DALLAS, May 9, 2016 /PRNewswire/ -- Azure Midstream
Partners, LP (NYSE: AZUR) ("Azure" or the "Partnership"), announced
financial and operating results for the three months
ended March 31, 2016.
Adjusted EBITDA for the first quarter 2016 was $5.1 million, compared to pro forma adjusted
EBITDA of $8.6 for the first quarter
of 2015, and distributable cash flow was $2.4 million, or $0.11 per limited partner unit, compared to pro
forma distributable cash flow of $7.2
million, or $0.40 per limited
partner unit in the first quarter of 2015. The Partnership
recognized a net loss of $113.6
million for the quarter due primarily to a $107.5 million non-cash impairment of tangible
and intangible assets related to the AES and NuDevco restructure.
This compares to a pro forma net loss of $7.6 million for the first quarter of 2015.
Adjusted EBITDA and distributable cash flow are explained in
greater detail under "Non-GAAP Financial Measures," and
reconciliations of these measures to their most directly comparable
GAAP measures are included in the tables at the end of this
release.
"While the challenging commodity market persists, we have just
completed the strategic restructuring plan with AES and its parent,
NuDevco according to the plans we outlined during our recent
earnings call," said I.J. "Chip" Berthelot, President and Chief
Executive Officer. "This allows us to reduce outstanding units by
fifty percent, focus more intensely on our core gas business and
proceed with additional strategic initiatives as a more streamlined
organization."
The execution of the AES restructure agreement accelerated a
letter of credit which on April 1,
2016 was used to reduce the outstanding debt at the end of
the first quarter by $15.0
million. Additionally, effective April 1, 2016, NuDevco surrendered to the
Partnership 1,939,265 common units, 8,724,545 subordinated units
and 10 IDR units of the Partnership
which were held by NuDevco and its subsidiary. This reduced
the number of outstanding units of the Partnership from
approximately 21.7 million units to 11.1 million common
units. In return, the Partnership agreed to terminate both
the gathering and processing and transloading agreements coupled
with a mutual release of future claims with AES, and AES assigned
all of its rights and interests in third party contracts to the
Partnership.
Giving full effect to the restructure, on a pro forma basis, the
Partnership could have generated $0.22 per limited partner unit with 11.1 million
units outstanding for the first quarter of 2016.
First Quarter 2016 Results
AES was the anchor tenant for the transloading business.
As a result of the restructure, the transloading business will be
combined with the gathering and processing segment for reporting
purposes going forward. Our transloading sites are located in
underserved oil producing regions and provided a crucial oil
transport service when energy prices were more robust. In
this environment, we will use this opportunity to evaluate the
viability of each location and seek opportunity to reduce cost in
the near term to position for optimization in the long-term.
Gross margin for the gathering and processing segment for the
first quarter 2016 was $9.4 million
compared to $7.5 million in the first
quarter of 2015. Gathered gas volumes were 260 MMcf/d and gas
processed volumes were 66 MMcf/d for the first quarter 2016.
Gathered gas volumes were 249 MMcf/d and gas processed volumes were
183 MMcf/d for the first quarter 2015.
The Partnership's first quarter 2016 recurring operating
expenses were $4.0 million, recurring
general and administrative expenses were $2.4 million, depreciation and amortization
expenses were $6.0 million, and
interest expense was $3.0 million.
Debt, net of cash, was $215.6
million as of March 31,
2016. Pro forma debt, net of cash, considering the effects of
the $15.0 million debt reduction was
$200.6 million as of March 31, 2016.
In connection with the AES restructure, the Partnership recorded
a non-cash impairment loss of $107.5
million in the first quarter of 2016. The impairment
was comprised of a $78.3 million
impairment to the processing tangible assets and $29.2 million impairment to the intangible asset
identified as part of the purchase price allocation to the
Partnership's assets acquired related to the customer relationship
with AES.
Suspension of Distributions
The Partnership has suspended distributions for the quarterly
period ended March 31, 2016.
The Partnership's board of directors and management believe the
suspension to be in the best long-term interest of all
stakeholders. The board of directors will continue to
evaluate the Partnership's ability to reinstate the distribution,
although reinstatement of distributions is not expected in the near
term absent substantial improvement in our operating performance
and compliance with the terms of our credit agreement.
First Quarter 2016 Conference Call and Webcast
Azure will host a conference call to discuss first quarter 2016
results at 10:00 am CT (11:00 am ET) on Monday,
May 9, 2016.
Interested parties can listen to a live webcast of the call from
the Events & Presentations page of the Azure Investor Relations
website at
http://investor.azuremidstreampartners.com/phoenix.zhtml?c=253822&p=irol-calendar.
An archived replay of the webcast will be available for 12 months
following the live presentation.
The call can be accessed live over the telephone by dialing
1-877-815-2357, 1-330-968-0354 for international callers. The
conference ID for the call is 1385069. A telephonic replay of the
call will be available for 7 days and can be accessed by dialing
1-855-859-2056 or 1-404-537-3406 for international callers, with
conference ID number 1385069.
AZURE MIDSTREAM
PARTNERS, LP
SELECTED BALANCE SHEET DATA
(Unaudited)
(In Thousands, except unit amounts)
|
|
|
|
|
|
|
|
|
March 31,
2016
|
|
December 31,
2015
|
|
Selected Balance
Sheet Data:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
15,961
|
|
$
7,511
|
|
|
Total
assets
|
454,933
|
|
563,964
|
|
|
Long-term debt, net
of deferred borrowing costs
|
228,665
|
|
228,474
|
|
|
Total partners'
capital
|
$
203,300
|
|
$
316,447
|
|
|
|
|
|
|
|
Azure Limited
Partners' Capital:
|
|
|
|
|
|
Limited partner units
outstanding March 31, 2016
|
21,788,763
|
|
21,769,199
|
|
|
|
|
|
|
|
|
AZURE MIDSTREAM
PARTNERS, LP
SELECTED STATEMENT OF OPERATIONS DATA
(Unaudited)
(In Thousands)
|
|
|
|
|
|
|
|
Quarter
Ended
March 31,
2016
|
|
Pro
Forma
Quarter
Ended
March 31, 2015
(1)
|
|
|
|
|
|
|
|
|
|
|
|
Total operating
revenues
|
$
12,681
|
|
$
17,318
|
|
|
Operating
expenses
|
|
|
|
|
|
Cost of
natural gas and NGLs
|
3,330
|
|
2,982
|
|
|
Operation and maintenance
|
4,000
|
|
4,340
|
|
|
General
and administrative
|
2,335
|
|
8,473
|
|
|
Non-cash
equity based compensation
|
424
|
|
5,005
|
|
|
Asset
impairment
|
107,477
|
|
-
|
|
|
Depreciation and amortization expense
|
5,990
|
|
3,234
|
|
|
Total operating
expenses
|
123,556
|
|
24,034
|
|
|
Operating
loss
|
(110,875)
|
|
(6,716)
|
|
|
Other expense,
net
|
95
|
|
-
|
|
|
Interest
expense
|
3,001
|
|
828
|
|
|
Net loss before
tax
|
(113,971)
|
|
(7,544)
|
|
|
Income tax expense
(benefit)
|
(400)
|
|
81
|
|
|
Net loss
|
$
(113,571)
|
|
$
(7,625)
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The pro forma income
statement for the first quarter of 2015 presents the full three
months of the historical Marlin business and includes the impacts
of the business combination and the contribution of the Legacy
System as of the closing of the Transactions.
|
The following table presents a reconciliation of net loss to
Adjusted EBITDA and DCF for first quarter 2016 and pro forma first
quarter 2015.
AZURE MIDSTREAM
PARTNERS, LP
NON-GAAP FINANCIAL MEASURES
(Unaudited)
|
|
|
|
|
(In
Thousands)
|
Quarter
Ended
March 31,
2016
|
|
Pro
Forma
Quarter
Ended
March 31, 2015
(4)
|
|
|
Net loss
|
$
(113,571)
|
|
$
(7,625)
|
Add
(deduct):
|
|
|
|
Interest
expense
|
3,001
|
|
828
|
Income tax
expense
|
(400)
|
|
81
|
Depreciation and
amortization expense
|
5,990
|
|
3,234
|
Asset
impairment
|
107,477
|
|
-
|
Non-cash equity based
compensation
|
424
|
|
5,005
|
Other adjustments
(1)
|
2,146
|
|
7,105
|
Adjusted
EBITDA
|
$
5,067
|
|
$
8,628
|
Deduct:
|
|
|
|
Cash interest
expense
|
(2,574)
|
|
(738)
|
Cash
taxes
|
(7)
|
|
(81)
|
Maintenance
capital expenditures
|
(55)
|
|
(609)
|
Distributable cash
flow
|
$
2,431
|
|
$
7,200
|
|
|
|
|
DCF per limited
partner unit (2)
|
$
0.11
|
|
$
0.40
|
Distributions to
limited partners (3)
|
$
-
|
|
$
6,630
|
Distributions per
limited partner unit
|
$
-
|
|
$
0.37
|
Distribution coverage
ratio
|
|
|
1.1x
|
|
|
(1)
|
Other adjustments
primarily relate to the deferred revenue associated with our
minimum revenue commitment ("MRC") agreement and several minimum
volume commitment ("MVC") agreements. We include a
proportional amount of the expected MRC/MVC cash receipts in each
quarter in respect of the annual period for which we actually
receive the payment to ensure our Adjusted EBITDA reflects the
amount of cash we are entitled to receive on an annual basis under
these MRC/MVC agreements.
|
|
|
(2)
|
DCF per limited
partner unit is calculated using the shares outstanding at March
31, 2016 of 21.8 million shares. Pro forma DCF per limited
partner unit, considering the effects of the AES settlement, would
be $0.22.
|
|
|
(3)
|
The Partnership has
suspended the distribution for the quarterly period ended March 31,
2016.
|
|
|
(4)
|
The pro forma results
for the first quarter of 2015 present the full three months of the
historical Marlin business and include the impacts of the business
combination and the contribution of the Legacy System as of the
closing of the Transactions. We view Pro Forma Adjusted
EBITDA and Pro Forma DCF for the first quarter of 2015 as the key
financial metrics used to compare the performance of the combined
Partnership as compared to the first quarter of 2016.
|
AZURE MIDSTREAM
PARTNERS, LP
SELECTED OPERATING DATA
(Unaudited)
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Quarter
Ended
|
|
|
|
March 31,
2016
|
|
March 31,
2015
|
|
Average throughput
volumes of natural gas (MMcf/d) (1)
|
260
|
|
249
|
|
Average volume of
processed gas (MMcf/d)
|
66
|
|
183
|
|
Transloading
facilities (BBls/d), primarily MVC volumes
|
|
-
|
|
22,536
|
|
|
|
(1)
|
Average throughput
volumes reflected for March 31, 2015 represent three months of the
Legacy System and one month of Marlin.
|
About Azure Midstream Partners, LP
Azure Midstream Partners, LP, headquartered in Dallas, Texas, is a fee-based, growth oriented
limited partnership formed to develop, operate, and acquire
midstream energy assets. The Partnership provides natural gas
gathering, transportation, and processing services; as well as NGL
transportation and crude oil logistics services. The Partnership's
assets include 1,013 miles of gathering lines in the Shelby Trough
sub-play of the Haynesville Shale and the horizontal Cotton Valley play located in east
Texas and north Louisiana that are capable of gathering 1.9
Bcf/d. The Partnership also has four natural gas processing
facilities with 305 MMcf/d of cumulative processing capacity
located in the Panola,
San Augustine and Tyler Counties of Texas, two NGL transportation pipelines that
connect its Panola County and
Tyler County processing facilities
to third party NGL pipelines capable of transporting 20,000 barrels
per day, and three crude oil transloading facilities containing six
crude oil transloaders with a combined capacity of 31,200
Bbls/d.
Additional information about Azure Midstream Partners, LP can be
found at www.azuremidstreampartners.com.
About Azure Midstream Energy, LLC
Azure Energy is a midstream company with a focus on owning,
operating, developing and acquiring midstream energy infrastructure
in core producing areas in the United
States. Azure Energy owns 100% of Azure Midstream Partners
GP, LLC, the Partnership's general partner, and 90% of the
incentive distribution rights in the Partnership. In addition to
its ownership of the Partnership, Azure Energy provides natural gas
gathering, compression, treating and processing services in north
Louisiana and east Texas in the prolific Haynesville and Bossier Shale formations.
www.azuremidstream.com
Use of Non-GAAP Financial Measures
We report financial results in accordance with GAAP. We also
present adjusted EBITDA and distributable cash flow each of which
are non-GAAP financial measures. We define gross margin as total
revenues less cost of natural gas and NGLs. We define Adjusted
EBITDA as net income (loss), plus interest expense, income tax
expense, depreciation and amortization expense, certain non-cash
charges (such as non-cash equity based compensation, impairments,
gains and losses on the sale of assets), transaction-related costs
and selected charges that are unusual and non-recurring; less
interest income, income tax benefit and select gains that are
unusual or non-recurring.
We define distributable cash flow as adjusted EBITDA plus cash
interest income, less cash interest paid, income tax expense and
maintenance capital expenditures. Our definitions of these non-GAAP
financial measures may differ from the definitions of similar
measures used by other companies. Management uses these non- GAAP
financial measures in making financial, operating and planning
decisions and in evaluating our financial performance. Furthermore,
management believes that these non-GAAP financial measures may
provide users with additional meaningful comparisons between
current results and results of prior periods as they are expected
to be reflective of our core ongoing business. These measures have
limitations, and investors should not consider them in isolation or
as a substitute for analysis of our results as reported under GAAP.
Reconciliations of GAAP to non-GAAP financial measures are attached
to this release.
Forward-Looking Statements
This press release contains forward-looking statements. These
forward-looking statements are identified as any statement that
does not relate strictly to historical or current facts. In
particular, statements, express or implied, concerning future
actions, conditions or events, future operating results or the
ability to generate revenues, income or cash flow or to make
distributions are forward-looking statements. The forward-looking
statements in this press release include statements regarding Azure
and its affiliates, including statements about (1) the benefits of
the recent transactions described herein, including Azure's ability
to successfully make future acquisitions, to maintain or increase
future distributions, and to capitalize on certain commercial and
operational synergies, (2) future expectations and projections of
results of operations or financial condition (3) the anticipated
financial performance of Azure, and (4) our ability to comply with
the restrictions contained in the agreements governing our debt.
Forward-looking statements are not guarantees of performance. They
involve risks, uncertainties and assumptions. Future actions,
conditions or events and future results of operations of Azure may
differ materially from those expressed in these forward-looking
statements. Many of the factors that will determine these results
are beyond Azure's ability to control or predict. These statements
are necessarily based upon various assumptions involving judgments
with respect to the future, including, among others, conditions in
the capital and credit markets; the ability to achieve synergies
and revenue growth; national, international, regional and local
economic, competitive and regulatory conditions and developments;
technological developments; inflation rates; interest rates; the
political and economic stability of oil producing nations; energy
markets; commodity prices; weather conditions; environmental
conditions; business and regulatory or legal decisions; the timing
and success of business development efforts; terrorism; and other
uncertainties. In addition, an extensive list of specific material
risks and uncertainties affecting Azure is contained in its 2014
Annual Report on Form 10-K, as amended, and in our other public
filings and press releases. There is no assurance that any of the
actions, events or results of the forward-looking statements will
occur, or if any of them do, what impact they will have on Azure's
results of operations or financial condition. Because of these
uncertainties, you are cautioned not to put undue reliance on any
forward-looking statement.
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SOURCE Azure Midstream Partners, LP