QEP MIDSTREAM PARTNERS LP 
By DENVER, Feb. 25, 2014 /PRNewswire/ -- QEP Midstream Partners, LP (NYSE: QEPM) ("QEPM" or the "Partnership") today reported estimated financial and operating results for the fourth quarter and for the period following the closing of the initial public offering ("IPO") on August 14, 2013, through December 31, 2013 (the "Post-IPO Period"). The Partnership reported fourth quarter 2013 net income of $12.6 million, or $0.23 per limited partner unit (on a diluted basis), fourth quarter 2013 Adjusted EBITDA (a non-GAAP measure) of $20.2 million, and fourth quarter 2013 distributable cash flow ("DCF", a non-GAAP measure) of $17.1 million, which represents 120% coverage of the fourth quarter distribution. The Partnership reported Post-IPO Period net income of $19.1 million, or $0.35 per limited partner unit (on a diluted basis) and Adjusted EBITDA (a non-GAAP measure) of $30.7 million.
(Logo: http://photos.prnewswire.com/prnh/20130904/LA74347LOGO)
The Partnership paid a quarterly distribution of $0.26 per unit for the fourth quarter on February 14, 2014, to unitholders of record at the close of business on February 4, 2014. The distribution represents an increase of $0.01 per common unit, or 4%, over the third quarter 2013 distribution (pro rata).
Please see the definitions of non-GAAP measures and the reconciliation to the most comparable measures calculated in accordance with GAAP in the "Non-GAAP Financial Measures" section of this press release.
Post-IPO Period Highlights
-- Completed the IPO on August 14, 2013
-- Generated $30.7 million of Adjusted EBITDA and $26.7 million of
distributable cash flow
-- Announced a fourth quarter cash distribution of $0.26 per unit
-- Established strong balance sheet and liquidity to support future growth
"The strong financial and operating results in the fourth quarter are a continuation of the consistent and profitable growth that these assets and our operating teams have been delivering for years," commented Chuck Stanley, President, Chairman and Chief Executive Officer. "The Partnership delivered strong financial results in the quarter and we are excited about opportunities for future growth. Our quarterly distribution of $0.26 per unit marks a four percent increase from our minimum quarterly distribution. Our guidance for 2014 implies continued growth in our business and distributable cash flow and we expect that our strong financial position will enable continued growth in the years to come," concluded Stanley.
Operating Results
Results of operations during the fourth quarter 2013 were largely in line with company expectations. Compared to the results for the fourth quarter 2012 for the Partnership's Predecessor (see discussion below regarding Predecessor Financial Information), gathering and transportation revenue and gathering expense decreased. This is due to the lack of comparability of the results of the Predecessor, which include results for assets that were not assigned to the Partnership but were, instead, retained by the Predecessor.
Compared to the fourth quarter 2012, on a pro forma basis, gathering and transportation revenue increased by approximately $0.2 million, primarily driven by an increase in gathering revenue due to an increase in volumes on the Green River Gathering System. Gathering expense increased $0.9 million from the fourth quarter 2012 as a result of increased labor and benefits costs associated with the contributed properties.
Balance Sheet
As of December 31, 2013, the Partnership had $19.0 million of cash and cash equivalents and its $500.0 million revolving credit facility was undrawn.
Capital Expenditures
Capital expenditures totaled $20.0 million for the Partnership during the Post-IPO Period, which includes expansion capital of $6.9 million and maintenance capital of $13.1 million. Maintenance capital expenditures of $13.1 million include $9.6 million related to a condensate pipeline repair and replacement project that was completed in the fourth quarter 2013. The Partnership was reimbursed by QEP Resources, Inc. for these costs pursuant to an indemnification provision in the Omnibus Agreement executed in connection with the closing of the IPO. The remaining maintenance capital expenditures of $3.5 million related to compressor overhauls and line looping projects intended to improve efficiency and increase flexibility on the Vermillion and Green River gathering systems. Expansion capital expenditures of $6.9 million related primarily to a compressor replacement project on the Vermillion Gathering System.
2014 Guidance
For 2014 the Partnership's forecasts distributable cash flow in a range of $65 million to $70 million, Adjusted EBITDA of $78 million to $83 million, capital expenditures of $18 million to $20 million, including approximately $8 million of expansion capital expenditures related to expansion of the Vermillion Gathering System.
Predecessor Financial Information
Certain information in this release includes periods prior to the completion of the IPO and prior to the effective dates of certain agreements between the Partnership and QEPR. Consequently, the financial statements contained in this release include periods that pertain to QEP Midstream Partners, LP Predecessor, the Partnership's predecessor for accounting purposes (the Predecessor). Because the results of the Predecessor include results for both the properties conveyed to the Partnership in connection with the IPO and properties retained by the Predecessor, the Partnership does not consider the results of the Predecessor to be indicative of the Partnership's future results. The Partnership has included in this release Supplemental Pro Forma Disclosures, which provide historical financial data limited to only the properties conveyed to the Partnership in connection with the IPO.
Estimates of key financial and operating data follow.
Fourth Quarter 2013 Results Conference Call
QEPM's management will discuss fourth quarter 2013 results in a conference call on Wednesday, February 26, 2014, beginning at 11:00 a.m. EST. The conference call can be accessed at www.qepm.com. You may also participate in the conference call by dialing (877) 407-4019 domestically or (201) 689-8337 internationally. Attendees should log in to the webcast or dial in approximately 15 minutes prior to the call's start time. A replay of the conference call will be available on the website and a telephone audio replay will be available from February 26, 2014 to March 26, 2014, by calling (877) 660-6853 domestically or (201) 612-7415 internationally and then entering conference ID # 13574900.
About QEP Midstream Partners, LP
QEP Midstream Partners, LP is a master limited partnership formed by QEP Resources, Inc. (NYSE: QEP) to own, operate, acquire and develop midstream assets. The Partnership provides midstream gathering services to QEP and third-party companies in the Green River, Uinta and Williston basins.
Forward-Looking Statements
Disclosures in this press release contain certain forward-looking statements within the meaning of the federal securities laws. Statements that do not relate strictly to historical or current facts are forward-looking. These statements contain words such as "possible," "if," "will" and "expect" and involve risks and uncertainties including, among others, that our business plans may change as circumstances warrant. Such forward-looking statements include statements regarding: future growth; financial position; pro forma disclosures; financial data for the Predecessor; reimbursement of expenses related to condensate pipeline repair and replacement; ability of compressor overhaul and line looping projects to improve efficiency and increase flexibility of QEPM's gathering systems; and forecasted distributable cash flow, Adjusted EBITDA, capital expenditures and cash interest expense for the twelve months ending December 31, 2014. Factors that could cause QEPM's actual results to differ materially from the results contemplated by such forward-looking statements include: changes in general economic conditions; competitive conditions in QEPM's industry; actions taken by third-party operators, processors and transporters; changes in the demand for oil and natural gas storage and transportation services; QEPM's ability to successfully implement its business plan; QEPM's ability to complete internal growth projects on time and on budget; the price and availability of debt and equity financing; operating risks and hazards incidental to transporting, storing and processing oil and natural gas, as applicable; natural disasters, weather-related delays and casualty losses; the outcome of litigation; changes in interest rates; and other factors discussed in the "Risk Factors" section of QEPM's Prospectus, dated August 8, 2013, filed with the Securities and Exchange Commission on August 9, 2013. Investors should not place undue reliance on forward-looking statements as a prediction of actual results. QEPM undertakes no obligation to update or revise such forward-looking statements to reflect events or circumstances that occur, or of which QEPM becomes aware, after the date hereof.
Contact
Investors:
Greg Bensen
Director, Investor Relations
303-405-6665
Media:
Brent Rockwood
Director, Communications
303-672-6999
QEP MIDSTREAM PARTNERS, LP
CONSOLIDATED STATEMENTS OF INCOME
Year Ended
December 31, 2013
-----------------
Three Months Three Months Period From Period From Year Ended
Ended Ended August 14, January 1, December 31,
December 31, December 31, 2013, through 2013, through 2012
2013 2012 December 31, August 13,
2013 2013
---- ----
Successor Predecessor Successor Predecessor Predecessor
--------- ----------- --------- ----------- -----------
(in millions, except per unit information)
Revenues
Gathering and
transportation $29.9 $37.9 $46.1 $92.9 $151.3
Condensate
sales 1.8 1.9 2.0 7.4 10.9
--- --- --- --- ----
Total revenues 31.7 39.8 48.1 100.3 162.2
---- ---- ---- ----- -----
Operating
expenses
Gathering 6.7 8.3 9.8 19.7 29.9
General and
administrative 4.0 4.4 5.5 13.6 17.0
Taxes other
than income
taxes 0.5 0.7 0.8 1.3 3.1
Depreciation
and
amortization 7.6 10.0 11.7 25.0 39.8
--- ----
Total operating
expenses 18.8 23.4 27.8 59.6 89.8
Net loss from
property sales - - - (0.5) -
--- ---- ---
Operating
income 12.9 16.4 20.3 40.2 72.4
Other income - 0.1 - - 0.1
Income from
unconsolidated
affiliates 1.2 1.7 1.2 3.8 7.2
Interest
expense (0.6) (3.3) (0.9) (2.6) (8.7)
---- ---- ---- ---- ----
Net income 13.5 14.9 20.6 41.4 71.0
Net income
attributable
to
noncontrolling
interest (0.9) (1.0) (1.5) (2.5) (3.7)
---- ---- ---- ---- ----
Net income
attributable
to QEP
Midstream or
Predecessor $12.6 $13.9 $19.1 $38.9 $67.3
===== ===== ===== ===== =====
Net income
attributable
to QEP
Midstream per
limited
partner unit
(basic and
diluted):
Common units $0.23 $0.35
Subordinated
units $0.23 $0.35
Weighted-
average
limited
partner units
outstanding
(basic and
diluted):
Common units 26.7 26.7
Subordinated
units 26.7 26.7
QEP MIDSTREAM PARTNERS, LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
Period From Period From Year Ended
August 14, January 1, December 31,
2013, through 2013, through 2012
December 31, August 13,
2013 2013
----
Successor Predecessor Predecessor
--------- ----------- -----------
(in millions)
OPERATING
ACTIVITIES
Net
income $20.6 $41.4 $71.0
Adjustments
to activities:
reconcile
net
income
to
net
cash
provided
by
operating
Depreciation
and
amortization 11.7 25.0 39.8
Unit-
based
compensation
expense 0.5 - -
Income
from
unconsolidated
affiliates (1.2) (3.8) (7.2)
Distributions
from
unconsolidated
affiliates 1.3 4.9 7.8
Amortization
of
debt
issuance
costs 0.2 - -
Net
loss
from
asset
sales - 0.5 -
Changes
in
operating
assets
and
liabilities (1.5) 22.9 (4.4)
Net
cash
provided
by
operating
activities $31.6 $90.9 $107.0
----- ----- ------
INVESTING
ACTIVITIES
Property,
plant
and
equipment $(14.2) $(9.1) $(43.7)
Proceeds
from
sale
of
assets 0.5 0.6 0.3
Other - - -
--- --- ---
Net
cash
used
in
investing
activities $(13.7) $(8.5) $(43.4)
------ ----- ------
FINANCING
ACTIVITIES
Repayments
of
long-
term
debt
(to
related
party) $(95.5) $(66.4) $(43.6)
Long-
term
debt
issuance
costs (3.2) - -
Net
proceeds
from
initial
public
offering 449.6 - -
Proceeds
from
initial
public
offering
distributed
to
parent (351.1) - -
Contributions
from
(distributions
to)
parent,
net 9.6 (12.2) (14.5)
Distribution
to
unitholders (7.1) - -
Distribution
to
noncontrolling
interest (2.3) (4.1) (6.6)
---- ---- ----
Net
cash
provided
by
(used
in)
financing
activities $ - $(82.7) $(64.7)
--- --- ------ ------
Change
in
cash
and
cash
equivalents $17.9 $(0.3) $(1.1)
Beginning
cash
and
cash
equivalents 1.1 1.4 2.5
Ending
cash
and
cash
equivalents $19.0 $1.1 $1.4
Supplemental
Disclosures:
Non-
cash
investing
activities
Change
in
capital
expenditure
accrual
balance $5.8 $(1.6) $(1.3)
Supplemental Pro Forma Disclosures
Certain information contained in this release relates to periods that ended prior to the completion of the IPO and prior to the effective dates of certain agreements between the Partnership and QEP Resources, Inc. Consequently, the historical financial results include combined results for both the properties conveyed to the Partnership in connection with the IPO and properties retained by the Predecessor. The following information is for informational purposes only and was derived from the Predecessor financial information by removing the results of the assets retained by the Predecessor (consisting of the Uinta Basin Gathering System and general support equipment). QEPM believes that historical data limited to only the properties conveyed to the Partnership in connection with the IPO is relevant and meaningful, enhances the discussion of periods presented and is useful to the reader to better understand trends in QEPM's operations. The following information is for informational purposes only and was derived from the Predecessor financial information by removing the results of the assets retained by the Predecessor (consisting of the Uinta Basin Gathering System and general support equipment). Management does not believe that the financial data is necessarily indicative of the financial data reported by the Partnership for periods subsequent to the IPO, future results of QEPM, or other transactions that resulted in the capitalization and start-up of the QEPM.
QEP Midstream Partners, LP
Pro Forma Financial Data
Three Months Ended Year Ended
December 31 December 31, Change
------------------ ------------- ------
2013 2012 2013 2013 2012 2013
vs. vs.
2012 2012
---- ---- ----- ---- ---- -----
(in millions, except operating, per
unit amounts and percentages)
Revenues
Gathering and
transportation $29.9 $29.7 $0.2 $119.0 $119.0 $ -
Condensate
sales 1.8 1.7 0.1 7.6 8.5 (0.9)
--- --- --- --- ---
Total
revenues $31.7 $31.4 $0.3 $126.6 $127.5 $(0.9)
----- ----- ---- ------ ------ -----
Operating
expenses
Gathering
expenses $6.7 $5.8 $0.9 $24.0 $21.1 $2.9
Operating
Statistics
Natural gas
throughput
in millions
of MMBtu
Gathering and
transportation 74.3 74.7 (0.4) 300.2 309.2 (9.0)
Equity
interest (1) 6.4 8.1 (1.7) 19.5 25.7 (6.2)
--- --- ---- ---- ---- ----
Total natural
gas
throughput 80.7 82.8 (2.1) 319.7 334.9 (15.2)
Throughput
attributable
to
noncontrolling
interests
(2) (2.8) (2.0) (0.8) (10.3) (12.1) 1.8
---- ---- ---- ----- -----
Total
throughput
attributable
to QEP
Midstream or
Predecessor 77.9 80.8 (2.9) 309.4 322.8 (13.4)
==== ==== ==== ===== ===== =====
Crude oil and
condensate
gathering
system
throughput
volumes (in
MBbls) 1,073.0 1,166.4 (93.4) 4,986.3 5,297.4 (311.1)
Water
gathering
volumes (in
MBbls) 1,227.0 1,069.9 157.1 4,215.6 3,998.4 217.2
Condensate
sales
volumes (in
MBbls) 21.2 21.2 - 92.2 98.8 (6.6)
Price
Average gas
gathering
and
transportation
fee (per
MMBtu) $0.34 $0.33 $0.01 $0.33 $0.32 $0.01
Average oil
and
condensate
gathering
fee (per
barrel) 2.47 2.37 0.10 2.49 2.31 0.18
Average water
gathering
fee (per
barrel) 1.85 1.86 (0.01) 1.83 1.84 (0.01)
Average
condensate
sale price
(per barrel) 85.25 84.53 0.72 78.30 86.43 (8.13)
(1) Includes QEPM's 50% share
of gross volumes from
Three Rivers Gathering,
L.L.C.
(2) Includes the 22%
noncontrolling interest in
Rendezvous Gas Services,
L.L.C.
Non-GAAP Financial Measures
This press release and the accompanying tables include financial measures in accordance with U.S. generally accepted accounting principles ("GAAP"), as well as non-GAAP financial measures, including Adjusted EBITDA and distributable cash flow. Management believes that the presentation of Adjusted EBITDA and distributable cash flow provides information useful to investors in assessing QEPM's financial condition and results of operations. Management defines Adjusted EBITDA as net income attributable to the Partnership or Predecessor before depreciation and amortization, interest and other income, interest expense, gains and losses from asset sales and deferred revenue associated with minimum volume commitment payments. We define distributable cash flow as Adjusted EBITDA less net cash interest paid, maintenance capital expenditures (net of reimbursements) and cash adjustments related to equity method investments and non-controlling interests, and other non-cash expenses. Distributable cash flow does not reflect changes in working capital balances.
The GAAP measures most directly comparable to Adjusted EBITDA and distributable cash flow are net income and cash flow from operating activities attributable to the Partnership or Predecessor. The tables below include reconciliations of these non-GAAP financial measures to the nearest GAAP financial measures.
Year Ended
December 31, 2013
-----------------
Three Months Three Months Period From Period From Year Ended
Ended Ended August 14, January 1, December 31,
December 31, December 31, 2013, through 2013, through 2012
2013 2012 December 31, August 13,
2013 2013
---- ----
Successor Predecessor Successor Predecessor Predecessor
--------- ----------- --------- ----------- -----------
(in millions)
Reconciliation of Net Income Attributable to QEP Midstream or Predecessor to Adjusted EBITDA and Distributable Cash Flows
Net income
attributable to
QEP Midstream or
Predecessor $12.6 $13.9 $19.1 $38.9 $67.3
Interest expense,
net of other
income 0.6 3.2 0.9 2.6 8.6
Depreciation and
amortization 7.6 10.0 11.7 25.0 39.8
Noncontrolling
interest share
of depreciation
and
amortization(1) (0.6) (0.6) (1.0) (1.6) (2.7)
Net loss from
asset sales - - - 0.5 -
Adjusted EBITDA $20.2 $26.5 $30.7 $65.4 $113.0
----- ----- ----- ----- ------
Cash interest
paid (0.5) (0.7)
Maintenance
capital
expenditures (8.8) (13.1)
Reimbursements
for maintenance
capital
expenditures 6.6 9.6
Cash adjustments
for non-
controlling
interest and
equity method
investments (0.6) -
Non-cash long-
term
compensation
expense 0.2 0.2
Distributable
Cash Flow $17.1 $26.7
===== =====
Year Ended
December 31, 2013
-----------------
Period From Period From Year Ended Year Ended
August 14, January 1, December 31, December 31,
2013, through 2013, through 2012 2011
December 31, August 13,
2013 2013
Successor Predecessor Predecessor Predecessor
--------- ----------- ----------- -----------
(in millions)
Reconciliation of Net Cash Flows Provided by Operating Activities to Adjusted EBITDA and Distributable Cash Flow
Net cash provided
by operating
activities $31.6 $90.9 $107.0 $97.5
Noncontrolling
interest share
of depreciation
and
amortization(1) (1.0) (1.6) (2.7) (2.7)
Income from
unconsolidated
affiliates, net
of distributions
from
unconsolidated
affiliates (0.1) (1.1) (0.6) (3.3)
Net income
attributable to
noncontrolling
interest (1.5) (2.5) (3.7) (3.2)
Interest expense 0.9 2.6 8.6 12.7
Working capital
changes 1.5 (22.9) 4.4 7.6
Amortization of
deferred
financing
charges (0.2) - - -
Unit-based
compensation
expense (0.5) - - -
Adjusted EBITDA $30.7 $65.4 $113.0 $108.6
----- ----- ------ ------
Cash interest
paid (0.7)
Maintenance
capital
expenditures (13.1)
Reimbursements
for maintenance
capital
expenditures 9.6
Non-cash long-
term
compensation
expense 0.2
---
Distributable
Cash Flow $26.7
=====
(1) Represents the
noncontrolling interest's
22% share of depreciation
and amortization
attributable to Rendezvous
Gas Services, L.L.C.
SOURCE QEP Midstream Partners, LP
