Breitburn Energy Partners LP (NASDAQ:BBEP) today announced
financial and operating results for the third quarter of 2014.
Key Highlights for the Third Quarter
2014:
- Total production was 3.4 MMBoe, which
represents an 8% increase from the third quarter of 2013
- Total oil and natural gas liquids (NGL)
production was 2.2 MMBoe, which represents a 14% increase from the
third quarter of 2013
- Increased Adjusted EBITDA, a non-GAAP
financial measure, to a record quarterly high of $118.7 million,
which represents a 6% increase from the third quarter of 2013
- Declared cash distributions to our
common unitholders attributable to the third quarter of 2014 of
approximately $2.01 per unit on an annualized basis, which
represents a 3% increase from the third quarter of 2013
- In October, acquired ~4,600 gross
(~3,700 net) acres in Howard County, increasing Breitburn’s Midland
Basin gross surface acreage by ~25% and gross effective acreage by
~20%
- Adds 32 potential horizontal locations
to Breitburn's existing inventory and creates potential for at
least 160 laterals (gross) on multiple benches
Management Commentary
Halbert S. Washburn, Breitburn’s Chief Executive Officer, said:
“Our focus in the third quarter was on moving the pending QR Energy
acquisition to closure, and as a result of our efforts, the QR
Energy unitholder vote is scheduled for November 18th. As a
reminder, certain QR Energy unitholders owning approximately 37% of
the votes of the outstanding QRE units have agreed to vote in favor
of the transaction. Based on the current schedule, we expect to
close the transaction later this month, ahead of our original
schedule. On the operations front, the team did a very good job
adapting to a dynamic commodity price environment. Of note was the
significant drop in LOE per Boe from last year’s, and last
quarter’s, levels. Finally, with our recent bolt-on acquisition of
contiguous acreage in Howard County, we continue our transition to
a horizontal well program in the Permian. We believe our
consolidated and expanded footprint will benefit us greatly as we
evaluate our options for maximizing the long-term value of our
Permian Basin acreage.”
Third Quarter 2014 Operating and
Financial Results Compared to Second Quarter 2014
- Total production was 3,353 MBoe in the
third quarter of 2014 compared to 3,373 MBoe in the second quarter
of 2014. Average daily production was 36.5 MBoe/day in the third
quarter of 2014 compared to 37.1 MBoe/day in the second quarter of
2014.
- Oil production increased to 1,904 MBbl
compared to 1,901 MBbl in the second quarter of 2014
- NGL production decreased to 253 MBbl
compared to 279 MBbl in the second quarter of 2014
- Natural gas production increased to
7,178 MMcf compared to 7,163 MMcf in the second quarter of
2014
- Adjusted EBITDA was $118.7 million in
the third quarter of 2014 compared to $110.0 million in the second
quarter of 2014, which represents an 8% increase and a record
quarterly high. The increase was primarily due to higher oil sales
volumes and lower commodity derivative settlement payments,
partially offset by lower commodity prices.
- Net income attributable to common
unitholders was $126.5 million, or $1.03 per diluted common unit,
in the third quarter of 2014 compared to a net loss of $106.6
million, or $0.89 per diluted common unit, in the second quarter of
2014.
- Oil, NGL and natural gas sales revenues
were $216.1 million in the third quarter of 2014, compared to
$219.1 million in the second quarter of 2014, primarily due to
lower realized oil and natural gas prices partially offset by
higher oil sales volumes.
- Lease operating expenses, which include
district expenses, processing fees and transportation costs, were
$18.70 per Boe in the third quarter of 2014 compared to $21.03 per
Boe in the second quarter of 2014.
- General and administrative expenses,
excluding non-cash unit-based compensation, were $3.85 per Boe in
the third quarter of 2014 compared to $3.06 per Boe in the second
quarter of 2014.
- Gains on commodity derivative
instruments were $146.2 million in the third quarter of 2014
compared to losses of $127.0 million in the second quarter of 2014,
which primarily reflects decreases in oil and natural gas futures
prices during the third quarter of 2014. Derivative instrument
settlement payments were $3.7 million in the third quarter of 2014
compared to payments of $17.0 million in the second quarter of
2014.
- WTI oil spot prices averaged $97.87 per
barrel and Brent oil spot prices averaged $101.90 per barrel in the
third quarter of 2014 compared to $103.35 per barrel and $109.69
per barrel, respectively, in the second quarter of 2014. Henry Hub
natural gas spot prices averaged $3.96 per Mcf in the third quarter
of 2014 compared to $4.61 per Mcf in the second quarter of
2014.
- Realized crude oil, NGL, and natural
gas prices, excluding the effects of commodity derivative
settlements, averaged $90.12 per Bbl, $37.87 per Bbl and $4.12 per
Mcf, respectively, in the third quarter of 2014, compared to $95.74
per Bbl, $38.26 per Bbl and $4.81 per Mcf, respectively, in the
second quarter of 2014.
- Oil, NGL and natural gas capital
expenditures were $108.0 million in the third quarter of 2014
compared to $89.0 million in the second quarter of 2014.
- Distributable cash flow, a non-GAAP
financial measure, was $53.3 million in the third quarter of 2014
compared to $52.7 million in the second quarter of 2014.
Distributable cash flow per common unit was approximately $0.390 in
the third quarter of 2014, which includes the effect of our recent
offering of 14.0 million common units in October 2014, compared to
approximately $0.431 in the second quarter of 2014.
Impact of Derivative
Instruments
Breitburn uses commodity derivative instruments to mitigate
risks associated with commodity price volatility and to help
maintain cash flows for operating activities, acquisitions, capital
expenditures and distributions. Breitburn does not enter into
derivative instruments for speculative trading purposes. Since
Breitburn does not use hedge accounting to account for its
derivative instruments, changes in the fair value of derivative
instruments are recorded in Breitburn’s earnings during each
reporting period. These non-cash changes in the fair value of
derivatives do not affect Adjusted EBITDA, cash flow from
operations, distributable cash flow or Breitburn’s ability to pay
cash distributions for the reporting periods presented.
Total gains from commodity derivative instruments were
approximately $146.2 million for the third quarter of 2014, which
included payments of $3.7 million for derivative instruments that
settled during the period.
Production, Statement of Operations,
and Realized Price Information
The following table presents production, selected income
statement and realized price information for the three months ended
September 30, 2014 and 2013 and the three months ended June 30,
2014:
Three Months Ended September 30,
June 30, September 30,
Thousands of dollars, except as indicated 2014
2014 2013 Oil sales $ 176,986 $ 173,948
$ 162,709 NGL sales 9,582 10,675 7,888 Natural gas sales 29,578
34,428 26,816 Gain (loss) on commodity derivative instruments
146,171 (127,000 ) (54,765 ) Other revenues, net 1,585 1,071
737 Total revenues $ 363,902 $ 93,122 $
143,385 Lease operating expenses and processing fees (a) $
62,714 $ 70,923 $ 58,731 Production and property taxes (b) 16,327
16,001 14,476 Total lease operating expenses
79,041 86,924 73,207 Purchases and other
operating costs 102 110 226 Change in inventory 3,761 (3,974
) (4,931 ) Total operating costs $ 82,904 $ 83,060 $
68,502 Lease operating expenses, pre taxes, per Boe (a) $
18.70 $ 21.03 $ 18.96 Production and property taxes per Boe (b)
4.87 4.74 4.67 Total lease operating expenses
per Boe $ 23.57 $ 25.77 $ 23.63 General and
administrative expenses (excluding non-cash unit-based
compensation) $ 12,908 $ 10,322 $ 11,227 Net
income (loss) $ 130,643 $ (104,725 ) $ (25,011 ) Less:
distributions to preferred unitholders 4,125 1,833 —
Net income (loss) attributable to common unitholders $
126,518 $ (106,558 ) $ (25,011 ) Total production (MBoe) (c)
3,353 3,373 3,098 Oil (MBbl) 1,904 1,901 1,681 NGLs (MBbl) 253 279
206 Natural gas (MMcf) 7,178 7,163 7,258 Average daily production
(Boe/d) 36,450 37,069 33,674 Sales volumes
(MBoe) (d) 3,412 3,289 3,027 Average realized
sales price (per Boe) (e) (f) $ 63.33 $ 66.59 $ 65.14 Oil (per Bbl)
(e) (f) 90.12 95.74 100.94 NGLs (per Bbl) (e) 37.87 38.26 38.11
Natural gas (per Mcf) (e) $ 4.12 $ 4.81 $ 3.69
(a) Includes district expenses, transportation expenses and
processing fees. (b) Includes ad valorem and severance taxes. (c)
Natural gas is converted on the basis of six Mcf of gas per one Bbl
of oil equivalent. This ratio reflects an energy content
equivalency and not a price or revenue equivalency. Given commodity
price disparities, the price for a Bbl of oil equivalent for
natural gas is significantly less than the price for a Bbl of oil.
(d) Oil sales were 1,964 MBbl, 1,817 MBbl and 1,610 MBbl for the
three months ended September 30, 2014, June 30, 2014 and September
30, 2013, respectively. (e) Excludes the effect of commodity
derivative settlements. (f) Includes oil purchases.
Non-GAAP Financial
Measures
This press release, the financial tables and other supplemental
information, including the reconciliations of certain non-generally
accepted accounting principles (“non-GAAP”) measures to their
nearest comparable generally accepted accounting principles
(“GAAP”) measures, may be used periodically by management when
discussing Breitburn’s financial results with investors and
analysts, and they are also available at www.breitburn.com.
Among the non-GAAP financial measures used are “Adjusted EBITDA”
and “distributable cash flow.” These non-GAAP financial measures
should not be considered as alternatives to GAAP measures such as
net income, operating income, cash flow from operating activities
or any other GAAP measure of liquidity or financial performance.
Management believes that these non-GAAP financial measures enhance
comparability to prior periods.
Adjusted EBITDA is presented because management believes it
provides additional information relative to the performance of
Breitburn’s assets, without regard to financing methods or capital
structure. Distributable cash flow is used by management as a tool
to measure the cash distributions we could pay to our unitholders.
This financial measure indicates to investors whether or not we are
generating cash flow at a level that can support our distribution
rate to our unitholders. These non-GAAP financial measures may not
be comparable to similarly titled measures of other publicly traded
partnerships or limited liability companies because all companies
may not calculate Adjusted EBITDA or distributable cash flow in the
same manner.
Adjusted EBITDA
The following table presents a reconciliation of net income
(loss) and net cash flows from operating activities, our most
directly comparable GAAP financial performance and liquidity
measures, to Adjusted EBITDA for each of the periods indicated.
Three Months Ended September 30,
June 30, September 30, Thousands of
dollars, except as indicated 2014 2014
2013 Reconciliation of net income (loss) to
Adjusted EBITDA: Net income (loss) $ 130,643 $ (104,725 ) $
(25,011 ) Loss (gain) on commodity derivative instruments (146,171
) 127,000 54,765 Commodity derivative instrument settlements (a)
(b) (3,704 ) (17,024 ) (6,323 ) Depletion, depreciation and
amortization expense 72,671 68,245 59,764 Impairment 29,434 — 361
Interest expense and other financing costs 29,494 30,208 23,548
Loss (gain) on sale of assets (63 ) 334 77 Income tax expense
(benefit) 532 (159 ) 24 Unit-based compensation expense (c) 5,829
6,098 4,889
Adjusted EBITDA
$ 118,665 $ 109,977 $ 112,094 Less: Maintenance capital (d) $
33,434 $ 26,999 $ 25,782 Cash interest expense 27,849 28,399 21,747
Distributions to preferred unitholders 4,125 1,833 —
Distributable cash flow available to common unitholders $
53,257 $ 52,746 $ 64,565 Distributable cash
flow available per common unit (e) (f) 0.390 0.431 0.636 Common
unit distribution coverage (f)
0.78
x
0.86
x
1.30
x
Reconciliation of net cash flows from
operating activities to Adjusted EBITDA:
Net cash provided by operating activities $ 103,807 $ 74,798
$ 69,520 Increase (decrease) in assets net of liabilities relating
to operating activities (13,160 ) 7,300 20,663 Interest expense (g)
27,729 28,178 21,721 Income from equity affiliates, net 191 (388 )
121 Incentive compensation expense (h) — — Income taxes 98
89 69
Adjusted EBITDA $ 118,665 $
109,977 $ 112,094
(a) Excludes premiums paid at contract
inception related to those derivative contracts that settled during
the periods of:
2,141
2,118
1,233
(b) Includes net cash settlements on
derivative instruments:
- Oil settlements paid of:
(7,940
)
(18,125
)
(17,906
)
- Natural gas settlements received of:
4,236
1,101
11,583
(c) Represents non-cash long-term
unit-based incentive compensation expense.
(d) Maintenance Capital is management's
estimate of the investment in capital projects and obligatory
spending on existing facilities and operations needed to hold
production approximately flat year over year.
(e) Includes common units outstanding
(including outstanding LTIP grants) at each distribution record
date.
(f) Third quarter 2014 includes the effect
of the offering of 14 million common units in October 2014.
(g) Excludes amortization of debt issuance
costs and amortization of senior note discount/premium.
(h) Represents cash-based incentive
compensation plan expense.
Hedge Portfolio Summary
The table below summarizes Breitburn’s commodity derivative
hedge portfolio as of November 4, 2014. Please refer to the updated
Commodity Price Protection Portfolio at www.breitburn.com for
additional details related to our hedge portfolio.
Year
2014
2015
2016
2017
2018
Oil Positions:
Fixed Price Swaps - NYMEX WTI Hedged
Volume (Bbls/d) 14,811 13,059 9,211 7,971 493 Average Price ($/Bbl)
$ 92.59 $ 93.05 $ 86.73 $ 84.23 $ 82.20 Fixed Price Swaps - ICE
Brent Hedged Volume (Bbls/d) 4,950 3,374 4,300 298 — Average Price
($/Bbl) $ 98.89 $ 97.89 $ 95.17 $ 97.50 $ — Collars - NYMEX WTI
Hedged Volume (Bbls/d) 1,000 1,000 — — — Average Floor Price
($/Bbl) $ 90.00 $ 90.00 $ — $ — $ — Average Ceiling Price ($/Bbl) $
112.00 $ 113.50 $ — $ — $ — Collars - ICE Brent Hedged Volume
(Bbls/d) — 500 500 — — Average Floor Price ($/Bbl) $ — $ 90.00 $
90.00 $ — $ — Average Ceiling Price ($/Bbl) $ — $ 109.50 $ 101.25 $
— $ — Puts - NYMEX WTI Hedged Volume (Bbls/d) 500 500 1,000 — —
Average Price ($/Bbl) $ 90.00 $ 90.00 $ 90.00 $ — $ — Total: Hedged
Volume (Bbls/d) 21,261 18,433 15,011 8,269 493 Average Price
($/Bbl) $ 93.87 $ 93.61 $ 89.48 $ 84.71 $ 82.20
Gas Positions:
Fixed Price Swaps - MichCon City-Gate Hedged Volume (MMBtu/d) 7,500
7,500 17,000 10,000 — Average Price ($/MMBtu) $ 6.00 $ 6.00 $ 4.46
$ 4.48 $ — Fixed Price Swaps - Henry Hub Hedged Volume (MMBtu/d)
41,600 47,700 24,700 8,571 1,870 Average Price ($/MMBtu) $ 4.75 $
4.77 $ 4.23 $ 4.39 $ 4.15 Puts - Henry Hub Hedged Volume (MMBtu/d)
6,000 1,500 — — — Average Price ($/MMBtu) $ 5.00 $ 5.00 $ — $ — $ —
Total: Hedged Volume (MMBtu/d) 55,100 56,700 41,700 18,571 1,870
Average Price ($/MMBtu) $ 4.95 $ 4.94 $ 4.32 $ 4.44 $ 4.15
Calls - Henry Hub Hedged Volume (MMBtu/d) 15,000 — — — — Average
Price ($/MMBtu) $ 9.00 $ — $ — $ — $ — Deferred Premium ($/MMBtu) $
0.12 $ — $ — $ — $ — Premiums paid in 2012 related to oil
and natural gas derivatives to be settled in the fourth quarter of
2014 and beyond are as follows:
Year Thousands of
dollars 2014 2015 2016
2017 2018 Oil $ 1,129 $ 4,683 $ 7,438 $
734 $ — Natural gas $ 1,012 $ 1,989 $ 952 $ — $
—
Other Information
Breitburn will host a conference call later today, Wednesday,
November 5, 2014, at 1:00 pm (EDT) to discuss Breitburn’s third
quarter results. The conference call may be accessed by calling
888-401-4668 (international callers dial 719-457-2664) or via
webcast at http://ir.breitburn.com/.
An archived edition of the conference call will also be available
through November 12th by calling 877-870-5176 (international
callers dial 858-384-5517) and entering replay PIN 6782123 or by
visiting http://ir.breitburn.com/.
Breitburn will take questions from securities analysts and
institutional portfolio managers; the call is open to all other
interested parties on a listen-only basis.
About Breitburn Energy Partners
LP
Breitburn Energy Partners LP is a publicly traded independent
oil and gas master limited partnership focused on the acquisition,
development, and production of oil and gas properties throughout
the United States. Breitburn’s producing and non-producing crude
oil and natural gas reserves are located in Michigan, Oklahoma,
Texas, Wyoming, California, Florida, Indiana and Kentucky. See
www.breitburn.com for more information.
Additional Information about the
Proposed Transactions and Where to Find It
In connection with the previously announced merger with QR
Energy, LP (proposed transaction), Breitburn has filed with the SEC
a registration statement on Form S-4 that includes a prospectus of
Breitburn and a proxy statement of QR Energy. Each of Breitburn and
QR Energy also filed other relevant documents with the SEC
regarding the proposed transaction. INVESTORS ARE URGED TO READ THE
PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH
THE SEC BECAUSE THEY CONTAIN IMPORTANT INFORMATION. You may obtain
a free copy of the proxy statement/prospectus and other relevant
documents filed by Breitburn and QR Energy with the SEC at the
SEC’s website at www.sec.gov. You may
also obtain these documents by contacting Breitburn Investor
Relations in writing at 515 S. Flower Street, Suite 4800, Los
Angeles, CA, 90071, or via e-mail by using the “Contact Form”
located at the Investor Relations tab at www.breitburn.com or by
calling (213) 225-0390; or by contacting QR Energy Investor
Relations in writing at 1401 McKinney Street, Suite 2400, Houston,
TX 77010, or via e-mail at ir@qracq.com or by calling (713) 452-2990.
Participants in the
Solicitation
Breitburn and QR Energy and their respective directors and
executive officers and other members of management and employees
may be deemed to be participants in the solicitation of proxies in
respect of the proposed transaction. Information about Breitburn’s
directors and executive officers is available in Breitburn’s proxy
statement dated April 25, 2014, for its 2014 Annual Meeting of
Unitholders. Information about QR Energy’s directors and executive
officers is available in QR Energy’s proxy statement dated February
3, 2014, for its Special Meeting of Unitholders held on March 10,
2014. Other information regarding the participants in the proxy
solicitations and a description of their direct and indirect
interests, by security holdings or otherwise, will be contained in
the proxy statement/prospectus and other relevant materials that
have been filed with the SEC regarding the proposed transaction.
Investors should read the proxy statement/prospectus carefully
before making any voting or investment decisions. You may obtain
free copies of these documents from Breitburn or QR Energy using
the sources indicated above.
This document shall not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of any such jurisdiction.
No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S.
Securities Act of 1933, as amended.
Cautionary Statement Regarding
Forward-Looking Information
This press release contains statements that Breitburn believes
to be “forward-looking statements” within the meaning of Section
21E of the Securities Exchange Act of 1934. All statements other
than historical facts, including, without limitation, statements
regarding the expected benefits of the proposed transaction to
Breitburn and QR Energy and their unitholders, the anticipated
completion of the proposed transaction or the timing thereof, the
expected future reserves, production, financial position, business
strategy, revenues, earnings, costs, capital expenditures and debt
levels of the combined company, and plans and objectives of
management for future operations, are forward-looking statements.
When used in this press release, words such as we “may,” “can,”
“expect,” “intend,” “plan,” “estimate,” “anticipate,” “project,”
“believe,” “will” or “should” or the negative thereof or variations
thereon or similar terminology are generally intended to identify
forward-looking statements. It is uncertain whether the events
anticipated will transpire, or if they do occur what impact they
will have on the results of operations and financial condition of
Breitburn, QR Energy or of the combined company. Such
forward-looking statements are subject to risks and uncertainties
that could cause actual results to differ materially from those
expressed in, or implied by, such statements.
These risks and uncertainties include, but are not limited to:
the ability to obtain unitholder, court and regulatory approvals of
the proposed transaction; the ability to complete the proposed
transaction on anticipated terms and timetable; Breitburn’s and QR
Energy’s ability to integrate successfully after completion of the
proposed transaction and achieve anticipated benefits from the
proposed transaction; the possibility that various closing
conditions for the proposed transaction may not be satisfied or
waived; risks relating to any unforeseen liabilities of Breitburn
or QR Energy; declines in oil, NGL or natural gas prices; the level
of success in exploitation, development and production activities;
adverse weather conditions that may negatively impact development
or production activities; the timing of exploitation and
development expenditures; the ability to obtain sufficient
quantities of CO2 necessary to carry out EOR projects; inaccuracies
of reserve estimates or assumptions underlying them; revisions to
reserve estimates as a result of changes in commodity prices;
impacts to financial statements as a result of impairment
write-downs; risks related to level of indebtedness and periodic
redeterminations of the borrowing base under Breitburn’s credit
agreement; ability to generate sufficient cash flows from
operations to meet the internally funded portion of any capital
expenditures budget; ability to obtain external capital to finance
exploitation and development operations and acquisitions; federal,
state and local initiatives and efforts relating to the regulation
of hydraulic fracturing; the ability to successfully complete
potential asset dispositions and the risks related thereto; the
impacts of hedging on results of operations; failure of properties
to yield oil or natural gas in commercially viable quantities;
uninsured or underinsured losses resulting from oil and natural gas
operations; inability to access oil and natural gas markets due to
market conditions or operational impediments; the impact and costs
of compliance with laws and regulations governing oil and gas
operations; ability to replace oil and natural gas reserves; any
loss of senior management or technical personnel; competition in
the oil and natural gas industry; risks arising out of hedging
transactions; and other risks described under the caption “Risk
Factors” in Breitburn’s and QR Energy’s respective Annual Reports
on Form 10-K for the period ended December 31, 2013. Breitburn
assumes no obligation, and disclaim any duty, to update the
forward-looking statements in this press release to reflect
subsequent events or circumstances.
BBEP-IR
Breitburn Energy Partners LP and
Subsidiaries
Unaudited Consolidated Balance
Sheets
September 30, December 31, Thousands
of dollars 2014 2013
ASSETS
Current assets
Cash $ 3,227 $ 2,458 Accounts and other receivables, net 98,360
96,862 Derivative instruments 44,256 7,914 Related party
receivables 1,509 2,604 Inventory 4,418 3,890 Prepaid expenses
3,831 3,334 Total current assets 155,601 117,062
Equity investments
6,551 6,641
Property, plant and equipment
Oil and gas properties 5,102,392 4,818,639 Other assets 36,138
21,338 5,138,530 4,839,977 Accumulated depletion and
depreciation (1,148,185 ) (924,601 ) Net property, plant and
equipment 3,990,345 3,915,376
Other long-term assets
Intangibles, net 9,286 11,679 Derivative instruments 25,863 71,319
Other long-term assets 76,008 74,205
Total assets
$ 4,263,654 $ 4,196,282
LIABILITIES AND EQUITY
Current liabilities
Accounts payable $ 64,199 $ 69,809 Derivative instruments 7 24,876
Distributions payable 733 — Revenue and royalties payable 32,401
26,233 Wages and salaries payable 12,173 15,359 Accrued interest
payable 42,856 19,690 Accrued liabilities 32,604 26,922
Total current liabilities 184,973 182,889 Credit
facility 719,000 733,000 Senior notes, net 1,156,589 1,156,675
Deferred income taxes 2,902 2,749 Asset retirement obligation
133,216 123,769 Derivative instruments 5,145 2,560 Other long-term
liabilities 5,530 4,820 Total liabilities 2,207,355
2,206,462
Equity
Series A preferred units, 8.0 million units issued and outstanding
at September 30, 2014 and 0 at December 31, 2013 193,215 — Common
units, 120.5 million units issued and outstanding at September 30,
2014 and 119.2 million at December 31, 2013 1,863,084
1,989,820 Total equity 2,056,299 1,989,820
Total liabilities and equity
$ 4,263,654 $ 4,196,282
Breitburn Energy Partners LP and
Subsidiaries
Unaudited Consolidated Statements of
Operations
Three Months Ended Nine Months Ended
September 30, September 30, Thousands of dollars,
except per unit amounts 2014 2013
2014 2013
Revenues and other income items Oil, natural gas and natural
gas liquid sales $ 216,146 $ 197,413 $ 658,753 $ 467,061 Gain
(loss) on commodity derivative instruments, net 146,171 (54,765 )
(21,057 ) (11,948 ) Other revenue, net 1,585 737
4,240 2,197 Total revenues and other income items
363,902 143,385 641,936 457,310
Operating costs and expenses
Operating costs 82,904 68,502 248,161 181,889 Depletion,
depreciation and amortization 72,671 59,764 204,417 154,095
Impairments 29,434 361 29,434 361 General and administrative
expenses 18,737 16,116 53,886 44,695 Loss (gain) on sale of assets
(63 ) 77 357 139 Total operating costs and
expenses 203,683 144,820 536,255 381,179
Operating income (loss)
160,219 (1,435 ) 105,681 76,131 Interest expense, net of
capitalized interest 29,494 23,548 90,360 60,387 Other expense
(income), net (450 ) 4 (1,223 ) (5 ) Total other expense
29,044 23,552 89,137 60,382
Income (loss) before taxes
131,175 (24,987 ) 16,544 15,749
Income tax expense
532 24 384 628
Net income (loss)
130,643 (25,011 ) 16,160 15,121
Less: distributions to preferred
unitholders
4,125 — 5,958 —
Net income (loss) attributable to
common unitholders
$ 126,518 $ (25,011 ) $ 10,202 $ 15,121
Basic net income (loss) per common unit $ 1.03 $ (0.25 ) $
0.08 $ 0.15 Diluted net income (loss) per common unit
$ 1.03 $ (0.25 ) $ 0.08 $ 0.15
Breitburn Energy Partners LP and
Subsidiaries
Unaudited Consolidated Statements of
Cash Flows
Nine Months Ended September 30,
Thousands of dollars 2014 2013
Cash flows from operating
activities
Net income $ 16,160 $ 15,121 Adjustments to reconcile to cash flows
from operating activities: Depletion, depreciation and amortization
204,417 154,095 Impairments 29,434 361 Unit-based compensation
expense 18,440 14,700 Loss on derivative instruments 21,057 11,948
Derivative instrument settlement receipts (payments) (34,228 )
3,633 Income from equity affiliates, net 90 (122 ) Deferred income
taxes 153 252 Loss on sale of assets 357 139 Other 5,172 3,989
Changes in net assets and liabilities Accounts receivable and other
assets (3,345 ) (62,882 ) Inventory (528 ) (8,032 ) Net change in
related party receivables and payables 1,095 883 Accounts payable
and other liabilities 36,642 32,857 Net cash provided
by operating activities 294,916 166,942
Cash flows from investing
activities
Property acquisitions (6,422 ) (861,601 ) Capital expenditures
(293,275 ) (191,472 ) Proceeds from sale of assets 366 226 Other
(9,242 ) — Net cash used in investing activities (308,573 )
(1,052,847 )
Cash flows from financing
activities
Proceeds from issuance of preferred units, net 193,215 — Proceeds
from issuance of common units, net 25,917 285,011 Distributions to
preferred unitholders (5,225 ) — Distributions to common
unitholders (181,430 ) (137,447 ) Proceeds from long-term debt
693,000 1,381,000 Repayments of long-term debt (707,000 ) (636,000
) Change in bank overdraft (2,417 ) (316 ) Debt issuance costs
(1,634 ) (8,032 ) Net cash provided by financing activities 14,426
884,216
Increase (decrease) in cash
769 (1,689 )
Cash beginning of period
2,458 4,507
Cash end of period
$ 3,227 $ 2,818
Breitburn Energy Partners LPAntonio D'AmicoVice President,
Investor Relations & Government AffairsorJessica Tang,
213-225-0390Investor Relations Manager