Sanchez Midstream Partners LP (NYSE American:SNMP) (“SNMP” or the
“Partnership”) today reported second quarter 2017 results.
Highlights from the report include:
- The Partnership has declared a second quarter 2017 cash
distribution on common units of $0.4441 per unit ($1.7764 per unit
annualized), which represents the seventh consecutive 1.5 percent
increase since the Partnership’s third quarter 2015 cash
distribution on common units for a 6.2 percent annualized rate of
increase;
- The Raptor Gas Processing Facility began operations with
current capacity of 200 million cubic feet per day (“MMcfe/d) of
natural gas in the second quarter 2017 with plant expansion to 260
MMcfe/d expected in the second half of 2017;
- The Carnero Gathering Line now connects the Sanchez Energy
Corporation (NYSE:SN) (“Sanchez Energy”) Comanche asset to the
Raptor Gas Processing Facility;
- Throughput volumes of natural gas for the Western Catarina
Midstream system were 170 MMcfe/d for the second quarter 2017,
which is 12 percent higher than first quarter 2017;
- The Seco Pipeline is in early phases of start-up and is
expected to be fully operational in the next several weeks;
- The Partnership closed the sale of its remaining operated
Oklahoma production assets for approximately $5.5 million in July
2017 and has entered into an agreement to sell certain non-core,
non-operated production assets in Texas for approximately $6.3
million in a transaction that is expected to close in the third
quarter 2017;
- The Partnership reported net income of $0.6 million for the
second quarter 2017 compared to a net loss of $7.7 million in the
first quarter 2017 and Adjusted EBITDA (a non-GAAP financial
measure) of $15.3 million for the second quarter 2017, which was up
approximately 46 percent when compared to the first quarter 2017;
and
- The Partnership’s second quarter 2017 cash available for
distribution was $4.1 million.
MANAGEMENT COMMENTARY
“During the second quarter 2017, we focused on
completing the successful transformation of the Partnership to a
midstream-focused master limited partnership,” said Gerry
Willinger, Chief Executive Officer of the general partner of SNMP.
“To this end, we brought several important midstream projects
on-line in South Texas, took measures to divest our remaining
operated production assets, and rebranded the Partnership to better
reflect our strategic focus.
“The Raptor Gas Processing Facility, a 50 percent
joint venture with Targa Resources Corp. (“Targa”), began flowing
gas in late May 2017 and is now fully operational. The
natural gas processing plant has current capacity of 200 MMcfe/d,
with plant expansion to 260 MMcfe/d of natural gas processing
capacity expected to be complete in the second half of 2017.
The Carnero Gathering Pipeline, a 50 percent joint venture
with Targa that went into service in 2016, currently delivers
natural gas from Sanchez Energy’s Catarina asset to the Raptor Gas
Processing Facility. During the second quarter 2017, we also
completed an interconnection between the Carnero Gathering Pipeline
and Sanchez Energy’s recently acquired Comanche asset.
Additionally, we completed construction of the Seco Pipeline, a dry
gas pipeline, 100 percent owned by the Partnership that will
provide takeaway from the Raptor Gas Processing Facility to premium
natural gas markets in South Texas. Together, these midstream
assets, along with the Western Catarina Midstream system, will
provide a stable stream of fee-based cash flow to the Partnership
and form the basis of our midstream growth strategy in South
Texas.
“In conjunction with our focus on midstream
activities, we continued to divest certain of our non-core
production assets in the second quarter 2017. In July 2017,
we closed the sale of our remaining operated Oklahoma production
assets for approximately $5.5 million and, in a separate agreement
executed that month, agreed to sell certain non-core, non-operated
production assets in Texas for approximately $6.3 million in a
transaction that is expected to close in the third quarter
2017. Both transactions are subject to normal and customary
closing adjustments. In addition to reducing our exposure to
a price-sensitive, production-based revenue stream, we anticipate
the sale of the Oklahoma production assets will lower overhead
costs associated with operating the properties. With the increase
in operating margins from midstream activities, we anticipate that
the asset sales will have no impact on our borrowing capacity,
which is currently based on lender commitments totaling $200
million. It is worth noting that the Oklahoma production
assets were excluded from the guidance we provided at the beginning
of 2017. Based upon successful completion of our South Texas
midstream projects and the visibility those projects provide, we
reiterate our full year guidance for 2017.
“Given the transitional nature of our business
during the first half of this year, during which a number of key
projects were in various phases of completion, we fully anticipated
the first half of 2017 would be challenging in terms of our use of
capital and financial results. That being said, throughput
volumes of natural gas on the Western Catarina Midstream system for
the second quarter 2017 increased approximately 12 percent when
compared to the prior quarter and were 19 percent above the minimum
commitment level under our gathering agreement with Sanchez
Energy. As Sanchez Energy’s drilling plans call for an
additional 32 wells at Catarina in the second half of 2017, we
currently anticipate growth in volume on the Western Catarina
Midstream system during the remainder of this year.
“More importantly, Sanchez Energy’s acquisition of
the Comanche asset provides a path to sustainable midstream growth
for the Partnership. Our South Texas assets are strategically
positioned to capture upside stemming from that growth, and we
anticipate greater volumes through our midstream facilities in the
years to come. We continue to evaluate opportunities to
secure additional midstream capacity for upside generated from the
Comanche asset, and look forward to growing along with Sanchez
Energy as they continue to execute their strategy in the Western
Eagle Ford.”
OPERATING AND FINANCIAL RESULTS
The Partnership’s revenue totaled $25.0 million
during the second quarter 2017. Included in total revenue for
the second quarter 2017 is revenue from the Western Catarina
Midstream system of $14.2 million and $7.6 million from production
activities. The balance of the Partnership’s second quarter
2017 total revenue came from hedge settlements ($1.9 million) and a
gain on mark-to-market activities ($1.3 million), which is a
non-cash item.
Total operating expenses during the second quarter
2017 totaled $23.6 million, which includes $3.0 million in
operating expenses related to the Western Catarina Midstream system
and $4.3 million in production-related operating expenses and
taxes. Second quarter 2017 general and administrative
and unit based compensation expenses of $7.1 million
include $3.8 million in unit-based compensation and asset
management fees, both of which are non-cash items.
On a GAAP basis, the Partnership recorded net
income of $0.6 million for the second quarter 2017. Adjusted
EBITDA (a non-GAAP financial measure) for the second quarter 2017
was approximately $15.3 million. The Partnership’s
calculation of Adjusted EBITDA is discussed in further detail
below.
LIQUIDITY UPDATE
As of June 30, 2017, the Partnership had $178
million in debt outstanding under its credit facility, which had a
borrowing base of $215.6 million and an elected commitment amount
of $200 million. With the increase in operating margins from
midstream activities, the Partnership anticipates that its sale of
operated Oklahoma and non-operated Texas production assets will
have no impact on its borrowing capacity, which is currently based
on lender commitments totaling $200 million.
The Partnership had approximately $2.0 million in
cash and cash equivalents at June 30, 2017.
HEDGE UPDATE
For the period July 1,
2017 through Dec. 31, 2017, the Partnership has hedged
approximately 0.5 Bcf of its natural gas production at an effective
NYMEX fixed price of approximately $5.45 per million
British thermal units and approximately 169 thousand barrels of its
crude oil production at an effective NYMEX fixed price of
approximately $61.48 per barrel. More information
on the Partnership’s hedge positions can be found in the SNMP
Investor Presentation posted at www.sanchezmidstream.com.
COMMON UNITS
The Partnership had 14,602,148 common units issued
and outstanding as of Aug. 10, 2017.
DISTRIBUTIONS
On Aug. 9, 2017, the Partnership declared a second
quarter 2017 cash distribution on its common units of $0.4441 per
unit ($1.7764 per unit annualized), which represents the seventh
consecutive 1.5 percent increase since the Partnership’s third
quarter 2015 cash distribution on common units for a 6.2 percent
annualized rate of increase. The Partnership also declared a
second quarter 2017 distribution to the holders of its Class B
preferred units equal to $0.28225 per Class B preferred
unit.
Based on second quarter 2017 adjusted EBITDA of
$15.3 million, cash interest expense of $1.9 million, maintenance
capital of $0.6 million, and $8.75 million in preferred dividends,
the Partnership generated $4.1 million in cash available for
distribution this quarter.
CONFERENCE CALL INFORMATION
The Partnership will host a conference call at
10:00 a.m. Central Time (11:00 a.m. Eastern Time) on Tuesday, Aug.
15, 2017 to discuss second quarter 2017 results.
To participate in the conference call, analysts,
investors, media and the public in the U.S. may dial (844) 824-3837
shortly before 10:00 a.m. Central Time (11:00 a.m. Eastern
Time). The international phone number is (412)
317-5161. Callers should request the “Sanchez Midstream
Partners Second Quarter 2017 Conference Call” once reaching the
operator.
A live audio webcast of the conference call and the
earnings release will be available on the Partnership’s website
(www.sanchezmidstream.com) under the Investor Relations page.
A replay will be available approximately one hour after the
call through Aug. 22, 2017, at 10:59 p.m. Central
Time (11:59 p.m. Eastern Time). The replay may be accessed by
dialing (844) 512-2921 (U.S.) or (412) 317-6671 (International),
and referencing the replay passcode: 10111167.
ABOUT THE PARTNERSHIP
Sanchez Midstream Partners LP (NYSE American:SNMP)
is a growth-oriented publicly-traded limited partnership focused on
the acquisition, development, ownership and operation of midstream
and production assets in North America. The Partnership has
ownership stakes in oil and natural gas gathering systems, natural
gas pipelines, and a natural gas processing facility, all located
in the Western Eagle Ford in South Texas.
ADDITIONAL INFORMATION
Additional information about SNMP can be found in
the Partnership’s documents on file with the U.S. Securities and
Exchange Commission (www.sec.gov) and in the “Investor
Presentation” available on the Partnership’s website
(www.sanchezmidstream.com).
NON-GAAP MEASURES
We present Adjusted EBITDA, a non-GAAP financial
measure, in addition to our reported net income (loss), the most
comparable GAAP financial measure, in this news release.
Adjusted EBITDA is a non-GAAP financial measure
that is defined as net income (loss) adjusted by: (i) interest
(income) expense, net, which includes interest expense, interest
expense net (gain) loss on interest rate derivative contracts, and
interest (income); (ii) income tax expense (benefit);
(iii) depreciation, depletion and amortization;
(iv) asset impairments; (v) accretion expense;
(vi) (gain) loss on sale of assets; (vii) unit-based
compensation programs; (viii) unit-based asset management
fees; (ix) distributions in excess of equity earnings;
(x) (gain) loss on mark-to-market activities; (xi) commodity
derivatives settlements applied to future positions;
(xii) (gain) loss on embedded derivatives; and (xiii)
acquisition and divestiture costs. For a reconciliation of
Adjusted EBITDA to Net Income (Loss), the most directly comparable
GAAP measure, see the tables at the end of this release.
Adjusted EBITDA is a significant performance metric
used by our management to indicate (prior to the establishment of
any cash reserves by the board of directors of our general partner)
the distributions that we would expect to pay to our unitholders.
Specifically, this financial measure indicates to investors whether
or not we are generating cash flow at a level that can sustain or
support a quarterly distribution or any increase in our quarterly
distribution rates. Adjusted EBITDA is also used as a quantitative
standard by our management and by external users of our financial
statements such as investors, research analysts, our lenders and
others to assess: (i) the financial performance of our assets
without regard to financing methods, capital structure or
historical cost basis; (ii) the ability of our assets to
generate cash sufficient to pay interest costs and support our
indebtedness; and (iii) our operating performance and return
on capital as compared to those of other companies in our industry,
without regard to financing or capital structure. We believe
that the presentation of Adjusted EBITDA provides useful
information to investors in assessing our financial condition and
results of operations. The GAAP measure most directly comparable to
Adjusted EBITDA is net income. Our non-GAAP financial measure of
Adjusted EBITDA should not be considered as an alternative to GAAP
net income. Adjusted EBITDA has important limitations as an
analytical tool because it excludes some but not all items that
affect net income. Adjusted EBITDA should not be considered in
isolation or as a substitute for analysis of our results as
reported under GAAP. Because Adjusted EBITDA may be defined
differently by other companies in our industry, our definition of
Adjusted EBITDA may not be comparable to similarly titled measures
of other companies, thereby diminishing its utility. For a
reconciliation of Adjusted EBITDA to net income, the most
comparable GAAP financial metric, please see the tables below.
FORWARD-LOOKING STATEMENTS
This press release contains, and the officers and
representatives of the Partnership and its general partner may from
time to time make, statements that are considered forward–looking
statements within the meaning of the Securities Act of 1933 and the
Securities Exchange Act of 1934. These forward-looking
statements are subject to a number of risks and uncertainties, many
of which are beyond our control, which may include statements about
our: business strategy; acquisition strategy; financing strategy;
ability to make, maintain and grow distributions; the ability of
our customers to meet their drilling and development plans on a
timely basis or at all and perform under gathering and processing
agreements; future operating results; future capital expenditures;
the Partnership’s well-positioned assets in the Eagle Ford Shale;
and plans, objectives, expectations, forecasts, outlook and
intentions. All of these types of statements, other than
statements of historical fact included in this press release, are
forward-looking statements. In some cases,
forward-looking statements can be identified by terminology such as
“may,” “could,” “should,” “expect,” “plan,” “project,” “intend,”
“anticipate,” “believe,” “estimate,” “predict,” “potential,”
“pursue,” “target,” “continue,” the negative of such terms or other
comparable terminology.
The forward-looking statements contained in this
press release are largely based on our expectations, which reflect
estimates and assumptions made by our management. These
estimates and assumptions reflect our best judgment based on
currently known market conditions and other factors. Although
we believe such estimates and assumptions to be reasonable, they
are inherently uncertain and involve a number of risks and
uncertainties that are beyond our control. In addition,
management’s assumptions about future events may prove to be
inaccurate. Management cautions all readers that the
forward-looking statements contained in this press release are not
guarantees of future performance, and we cannot assure any reader
that such statements will be realized or the forward-looking events
and circumstances will occur. Actual results may differ
materially from those anticipated or implied in the forward-looking
statements due to factors listed in the “Risk Factors” section in
our filings with the U.S. Securities and Exchange Commission and
elsewhere in those filings. The forward-looking statements
speak only as of the date made, and other than as required by law,
we do not intend to publicly update or revise any forward-looking
statements as a result of new information, future events or
otherwise. These cautionary statements qualify all
forward-looking statements attributable to us or persons acting on
our behalf.
Sanchez
Midstream Partners LP |
|
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
($ in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil, liquids, and gas
sales |
|
$ |
9,506 |
|
|
$ |
11,298 |
|
|
$ |
19,622 |
|
|
$ |
23,696 |
|
|
|
|
Gathering and
transportation sales |
|
|
14,176 |
|
|
|
14,258 |
|
|
|
25,387 |
|
|
|
28,133 |
|
|
|
|
Gain (loss) on
mark-to-market activities |
|
|
1,347 |
|
|
|
(13,210 |
) |
|
|
5,827 |
|
|
|
(16,314 |
) |
|
|
|
Total revenues |
|
|
25,029 |
|
|
|
12,346 |
|
|
|
50,836 |
|
|
|
35,515 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
Lease
operating expenses |
|
|
3,881 |
|
|
|
4,178 |
|
|
|
8,864 |
|
|
|
9,151 |
|
|
|
|
Transportation operating expenses |
|
|
3,032 |
|
|
|
3,014 |
|
|
|
6,328 |
|
|
|
6,068 |
|
|
|
|
Cost of
sales |
|
|
40 |
|
|
|
63 |
|
|
|
77 |
|
|
|
193 |
|
|
|
|
Production taxes |
|
|
353 |
|
|
|
326 |
|
|
|
826 |
|
|
|
547 |
|
|
|
|
General
and administrative |
|
|
6,353 |
|
|
|
4,978 |
|
|
|
11,962 |
|
|
|
10,697 |
|
|
|
|
Unit-based compensation expense |
|
|
780 |
|
|
|
1,091 |
|
|
|
1,320 |
|
|
|
1,529 |
|
|
|
|
Depreciation, depletion and amortization |
|
|
8,937 |
|
|
|
6,129 |
|
|
|
21,118 |
|
|
|
13,317 |
|
|
|
|
Asset
impairments |
|
|
— |
|
|
|
— |
|
|
|
4,688 |
|
|
|
1,309 |
|
|
|
|
Accretion
expense |
|
|
240 |
|
|
|
315 |
|
|
|
498 |
|
|
|
630 |
|
|
|
|
Total
operating expenses |
|
|
23,616 |
|
|
|
20,094 |
|
|
|
55,681 |
|
|
|
43,441 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses
(income): |
|
|
|
|
|
|
|
|
|
|
|
Interest
expense |
|
|
1,896 |
|
|
|
1,103 |
|
|
|
3,779 |
|
|
|
2,002 |
|
|
|
|
Gain on
embedded derivatives |
|
|
— |
|
|
|
(6,898 |
) |
|
|
— |
|
|
|
(13,192 |
) |
|
|
|
Earnings
from equity investments |
|
|
(1,042 |
) |
|
|
— |
|
|
|
(1,524 |
) |
|
|
(12 |
) |
|
|
|
Other
income |
|
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(49 |
) |
|
|
|
Total
expenses, net |
|
|
24,470 |
|
|
|
14,298 |
|
|
|
57,936 |
|
|
|
32,190 |
|
|
|
|
Income (loss) before
income taxes |
|
|
559 |
|
|
|
(1,952 |
) |
|
|
(7,100 |
) |
|
|
3,325 |
|
|
|
|
Income
tax expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
Net income (loss) |
|
|
559 |
|
|
|
(1,952 |
) |
|
|
(7,100 |
) |
|
|
3,325 |
|
|
|
|
Less: |
|
|
|
|
|
|
|
|
|
|
|
Preferred
unit distributions paid in common units |
|
|
— |
|
|
|
— |
|
|
|
(2,625 |
) |
|
|
— |
|
|
|
|
Preferred
unit distributions |
|
|
(8,750 |
) |
|
|
(8,750 |
) |
|
|
(15,750 |
) |
|
|
(17,500 |
) |
|
|
|
Preferred
unit amortization |
|
|
(433 |
) |
|
|
(6,505 |
) |
|
|
(837 |
) |
|
|
(13,772 |
) |
|
|
|
Net loss attributable
to common unitholders |
|
$ |
(8,624 |
) |
|
$ |
(17,207 |
) |
|
$ |
(26,312 |
) |
|
$ |
(27,947 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
15,336 |
|
|
$ |
14,625 |
|
|
$ |
25,874 |
|
|
$ |
28,146 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per unit |
|
|
|
|
|
|
|
|
|
|
|
Common
units - Basic and Diluted |
|
$ |
(0.62 |
) |
|
$ |
(4.37 |
) |
|
$ |
(1.92 |
) |
|
$ |
(8.38 |
) |
|
|
|
Weighted Average Units
Outstanding |
|
|
|
|
|
|
|
|
|
|
|
Common
units - Basic and Diluted |
|
|
13,939,993 |
|
|
|
3,935,297 |
|
|
|
13,671,557 |
|
|
|
3,333,482 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
Sanchez
Midstream Partners LP |
|
|
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|
|
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|
Condensed
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
Dec. 31, |
|
|
|
|
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
|
|
|
|
($ in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
$ |
17,275 |
|
|
$ |
14,765 |
|
|
|
|
|
|
|
|
Midstream and
production assets, net |
|
|
226,641 |
|
|
|
222,820 |
|
|
|
|
|
|
|
|
Other assets |
|
|
303,399 |
|
|
|
302,120 |
|
|
|
|
|
|
|
|
Total
assets |
|
$ |
547,315 |
|
|
$ |
539,705 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities |
|
$ |
16,622 |
|
|
$ |
9,443 |
|
|
|
|
|
|
|
|
Long-term debt, net of
debt issuance costs |
|
|
176,554 |
|
|
|
151,322 |
|
|
|
|
|
|
|
|
Other long-term
liabilities |
|
|
18,276 |
|
|
|
19,205 |
|
|
|
|
|
|
|
|
Total
liabilities |
|
|
211,452 |
|
|
|
179,970 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mezzanine equity |
|
|
342,953 |
|
|
|
342,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners' capital
(deficit) |
|
|
(7,090 |
) |
|
|
16,744 |
|
|
|
|
|
|
|
|
Total partners' capital
(deficit) |
|
|
(7,090 |
) |
|
|
16,744 |
|
|
|
|
|
|
|
|
Total
liabilities and partners' capital |
|
$ |
547,315 |
|
|
$ |
539,705 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sanchez
Midstream Partners LP |
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Net Income (Loss) to |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months |
|
|
|
|
|
|
|
Ended |
|
|
|
|
|
Three Months Ended June 30, |
|
March 31, |
|
Six Months Ended June 30, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
($ in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Net Income (Loss) to |
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
559 |
|
|
$ |
(1,952 |
) |
|
$ |
(7,659 |
) |
|
$ |
(7,100 |
) |
|
$ |
3,325 |
|
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
Interest
expense, net |
|
|
1,896 |
|
|
|
1,103 |
|
|
|
1,883 |
|
|
|
3,779 |
|
|
|
2,002 |
|
|
Depreciation, depletion and amortization |
|
|
8,937 |
|
|
|
6,129 |
|
|
|
12,181 |
|
|
|
21,118 |
|
|
|
13,317 |
|
|
Asset
impairments |
|
|
- |
|
|
|
- |
|
|
|
4,688 |
|
|
|
4,688 |
|
|
|
1,309 |
|
|
Accretion
expense |
|
|
240 |
|
|
|
315 |
|
|
|
258 |
|
|
|
498 |
|
|
|
630 |
|
|
Unit-based compensation programs |
|
|
1,479 |
|
|
|
1,091 |
|
|
|
540 |
|
|
|
2,019 |
|
|
|
1,529 |
|
|
Unit-based asset management fees |
|
|
2,345 |
|
|
|
1,627 |
|
|
|
2,030 |
|
|
|
4,375 |
|
|
|
2,912 |
|
|
Distributions in excess of equity earnings |
|
|
803 |
|
|
|
- |
|
|
|
968 |
|
|
|
1,771 |
|
|
|
- |
|
|
(Gain)
loss on mark-to-market activities |
|
|
(1,347 |
) |
|
|
13,210 |
|
|
|
(4,480 |
) |
|
|
(5,827 |
) |
|
|
16,314 |
|
|
Gain on
embedded derivatives |
|
|
- |
|
|
|
(6,898 |
) |
|
|
- |
|
|
|
- |
|
|
|
(13,192 |
) |
|
Acquisition and divestiture costs |
|
|
424 |
|
|
|
- |
|
|
|
129 |
|
|
|
553 |
|
|
|
- |
|
|
Adjusted EBITDA
(1) |
|
$ |
15,336 |
|
|
$ |
14,625 |
|
|
$ |
10,538 |
|
|
$ |
25,874 |
|
|
$ |
28,146 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)To supplement our financial results and guidance presented
in accordance with U.S. generally accepted accounting principles
(“GAAP”), we use Adjusted EBITDA, a non-GAAP financial measure, in
this quarterly report. We believe that non-GAAP financial measures
are helpful in understanding our past financial performance and
potential future results, particularly in light of the effect of
various transactions effected by us. We define Adjusted EBITDA as
net income (loss) adjusted by: (i) interest (income) expense, net,
which includes interest expense, interest expense net, (gain) loss
on interest rate derivative contracts, and interest (income); (ii)
income tax expense (benefit); (iii) depreciation, depletion and
amortization; (iv) asset impairments; (v) accretion expense; (vi)
(gain) loss on sale of assets; (vii) unit-based compensation
programs; (viii) unit-based asset management fees; (ix)
distributions in excess of equity earnings; (x) (gain) loss on
mark-to-market activities; (xi) commodity derivatives settlements
applied to future positions; (xii) (gain) loss on embedded
derivatives; and (xiii) acquisition and divestiture costs. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sanchez
Midstream Partners LP |
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Net Income (Loss) to Adjusted |
|
|
|
|
|
|
|
|
|
|
|
EBITDA and Cash Available for Distribution |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June
30, |
|
Six Months Ended June 30, |
|
|
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
|
|
|
|
($ in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Net Income (loss) to Adjusted |
|
|
|
|
|
|
|
|
|
|
|
EBITDA and Cash Available for Distribution |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
559 |
|
|
$ |
(1,952 |
) |
|
$ |
(7,100 |
) |
|
$ |
3,325 |
|
|
|
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
Interest
expense, net |
|
|
1,896 |
|
|
|
1,103 |
|
|
|
3,779 |
|
|
|
2,002 |
|
|
|
|
Depreciation, depletion and amortization |
|
|
8,937 |
|
|
|
6,129 |
|
|
|
21,118 |
|
|
|
13,317 |
|
|
|
|
Asset
impairments |
|
|
— |
|
|
|
— |
|
|
|
4,688 |
|
|
|
1,309 |
|
|
|
|
Accretion
expense |
|
|
240 |
|
|
|
315 |
|
|
|
498 |
|
|
|
630 |
|
|
|
|
Unit-based compensation programs |
|
|
1,479 |
|
|
|
1,091 |
|
|
|
2,019 |
|
|
|
1,529 |
|
|
|
|
Unit-based asset management fees |
|
|
2,345 |
|
|
|
1,627 |
|
|
|
4,375 |
|
|
|
2,912 |
|
|
|
|
Distributions in excess of equity earnings |
|
|
803 |
|
|
|
— |
|
|
|
1,771 |
|
|
|
— |
|
|
|
|
(Gain)
loss on mark-to-market activities |
|
|
(1,347 |
) |
|
|
13,210 |
|
|
|
(5,827 |
) |
|
|
16,314 |
|
|
|
|
Gain on
embedded derivatives |
|
|
— |
|
|
|
(6,898 |
) |
|
|
— |
|
|
|
(13,192 |
) |
|
|
|
Acquisition and divestiture costs |
|
|
424 |
|
|
|
— |
|
|
|
553 |
|
|
|
— |
|
|
|
|
Adjusted EBITDA
(1) |
|
|
15,336 |
|
|
|
14,625 |
|
|
|
25,874 |
|
|
|
28,146 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maintenance capital expenditures(2) |
|
|
(600 |
) |
|
|
(600 |
) |
|
|
(1,200 |
) |
|
|
(1,200 |
) |
|
|
|
Cash
interest expense |
|
|
(1,871 |
) |
|
|
(873 |
) |
|
|
(3,458 |
) |
|
|
(1,732 |
) |
|
|
|
Preferred
unit distributions |
|
|
(8,750 |
) |
|
|
(8,750 |
) |
|
|
(15,750 |
) |
|
|
(17,500 |
) |
|
|
|
Cash available for
distribution |
|
$ |
4,115 |
|
|
$ |
4,402 |
|
|
$ |
5,466 |
|
|
$ |
7,714 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)To supplement our financial results and guidance presented
in accordance with U.S. generally accepted accounting principles
(“GAAP”), we use Adjusted EBITDA, a non-GAAP financial measure, in
this quarterly report. We believe that non-GAAP financial measures
are helpful in understanding our past financial performance and
potential future results, particularly in light of the effect of
various transactions effected by us. We define Adjusted EBITDA as
net income (loss) adjusted by: (i) interest (income) expense, net,
which includes interest expense, interest expense net, (gain) loss
on interest rate derivative contracts, and interest (income); (ii)
income tax expense (benefit); (iii) depreciation, depletion and
amortization; (iv) asset impairments; (v) accretion expense; (vi)
(gain) loss on sale of assets; (vii) unit-based compensation
programs; (viii) unit-based asset management fees; (ix)
distributions in excess of equity earnings; (x) (gain) loss on
mark-to-market activities; (xi) commodity derivatives settlements
applied to future positions; (xii) (gain) loss on embedded
derivatives; and (xiii) acquisition and divestiture costs. |
|
|
|
|
|
|
|
(2) Represents estimated maintenance capital expenditures
attributable to our controlling interest in our midstream and
production assets. Maintenance capital expenditures are cash
expenditures made to maintain, over the long-term, our operating
capacity, operating income or asset base. Examples of maintenance
capital expenditures are expenditures to develop and replace our
oil and natural gas reserves as well as the repair, refurbishment
and replacement of gathering and transportation assets, to maintain
equipment reliability, integrity and safety and to address
environmental laws and regulations. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sanchez
Midstream Partners LP |
|
|
|
|
|
|
|
|
|
Operating
Statistics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
Gathering and
Transportation Throughput: |
|
|
|
|
|
|
|
|
|
Oil
(MBbls) |
|
|
1,044 |
|
|
|
1,287 |
|
|
|
2,065 |
|
|
|
2,552 |
|
|
Gas
(MMcf) |
|
|
15,432 |
|
|
|
17,599 |
|
|
|
29,088 |
|
|
|
34,666 |
|
|
Total throughput
(MBOE)(1) |
|
|
3,616 |
|
|
|
4,220 |
|
|
|
6,913 |
|
|
|
8,330 |
|
|
Average daily
throughput (BOE/D) |
|
|
40 |
|
|
|
46 |
|
|
|
38 |
|
|
|
46 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes water
throughput. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30, |
|
Six Months Ended June 30, |
|
|
|
|
2017 |
|
|
|
2016 |
|
|
|
2017 |
|
|
|
2016 |
|
|
Net Production
in MBOE: |
|
|
|
|
|
|
|
|
|
Total production
(MBOE) |
|
|
290 |
|
|
|
304 |
|
|
|
600 |
|
|
|
607 |
|
|
Average daily
production (BOE/D) |
|
|
3,187 |
|
|
|
3,335 |
|
|
|
3,315 |
|
|
|
3,334 |
|
|
|
|
|
|
|
|
|
|
|
|
Average Sales
Price per BOE: |
|
|
|
|
|
|
|
|
|
BOE Net realized price,
including hedges (1) |
|
$ |
32.93 |
|
|
$ |
38.32 |
|
|
$ |
32.87 |
|
|
$ |
39.16 |
|
|
BOE Net realized price,
excluding hedges (2) |
|
$ |
26.49 |
|
|
$ |
20.25 |
|
|
$ |
27.14 |
|
|
$ |
18.43 |
|
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes impact of
mark-to-market gains (losses). |
|
|
|
|
|
|
|
|
|
(2) Excludes the impact
of all hedging gains (losses). |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PARTNERSHIP CONTACT
Charles C. Ward
Chief Financial Officer
Sanchez Midstream Partners GP LLC
(877) 847-0009
General Inquiries: (877) 847-0008
www.sanchezenergycorp.com