NEDERLAND, Texas, May 5, 2017 /PRNewswire/ -- OCI Partners LP, a
Delaware limited partnership (the
"Partnership"), announced its results for the three months ended
March 31, 2017. The Partnership owns
and operates an integrated methanol and ammonia production facility
that is strategically located on the Texas Gulf Coast near
Beaumont.
Summary of Financial Results for the Three Months Ended
March 31, 2017
- Revenues increased 33% to $93
million compared to $70
million for the same period in 2016
- EBITDA increased 122% to $40
million compared to $18
million for the same period in 2016
- Net income increased to $14
million compared to a net loss of ($6) million for the same period in 2016
- EBITDA and net income margins were 43% and 15% respectively,
compared to 26% and (9)%, respectively, during the same period in
2016
Termination of Exchange Offer from OCI N.V.
On April 17, 2017, OCI N.V.
(Euronext: OCI) ("OCI") terminated negotiations with the conflicts
committee of the board of directors of the Partnership regarding
OCI's previously announced offer to acquire all publicly held
common units of the Partnership in exchange for OCI shares. OCI
currently owns 79.88% of issued and outstanding common units of the
Partnership.
Key Management Change
On May 1, 2017, Mr. Frank Bakker resigned as President, Chief
Executive Officer and director of the general partner of the
Partnership, effective May
12th, to pursue other opportunities. On
May 4, 2017, Mr. Ahmed El-Hoshy,
Chief Executive Officer of OCI N.V. in the Americas ("OCI
Americas") and a director of the general partner of the Partnership
since July 2016, was appointed as
President and Chief Executive Officer of the general partner of the
Partnership effective May
12th.
Unplanned Shutdown
On April 27, both the methanol and
ammonia plants tripped and upon restart a leak was discovered in
one of the waste heat boilers that needed to be repaired. The
ammonia plant was restarted on May 2,
but the methanol plant is still down for repairs. The Partnership
has decided to take the opportunity to carry out several other
repairs, including the reformer roof, that are expected to
significantly improve the operating reliability of both plants, and
potentially increase methanol production capacity marginally above
nameplate. During the improvements to the methanol plant, the
ammonia plant will only be able to run at up to 70% of nameplate
capacity, depending on availability of over-the-fence hydrogen. The
Partnership estimates the total down time for the methanol plant
repairs will last approximately 16 days from the unplanned shutdown
on April 27, 2017.
Distributions
Based on the results of the three months ended March 31, 2017, the Board of Directors of the
general partner of the Partnership has approved a cash distribution
of $0.23 per common unit or
approximately $20.0 million in the
aggregate. The cash distribution will be paid on June 5, 2017 to unitholders of record at the
close of business on May 19, 2017.
The amount of any subsequent quarterly cash distributions will vary
depending on our future earnings as well as our cash requirements
for working capital, capital expenditures, debt service and other
contractual obligations, and reserves for future operating or
capital needs.
Run-Rate Quarterly Distribution Guidance
Partnership distributions, including the distribution of
$0.23 being declared with respect to
the three months ended March 31,
2017, remain largely consistent with our prior run-rate
guidance, where the run-rate distribution amount is primarily
affected each quarter for changes in average realized prices of
methanol, ammonia and natural gas.
Our distribution with respect to the three months ended
March 31, 2017 reflects an average
realized methanol price of $353 per
metric ton, an average realized ammonia price of $247 per metric ton, and an average natural gas
price of $3.15 per MMBtu.
To assist investors in making the linkage between these prices
and potential future distributions, we provide below a sensitivity
analysis:
- A $0.50 per MMBtu change in
natural gas prices results in an approximately $0.23 impact on annual distributions
- A $10 per metric ton change in
methanol prices results in an approximately $0.10 impact on annual distributions
- A $10 per metric ton change in
ammonia prices results in an approximately $0.04 impact on annual distributions
We intend to continue making distributions consistent with our
run-rate guidance, but there can be no assurance we will be able to
do so. In addition to the impact of commodity prices, our
distributions are subject to fluctuations in capacity utilization,
working capital, capital expenditures, debt service and other
contractual obligations, reserves for future operating or capital
needs and other factors, including overall business, regulatory and
financial considerations that may affect the availability of cash
to distribute. Please see "Forward-Looking Statements" below."
Statement from incoming President and Chief Executive Officer
– Ahmed El-Hoshy
"During the quarter, our ammonia and methanol production units
experienced 4 and 3 days of unplanned downtime, generating capacity
utilization rates of 102% and 96%, respectively.
Our underlying markets turned significantly more positive in the
first quarter of 2017, with robust price increases for both
methanol and ammonia. US weighted average methanol contract prices
improved rapidly during the quarter, reaching $491 per metric ton in March, up from
$370 per metric ton at the end of
2016. Ammonia prices (Tampa cfr)
reached a multi-year low of $210 per
metric ton in November 2016, but
improved throughout the first quarter to $330 per metric ton in March.
We saw a subsequent increase in realized prices, which
contributed to a significantly improved operational performance in
the first quarter. Our average realized methanol price was
$353 per metric ton in the first
quarter, an increase of 87% from $189
per metric ton in the same quarter last year and 37% from
$257 per metric ton in the fourth
quarter of 2016. Our average realized ammonia price was
$247 per metric ton in the first
quarter, down 16% from $295 per
metric ton in the first quarter of 2016, but up 24% from
$199 per metric ton in the fourth
quarter of 2016. Finally, our natural gas price averaged
$3.15 per MMBtu during the quarter,
up from $2.13 per MMBtu during the
first quarter of 2016, offsetting some of the benefits of the
higher pricing.
Looking forward, methanol spot prices declined towards the end
of March and into the second quarter, largely due to the return of
supply from various methanol plants following turnarounds, and
reduced MTO operating rates in China. The US weighted average methanol
contract price followed spot prices and declined to $440 per metric ton in April and to $399 per metric ton for May. This is likely to
lead to lower realized methanol prices in the second quarter
compared to the first, but current price levels are higher than
those achieved in 2016 and continue to generate healthy returns for
our operations. Global demand is expected to remain underpinned by
the MTO sector, which is generally benefiting from improved
economics and additional MTO capacity starting up.
Ammonia markets remained firm into the second quarter of 2017,
reflecting tight US and global supply. The Tampa CFR ammonia
contract price increased from $330
per metric ton in March to $340 per
metric ton in April, and came back to $330 per metric ton for May, on average above the
level of the first quarter."
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Volume Weighted
Average Price of
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Volume Weighted
Average Price of
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Methanol and
Ammonia
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Natural
Gas
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($ per metric
ton)
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($ per
MMBtu)
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For Three-Months
Ended March 31,
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For Three-Months
Ended March 31,
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2017
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2016
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2017
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2016
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Ammonia
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247
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295
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3.15
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2.13
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Methanol
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353
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189
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Production
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Capacity
Utilization
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(in '000
tons)
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Rate %
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For Three-Months
Ended March 31,
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For Three-Months
Ended March 31,
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2017
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2016
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2017
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2016
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Ammonia
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83
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88
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102%
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107%
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Methanol
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216
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225
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96%
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99%
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Non-GAAP Financial Measure
EBITDA is defined as net income (loss) plus (i) interest
expense and other financing costs, (ii) depreciation expense
and (iii) income tax expense. EBITDA is used as a supplemental
financial measure by management and by external users of our
unaudited financial statements, such as investors and commercial
banks, to assess:
- the financial performance of our assets without regard to
financing methods,
capital structure or historical cost basis; and
- our operating performance and return on invested capital
compared to those of other
publicly traded partnerships, without regard to financing methods
and capital structure
EBITDA should not be considered as an alternative to net income,
operating income, net cash provided by operating activities or any
other measure of financial performance or liquidity presented in
accordance with GAAP. EBITDA may have material limitations as a
performance measure because it excludes items that are necessary
elements of our costs and operations. In addition, EBITDA presented
by other companies may not be comparable to our presentation
because each company may define EBITDA differently.
EBITDA margin is defined as EBITDA divided by revenues. EBITDA
margin is used as a supplemental financial measure by the
Partnership's management in its analysis of our operating
performance.
The table below reconciles EBITDA to net income, its most
directly comparable financial measure calculated and presented in
accordance with GAAP, for the three months ended March 31, 2017 (dollars in thousands).
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Quarter Ended
March 31,
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2017
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2016
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Net income
(loss)
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$
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13,744
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-6,054
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Add:
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Interest
expense
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5,547
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8,792
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Interest expense –
related party
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4,530
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51
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Income tax
expense
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466
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80
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Depreciation
expense
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15,244
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15,378
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EBITDA
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$
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39,531
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18,247
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Conference Call with Management
The Partnership will hold a conference call on May 8, 2017, at 10:00 a.m.
ET, during which the Partnership's senior management will
review the Partnership's financial results for the first quarter
ended March 31, 2017 and provide an
update on corporate developments. Callers may listen to the live
presentation, which will be followed by a question and answer
segment, by dialing (816) 287-5664 and entering the conference code
18236977. A replay of the conference call will be made available
until May 22, 2017 and the replay can
be accessed by dialing (855) 859-2056 or (404) 537-3406 and
entering the same conference code 18236977.
About OCI Partners LP
The Partnership has filed its Annual Report on Form 10-K for the
year ended December 31, 2016, with
the Securities and Exchange Commission. A copy of the Annual Report
on Form 10-K is available to be viewed or downloaded at
www.ocipartnerslp.com by selecting "SEC Filings" on the "Financial
Reporting" sub-tab found under the "Investor and Media Relations"
tab, as well as on the SEC's website at www.sec.gov. Interested
investors may obtain a hard copy of the Annual Report on Form 10-K,
including the Partnership's financial statements, free of charge by
selecting "Annual Report" on the "Financial Reporting" sub-tab
found under the "Investor and Media Relations" tab.
OCI Partners LP (NYSE: OCIP) owns and operates an integrated
methanol and ammonia production facility that is strategically
located on the Texas Gulf Coast near Beaumont. The Partnership is headquartered in
Nederland, Texas and currently has
a methanol production design capacity of 912,500 metric tons per
year and an ammonia production design capacity of 331,000 metric
tons per year.
Notice to Foreign Investors
This release is intended to be a qualified notice to nominees as
provided for under Treasury Regulation Section 1.1446-4(b)(4) and
(d). Please note that 100% of the Partnership's distributions to
foreign investors are attributable to income that is effectively
connected with a United States
trade or business. Accordingly, all of the Partnership's
distributions to foreign investors are subject to federal income
tax withholding at the highest applicable effective tax rate.
Nominees, and not the Partnership, are treated as the withholding
agents responsible for withholding on the distributions received by
them on behalf of foreign investors.
Forward-Looking Statements
This press release contains forward-looking statements.
Statements that are predictive in nature, that depend upon or refer
to future events or conditions or that include the words "believe,"
"expect," "anticipate," "intend," "estimate" and other expressions
that are predictions of or indicate future events and trends and
that do not relate to historical matters identify forward-looking
statements. These forward-looking statements involve certain
risks and uncertainties, including, among others, the
following: our business plans may change as the methanol and
ammonia industry and markets warrant; the demand and sales prices
for methanol, ammonia and their derivatives may decrease due to
market, governmental and other factors; we may be unable to obtain
economically priced natural gas and other feedstocks; we may be
unable to successfully implement our business strategies, including
the completion of significant capital programs; the occurrence of
shutdowns (either temporary or permanent) or restarts of existing
methanol and ammonia facilities (including our own facility); the
timing and length of planned and unplanned downtime; and the
occurrence of operating hazards from accidents, fire, severe
weather, floods or other natural disasters. For more information
concerning factors that could cause actual results to differ
materially from those conveyed in the forward-looking statements,
please refer to the "Risk Factors" section of the Partnership's
most recently filed Annual Report on Form 10-K and Quarterly
Reports on Form 10-Q filed thereafter. The Partnership undertakes
no obligation to publicly update or revise any forward-looking
statement, whether as a result of new information, future events,
changed circumstances or otherwise, unless required by law.
Contacts:
Hans
Zayed
Director of Investor Relations
Phone: +1 917-817-5159
hans.zayed@oci.nl
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visit:http://www.prnewswire.com/news-releases/oci-partners-lp-reports-2017-first-quarter-results-and-announces-023-quarterly-cash-distribution-300452591.html
SOURCE OCI Partners LP