Breitburn Energy Partners LP (NASDAQ:BBEP) today announced
financial and operating results for the fourth quarter and full
year 2014.
Key Highlights
- Closed on the acquisitions of QR Energy
and strategic bolt-on acreage in the Permian Basin for
approximately $2.7 billion, including debt assumed.
- Increased fourth quarter 2014
production to 4.2 million Boe, a 35% increase from fourth quarter
2013, and increased full year production to 14.1 million Boe, a 29%
increase from 2013. Excluding production from QR Energy assets,
Breitburn's production increased 6% in the fourth quarter 2014
compared to fourth quarter 2013 and 20% for 2014 compared to 2013.
Annual production was in line with the forecast in Breitburn’s
third quarter Form 10Q.
- Increased Adjusted EBITDA, a non-GAAP
financial measure, to $127.4 million (including acquisition and
integration costs of $11.7 million), a 7% increase from third
quarter 2014. Increased full year Adjusted EBITDA to $473.8 million
(including acquisition and integration costs of $14.5 million), a
28% increase from 2013.
- Total estimated proved reserves as of
December 31, 2014, were 315.3 million Boe compared to 214.3 million
Boe as of December 31, 2013, a 47% increase.
- Total oil and gas capital expenditures
for 2014 were $389 million, a 32% increase from 2013. Excluding
capital spending of $25 million attributable to QR Energy assets,
2014 capital spending was within the range that was forecast in
Breitburn’s third quarter Form 10Q.
Management Commentary
Halbert S. Washburn, Breitburn’s Chief Executive Officer, said:
“Our recent acquisitions changed the nature of our portfolio,
solidifying and expanding our presence in the Permian, the
Mid-Continent and Ark-La-Tex, some of the most prolific oil and gas
regions of the country. We announced a substantially reduced
capital program of $200 million for 2015, and we remain focused on
operating within our cash flow this year. With more than half of
our production coming from the Permian, the Mid-Continent and
Ark-La-Tex, we plan to allocate a large portion of our capital this
year to these areas. Based on our operating results so far this
year, we feel comfortable with our 2015 guidance issued on January
2nd. At the midpoint of that guidance, we expect to generate
approximately $80 million of excess cash after distributions and
capital spending and have a DCF coverage ratio of approximately
1.35x. We are focused on reducing all costs wherever we can, and we
will continue to look for every opportunity to maximize operational
and financial flexibility.”
Fourth Quarter 2014 Operating and
Financial Results Compared to Third Quarter 2014
- Total production was 4,170 MBoe in the
fourth quarter of 2014 compared to 3,353 MBoe in the third quarter
of 2014. Average daily production was 49.7 MBoe/day in the fourth
quarter of 2014 compared to 36.5 MBoe/day in the third quarter of
2014.
- Oil production increased to 2,327 MBbl
compared to 1,904 MBbl in the third quarter of 2014
- NGL production increased to 368 MBbl
compared to 253 MBbl in the third quarter of 2014
- Natural gas production increased to
8,847 MMcf compared to 7,178 MMcf in the third quarter of 2014
- Adjusted EBITDA was $127.4 million in
the fourth quarter of 2014 (including acquisition and integration
costs of $11.7 million) compared to $118.7 million in the third
quarter of 2014, a 7% increase. The increase was primarily due to
the mid-quarter closing of the QR Energy transaction and higher
commodity derivative instrument settlements, partially offset by
lower sales revenue driven by lower crude oil prices and the
acquisition and integration costs.
- Net income attributable to common
unitholders was $401.0 million, or $2.27 per diluted common unit,
in the fourth quarter of 2014, which includes non-cash impairment
charges of approximately $119.6 million, or $0.68 per unit as
compared to net income of $126.5 million, or $1.03 per diluted
common unit, in the third quarter of 2014, which includes non-cash
impairment charges of approximately $29.4 million, or $0.24 per
unit. The increase in non-cash impairment charges was due to the
effect of decreased commodity prices on some of our higher cost oil
properties.
- Oil, NGL and natural gas sales revenues
were $197.1 million in the fourth quarter of 2014 compared to
$216.1 million in the third quarter of 2014, primarily due to lower
realized oil, natural gas and NGL prices due to the decrease in
commodity prices.
- Lease operating expenses, which include
district expenses, processing fees, disposal costs, and
transportation costs but exclude taxes, were $92.9 million in the
fourth quarter of 2014 compared to $62.7 million in the third
quarter of 2014. The increase was primarily due to the closing of
the QR Energy transaction in the fourth quarter, disposal costs
related to the East Texas Salt Water Disposal System, and expenses
incurred in upgrading pumping equipment in the Permian Basin to
reduce future well failure rates.
- General and administrative expenses,
excluding non-cash unit-based compensation costs and including QR
Energy general and administrative expenses and $11.7 million in
related acquisition and integration costs, were $28.1 million in
the fourth quarter of 2014 compared to $12.9 million in the third
quarter of 2014.
- Gains on commodity derivative
instruments were $587.6 million in the fourth quarter of 2014
compared to gains of $146.2 million in the third quarter of 2014,
primarily due to decreases in oil and natural gas futures prices
during the fourth quarter of 2014. Derivative instrument settlement
receipts were $62.1 million in the fourth quarter of 2014 compared
to payments of $3.7 million in the third quarter of 2014, primarily
due to lower oil prices.
- NYMEX WTI oil spot prices averaged
$73.21 per Bbl and Brent oil spot prices averaged $76.43 per Bbl in
the fourth quarter of 2014 compared to $97.87 per Bbl and $101.90
per Bbl, respectively, in the third quarter of 2014. Henry Hub
natural gas spot prices averaged $3.78 per Mcf in the fourth
quarter of 2014 compared to $3.96 per Mcf in the third quarter of
2014.
- Average realized crude oil, NGL, and
natural gas prices, excluding the effects of commodity derivative
settlements, averaged $69.36 per Bbl, $26.38 per Bbl and $4.07 per
Mcf, respectively, in the fourth quarter of 2014 compared to $90.12
per Bbl, $37.87 per Bbl and $4.12 per Mcf, respectively, in the
third quarter of 2014.
- Oil, NGL and natural gas capital
expenditures were $113 million (or $88 million after excluding
capital spending of $25 million attributable to QR Energy assets)
in the fourth quarter of 2014 compared to $108 million in the third
quarter of 2014.
- Distributable cash flow, a non-GAAP
financial measure, was $43.9 million in the fourth quarter of 2014
compared to $53.3 million in the third quarter of 2014.
Full Year 2014 Results
- Total oil, NGLs and natural gas sales
were $855.8 million in 2014, an increase of 30% from 2013.
- Full year lease operating expenses,
which include district expenses, processing fees, and
transportation costs but exclude taxes, were $293.6 million
compared to $216.3 million in 2013.
- Full year general and administrative
expenses, excluding unit-based compensation related costs and
including $14.5 million in acquisition and integration costs, were
$63.6 million compared to $38.8 million in 2013.
- Average realized oil and NGL prices,
excluding the effect of commodity derivative instruments, for 2014,
were $86.08 per Bbl and $35.46 per Bbl, respectively, compared to
NYMEX WTI oil prices of $93.21 per barrel. Average realized natural
gas prices, excluding the effect of commodity derivative
instruments, were $4.82 per Mcf compared to Henry Hub prices of
$4.37 per Mcf.
- Net income attributable to common
unitholders was $411.3 million, or $3.02 per diluted common unit,
in 2014, which includes non-cash impairment charges of
approximately $149.0 million, or $1.11 per unit, compared to a net
loss of $43.7 million, or $0.43 per diluted common unit, in 2013,
which includes non-cash impairment charges of approximately $54.4
million, or $0.54 per unit.
- Gains on commodity derivative
instruments were $566.5 million in 2014 compared to losses of $29.2
million in 2013, primarily due to decreases in oil and natural gas
futures prices in 2014. Derivative instrument settlement receipts
were $27.8 million in 2014 compared to receipts of $8.1 million in
2013, primarily due to lower oil prices.
- Distributable cash flow, a non-GAAP
financial measure, was $210.2 million in 2014 compared to $200.3
million in 2013.
2014 Estimated Proved
Reserves
Total estimated proved reserves as of December 31, 2014, were
315.3 MMBoe compared to total estimated proved reserves of 214.3
MMBoe as of December 31, 2013. The standardized measure of
discounted future net cash flows related to our estimated proved
reserves was approximately $4.5 billion as of December 31, 2014,
compared to approximately $3.2 billion as of December 31, 2013. Of
the total estimated proved reserves, 55% were oil, 8% were NGLs and
37% were natural gas, and 77% were classified as proved developed.
Set forth below is a breakdown of Breitburn’s total estimated
proved reserves among its seven operating areas:
Operating Area % Estimated Proved
Reserves Ark-La-Tex 21 % MI/IN/KY 20 % Permian Basin 18 %
Mid-Continent 13 % Rockies 11 % Florida 10 % California 7 %
The unweighted average first-day-of-the-month oil and natural
gas prices used to determine our total estimated proved reserves as
of December 31, 2014, were $94.99 per Bbl of oil for WTI
NYMEX, $101.30 per Bbl of oil for ICE Brent and $4.35 per MMBtu of
natural gas for Henry Hub.
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.
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
December 31, 2014 and 2013, the three months ended September 30,
2014, and the full year results for 2014 and 2013:
Three Months Ended Year Ended
December 31, December 31, September 30,
December 31, Thousands of dollars, except
as indicated 2014 2014 2013 2014
2013 Oil sales $ 151,335 $ 176,986 $ 158,456 $ 669,355 $
530,625 NGL sales 9,709 9,582 8,644 41,031 22,558 Natural gas sales
36,023 29,578 26,504 145,434 107,482 Gain (loss) on commodity
derivative instruments 587,590 146,171 (17,234 ) 566,533 (29,182 )
Other revenues, net 3,376 1,585 978 7,616
3,175 Total revenues $ 788,033 $ 363,902
$ 177,348 $ 1,429,969 $ 634,658 Lease
operating expenses (a) $ 92,936 $ 62,714 $ 63,439 $ 293,563 $
216,275 Production and property taxes (b) 14,084 16,327
11,295 62,071 46,220 Total lease
operating expenses 107,020 79,041 74,734
355,634 262,495 Purchases and other operating costs
299 102 440 725 1,322 Change in inventory 201 3,761
5,758 (678 ) (995 ) Total operating costs $ 107,520 $
82,904 $ 80,932 $ 355,681 $ 262,822
Lease operating expenses, pre taxes, per Boe (a) $ 22.29 $ 18.70 $
20.56 $ 20.80 $ 19.69 Production and property taxes per Boe (b)
3.38 4.87 3.66 4.40 4.21 Total
lease operating expenses per Boe $ 25.67 $ 23.57 $
24.22 $ 25.20 $ 23.90 General and
administrative expenses (excluding non-cash unit-based
compensation) $ 28,116 $ 12,908 $ 8,742 $
63,562 $ 38,752 Net income (loss) attributable to the
partnership $ 405,173 $ 130,643 $ (58,792 ) $ 421,333 $ (43,671 )
Less: distributions to preferred unitholders 4,125 4,125
— 10,083 — Net income (loss)
attributable to common unitholders $ 401,048 $ 126,518 $ (58,792 )
$ 411,250 $ (43,671 ) Total production (MBoe) (c) 4,170
3,353 3,086 14,114 10,983 Oil (MBbl) 2,327 1,904 1,704 7,931 5,651
NGLs (MBbl) 368 253 205 1,157 640 Natural gas (MMcf) 8,847 7,178
7,060 30,159 28,156 Average daily production (Boe/d) 49,665
36,450 33,542 38,670 30,091 Sales
volumes (MBoe) (d) 4,022 3,412 3,163 13,956
10,988 Average realized sales price (per Boe) (e) (f)
$ 48.96 $ 63.33 $ 61.10 $ 61.30 $ 60.05 Oil (per Bbl) (e) (f) 69.36
90.12 88.77 86.08 93.67 NGLs (per Bbl) (e) 26.38 37.87 42.17 35.46
35.25 Natural gas (per Mcf) (e) $ 4.07 $ 4.12 $ 3.75
$ 4.82 $ 3.82 (a)
Includes district expenses, processing
fees, disposal costs, and transportation costs.
(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 2,180 MBbl, 1,964 MBbl and 1,782 MBbl for the three
months ended December 31, 2014, September 30, 2014 and December 31,
2013, respectively, and 7,773 MBbl and 5,655 MBbl for the twelve
months ended December 31, 2014 and 2013, respectively. (e) Excludes
the effect of commodity derivative settlements. (f) Includes oil
purchases.
Non-GAAP Financial
Measures
This press release, including 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.
“Adjusted EBITDA” and “distributable cash flow” are among the
non-GAAP financial measures used in this press release. 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 Year Ended December
31, December 31, September 30,
December 31, Thousands of dollars, except as
indicated 2014 2014 2013 2014
2013 Reconciliation of net income (loss) to Adjusted
EBITDA: Net income (loss) attributable to the partnership $
405,173 $ 130,643 $ (58,792 ) $ 421,333 $ (43,671 ) Loss (gain) on
commodity derivative instruments (587,590 ) (146,171 ) 17,234
(566,533 ) 29,182 Commodity derivative instrument settlements (a)
(b) 62,053 (3,704 ) 4,450 27,825 8,083 Depletion, depreciation and
amortization expense 87,292 72,671 62,400 291,709 216,495
Impairment 119,566 29,434 54,012 149,000 54,373 Interest expense
and other financing costs 36,110 29,494 26,680 126,470 87,067 Loss
(gain) on sale of assets 306 (63 ) (2,154 ) 663 (2,015 ) Income tax
expense (benefit) (457 ) 532 277 (73 ) 905 Unit-based compensation
expense (c) 4,947 5,829 5,270 23,387
19,955
Adjusted EBITDA $ 127,400 $ 118,665 $ 109,377
$ 473,781 $ 370,374 Less: Maintenance capital (d) $ 43,714 $ 33,434
$ 29,217 $ 133,079 $ 89,267 Cash interest expense 35,651 27,849
24,741 120,470 80,767 Distributions to preferred unitholders 4,125
4,125 — 10,083 — Distributable
cash flow available to common unitholders $ 43,910 $ 53,257
$ 55,419 $ 210,149 $ 200,340
Distributable cash flow available per common unit (e) (f) 0.207
0.390 0.458 1.431 1.884 Common unit distribution coverage (f) 0.83x
0.78x 0.93x 0.81x 0.97x
Reconciliation of net cash flows
from operating activities to Adjusted EBITDA: Net cash
provided by operating activities $ 62,839 $ 103,807 $ 90,224 $
357,755 $ 257,166 Increase (decrease) in assets net of liabilities
relating to operating activities 29,199 (13,160 ) (5,680 ) (4,057 )
32,105 Interest expense (g) 35,563 27,729 24,654 120,143 80,617
Income from equity affiliates, net (88 ) 191 (67 ) (178 ) (55 )
Incentive compensation expense (h) — — (21 ) — (21 ) Non
controlling interest 17 — — 17 — Income taxes (130 ) 98 267
101 562
Adjusted EBITDA $ 127,400
$ 118,665 $ 109,377 $ 473,781 $ 370,374
(a) Excludes premiums paid at contract inception related to
those derivative contracts that settled during the applicable
periods of: 2,141 2,141 1,233 8,494 4,893 (b) Includes net
cash settlements on derivative instruments for: - Oil settlements
(paid) received: 55,975 (7,940 ) (7,378 ) 18,230 (36,183 ) -
Natural gas settlements received: 6,078 4,236 11,828 9,595 44,266
(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 over a multi-year period. (e) Based on common units
outstanding (including outstanding LTIP grants) at each
distribution record date within the periods. (f) Third quarter 2014
includes the effect of the offering of 14 million common units in
October 2014. Fourth quarter 2014 includes only 41 days of QR
Energy operating results, $11.7 million of acquisition and
integration costs, and the effect of 71.5 million common units
issued in connection with the QR Energy merger in November 2014.
(g) Excludes amortization of debt issuance costs and amortization
of senior note discount/premium. (h) Represents cash-based
incentive compensation plan expense.
Summary of Commodity Derivative
Instruments
The table below summarizes Breitburn’s commodity derivative
hedge portfolio as of March 2, 2015. Please refer to the Commodity
Price Protection Portfolio at www.breitburn.com for additional
information related to our hedge portfolio.
Year 2015 2016
2017 2018 Oil Positions: Fixed Price
Swaps - NYMEX WTI Volume (Bbl/d) 20,415 15,504 13,519 493 Average
Price ($/Bbl) $ 93.30 $ 88.07 $ 85.05 $ 82.20 Fixed Price Swaps -
ICE Brent Volume (Bbl/d) 3,374 4,300 298 — Average Price ($/Bbl) $
97.89 $ 95.17 $ 97.50 $ — Collars - NYMEX WTI Volume (Bbl/d) 2,025
1,500 — — Average Floor Price ($/Bbl) $ 90.00 $ 80.00 $ — $ —
Average Ceiling Price ($/Bbl) $ 111.73 $ 102.00 $ — $ — Collars -
ICE Brent Volume (Bbl/d) 500 500 — — Average Floor Price ($/Bbl) $
90.00 $ 90.00 $ — $ — Average Ceiling Price ($/Bbl) $ 109.50 $
101.25 $ — $ — Puts - NYMEX WTI Volume (Bbl/d) 500 1,000 — —
Average Price ($/Bbl) $ 90.00 $ 90.00 $ — $ — Total: Volume (Bbl/d)
26,814 22,804 13,816 493 Average Price ($/Bbl) $ 93.51 $ 89.01 $
85.32 $ 82.20
Gas Positions: Fixed Price Swaps -
MichCon City-Gate Volume (MMBtu/d) 7,500 17,000 10,000 — Average
Price ($/MMBtu) $ 6.00 $ 4.46 $ 4.48 $ — Fixed Price Swaps - Henry
Hub Volume (MMBtu/d) 54,891 36,050 19,016 1,870 Average Price
($/MMBtu) $ 4.84 $ 4.24 $ 4.43 $ 4.15 Collars - Henry Hub Volume
(MMBtu/d) 18,000 630 595 — Average Floor Price ($/MMBtu) $ 5.00 $
4.00 $ 4.00 $ — Average Ceiling Price ($/MMBtu) $ 7.48 $ 5.55 $
6.15 $ — Puts - Henry Hub Volume (MMBtu/d) 1,920 11,350 10,445 —
Average Price ($/MMBtu) $ 4.78 $ 4.00 $ 4.00 $ — Deferred Premium
($/MMBtu) $ 0.64
(a)
$ 0.66 $ 0.69 $ — Total: Volume (MMBtu/d) 82,311 65,030 40,056
1,870 Average Price ($/MMBtu) $ 4.98 $ 4.25 $ 4.33 $ 4.15
Basis Swaps- Henry Hub Volume (MMBtu/d) 14,400 — — — Average Price
($/MMBtu) $ (0.19 ) $ — $ — $ —
(a) Deferred premiums of $0.64 apply to
420 MMBtu/d.
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
2015 2016 2017
2018 Oil $ 4,683 $ 7,438 $ 734 $ — Natural gas $ 1,989 $ 952
$ — $ —
2014 Form 10-K and Tax Reporting
Package for Unitholders
Breitburn’s 2014 Form 10-K, which was filed yesterday, is
available through the Investor Relations/SEC Filings section of our
website at www.breitburn.com.
Also available for download on our website beginning on March
16, 2015 will be the 2014 tax reporting package, including Schedule
K-1. Breitburn expects to finish mailing the tax packages to its
unitholders within a week of the packages being available online.
To request electronic (paperless) delivery of your 2014 Individual
Tax Reporting Package, please visit www.taxpackagesupport.com/breitburn and register
to opt in for the applicable units you held during 2014. Electronic
delivery is available for: Breitburn Energy Partners LP Common
Units, QR Energy, LP Common Units, and Breitburn Energy Partners LP
Series A Cumulative Redeemable Perpetual Preferred Units (NASDAQ:
BBEPP). For additional information, unitholders may call the K-1
Tax Package Support Line toll free at 800-559-4966.
Other Information
Breitburn will host a conference call Tuesday, March 3, 2015, at
1:00 pm (EDT) to discuss Breitburn’s fourth quarter and full year
2014 results. The conference call may be accessed by calling
888-539-3612 (international callers dial 719-325-2244) or via
webcast at http://ir.breitburn.com/.
An archived edition of the conference call will also be available
through March 10th by calling 877-870-5176 (international callers
dial 858-384-5517) and entering replay PIN 8598867 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 Ark-La-Tex; Michigan,
Indiana, Kentucky; the Permian Basin; the Mid-Continent; the
Rockies; Florida; and California. See www.breitburn.com for more
information.
Cautionary Statement Regarding
Forward-Looking Information
This press release contains forward-looking statements relating
to Breitburn's operations that are based on management’s current
expectations, estimates and projections about its operations. Words
and phrases such as “believes,” “expect,” “future,” “impact,”
“guidance,” “will be,” “future” and variations of such words and
similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and
other factors, some of which are beyond our control and are
difficult to predict. These include risks relating to Breitburn's
financial performance and results, availability of sufficient cash
flow and other sources of liquidity to execute our business plan,
prices and demand for natural gas and oil, increases in operating
costs, uncertainties inherent in estimating our reserves and
production, our ability to replace reserves and efficiently develop
our current reserves, political and regulatory developments
relating to taxes, derivatives and our oil and gas operations,
risks relating to our acquisitions and the factors set forth under
the heading “Risk Factors” incorporated by reference from our
Annual Report on Form 10-K filed with the Securities and Exchange
Commission, and if applicable, our Quarterly Reports on Form 10-Q
and our Current Reports on Form 8-K. Therefore, actual outcomes and
results may differ materially from what is expressed or forecasted
in such forward-looking statements. The reader should not place
undue reliance on these forward-looking statements, which speak
only as of the date of this press release. Unless legally required,
Breitburn undertakes no obligation to update publicly any
forward-looking statements, whether as a result of new information,
future events or otherwise. Unpredictable or unknown factors not
discussed herein also could have material adverse effects on
forward-looking statements.
BBEP-IR
Breitburn Energy Partners LP and
Subsidiaries
Consolidated Balance Sheets
December 31, December
31, Thousands of dollars 2014 2013
ASSETS Current assets Cash $ 12,628 $ 2,458 Accounts
and other receivables, net 166,436 96,862 Derivative instruments
408,151 7,914 Related party receivables 2,462 2,604 Inventory 3,727
3,890 Prepaid expenses 7,304 3,334 Total current
assets 600,708 117,062
Equity investments 6,463 6,641
Property, plant and equipment Oil and gas properties
7,736,409 4,818,639 Other assets 60,533 21,338
7,796,942 4,839,977 Accumulated depletion and depreciation
(1,342,741 ) (924,601 ) Net property, plant and equipment 6,454,201
3,915,376
Other long-term assets Intangibles, net 8,336
11,679 Goodwill 92,024 — Derivative instruments 319,560 71,319
Other long-term assets 157,042 74,205
Total assets $ 7,638,334 $ 4,196,282
LIABILITIES AND EQUITY Current liabilities Accounts
payable $ 129,270 $ 69,809 Current portion of long-term debt
105,000 — Derivative instruments 5,457 24,876 Distributions payable
733 — Current asset retirement obligation 4,948 — Revenue and
royalties payable 40,452 26,233 Wages and salaries payable 22,322
15,359 Accrued interest payable 20,672 19,690 Production and
property taxes payable 25,207 20,558 Other current liabilities
7,495 6,364 Total current liabilities 361,556 182,889
Credit facility 2,089,500 733,000 Senior notes, net
1,156,560 1,156,675 Other long-term debt 1,100 —
Total long-term debt 3,247,160 1,889,675 Deferred income taxes
2,575 2,749 Asset retirement obligation 233,463 123,769 Derivative
instruments 2,269 2,560 Other long-term liabilities 25,135
4,820 Total liabilities 3,872,158 2,206,462
Equity Series A preferred units, 8.0 million units issued
and outstanding at December 31, 2014 and 0 at December 31, 2013
193,215 — Common units, 210.9 million units issued and outstanding
at December 31, 2014 and 119.2 million at December 31, 2013
3,566,468 1,989,820 Accumulated other comprehensive loss (392 ) —
Total partners' equity 3,759,291 1,989,820 Noncontrolling
interest 6,885 —
Total equity 3,766,176
1,989,820
Total liabilities and
equity $ 7,638,334 $ 4,196,282
Breitburn Energy Partners LP and
Subsidiaries
Consolidated Statements of
Operations
Three Months Ended
Twelve Months Ended December 31, December 31,
Thousands of dollars, except per unit amounts 2014
2013 2014 2013
Revenues and other income items Oil, natural gas and natural
gas liquid sales $ 197,067 $ 193,604 $ 855,820 $ 660,665 Gain
(loss) on commodity derivative instruments, net 587,590 (17,234 )
566,533 (29,182 ) Other revenue, net 3,376 978 7,616
3,175 Total revenues and other income items 788,033
177,348 1,429,969 634,658
Operating costs and expenses
Operating costs 107,520 80,933 355,681 262,822 Depletion,
depreciation and amortization 87,292 62,400 291,709 216,495
Impairments 119,566 54,012 149,000 54,373 General and
administrative expenses 33,063 14,012 86,949 58,707 Loss (gain) on
sale of assets 306 (2,154 ) 663 (2,015 ) Total
operating costs and expenses 347,747 209,203 884,002
590,382
Operating income (loss) 440,286
(31,855 ) 545,967 44,276 Interest expense, net of
capitalized interest 36,600 26,680 126,960 87,067 Gain on interest
rate swaps (490 ) – (490 ) — Other income, net (523 ) (20 ) (1,746
) (25 ) Total other expense 35,587 26,660 124,724
87,042
Income (loss) before taxes
404,699 (58,515 ) 421,243 (42,766 ) Income tax expense
(benefit) (457 ) 277 (73 ) 905
Net income
(loss) 405,156 (58,792 ) 421,316 (43,671 ) Less: Net
loss attributable to noncontrolling interest (17 ) – (17 ) —
Net income
(loss) attributable to the partnership 405,173 (58,792 )
421,333 (43,671 ) Less: distributions to preferred
unitholders 4,125 – 10,083 —
Net income (loss) attributable to common
unitholders $ 401,048 $ (58,792 ) $ 411,250 $
(43,671 ) Basic net income (loss) per common unit $ 2.28
$ (0.52 ) $ 3.04 $ (0.43 ) Diluted net income (loss)
per common unit $ 2.27 $ (0.52 ) $ 3.02 $ (0.43 )
Breitburn Energy Partners LP and
Subsidiaries
Consolidated Statements of
Comprehensive Income
Year Ended December 31,
Thousands of dollars, except per unit amounts 2014
2013 Net income (loss) $ 421,316 $ (43,671 )
Other comprehensive income, net of tax: Change in
fair value of available-for-sale securities (189 ) — Pension and
post-retirement benefits actuarial loss (473 ) — Total other
comprehensive loss (662 ) —
Total comprehensive
income (loss) 420,654 (43,671 ) Less:
Comprehensive loss attributable to noncontrolling interest (287 ) —
Comprehensive income (loss) attributable to the
partnership $ 420,941 $ (43,671 )
Breitburn Energy Partners LP and
Subsidiaries
Consolidated Statements of Cash
Flows
Year Ended December 31,
Thousands of dollars 2014 2013
Cash flows from operating activities Net income (loss) $
421,316 $ (43,671 ) Adjustments to reconcile to cash flow from
operating activities: Depletion, depreciation and amortization
291,709 216,495 Impairment of oil and natural gas properties
149,000 54,373 Unit-based compensation expense 23,387 19,955 (Gain)
loss on derivative instruments (567,024 ) 29,182 Derivative
instrument settlement receipts 26,806 8,083 Income from equity
affiliates, net 178 (55 ) Deferred income taxes (174 ) 262 Loss
(gain) on sale of assets 663 (2,015 ) Other 6,204 5,163 Changes in
net assets and liabilities Accounts receivable and other assets
41,754 (29,322 ) Inventory 163 (804 ) Net change in related party
receivables and payables 142 (1,191 ) Accounts payable and other
liabilities (36,369 ) 711 Net cash provided by operating
activities 357,755 257,166
Cash flows from
investing activities Property acquisitions, net of cash
acquired (401,465 ) (1,175,817 ) Capital expenditures (417,755 )
(266,308 ) Other (18,283 ) (26,661 ) Proceeds from sale of assets
499 2,981 Net cash used in investing activities
(837,004 ) (1,465,805 )
Cash flows from financing activities
Proceeds from issuance of preferred units, net 193,215 — Proceeds
from issuance of common units, net 277,613 618,013 Distributions to
preferred unitholders (9,350 ) — Distributions to common
unitholders (264,585 ) (186,868 ) Proceeds from issuance of
long-term debt, net 2,457,600 2,276,000 Repayments of long-term
debt (1,785,000 ) (1,487,000 ) Senior note redemption (352,531 ) —
Change in bank overdraft (2,434 ) 2,013 Debt issuance costs (25,109
) (15,568 ) Net cash provided by financing activities 489,419
1,206,590
Increase (decrease) in cash 10,170
(2,049 )
Cash beginning of period 2,458 4,507
Cash end of period $ 12,628 $ 2,458
Breitburn Energy Partners LPAntonio D'AmicoVice President,
Investor Relations & Government AffairsorJessica TangInvestor
Relations Manager213-225-0390