RADNOR, PENNSYLVANIA - July 31, 2014 - Niska Gas
Storage Partners LLC (NYSE:NKA) ("Niska" or "the Company") reported
today the declaration of a quarterly distribution and financial
results for the three months ended June 30, 2014. The Company also
provided an update on the current business environment and outlook,
announced a distribution reinvestment commitment from the Company's
largest unitholder, and announced a new member of the board of
directors.
Distributions
Niska announced today a cash distribution of $0.35
per common unit for the first fiscal quarter ended June 30, 2014.
This distribution is equivalent to $1.40 per common unit on an
annual basis and will be paid on August 19, 2014 to unitholders of
record on August 11, 2014.
Financial
Results
Adjusted EBITDA (as defined below) for Niska's
first fiscal quarter ended June 30, 2014, was $35.8 million
compared to $15.3 million for the fiscal quarter ended June 30,
2013. Cash Available for Distribution (as defined below) was
$24.0 million for the quarter, compared to negative $0.5 million in
the first quarter last year. Net loss was $19.0 million in the
three months ended June 30, 2014, compared to net income of $8.0
million in the same period last year. Loss per common unit
was negative $0.52 for the quarter ended June 30, 2014, compared to
earnings of $0.23 per common unit last year.
Results for the three months ended June 30, 2014
include the previously disclosed one-time recognition of
approximately $26.0 million of long-term contract revenue related
to the termination and renegotiation of the storage services
agreement with TransCanada Gas Storage Partnership, Niska's largest
volumetric customer. Excluding this one-time payment,
Adjusted EBITDA and Cash Available for Distribution would have been
$9.8 million and negative $2.0 million, respectively.
Also during the quarter, we recorded a non-cash
depreciation charge of $28.0 million related to estimated cushion
gas migration at one of our facilities in Alberta. After
experiencing unprecedented deliverability requirements throughout
the fourth quarter of fiscal 2014, the Company undertook an
evaluation of facility performance, cycling capabilities, and costs
associated with maintaining those capabilities going forward.
As a result of this evaluation, we determined that
approximately 2.6 Bcf of cushion gas, which carried a book cost of
$9.85 per Mcf, had migrated at our Countess facility and no longer
provided effective pressure support. We have recorded the
$28.0 million depreciation charge as our best estimate of the
migration using information currently available. We continue
to gather additional engineering data to evaluate performance
capabilities at the facility.
Storage Operations and
Outlook
"Continued robust natural gas
production growth combined with weak seasonal demand have lowered
natural gas prices and reduced market volatility, all of which have
further exacerbated already challenging storage conditions
thus far in fiscal 2015, although our financial results for the
first quarter largely fell in line with expectations,"
commented Bill Shea, Chairman, President and Chief Executive
Officer. "As stated last quarter, we expect
the majority of revenues to be realized in the second half of the
fiscal year, particularly in our fiscal fourth quarter."
"Looking ahead to the remainder
of the storage year, we expect increased fall and winter gas price
volatility, and we believe we are well positioned to take advantage
of market uplifts as they present themselves. Given current
market conditions, we feel it is prudent to revise our outlook from
previous expectations. Therefore, we are adjusting our prior
guidance ranges for the fiscal year ending March 31, 2015 to
Adjusted EBITDA of $90 - $110 million, from $120 - $140 million,
and Cash Available for Distribution to $35 - $55 million,
from $65 - $85 million."
Mr. Shea continued, "A key
driver for the revised guidance was the narrowing of seasonal
spreads in the regions in which we operate during the early part of
the injection season. Additionally, natural gas prices
for fiscal 2015 declined by $0.90 - $1.00 per Mcf over the past six
weeks, which potentially further reduces the market opportunities
that we can capture during this storage cycle." Mr. Shea
concluded by stating, "Affiliates of Carlyle/Riverstone Energy and Power Fund II
and Carlyle/Riverstone Energy and Power Fund III (together the
"Carlyle/Riverstone Funds"), who currently own approximately 18.7
million Niska common units, or 51.6% of total common units
outstanding, have announced their intention to reinvest 100% of
their distributions this quarter, which represents a reinvestment
of approximately $6.5 million. Furthermore, the
Carlyle/Riverstone Funds have agreed to reinvest distributions on
at least 50% of their units for the next three consecutive
quarters."
Announcement of New Board
Member
The company today announced the appointment of
Olivia C. Wassenaar to the board of directors ("the Board").
Ms. Wassenaar was appointed on July 30, 2014, and will serve as a
member of the Board's finance committee. Ms. Wassenaar joined
Riverstone Holdings LLC in 2008 as a Vice President, was promoted
to a Principal in 2010, and has served as a Managing Director since
2014. In this capacity, she invests in and monitors investments in
the midstream and exploration and production sectors of the energy
industry. Ms. Wassenaar also serves on the board of directors of
Eagle Energy Exploration LLC, Northern Blizzard Resources Inc.,
Talos Energy LLC, and USA Compression (NYSE: USAC). Prior to
joining Riverstone, Ms. Wassenaar was an Associate with Goldman,
Sachs & Co. in the Global Natural Resources investment banking
group. Ms. Wassenaar received her A.B., magna cum laude, from
Harvard College and earned an M.B.A. from the Wharton School of the
University of Pennsylvania.
Mr. Shea commented, "Olivia
brings an extensive energy industry and finance background to the
Board, with a particular focus on midstream and natural gas.
I am confident that her strong background will be a valuable asset
to Niska and enable us to enhance our diversification
initiatives."
Earnings Call
Niska will host a conference call to discuss
the Company's quarterly results, as well as an update on the
current business environment, on Thursday, July 31, 2014, at 9:00
a.m. Eastern Time (8:00 a.m. Central). This call will be webcast by
NASDAQ OMX and can be accessed at Niska's website at
www.niskapartners.com.
If you are unable to participate in the webcast of
the earnings call, you may access the live conference call by
dialing the following numbers:
Primary
Dial-In: |
1-800-237-9752 |
Secondary
Dial-In: |
1-617-847-8706 |
Access
Code: |
61572991 |
A telephonic replay can be accessed until 11:59
p.m. Central, August 2, 2014, at the following numbers:
Primary
Dial-In: |
1-888-286-8010 |
Secondary
Dial-In: |
1-617-801-6888 |
Access
Code: |
85714553 |
In addition, an electronic replay and PDF
transcript will be available on Niska's website in the Investor
Center section under the Presentations & Webcasts tab.
About Niska
Niska is a growth-oriented midstream natural gas
services provider with operations focused on owning, operating,
developing and acquiring midstream energy assets in the United
States and Canada. We are currently the largest independent
owner and operator of natural gas storage in North America, with
strategically located assets in key natural gas producing and
consuming regions. Niska owns and operates three natural gas
storage facilities, including the AECO Hub TM in
Alberta, Canada; Wild Goose in California; and Salt Plains in
Oklahoma. We also contract for natural gas storage capacity in the
U.S. Mid-continent.
Forward Looking
Statements
This press release includes "forward-looking
statements" - that is, statements related to future, not past,
events. Forward-looking statements are based on current
expectations and include any statement that does not directly
relate to a current or historical fact. In this context,
forward-looking statements often address our expected future
business and financial performance, and often contain words such as
"anticipate," "believe," "intend," "expect," "plan," "will" or
other similar words. Our estimates of future Adjusted EBITDA and
Cash Available for Distribution are forward-looking statements.
These forward-looking statements involve certain risks and
uncertainties that ultimately may not prove to be accurate. Among
these risks and uncertainties are (1) changes in general economic
conditions; (2) our level of exposure to the market value of
natural gas storage services which could adversely affect our
revenues and cash available to make distributions; (3) competitive
conditions in our industry; (4) actions taken by third-party
operators, processors and transporters; (5) changes in the
availability and cost of capital; (6) operating hazards, natural
disasters, weather-related delays, casualty losses and other
matters beyond our control; (7) the effects of existing and future
laws and governmental regulations; (8) the effects of future
litigation; and (9) other factors and uncertainties inherent in the
development and operation of natural gas storage facilities. Other
factors that are not described that are unknown or unpredictable
could also have a material adverse effect on future results.
For further discussion of risks and uncertainties, you should refer
to Niska's filings with the United States Securities and Exchange
Commission. Actual results and future events could differ
materially from those anticipated in such statements. Niska
undertakes no obligation, and does not intend, to update these
forward-looking statements to reflect events or circumstances
occurring after this press release. You are cautioned not to place
undue reliance on these forward-looking statements, which speak
only as of the date of this press release. All forward-looking
statements are qualified in their entirety by this cautionary
statement.
*****
Non-GAAP Financial Measures
Niska uses and discloses the financial measures
"Adjusted EBITDA" and "Cash Available for Distribution" in this
press release. Niska defines Adjusted EBITDA as net earnings
before interest, income taxes, depreciation and amortization,
unrealized risk management gains and losses, foreign exchange gains
and losses, non-cash compensation expense, and other income.
Niska defines Cash Available for Distribution as Adjusted
EBITDA reduced by interest expense (excluding amortization of
deferred financing costs), income taxes paid (or recovered),
maintenance capital expenditures and other income. Niska's
Adjusted EBITDA and Cash Available for Distribution are not
presentations made in accordance with Generally Accepted Accounting
Principles in the United States ("GAAP"). Niska's management
utilizes Adjusted EBITDA and Cash Available for Distribution as key
performance measures in order to assess:
-
the financial performance of Niska's assets,
operations and return on capital without regard to financing
methods, capital structure or historical cost basis;
-
the ability of Niska's assets to generate cash
sufficient to pay interest on its indebtedness and make
distributions to its equity holders;
-
repeatable operating performance that is not
distorted by non-recurring items or market volatility; and
-
the viability of acquisitions and capital
expenditure projects.
The GAAP measure most directly comparable to
Adjusted EBITDA and Cash Available for Distribution is net
earnings. For a reconciliation of Adjusted EBITDA to net earnings,
please see the schedule provided in the attached pages. This
press release contains forward-looking estimates of Adjusted EBITDA
and Cash Available for Distribution for the fiscal year ending
March 31, 2015. Reconciliations to GAAP net earnings are not
provided for these forward-looking estimates because GAAP net
earnings for the fiscal year ending March 31, 2015 are not
accessible. Niska is able to estimate interest expense, income tax
benefits and expenses, depreciation and amortization, inventory
write-downs, impairments of assets (including goodwill), losses on
extinguishment of debt, foreign exchange gains and losses and other
income. However, the Company is unable to predict future
unrealized risk management gains and losses and these amounts could
be material, such that the amount of net earnings would vary
substantially from the amount of projected Adjusted EBITDA and Cash
Available for Distribution.
Niska believes that investors benefit from having
access to the same financial measures used by Niska's management.
Further, Niska believes that these measures are useful to investors
because they are one of the bases for comparing Niska's operating
performance with that of other companies with similar operations,
although Niska's measures may not be directly comparable to similar
measures used by other companies.
This information is intended to
be a qualified notice under Treasury Regulation Section
1.1446-4(b). Under rules applicable to publicly-traded
partnerships, our distributions to non-U.S. unitholders are subject
to withholding tax at the highest effective applicable rate to the
extent attributable to income that is effectively connected with
the conduct of a U.S. trade or business. Given the uncertainty at
the time of making distributions regarding the amount of any
distribution that is attributable to income that is so effectively
connected, we intend to treat all of our distributions as
attributable to our U.S. operations, and as a result, the entire
distribution will be subject to withholding.
This press release does not
constitute an offer to sell or the solicitation of an offer to buy
common units of the Partnership, nor shall there be any sale of
these securities in any state or jurisdiction in which such offer,
solicitation or sale, would be unlawful prior to registration or
qualification under the securities laws of any such state or
jurisdiction.
Contact
Niska Gas Storage Partners LLC
Investor Relations:
Brandon Tran, Investor Relations Associate
(403) 513-8600
NISKA GAS
STORAGE PARTNERS LLC
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
AND
COMPREHENSIVE INCOME (LOSS)
(in thousands of U.S. dollars, except for per
unit amounts)
(unaudited)
|
|
Three
Months Ended |
|
|
|
June 30, |
|
|
|
2014 |
|
2013 |
|
|
|
|
|
|
|
REVENUES |
|
|
|
|
|
Fee-based revenue |
|
$ |
42,754 |
|
$ |
31,471 |
|
Optimization, net |
|
12,623 |
|
25,718 |
|
|
|
55,377 |
|
57,189 |
|
|
|
|
|
|
|
EXPENSES (INCOME) |
|
|
|
|
|
Operating |
|
10,953 |
|
10,444 |
|
General and administrative |
|
10,075 |
|
11,290 |
|
Depreciation and amortization |
|
49,966 |
|
10,333 |
|
Interest |
|
12,313 |
|
16,206 |
|
Foreign exchange (gains) losses |
|
(50 |
) |
858 |
|
Other
(income) expense |
|
(16 |
) |
391 |
|
|
|
83,241 |
|
49,522 |
|
|
|
|
|
|
|
EARNINGS (LOSS) BEFORE INCOME
TAXES |
|
(27,864 |
) |
7,667 |
|
|
|
|
|
|
|
Income tax benefit |
|
(8,892 |
) |
(300 |
) |
|
|
|
|
|
|
NET EARNINGS (LOSS) AND
COMPREHENSIVE INCOME (LOSS) |
|
$ |
(18,972 |
) |
$ |
7,967 |
|
|
|
|
|
|
|
Net earnings (loss) allocated to: |
|
|
|
|
|
|
|
|
|
|
|
Managing member |
|
$ |
(358 |
) |
$ |
158 |
|
Common
unitholders |
|
$ |
(18,614 |
) |
$ |
7,809 |
|
|
|
|
|
|
|
Earnings (loss) per unit allocated to common unitholders - basic
and diluted |
|
$ |
(0.52 |
) |
$ |
0.23 |
|
NISKA GAS
STORAGE PARTNERS LLC
SELECTED FINANCIAL DATA AND NON-GAAP
RECONCILIATIONS
(in thousands of U.S. dollars, except
capacity amounts)
(unaudited)
|
|
Three
Months Ended |
|
|
|
June 30, |
|
|
|
2014 |
|
2013 |
|
|
|
|
|
|
|
Reconciliation of Net
Earnings (Loss) to Adjusted EBITDA and Cash Available for
Distribution: |
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
|
$ |
(18,972 |
) |
$ |
7,967 |
|
Add /
(deduct): |
|
|
|
|
|
Interest expense |
|
12,313 |
|
16,206 |
|
Income
tax benefit |
|
(8,892 |
) |
(300 |
) |
Depreciation and amortization |
|
49,966 |
|
10,333 |
|
Non-cash compensation expense |
|
250 |
|
- |
|
Unrealized risk management losses (gains) |
|
1,151 |
|
(20,118 |
) |
Foreign exchange (gains) losses |
|
(50 |
) |
858 |
|
Other (income) expense |
|
(16 |
) |
391 |
|
Adjusted EBITDA |
|
$ |
35,750 |
|
$ |
15,337 |
|
Less: |
|
|
|
|
|
Cash
interest expense, net |
|
11,401 |
|
15,371 |
|
Income taxes recovered |
|
(16 |
) |
- |
|
Maintenance capital expenditures |
|
399 |
|
57 |
|
Other (income) expense |
|
(16 |
) |
391 |
|
Cash available for distribution |
|
$ |
23,982 |
|
$ |
(482 |
) |
|
|
|
|
|
|
Revenue: |
|
|
|
|
|
Fee-based revenue: |
|
|
|
|
|
Long-term contract revenue |
|
$ |
40,482 |
|
$ |
20,596 |
|
Short-term contract revenue |
|
2,272 |
|
10,875 |
|
Total |
|
$ |
42,754 |
|
$ |
31,471 |
|
|
|
|
|
|
|
Proprietary optimization: |
|
|
|
|
|
Realized optimization |
|
$ |
13,774 |
|
$ |
5,600 |
|
Unrealized risk management (losses) gains |
|
(1,151 |
) |
20,118 |
|
Total |
|
$ |
12,623 |
|
$ |
25,718 |
|
|
|
|
|
|
|
Capital
expenditures: |
|
|
|
|
|
Maintenance |
|
$ |
399 |
|
$ |
57 |
|
Expansion |
|
578 |
|
115 |
|
Total |
|
$ |
977 |
|
$ |
172 |
|
|
|
|
|
|
|
Operating data: |
|
|
|
|
|
Effective working gas capacity (Bcf) |
|
250.5 |
|
250.5 |
|
|
|
June
30, |
|
March
31, |
|
|
|
2014 |
|
2014 |
|
|
|
(unaudited) |
|
Selected Balance Sheet
data |
|
|
|
|
|
Cash
and cash equivalents |
|
$ |
6,790 |
|
$ |
7,704 |
|
Borrowings under revolving credit facility |
|
$ |
204,500 |
|
$ |
119,500 |
|
Total
debt excluding revolving credit facility |
|
$ |
586,904 |
|
$ |
587,225 |
|
Members' equity |
|
$ |
528,047 |
|
$ |
554,140 |
|
This
announcement is distributed by NASDAQ OMX Corporate Solutions on
behalf of NASDAQ OMX Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Niska Gas Storage Partners LLC via
Globenewswire
HUG#1844272
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