Today, DCP Midstream, LP (NYSE: DCP) reported its financial results
for the three months ended March 31, 2021.
HIGHLIGHTS
- For the three months ended March 31, 2021, DCP had net
income attributable to partners of $53 million, net cash used in
operating activities of $4 million, adjusted EBITDA of $275
million, and distributable cash flow of $175 million.
- Generated $89 million of excess free cash flow for the three
months ended March 31, 2021, after fully funding distributions and
growth capital, representing a 5% sequential increase.
- Achieved bank leverage of 4.1 times as of the end of the first
quarter.
- First quarter costs totaled $187 million, representing a 22%
reduction compared to fourth quarter 2020, driven by continued cost
discipline and timing of expenses.
- Total capital expenditures of $14 million, including $10
million of sustaining capital, was reduced by 59% compared to
fourth quarter 2020.
- Winter Storm Uri created a one-time adverse financial impact of
$60 million to first quarter adjusted EBITDA.
- As a result of significant producer volume declines and record
natural gas pricing, the storm created negative impacts on
commercial settlements, which were partially offset by DCP's
balanced portfolio and integrated value chain, including gas
storage.
- Despite the one-time first quarter negative impact, DCP
delivered a solid first quarter outcome and is maintaining its 2021
financial guidance.
FIRST QUARTER 2021 SUMMARY FINANCIAL
RESULTS
|
Three Months Ended |
March 31, |
|
2021 |
|
2020 |
|
(Unaudited) |
|
(Millions, except per unit amounts) |
|
|
|
|
Net income (loss) attributable to partners |
$ |
53 |
|
|
$ |
(550 |
) |
Net income (loss) per limited
partner unit - basic and diluted |
$ |
0.19 |
|
|
$ |
(2.71 |
) |
Net cash (used in) provided by
operating activities |
$ |
(4 |
) |
|
$ |
314 |
|
Adjusted EBITDA(1) |
$ |
275 |
|
|
$ |
321 |
|
Distributable cash
flow(1) |
$ |
175 |
|
|
$ |
220 |
|
Excess free cash flow(1) |
$ |
89 |
|
|
$ |
(32 |
) |
|
|
|
|
|
|
|
|
(1) This press release includes the following financial measures
not presented in accordance with U.S. generally accepted accounting
principles, or GAAP: adjusted EBITDA, distributable cash flow,
excess free cash flow, and adjusted segment EBITDA. Each such
non-GAAP financial measure is defined below under “Non-GAAP
Financial Information”, and each is reconciled to its most directly
comparable GAAP financial measure under “Reconciliation of Non-GAAP
Financial Measures” in schedules at the end of this press
release.
CEO'S PERSPECTIVE
"Our team safely mitigated the operational and financial impacts
of Winter Storm Uri with our first quarter results demonstrating
the strength and resiliency of our diversified and integrated
business model," said Wouter van Kempen, chairman, president, and
CEO. "With a strong base business, demand recovery in sight, and a
constructive commodity price environment, we are well-positioned to
build on our first quarter performance and meet our 2021
commitments to generate significant excess free cash flow and
enhance our balance sheet."
COMMON UNIT DISTRIBUTIONS
On April 20, 2021, DCP announced a quarterly common unit
distribution of $0.39 per limited partner unit. This distribution
remains unchanged from the previous quarter.
DCP generated distributable cash flow of $175 million for
three months ended March 31, 2021. Distributions declared were
$81 million for the three months ended March 31,
2021.
FIRST QUARTER 2021 OPERATING RESULTS BY BUSINESS
SEGMENT
Logistics and Marketing
Logistics and Marketing segment net income attributable to
partners for the three months ended March 31, 2021 and 2020 was
$146 million and $236 million, respectively.
Adjusted segment EBITDA decreased to $155 million for the three
months ended March 31, 2021, from $208 million for the three months
ended March 31, 2020, reflecting lower earnings on gas and NGL
marketing and Sand Hills, partially offset by favorable gas
storage.
The following table represents volumes for the Logistics and
Marketing segment:
|
|
|
|
|
|
Three Months Ended March 31, 2021 |
|
Three Months Ended December 31, 2020 |
|
Three Months Ended March 31, 2020 |
NGL Pipeline |
|
% Owned |
|
Net Pipeline Capacity (MBbls/d) |
|
Average NGL Throughput (MBpd) |
|
Average NGL Throughput (MBpd) |
|
Average NGL Throughput (MBpd) |
Sand Hills |
|
67 |
% |
|
333 |
|
|
228 |
|
|
257 |
|
|
322 |
|
Southern Hills |
|
67 |
% |
|
128 |
|
|
105 |
|
|
108 |
|
|
93 |
|
Front Range |
|
33 |
% |
|
87 |
|
|
56 |
|
|
57 |
|
|
60 |
|
Texas Express |
|
10 |
% |
|
37 |
|
|
19 |
|
|
21 |
|
|
20 |
|
Other |
|
Various |
|
|
310 |
|
|
170 |
|
|
167 |
|
|
182 |
|
Total |
|
|
|
895 |
|
|
578 |
|
|
610 |
|
|
677 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gathering and Processing
Gathering and Processing segment net income (loss) attributable
to partners for the three months ended March 31, 2021 and 2020 was
$27 million and $(645) million, respectively.
Adjusted segment EBITDA decreased to $156 million for the three
months ended March 31, 2021, from $168 million for the three months
ended March 31, 2020, reflecting lower wellhead volumes, partially
offset by improved commodity pricing.
The following table represents volumes for the Gathering and
Processing segment:
|
|
Three Months Ended March 31, 2021 |
|
Three Months Ended March 31, 2021 |
|
Three Months Ended December 31, 2020 |
|
Three Months Ended March 31, 2020 |
System |
|
Net Plant/Treater Capacity (MMcf/d) |
|
Average Wellhead Volumes (MMcf/d) |
|
Average Wellhead Volumes (MMcf/d) |
|
Average Wellhead Volumes (MMcf/d) |
North |
|
1,580 |
|
|
1,520 |
|
|
1,510 |
|
|
1,603 |
|
Midcontinent |
|
1,110 |
|
|
799 |
|
|
804 |
|
|
960 |
|
Permian |
|
1,200 |
|
|
858 |
|
|
1,014 |
|
|
1,038 |
|
South |
|
1,730 |
|
|
900 |
|
|
1,114 |
|
|
1,339 |
|
Total |
|
5,620 |
|
|
4,077 |
|
|
4,442 |
|
|
4,940 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CREDIT FACILITIES AND DEBT
DCP has two credit facilities with up to $1.75 billion of total
capacity. Proceeds from these facilities can be used for working
capital requirements and other general partnership purposes
including growth and acquisitions.
- DCP has a $1.4 billion senior unsecured revolving credit
agreement, or the Credit Agreement, that matures on
December 9, 2024. As of March 31, 2021, total unused
borrowing capacity under the Credit Agreement was $1,332 million
net of $58 million of outstanding borrowings and $10 million of
letters of credit.
- DCP has an accounts receivable
securitization facility that provides up to $350 million of
borrowing capacity that matures August 12, 2022. As of
March 31, 2021, DCP had $350 million of outstanding borrowings
under the accounts receivable securitization facility.
As of March 31, 2021, DCP had $5,683 million of total
consolidated principal debt outstanding, with the next maturity in
September 2021. The total debt outstanding includes $550
million of junior subordinated notes which are excluded from
debt pursuant to DCP's Credit Agreement leverage ratio calculation.
For the twelve months ended March 31, 2021, DCP's leverage
ratio was 4.1 times. The effective interest rate on DCP's overall
debt position, as of March 31, 2021, was 5.22%.
CAPITAL EXPENDITURES AND INVESTMENTS
During the three months ended March 31, 2021, DCP had
expansion capital expenditures and equity investments totaling
$4 million, and sustaining capital expenditures totaling
$10 million.
FIRST QUARTER 2021 EARNINGS CALL
DCP will host a conference call webcast tomorrow, May 6, 2021,
at 10:00 a.m. ET, to discuss its first quarter earnings. The live
audio webcast of the conference call and presentation slides can be
accessed through the Investors section on the DCP website at
www.dcpmidstream.com and the conference call can be accessed by
dialing (844) 233-0113 in the United States or (574) 990-1008
outside the United States. The conference confirmation number is
9896188. An audio webcast replay, presentation slides and
transcript will also be available by accessing the Investors
section on the DCP website.
NON-GAAP FINANCIAL INFORMATION
This press release and the accompanying financial schedules
include the following non-GAAP financial measures: adjusted EBITDA,
distributable cash flow, excess free cash flow and adjusted segment
EBITDA. The accompanying schedules provide reconciliations of these
non-GAAP financial measures to their most directly comparable GAAP
financial measures. DCP's non-GAAP financial measures should not be
considered in isolation or as an alternative to its financial
measures presented in accordance with GAAP, including operating
revenues, net income or loss attributable to partners, net cash
provided by or used in operating activities or any other measure of
liquidity or financial performance presented in accordance with
GAAP as a measure of operating performance, liquidity or ability to
service debt obligations and make cash distributions to
unitholders. The non-GAAP financial measures presented by DCP may
not be comparable to similarly titled measures of other companies
because they may not calculate their measures in the same
manner.
DCP defines adjusted EBITDA as net income or loss attributable
to partners adjusted for (i) distributions from unconsolidated
affiliates, net of earnings, (ii) depreciation and amortization
expense, (iii) net interest expense, (iv) noncontrolling interest
in depreciation and income tax expense, (v) unrealized gains and
losses from commodity derivatives, (vi) income tax expense or
benefit, (vii) impairment expense and (viii) certain other non-cash
items. Adjusted EBITDA further excludes items of income or loss
that we characterize as unrepresentative of our ongoing operations.
Management believes these measures provide investors meaningful
insight into results from ongoing operations.
The commodity derivative non-cash losses and gains result from
the marking to market of certain financial derivatives used by us
for risk management purposes that we do not account for under the
hedge method of accounting. These non-cash losses or gains may or
may not be realized in future periods when the derivative contracts
are settled, due to fluctuating commodity prices.
Adjusted EBITDA is used as a supplemental liquidity and
performance measure and adjusted segment EBITDA is used as a
supplemental performance measure by DCP's management and by
external users of its financial statements, such as investors,
commercial banks, research analysts and others to assess:
- financial performance of DCP's assets without regard to
financing methods, capital structure or historical cost basis;
- DCP's operating performance and return on capital as compared
to those of other companies in the midstream energy industry,
without regard to financing methods or capital structure;
- viability and performance of acquisitions and capital
expenditure projects and the overall rates of return on investment
opportunities;
- performance of DCP's business excluding non-cash commodity
derivative gains or losses; and
- in the case of adjusted EBITDA, the
ability of DCP's assets to generate cash sufficient to pay interest
costs, support its indebtedness, make cash distributions to its
unitholders and pay capital expenditures.
DCP defines adjusted segment EBITDA for each segment as segment
net income or loss attributable to partners adjusted for (i)
distributions from unconsolidated affiliates, net of earnings, (ii)
depreciation and amortization expense, (iii) net interest expense,
(iv) noncontrolling interest in depreciation and income tax
expense, (v) unrealized gains and losses from commodity
derivatives, (vi) income tax expense or benefit, (vii) impairment
expense and (viii) certain other non-cash items. Adjusted segment
EBITDA further excludes items of income or loss that we
characterize as unrepresentative of our ongoing operations for that
segment.
DCP defines distributable cash flow as adjusted EBITDA less
sustaining capital expenditures, net of reimbursable projects,
interest expense, cumulative cash distributions earned by the
Series A, Series B and Series C Preferred Units (collectively the
"Preferred Limited Partnership Units") and certain other items.
DCP defines excess free cash flow as distributable cash flow, as
defined above, less distributions to limited partners, less
expansion capital expenditures, net of reimbursable projects, and
contributions to equity method investments, and less certain other
items. Expansion capital expenditures are cash expenditures to
increase DCP's cash flows, operating or earnings capacity.
Expansion capital expenditures add on to or improve the capital
assets owned, or acquire or construct new gathering lines and well
connects, treating facilities, processing plants, fractionation
facilities, pipelines, terminals, docks, truck racks, tankage and
other storage, distribution or transportation facilities and
related or similar midstream assets.
Sustaining capital expenditures are cash expenditures made to
maintain DCP's cash flows, operating capacity or earnings capacity.
These expenditures add on to or improve capital assets owned,
including certain system integrity, compliance and safety
improvements. Sustaining capital expenditures also include certain
well connects, and may include the acquisition or construction of
new capital assets. Income attributable to preferred units
represent cash distributions earned by the Preferred Limited
Partnership Units. Cash distributions to be paid to the holders of
the Preferred Limited Partnership Units, assuming a distribution is
declared by DCP's board of directors, are not available to common
unit holders. Non-cash mark-to-market of derivative instruments is
considered to be non-cash for the purpose of computing
distributable cash flow because settlement will not occur until
future periods, and will be impacted by future changes in commodity
prices and interest rates. DCP compares the distributable cash flow
it generates to the cash distributions it expects to pay to its
partners. Distributable cash flow is used as a supplemental
liquidity and performance measure by DCP's management and by
external users of its financial statements, such as investors,
commercial banks, research analysts and others, to assess DCP's
ability to make cash distributions to its unitholders. Excess free
cash flow is used as a supplemental liquidity and performance
measure by our management and by external users of our financial
statements, such as investors, commercial banks, research analysts
and others, and is useful to investors and management as a measure
of our ability to generate cash particularly in light of an ongoing
transition in the midstream industry that has shifted investor
focus from distribution growth to capital discipline, cost
efficiency, and balance-sheet strength. Once business needs and
obligations are met, including cash reserves to provide funds for
distribution payments on our units and the proper conduct of our
business, which includes cash reserves for future capital
expenditures and anticipated credit needs, this cash can be used to
reduce debt, reinvest in the company for future growth, or return
to unitholders.
ABOUT DCP MIDSTREAM, LP
DCP Midstream, LP (NYSE: DCP) is a Fortune 500 midstream master
limited partnership headquartered in Denver, Colorado, with a
diversified portfolio of gathering, processing, logistics and
marketing assets. DCP is one of the largest natural gas liquids
producers and marketers, and one of the largest natural gas
processors in the U.S. The owner of DCP’s general partner is a
joint venture between Enbridge and Phillips 66. For more
information, visit the DCP Midstream, LP website at
www.dcpmidstream.com.
CAUTIONARY STATEMENTS
This press release may contain or incorporate by reference
forward-looking statements as defined under the federal securities
laws regarding DCP Midstream, LP, including projections, estimates,
forecasts, plans and objectives. Although management believes that
expectations reflected in such forward-looking statements are
reasonable, no assurance can be given that such expectations will
prove to be correct. In addition, these statements are subject to
certain risks, uncertainties and other assumptions that are
difficult to predict and may be beyond DCP's control. If any of
these risks or uncertainties materialize, or if underlying
assumptions prove incorrect, DCP's actual results may vary
materially from what management forecasted, anticipated, estimated,
projected or expected.
The key risk factors that may have a direct bearing on DCP's
results of operations and financial condition are described in
detail in the "Risk Factors" section of DCP's most recently filed
annual report and subsequently filed quarterly reports with the
Securities and Exchange Commission. Investors are encouraged to
closely consider the disclosures and risk factors contained in
DCP's annual and quarterly reports filed from time to time with the
Securities and Exchange Commission. The forward looking statements
contained herein speak as of the date of this announcement. DCP
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by applicable
securities laws. Information contained in this press release is
unaudited and subject to change.
Investors or Analysts:Mike
Fullmanmfullman@dcpmidstream.com303-605-1628
DCP MIDSTREAM,
LPFINANCIAL RESULTS ANDSUMMARY
FINANCIAL DATA(Unaudited)
|
|
Three Months Ended March 31, |
|
|
2021 |
|
2020 |
|
|
(Millions, except per unit amounts) |
Sales of natural gas, NGLs and condensate |
|
$ |
2,569 |
|
|
$ |
1,393 |
|
Transportation, processing and
other |
|
118 |
|
|
112 |
|
Trading and marketing (losses)
gains, net |
|
(369 |
) |
|
152 |
|
Total operating revenues |
|
2,318 |
|
|
1,657 |
|
Purchases and related
costs |
|
(2,037 |
) |
|
(1,146 |
) |
Operating and maintenance
expense |
|
(149 |
) |
|
(153 |
) |
Depreciation and amortization
expense |
|
(91 |
) |
|
(99 |
) |
General and administrative
expense |
|
(38 |
) |
|
(56 |
) |
Asset impairments |
|
— |
|
|
(746 |
) |
Other expense, net |
|
— |
|
|
(3 |
) |
Total operating costs and expenses |
|
(2,315 |
) |
|
(2,203 |
) |
Operating income (loss) |
|
3 |
|
|
(546 |
) |
Interest expense, net |
|
(77 |
) |
|
(78 |
) |
Earnings from unconsolidated
affiliates |
|
128 |
|
|
76 |
|
Income tax expense |
|
— |
|
|
(1 |
) |
Net income attributable to
noncontrolling interests |
|
(1 |
) |
|
(1 |
) |
Net income (loss) attributable to partners |
|
53 |
|
|
(550 |
) |
Series A preferred partner's
interest in net income |
|
(9 |
) |
|
(9 |
) |
Series B preferred partner's
interest in net income |
|
(3 |
) |
|
(3 |
) |
Series C preferred partner's
interest in net income |
|
(2 |
) |
|
(2 |
) |
Net income (loss) allocable to
limited partners |
|
$ |
39 |
|
|
$ |
(564 |
) |
Net income (loss) per limited
partner unit — basic and diluted |
|
$ |
0.19 |
|
|
$ |
(2.71 |
) |
Weighted-average limited
partner units outstanding — basic |
|
208.4 |
|
|
208.3 |
|
Weighted-average limited
partner units outstanding — diluted |
|
208.5 |
|
|
208.3 |
|
|
|
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
2021 |
|
2020 |
|
|
(Millions) |
Cash and cash equivalents |
|
$ |
5 |
|
|
$ |
52 |
|
Other current assets |
|
1,226 |
|
|
956 |
|
Property, plant and equipment,
net |
|
7,913 |
|
|
7,993 |
|
Other long-term assets |
|
3,967 |
|
|
3,956 |
|
Total assets |
|
$ |
13,111 |
|
|
$ |
12,957 |
|
|
|
|
|
|
Current liabilities |
|
$ |
1,240 |
|
|
$ |
1,116 |
|
Current debt |
|
504 |
|
|
505 |
|
Long-term debt |
|
5,178 |
|
|
5,119 |
|
Other long-term
liabilities |
|
357 |
|
|
356 |
|
Partners' equity |
|
5,805 |
|
|
5,834 |
|
Noncontrolling interests |
|
27 |
|
|
27 |
|
Total liabilities and
equity |
|
$ |
13,111 |
|
|
$ |
12,957 |
|
|
|
|
|
|
|
|
|
|
DCP MIDSTREAM,
LPRECONCILIATION OF NON-GAAP FINANCIAL
MEASURES(Unaudited)
|
Three Months Ended March 31, |
|
2021 |
|
2020 |
|
(Millions) |
Reconciliation of
Non-GAAP Financial Measures: |
|
|
|
Net income (loss) attributable to partners |
$ |
53 |
|
|
$ |
(550 |
) |
Interest expense, net |
77 |
|
|
78 |
|
Depreciation, amortization and income tax expense, net of
noncontrolling interests |
91 |
|
|
100 |
|
Distributions from unconsolidated affiliates, net of earnings |
1 |
|
|
77 |
|
Asset impairments |
— |
|
|
746 |
|
Other non-cash charges |
— |
|
|
4 |
|
Non-cash commodity derivative mark-to-market |
53 |
|
|
(134 |
) |
Adjusted EBITDA |
275 |
|
|
321 |
|
Interest expense, net |
(77 |
) |
|
(78 |
) |
Sustaining capital expenditures, net of noncontrolling interest
portion and reimbursable projects (a) |
(10 |
) |
|
(10 |
) |
Distributions to preferred limited partners (b) |
(14 |
) |
|
(14 |
) |
Other, net |
1 |
|
|
1 |
|
Distributable cash flow |
175 |
|
|
220 |
|
Distributions to limited partners |
(81 |
) |
|
(162 |
) |
Expansion capital expenditures and equity investments, net of
reimbursable projects |
(4 |
) |
|
(89 |
) |
Other, net |
(1 |
) |
|
(1 |
) |
Excess free cash flow |
$ |
89 |
|
|
$ |
(32 |
) |
|
|
|
|
Net cash (used in) provided by
operating activities |
$ |
(4 |
) |
|
$ |
314 |
|
Interest expense, net |
77 |
|
|
78 |
|
Net changes in operating assets and liabilities |
152 |
|
|
76 |
|
Non-cash commodity derivative mark-to-market |
53 |
|
|
(134 |
) |
Other, net |
(3 |
) |
|
(13 |
) |
Adjusted EBITDA |
275 |
|
|
321 |
|
Interest expense, net |
(77 |
) |
|
(78 |
) |
Sustaining capital expenditures, net of noncontrolling interest
portion and reimbursable projects (a) |
(10 |
) |
|
(10 |
) |
Distributions to preferred limited partners (b) |
(14 |
) |
|
(14 |
) |
Other, net |
1 |
|
|
1 |
|
Distributable cash flow |
175 |
|
|
220 |
|
Distributions to limited partners |
(81 |
) |
|
(162 |
) |
Expansion capital expenditures and equity investments, net of
reimbursable projects |
(4 |
) |
|
(89 |
) |
Other, net |
(1 |
) |
|
(1 |
) |
Excess free cash flow |
$ |
89 |
|
|
$ |
(32 |
) |
|
|
|
|
|
|
|
|
(a) Excludes reimbursements for leasehold improvements(b)
Represents cumulative cash distributions earned by the Series A, B
and C Preferred Units, assuming distributions are declared by DCP's
board of directors.
DCP MIDSTREAM,
LPRECONCILIATION OF NON-GAAP FINANCIAL
MEASURESSEGMENT FINANCIAL RESULTS AND OPERATING
DATA (Unaudited)
|
Three Months Ended March 31, |
|
2021 |
|
2020 |
|
(Millions, except as indicated) |
Logistics and Marketing Segment: |
|
|
|
Financial results: |
|
|
|
Segment net income attributable to partners |
$ |
146 |
|
|
$ |
236 |
|
Non-cash commodity derivative mark-to-market |
5 |
|
|
(42 |
) |
Depreciation and amortization expense |
3 |
|
|
3 |
|
Distributions from unconsolidated affiliates, net of earnings |
1 |
|
|
10 |
|
Other charges |
— |
|
|
1 |
|
Adjusted segment EBITDA |
$ |
155 |
|
|
$ |
208 |
|
|
|
|
|
Operating and financial data: |
|
|
|
NGL pipelines throughput (MBbls/d) |
578 |
|
|
677 |
|
NGL fractionator throughput (MBbls/d) |
43 |
|
|
58 |
|
Operating and maintenance expense |
$ |
6 |
|
|
$ |
7 |
|
|
|
|
|
Gathering and Processing Segment: |
|
|
|
Financial results: |
|
|
|
Segment net income (loss) attributable to partners |
$ |
27 |
|
|
$ |
(645 |
) |
Non-cash commodity derivative mark-to-market |
48 |
|
|
(92 |
) |
Depreciation and amortization expense, net of noncontrolling
interest |
81 |
|
|
89 |
|
Asset impairments |
— |
|
|
746 |
|
Distributions from unconsolidated affiliates, net of losses |
— |
|
|
67 |
|
Other charges |
— |
|
|
3 |
|
Adjusted segment EBITDA |
$ |
156 |
|
|
$ |
168 |
|
|
|
|
|
Operating and financial data: |
|
|
|
Natural gas wellhead (MMcf/d) |
4,077 |
|
|
4,940 |
|
NGL gross production (MBbls/d) |
361 |
|
|
404 |
|
Operating and maintenance expense |
$ |
140 |
|
|
$ |
142 |
|
|
|
|
|
|
|
|
|
DCP Midstream (NYSE:DCP)
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