Breitburn Energy Partners LP (NASDAQ:BBEP) today announced
financial and operating results for the first quarter 2016.
Additional details concerning Breitburn’s operations and financial
results are available in its first quarter 2016 report on Form
10-Q, which will be filed with the Securities and Exchange
Commission and will be available at the Investor Relations tab of
the Company’s website or at www.SEC.gov.
First Quarter 2016 Operating and
Financial Results Compared to Fourth Quarter 2015
- Total production was 4,848 MBoe in the
first quarter of 2016, compared to 5,106 MBoe in the fourth quarter
of 2015. Average daily production was 53.3 MBoe/day in the first
quarter of 2016 compared to 55.5 MBoe/day in the fourth quarter of
2015.
- Oil production decreased to 2,589 MBbl,
compared to 2,795 MBbl in the fourth quarter of 2015.
- NGL production decreased to 498 MBbl,
compared to 526 MBbl in the fourth quarter of 2015.
- Natural gas production decreased to
10,567 MMcf, compared to 10,712 MMcf in the fourth quarter of
2015.
- Adjusted EBITDA was $131.5 million
(including $2.2 million of restructuring costs) in the first
quarter of 2016 compared to $169.0 million in the fourth quarter of
2015, a 22% decrease. The decrease was primarily due to lower sales
revenue due to lower average realized prices, lower sales volume,
lower commodity derivative instrument settlement receipts, lower
other revenue, higher cash restructuring costs and higher G&A
expenses, partially offset by lower operating costs.
- Net loss attributable to common
unitholders was $115.3 million, or $0.54 per diluted common unit,
in the first quarter of 2016, which included $97.4 million in
unrealized losses on commodity derivative instruments and non-cash
impairment charges of approximately $2.8 million, or $0.01 per
diluted common unit, primarily related to the impact that further
deterioration in future commodity prices had on our projected net
revenues for certain of our oil and gas properties, compared to net
loss of $902.3 million or $4.25 per diluted common unit, in the
fourth quarter of 2015, which included non-cash impairment charges
of approximately $878.3 million, or $4.14 per diluted common
unit.
- Oil, NGL and natural gas sales revenues
were $105.5 million in the first quarter of 2016 compared to $139.7
million in the fourth quarter of 2015, primarily due to lower
realized oil and natural gas prices.
- Lease operating expenses, which include
district expenses, processing fees, and transportation costs but
exclude taxes and non-cash unit-based compensation expense, were
$16.29 per Boe in the first quarter of 2016 compared to $17.74 per
Boe in the fourth quarter of 2015. The decrease was primarily due
to our continued focus on lowering costs and lower commodity
prices.
- General and administrative expenses,
excluding non-cash unit-based compensation expenses, were $17.6
million in the first quarter of 2016, compared to $14.5 million in
the fourth quarter of 2015. The increase was primarily due to
higher employee related costs and professional fees.
- Gains on commodity derivative
instruments were $37.9 million in the first quarter of 2016
compared to gains of $141.8 million in the fourth quarter of 2015,
primarily due to unrealized losses of $97.4 million during the
first quarter of 2016 compared to unrealized losses of $2.2 million
during the fourth quarter of 2015. Derivative instrument settlement
receipts were $135.4 million in the first quarter of 2016 compared
to receipts of $144.1 million in the fourth quarter of 2015,
primarily due to lower hedged volumes.
- NYMEX WTI oil spot prices averaged
$33.35 per Bbl and Brent oil spot prices averaged $33.84 per Bbl in
the first quarter of 2016 compared to $41.94 per Bbl and $43.56 per
Bbl, respectively, in the fourth quarter of 2015. Henry Hub natural
gas spot prices averaged $1.99 per Mcf in the first quarter of 2016
compared to $2.12 per Mcf in the fourth quarter of 2015.
- Average realized crude oil, NGL, and
natural gas prices, excluding the effects of commodity derivative
settlements, were $29.37 per Bbl, $10.81 per Bbl and $2.05 per Mcf,
respectively, in the first quarter of 2016 compared to $37.31 per
Bbl, $13.03 per Bbl and $2.32 per Mcf, respectively, in the fourth
quarter of 2015.
- Oil, NGL and natural gas capital
expenditures were approximately $16 million in the first quarter of
2016 compared to $36 million in the fourth quarter of 2015.
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 and distributable cash flow 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
March 31, 2016 and 2015, and the three months ended December 31,
2015:
Three Months Ended March 31,
December 31, March 31, Thousands of
dollars, except as indicated 2016
2015 2015 Oil sales $ 78,358 $
108,024 $ 123,843 NGL sales 5,382 6,852 7,591 Natural gas sales
21,710 24,812 31,189 Gain on commodity derivative instruments
37,923 141,842 137,192 Other revenues, net 4,593
5,934 6,469 Total revenues
147,966 287,464 306,284 Lease
operating expenses (a) 79,842 90,563 100,079 Production and
property taxes (b) 9,909 9,033
13,544 Total lease operating expenses 89,751
99,596 113,623 Purchases and other
operating costs 2,618 2,119 158 Salt water disposal costs 2,980
2,408 4,021 Change in inventory (375 ) 2,116
176 Total operating costs 94,974
106,239 117,978 Lease operating expenses
before taxes, per Boe (a)(c) 16.29 17.74 19.81 Production and
property taxes per Boe (b) 2.04 1.77
2.68 Total lease operating expenses per Boe
18.33 19.51 22.49 General and
administrative expenses (excluding non-cash unit-based
compensation) 17,616 14,508
25,335 Net loss attributable to the partnership $
(103,786
) $ (890,878 ) $ (58,825 ) Basic net loss per unit $ (0.54 )
$ (4.25 ) $ (0.29 ) Diluted net loss per unit $ (0.54 ) $ (4.25 ) $
(0.29 ) Total production (MBoe) (d) 4,848 5,106 5,051 Oil
(MBbl) 2,589 2,795 2,890 NGLs (MBbl) 498 526 459 Natural gas (MMcf)
10,567 10,712 10,211 Average daily production (Boe/d) 53,275
55,500 56,122 Sales volumes
(MBoe) (e)(f)(g) 4,927 5,151
4,999 Average realized sales price (per Boe) (g) $ 21.40 $
26.72 $ 32.52 Oil (per Bbl) (g) 29.37 37.31 43.62 NGLs (per Bbl)
(g) 10.81 13.03 16.54 Natural gas (per Mcf) (g) $ 2.05 $ 2.32 $
3.05 (a) Includes district expenses, processing fees, and
transportation expenses. (b) Includes ad valorem and severance
taxes. (c) Excludes non-cash unit-based compensation expenses of
$0.9 million for the three months ended March 31, 2016. (d) 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. (e) Oil
sales were 2,668 MBbl, 2,841 MBbl and 2,837 MBbl for the three
months ended March 31, 2016, December 31, 2015 and March 31, 2015,
respectively. (f) Includes 90 MBoe of condensate purchased from
third parties during the three months ended March 31, 2016. (g)
Excludes the effect of commodity derivative settlements.
Non-GAAP Financial
Measures
This press release, including the financial tables and other
supplemental information and 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
breitburn.com.
“Adjusted EBITDA” is among the non-GAAP financial measures used
in this press release. This non-GAAP financial measure should not
be considered as an alternative 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 this non-GAAP financial measure enhances
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. This non-GAAP financial
measure 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 in the same
manner.
Adjusted EBITDA
The following table presents a reconciliation of net 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 March 31,
December 31, March 31, Thousands of
dollars, except as indicated 2016
2015 2015
Reconciliation of net loss to Adjusted
EBITDA:
Net loss attributable to the partnership $ (103,786 ) $ (890,878 )
$ (58,825 ) Gain on commodity derivative instruments (37,923 )
(141,842 ) (137,192 ) Commodity derivative instrument settlements
(a) (b) 135,360 144,083 126,357 Depletion, depreciation and
amortization expense 83,723 123,312 109,824 Impairment of oil and
natural gas properties 2,793 878,335 59,113 Interest expense and
other financing costs 58,332 50,319 41,477 (Gain) loss on sale of
assets (12,260 ) (1,542 ) 15
Income tax (benefit) expense
(95 ) 1,162 92 Unit-based compensation expense (c) 4,673 6,091
6,927 Restructuring costs - unit-based compensation (c) 638
— 814
Adjusted EBITDA $
131,455 $ 169,040 $ 148,602
Reconciliation of net cash
flows from operating activities to Adjusted EBITDA: Net
cash provided by operating activities $ 126,809 $ 85,521 $ 141,149
(Decrease) increase in assets net of liabilities relating to
operating activities (44,142 ) 35,665 (30,968 ) Interest expense
(d) 48,846 48,364 38,729 Income from equity affiliates, net 90 94
(325 ) Noncontrolling interest 220 (202 ) — Income taxes 44 (413 )
93
(Loss) gain on marketable securities
(412 ) 11 (76 )
Adjusted EBITDA
$ 131,455 $ 169,040 $ 148,602 (a)
Excludes premiums paid at contract inception related to
those derivative contracts that settled during the applicable
periods of: $ 2,086 $ 1,682 $ 1,645 (b) Includes net cash
settlements on derivative instruments for: - Oil settlements
received: $ 121,988 $ 123,492 $ 111,879 - Natural gas settlements
received: 13,372 20,592 14,478 (c) Represents non-cash long-term
unit-based incentive compensation expense. (d) Excludes
amortization of debt issuance costs and amortization of senior note
discount/premium.
Summary of Commodity Derivative
Instruments
The table below summarizes Breitburn’s commodity derivative
hedge portfolio as of May 6, 2016. Please refer to the Commodity
Price Protection Portfolio at breitburn.com for additional
information related to our hedge portfolio.
Year 2016 2017
2018 2019 Oil Positions: Fixed Price
Swaps - NYMEX WTI Volume (Bbl/d) 17,404 14,519 1,493 1,000 Average
Price ($/Bbl) $ 82.92 $ 82.81 $ 64.02 $ 56.35 Fixed Price Swaps -
ICE Brent Volume (Bbl/d) 4,300 298 — — Average Price ($/Bbl) $
95.17 $ 97.50 $ — $ — Collars - NYMEX WTI Volume (Bbl/d) 1,500 — —
— Average Floor Price ($/Bbl) $ 80.00 $ — $ — $ — Average Ceiling
Price ($/Bbl) $ 102.00 $ — $ — $ — Collars - ICE Brent Volume
(Bbl/d) 500 — — — Average Floor Price ($/Bbl) $ 90.00 $ — $ — $ —
Average Ceiling Price ($/Bbl) $ 101.25 $ — $ — $ — Puts - NYMEX WTI
Volume (Bbl/d) 1,000 — — — Average Price ($/Bbl) $ 90.00 $ — $ — $
— Total: Volume (Bbl/d) 24,704 14,817 1,493 1,000 Average Price
($/Bbl) $ 85.31 $ 83.11 $ 64.02 $ 56.35
Gas
Positions: Fixed Price Swaps - MichCon City-Gate Volume
(MMBtu/d) 29,000 24,000 17,500 10,000 Average Price ($/MMBtu) $
3.91 $ 3.71 $ 3.10 $ 3.15 Fixed Price Swaps - Henry Hub Volume
(MMBtu/d) 42,050 21,016 2,870 — Average Price ($/MMBtu) $ 4.02 $
4.29 $ 3.74 $ — Collars - Henry Hub Volume (MMBtu/d) 630 595 — —
Average Floor Price ($/MMBtu) $ 4.00 $ 4.00 $ — $ — Average Ceiling
Price ($/MMBtu) $ 5.55 $ 6.15 $ — $ — Puts - Henry Hub Volume
(MMBtu/d) 11,350 10,445 — — Average Price ($/MMBtu) $ 4.00 $ 4.00 $
— $ — Deferred Premium ($/MMBtu) $ 0.66 $ 0.69 $ — $ — Total:
Volume (MMBtu/d) 83,030 56,056 20,370 10,000 Average Price
($/MMBtu) $ 3.98 $ 3.98 $ 3.19 $ 3.15
Premiums paid in 2012 related to oil and natural gas derivatives
to be settled beyond March 31, 2016 were as follows:
Year Thousands of dollars 2016
2017 Oil $ 5,589 $ 734 Natural gas 715 —
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; the
Midwest; the Permian Basin; the Mid-Continent; the Rockies; the
Southeast; 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,” “will
be,” “forecast” 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;
changes in our business strategy, level of indebtedness and
periodic redeterminations of the borrowing base under our credit
facility and any deficiency that would have to be repaid; ability
to continue to borrow under the credit facility; potential need to
sell certain assets, restructure our debt, raise additional capital
or seek bankruptcy protection; our future levels of indebtedness,
liquidity, compliance with financial covenants and our ability to
continue as a going concern; 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
(Unaudited)
March 31, December 31,
Thousands of dollars 2016
2015 ASSETS Current assets Cash $
81,691 $ 10,464 Accounts and other receivables, net 113,215 128,589
Derivative instruments 388,829 439,627 Related party receivables
1,518 2,274 Inventory 1,345 926 Prepaid expenses 3,470
6,447
Total current assets 590,068
588,327
Equity investments 6,657 6,567
Property, plant
and equipment Oil and natural gas properties 7,855,082
7,898,117 Other property, plant and equipment 194,876
188,795 8,049,958 8,086,912 Accumulated depletion and
depreciation (4,185,936 ) (4,154,030 ) Net property,
plant and equipment 3,864,022 3,932,882
Other long-term
assets Derivative instruments 179,658 226,764 Other long-term
assets 74,981 80,847
Total
assets $ 4,715,386 $ 4,835,387
LIABILITIES AND
EQUITY Current liabilities Accounts payable $ 42,169 $
50,412 Current portion of long-term debt 172,000 154,000 Derivative
instruments 4,309 4,462 Distributions payable 733 733 Current
portion of asset retirement obligation 1,679 2,341 Revenue and
royalties payable 33,476 35,462 Wages and salaries payable 12,928
21,654 Accrued interest payable 61,415 19,517 Production and
property taxes payable 20,178 24,292 Other current liabilities
7,834 5,133 Total current liabilities
356,721 318,006 Credit facility 1,025,000 1,075,000 Senior notes,
net 1,754,840 1,752,194 Other long-term debt 3,779
3,148 Total long-term debt 2,783,619 2,830,342
Deferred income taxes 3,704 3,844 Asset retirement obligation
247,956 252,037 Derivative instruments 752 255 Other long-term
liabilities 19,751 25,008 Total
liabilities 3,412,503 3,429,492
Equity Series A preferred
units, 8.0 million units issued and outstanding at March 31, 2016
and December 31, 2015 193,215 193,215 Series B preferred units,
49.6 million and 48.8 million units issued and outstanding at March
31, 2016 and December 31, 2015, respectively 359,611 353,471 Common
units, 213.7 million and 213.5 million units issued and outstanding
at March 31, 2016 and December 31, 2015, respectively 742,713
852,114 Accumulated other comprehensive income (loss) 49
(229 ) Total partners' equity 1,295,588 1,398,571
Noncontrolling interest 7,295 7,324
Total equity 1,302,883 1,405,895
Total liabilities and equity $ 4,715,386 $ 4,835,387
Breitburn Energy Partners LP and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three Months Ended March 31,
Thousands of dollars, except per unit amounts
2016 2015
Revenues and other income items Oil, natural gas and natural
gas liquid sales $ 105,450 $ 162,623 Gain on commodity derivative
instruments, net 37,923 137,192 Other revenue, net 4,593
6,469 Total revenues and other income items
147,966 306,284
Operating costs and expenses Operating costs
94,974 117,978 Depletion, depreciation and amortization 83,723
109,824 Impairment of oil and natural gas properties 2,793 59,113
General and administrative expenses 21,414 32,262 Restructuring
costs 2,809 4,918 (Gain) loss on sale of assets (12,260 )
15 Total operating costs and expenses 193,453
324,110
Operating loss (45,487 )
(17,826 ) Interest expense, net of capitalized interest
55,989 39,665 Loss on interest rate swaps 2,343 1,812 Other expense
(income), net 282 (477 ) Total other expense
58,614 41,000
Loss before taxes
(104,101 ) (58,826 ) Income tax (benefit) expense (95 )
92
Net loss (104,006 ) (58,918 ) Less: Net
loss attributable to noncontrolling interest (220 )
(93 )
Net loss attributable to the partnership
(103,786 ) (58,825 ) Less: Distributions to Series A
preferred unitholders 4,125 4,125 Less: Non-cash distributions to
Series B preferred unitholders 7,386 — Less: Net loss attributable
to participating units — (1,432 )
Net loss
used to calculate basic and diluted net loss per unit $
(115,297 ) $ (61,518 ) Basic net loss per common unit $
(0.54 ) $ (0.29 ) Diluted net loss per common unit $ (0.54 ) $
(0.29 )
Weighted average number of units used to
calculate basic and diluted net loss per unit (in thousands):
Basic 213,661 210,931 Diluted 213,661 210,931
Breitburn
Energy Partners LP and Subsidiaries Consolidated Statements
of Comprehensive Loss
(Unaudited)
Three Months Ended March 31, Thousands of
dollars, except per unit amounts 2016
2015 Net loss $ (104,006 ) $
(58,918 )
Other comprehensive income, net of tax:
Change in fair value of available-for-sale securities (a)
470 173 Total other comprehensive income
470 173
Total comprehensive loss
(103,536 ) (58,745 ) Less: Comprehensive loss
attributable to noncontrolling interest (28 ) (23 )
Comprehensive loss attributable to the partnership $
(103,508 ) $ (58,722 )
(a) Net of income taxes of $0.2 million
and $0.1 million for the three months ended March 31, 2016 and
2015, respectively.
Breitburn Energy Partners LP and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31, Thousands of
dollars 2016 2015
Cash flows from operating activities Net loss
$ (104,006 ) $ (58,918 ) Adjustments to reconcile cash flows from
operating activities: Depletion, depreciation and amortization
83,723 109,824 Impairment of oil and natural gas properties 2,793
59,113 Unit-based compensation expense 5,311 7,741 Gain on
derivative instruments (35,580 ) (135,380 ) Derivative instrument
settlement receipts 133,828 124,904 Income from equity affiliates,
net (90 ) 325 Deferred income taxes (140 ) 168 (Gain) loss on sale
of assets (12,260 ) 15 Other 8,182 (41 ) Changes in assets and
liabilities: Accounts receivable and other assets 12,109 30,043
Inventory (419 ) (185 ) Net change in related party receivables and
payables 756 2,462 Accounts payable and other liabilities
32,602 1,078 Net cash provided by operating
activities 126,809 141,149
Cash
flows from investing activities Property acquisitions (3,942 )
(13,993 ) Capital expenditures (26,965 ) (97,230 ) Proceeds from
sale of assets 11,796 — Proceeds from sale of available-for-sale
securities 5,118 — Purchases of available-for-sale securities
(5,416 ) — Other — (853 ) Net cash used in
investing activities (19,409 ) (112,076 )
Cash
flows from financing activities Proceeds from issuance of
common units, net — (63 ) Distributions to preferred unitholders
(4,126 ) (4,125 ) Distributions to common unitholders — (54,122 )
Proceeds from issuance of long-term debt, net 37,000 193,600
Repayments of long-term debt (69,000 ) (168,500 ) Principal
payments on capital lease obligations (19 ) — Change in book
overdraft (25 ) 199 Debt issuance costs (3 ) —
Net cash used in financing activities (36,173 )
(33,011 )
Increase (decrease) in cash 71,227 (3,938 )
Cash beginning of period 10,464 12,628
Cash end of period $ 81,691 $ 8,690
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Breitburn Energy Partners LPAntonio D'AmicoVice President,
Investor Relations & Government AffairsorJessica TangInvestor
Relations Manager(213) 225-0390