(6) Plant inlet volumes and NGLs
produced represent total
volumes processed and produced
by the Texas segment at all
plants, including plants owned
by the Texas segment and plants
owned by third parties.
(7) "Service throughput" means the
volume of natural gas delivered
to Copano's 100%-owned
processing plants by third-
party pipelines plus Copano's
"pipeline throughput," which is
the volume of natural gas
transported or gathered through
Copano's pipelines.
(8) Plant inlet volumes and NGLs
produced represent total
volumes processed and produced
by the Oklahoma segment at all
plants, including plants owned
by the Oklahoma segment and
plants owned by third parties.
COPANO ENERGY, L.L.C. AND SUBSIDIARIES
UNAUDITED NON-GAAP FINANCIAL MEASURES
Three Months Ended Nine Months Ended September 30,
September 30,
-------------
2012 2011 2012 2011
---- ---- ---- ----
Reconciliation of total segment gross margin to operating income
(loss): (In thousands)
Operating income
(loss) $43,185 $(146,282) $(53,969) $(109,752)
Add: Operations
and maintenance
expenses 19,242 16,091 56,171 46,953
Depreciation
and
amortization 19,259 16,911 57,409 51,143
Impairment - 5,000 28,744 5,000
General and
administrative
expenses 13,697 10,031 38,939 34,530
Taxes other
than income 1,983 1,502 5,459 4,029
Equity in
(earnings)
loss from
unconsolidated
affiliates (12,558) 161,589 89,733 158,581
Gain on sale of
operating
assets (9,716) - (9,716) -
------ --- ------ ---
Total segment gross
margin $75,092 $64,842 $212,770 $190,484
Reconciliation of EBITDA, adjusted EBITDA and total distributable
cash flow to net income (loss):
Net income (loss) $28,925 $(157,736) $(97,628) $(163,565)
Add: Depreciation
and amortization 19,259 16,911 57,409 51,143
Interest and
other
financing
costs 13,797 11,080 42,823 34,450
Provision for
income taxes 474 390 1,406 1,161
--- --- ----- -----
EBITDA 62,455 (129,355) 4,010 (76,811)
Add: Amortization
of commodity
derivative options 5,924 7,442 16,002 22,069
Distributions
from
unconsolidated
affiliates 11,994 6,757 34,508 20,329
Loss on
refinancing of
unsecured debt - - - 18,233
Equity-based
compensation 3,223 2,093 7,575 9,184
Equity in
(earnings)
loss from
unconsolidated
affiliates (12,558) 161,589 89,733 158,581
Unrealized loss
(gain) from
commodity risk
management
activities 2,583 (2,332) (1,818) (2,695)
Impairment - 5,000 28,744 5,000
Other non-cash
operating
items (591) 576 2,894 (272)
---- --- ----- ----
Adjusted EBITDA 73,030 51,770 181,648 153,618
Less: Interest
expense (13,745) (11,029) (42,526) (33,623)
Current income
tax expense
and other (419) (305) (1,166) (929)
Maintenance
capital
expenditures (1,743) (3,510) (7,984) (11,111)
------ ------ ------ -------
Total distributable
cash flow $57,123 $36,926 $129,972 $107,955
Actual quarterly distribution $46,087 $38,705
=== ======= =======
Total distributable cash flow coverage 124% 95%
=== ===
SOURCE Copano Energy, L.L.C.
