Sanchez Midstream Partners LP (NYSE American:SNMP) (“SNMP” or the
“Partnership”) today reported fourth quarter and full year 2017
results. Highlights from the report include:
- The Partnership reported net income of $0.3 million for the
fourth quarter 2017, which compares to net income of $3.8 million
for the third quarter 2017;
- The Partnership reported Adjusted EBITDA (a non-GAAP financial
measure) of $21.4 million for the fourth quarter 2017, up
approximately 21 percent when compared to the third quarter
2017;
- In February 2018, the Partnership declared and paid a fourth
quarter 2017 cash distribution on common units of $0.4508 per unit
($1.8032 per unit annualized);
- The Partnership’s fourth quarter 2017 cash available for
distribution (a non-GAAP financial measure) was $9.9 million,
resulting in a distribution coverage ratio of 1.5 times; and
- After completing an extensive capital program, which resulted
in the commercial in-service of the Raptor Gas Processing Facility
and SECO Pipeline in 2017, the Partnership intends to use excess
cash flow to reduce debt, further improve its balance sheet, and
internally finance growth.
MANAGEMENT COMMENTARY“After
years of planning, focused investment, and the strategic
divestiture of non-core producing assets, we successfully completed
the transformation of SNMP to a midstream master limited
partnership in 2017,” said Gerry Willinger, Chief Executive Officer
of the general partner of SNMP. “As part of this
transformation, we completed an extensive capital program, improved
our existing asset base, completed and expanded the Raptor Gas
Processing Facility, developed the SECO Pipeline, and positioned
the Partnership to achieve free cash flow heading into
2018.
“The Raptor Gas Processing Facility, a joint
venture that is 50 percent owned and operated by Targa Resources
Corp. (“Targa”), began commercial operations in June 2017 with 200
million cubic feet equivalent per day (“MMcfe/d”) of processing
capacity, and was expanded in the third quarter 2017 to capacity of
260 MMcfe/d. We developed our wholly owned SECO Pipeline on a
parallel path with the completion of the Raptor Gas Processing
Facility. The SECO Pipeline was brought on-line in August 2017, and
connects to the Raptor Gas Processing Facility, providing 400
MMcfe/d of capacity to transport dry gas to multiple markets in
South Texas. These assets, together with Western Catarina
Midstream and the Carnero Gathering Pipeline, a joint venture with
Targa that feeds the Raptor Gas Processing Facility, form the basis
of our midstream strategy in South Texas and provide stable,
fee-based cash flow to support our continued growth.
“As we look to expand our strategic position in
South Texas, we have made a concerted effort to reduce the
Partnership’s exposure to production activities which, by their
nature, are sensitive to commodity prices and are less suited for
our business model going forward. To that end, we closed the
sale of our remaining operated Oklahoma production assets in July
2017 for approximately $5.5 million. More recently, in
November 2017, we closed the sale of certain non-operated
production assets in Texas for approximately $6.3 million. We
intend to pursue additional strategic divestitures of producing
assets, with an eye toward continuing to expand the contribution of
our fee-based, midstream activities.
“With the completion of the Raptor Gas
Processing Facility and SECO Pipeline, our fourth quarter 2017
Adjusted EBITDA more than doubled when compared to Adjusted EBITDA
for the first quarter 2017. As a result, our cash available
for distribution in the fourth quarter 2017 was approximately $9.9
million, which covered our distribution on common units by 1.5
times.
“Importantly, although our total capital
spending in 2018 is expected to be considerably lower when compared
to 2017, we continue to see opportunities for cash flow growth this
year. Our South Texas midstream assets are strategically
positioned to capture upside from the development activity of
Sanchez Energy Corporation (NYSE:SN) at Comanche and Catarina, and
we anticipate increasing volumes through our facilities in 2018 and
the years to come.
“Having posted eight consecutive quarters of
distribution growth, we elected this quarter to hold our
distribution flat at $0.4508 per common unit. This decision,
which we did not take lightly, comes as the capital markets
increasingly favor coverage and balance sheet strength over
growth. As a result, it is apparent that the capital markets
are not rewarding the Partnership for its current distribution
stream, let alone increases in our quarterly distribution. As
evidenced by our distribution coverage ratio, we believe we have
sufficient cash flow to consider distribution increases in the
future. However, until such time that the capital markets
become less restrictive, we believe it is more prudent to use
excess cash flow to reduce debt, further improve the Partnership’s
balance sheet, and internally finance growth.”
FINANCIAL RESULTSThe Partnership’s revenue
totaled $18.7 million during the fourth quarter 2017.
Included in total revenue for the fourth quarter 2017 is
$16.2 million from the midstream activities of Western Catarina
Midstream and the SECO Pipeline and $6.1 million from production
activities. The balance of the Partnership’s fourth quarter
2017 total revenue came from hedge settlements ($0.4 million) and a
loss on mark-to-market activities ($4.0 million), which is a
non-cash item.
The Partnership’s revenue for the full year 2017
totaled $88.1 million. Included in total revenue for the full
year is $55.8 million from the midstream activities of Western
Catarina Midstream and the SECO Pipeline and $28.4 million from
production activities. The balance of the Partnership’s total
revenue for the full year came from hedge settlements ($9.1 million
net, which includes a $3.6 million gain related to the August 2017
hedge repositioning) and a loss on mark-to-market activities ($5.2
million), which is a non-cash item.
Earnings from the Partnership’s midstream joint
ventures with Targa totaled $3.5 million in the fourth quarter 2017
and $7.9 million for the full year 2017.
On a GAAP basis, the Partnership recorded net
income of $0.3 million for the fourth quarter 2017, which compares
to net income of $3.8 million for the third quarter 2017 and a net
loss of $12.9 million in the fourth quarter 2016. The Partnership
reported a net loss of $3.0 million for the full year 2017, which
compares to net income of $19.2 million for the full year
2016.
Adjusted EBITDA (a non-GAAP financial measure)
for the fourth quarter 2017 was approximately $21.4 million, which
is up approximately 21 percent when compared to the third quarter
2017 Adjusted EBITDA of $17.8 million. For the full year
2017, the Partnership reported Adjusted EBITDA of $65.0 million
which is 17 percent higher when compared to full year 2016 Adjusted
EBITDA of $55.4 million. The Partnership’s calculation of
Adjusted EBITDA is discussed in further detail below.
LIQUIDITY UPDATEAs of Dec. 31, 2017, the
Partnership had $189 million in debt outstanding under its credit
facility, which has a current borrowing base of $249.3 million and
an elected commitment amount of $200 million. The midstream
portion of the borrowing base is approximately $211 million, which
results in the Partnership’s midstream collateral more than
covering the $200 million elected commitment
amount.
The Partnership had approximately $0.3 million
in cash and cash equivalents as of Dec. 31, 2017.
HEDGE UPDATEFor the full year
2018, the Partnership has hedged approximately 0.5 billion cubic
feet of its natural gas production at an effective NYMEX fixed
price of approximately $3.00 per million British thermal
units and approximately 260 thousand barrels of its crude oil
production at an effective NYMEX fixed price of
approximately $59.74 per barrel. The Partnership
has additional hedges covering a portion of its production in 2019
through 2020. More information on the Partnership’s hedge
positions can be found in the SNMP Investor Presentation posted at
www.sanchezmidstream.com.
COMMON UNITSThe Partnership had
14,965,134 common units issued and outstanding as of March 6,
2018.
DISTRIBUTIONSOn Feb. 8, 2018,
the Partnership declared a fourth quarter 2017 cash distribution on
its common units of $0.4508 per unit ($1.8032 per unit
annualized). The Partnership also declared a fourth quarter
2017 distribution to the holders of its Class B preferred units
equal to $0.28225 per Class B preferred unit.
Based on fourth quarter 2017 Adjusted EBITDA of
$21.4 million, cash interest expense of $2.9 million, maintenance
capital of $0.6 million, and $8.8 million in preferred
distributions, the Partnership generated approximately $9.9 million
in cash available for distribution (a non-GAAP financial measure)
during the fourth quarter 2017, resulting in a distribution
coverage ratio of 1.5 times.
CONFERENCE CALL INFORMATIONThe Partnership will
host a conference call at 10:00 a.m. Central Time (11:00 a.m.
Eastern Time) on Friday, March 9, 2018 to discuss fourth 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 Fourth 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 March 16, 2018, 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: 10116991.
ABOUT THE PARTNERSHIPSanchez Midstream Partners
LP (NYSE American:SNMP) is a growth-oriented publicly-traded
limited partnership focused on the acquisition, development,
ownership and operation of midstream 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 INFORMATIONAdditional 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 MEASURESWe present Adjusted EBITDA and
cash available for distribution, non-GAAP financial measures, 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 settled early; (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. Cash available for distribution is defined as
Adjusted EBITDA less cash interest expense; distributions on
preferred units; and maintenance capital. For a
reconciliation of cash available for distribution to Net Income
(Loss), the most directly comparable GAAP measure, see the tables
at the end of this release.
Adjusted EBITDA and cash available for
distribution are significant performance metrics 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, these financial measures indicate 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 and cash available
for distribution are also used as quantitative standards 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 and cash available for distribution provides useful
information to investors in assessing our financial condition and
results of operations. The GAAP measure most directly comparable to
Adjusted EBITDA and cash available for distribution is net income
(loss). Our non-GAAP financial measures of Adjusted EBITDA and cash
available for distribution should not be considered as an
alternative to GAAP net income (loss). Adjusted EBITDA and cash
available for distribution have important limitations as analytical
tools because they exclude some but not all items that affect net
income. Adjusted EBITDA and cash available for distribution should
not be considered in isolation or as substitutes for analysis of
our results as reported under GAAP. Because Adjusted EBITDA and
cash available for distribution may be defined differently by other
companies in our industry, our definition of Adjusted EBITDA and
cash available for distribution may not be comparable to similarly
titled measures of other companies, thereby diminishing their
utility. For reconciliations of Adjusted EBITDA and cash available
for distribution to net income (loss), the most comparable GAAP
financial metric, please see the tables below.
FORWARD-LOOKING STATEMENTSThis 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, processing and other agreements; future
operating results; the ability of our partners to perform under our
joint ventures and partnerships; future capital expenditures; 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 the management of our general
partner. 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. 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.
PARTNERSHIP CONTACTKevin
SmithVP of Investor Relations(281) 925-4828
General Inquiries: (877)
847-0008
www.sanchezmidstream.com
| |
|
|
|
|
|
|
|
|
| Sanchez
Midstream Partners LP |
|
|
|
|
|
|
|
|
| Condensed
Consolidated Statements of Operations |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended
Dec. 31, |
|
Year Ended Dec.
31, |
| |
|
|
| |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
($ in thousands, except per unit
amounts) |
| |
|
|
|
|
|
|
|
|
| Oil, liquids, and gas
sales |
|
$ |
6,545 |
|
|
$ |
7,402 |
|
|
$ |
37,529 |
|
|
$ |
44,493 |
|
| Gathering and
transportation sales |
|
|
16,204 |
|
|
|
12,842 |
|
|
|
55,825 |
|
|
|
53,972 |
|
| Loss on mark-to-market
activities |
|
|
(4,032 |
) |
|
|
(4,928 |
) |
|
|
(5,205 |
) |
|
|
(27,780 |
) |
| Total
revenues |
|
|
18,717 |
|
|
|
15,316 |
|
|
|
88,149 |
|
|
|
70,685 |
|
| |
|
|
|
|
|
|
|
|
| Operating
expenses: |
|
|
|
|
|
|
|
|
| Lease
operating expenses |
|
|
2,395 |
|
|
|
3,063 |
|
|
|
12,994 |
|
|
|
14,981 |
|
|
Transportation operating expenses |
|
|
2,610 |
|
|
|
3,299 |
|
|
|
11,600 |
|
|
|
12,478 |
|
| Cost of
sales |
|
|
— |
|
|
|
36 |
|
|
|
77 |
|
|
|
328 |
|
|
Production taxes |
|
|
310 |
|
|
|
330 |
|
|
|
1,476 |
|
|
|
1,167 |
|
| General
and administrative |
|
|
5,779 |
|
|
|
5,918 |
|
|
|
22,655 |
|
|
|
22,901 |
|
|
Unit-based compensation expense |
|
|
723 |
|
|
|
322 |
|
|
|
3,373 |
|
|
|
1,941 |
|
| (Gain)
loss on sale of assets |
|
|
(1,604 |
) |
|
|
— |
|
|
|
(4,150 |
) |
|
|
219 |
|
|
Depreciation, depletion and amortization |
|
|
6,813 |
|
|
|
12,975 |
|
|
|
34,830 |
|
|
|
33,799 |
|
| Asset
impairments |
|
|
— |
|
|
|
6,337 |
|
|
|
4,688 |
|
|
|
7,646 |
|
| Accretion
expense |
|
|
126 |
|
|
|
226 |
|
|
|
773 |
|
|
|
1,127 |
|
| Total
operating expenses |
|
|
17,152 |
|
|
|
32,506 |
|
|
|
88,316 |
|
|
|
96,587 |
|
| |
|
|
|
|
|
|
|
|
| Other (income)
expense: |
|
|
|
|
|
|
|
|
| Interest
expense |
|
|
2,347 |
|
|
|
1,548 |
|
|
|
8,341 |
|
|
|
5,093 |
|
| Gain on
embedded derivatives |
|
|
— |
|
|
|
(4,590 |
) |
|
|
— |
|
|
|
(47,794 |
) |
| Earnings
from equity investments |
|
|
(3,488 |
) |
|
|
(1,246 |
) |
|
|
(7,885 |
) |
|
|
(2,382 |
) |
| Other
(income) expense |
|
|
2,417 |
|
|
|
— |
|
|
|
2,417 |
|
|
|
(50 |
) |
| Total
expenses, net |
|
|
18,428 |
|
|
|
28,218 |
|
|
|
91,189 |
|
|
|
51,454 |
|
| Income (loss) before
income taxes |
|
|
289 |
|
|
|
(12,902 |
) |
|
|
(3,040 |
) |
|
|
19,231 |
|
| Income
tax expense |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Net income (loss) |
|
|
289 |
|
|
|
(12,902 |
) |
|
|
(3,040 |
) |
|
|
19,231 |
|
| Less: |
|
|
|
|
|
|
|
|
| Preferred
unit distributions paid in common units |
|
|
— |
|
|
|
— |
|
|
|
(2,625 |
) |
|
|
— |
|
| Preferred
unit distributions |
|
|
(8,750 |
) |
|
|
(9,625 |
) |
|
|
(33,250 |
) |
|
|
(39,375 |
) |
| Preferred
unit amortization |
|
|
(496 |
) |
|
|
(3,960 |
) |
|
|
(1,796 |
) |
|
|
(24,340 |
) |
| Net loss attributable
to common unitholders |
|
$ |
(8,957 |
) |
|
$ |
(26,487 |
) |
|
$ |
(40,711 |
) |
|
$ |
(44,484 |
) |
| |
|
|
|
|
|
|
|
|
| Adjusted EBITDA |
|
$ |
21,404 |
|
|
$ |
12,429 |
|
|
$ |
65,029 |
|
|
$ |
55,396 |
|
| |
|
|
|
|
|
|
|
|
| Net loss per unit |
|
|
|
|
|
|
|
|
| Common
units - Basic |
|
$ |
(0.62 |
) |
|
$ |
(3.34 |
) |
|
$ |
(2.90 |
) |
|
$ |
(9.55 |
) |
| Weighted Average Units
Outstanding |
|
|
|
|
|
|
|
|
| Common
units - Basic |
|
|
14,486,001 |
|
|
|
7,941,890 |
|
|
|
14,039,726 |
|
|
|
4,658,970 |
|
| |
|
|
|
|
|
|
|
|
| Sanchez
Midstream Partners LP |
|
|
|
|
|
|
|
|
| Condensed
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
|
Dec. 31, |
|
Dec. 31, |
|
|
|
|
| |
|
2017 |
|
2016 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
($ in thousands) |
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Current assets |
|
$ |
17,527 |
|
|
$ |
14,765 |
|
|
|
|
|
| Midstream and
production assets, net |
|
|
213,145 |
|
|
|
222,820 |
|
|
|
|
|
| Other assets |
|
|
297,751 |
|
|
|
302,120 |
|
|
|
|
|
| Total
assets |
|
$ |
528,423 |
|
|
$ |
539,705 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Current
liabilities |
|
$ |
13,413 |
|
|
$ |
9,443 |
|
|
|
|
|
| Long-term debt, net of
debt issuance costs |
|
|
187,808 |
|
|
|
151,322 |
|
|
|
|
|
| Other long-term
liabilities |
|
|
12,598 |
|
|
|
19,205 |
|
|
|
|
|
| Total
liabilities |
|
|
213,819 |
|
|
|
179,970 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Mezzanine equity |
|
|
343,912 |
|
|
|
342,991 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Partners' capital
(deficit) |
|
|
(29,308 |
) |
|
|
16,744 |
|
|
|
|
|
| Total partners' capital
(deficit) |
|
|
(29,308 |
) |
|
|
16,744 |
|
|
|
|
|
| Total
liabilities and partners' capital |
|
$ |
528,423 |
|
|
$ |
539,705 |
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Sanchez
Midstream Partners LP |
|
|
|
|
|
|
|
|
| Reconciliation
of Net Income (Loss) to Adjusted |
|
|
|
|
|
|
|
|
|
EBITDA and Cash Available for Distribution |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended Dec.
31, |
|
Year Ended Dec.
31, |
| |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
($ in thousands) |
| |
|
|
|
|
|
|
|
|
| Reconciliation
of Net Income (Loss) to Adjusted |
|
|
|
|
|
|
|
|
|
EBITDA and Cash Available for Distribution |
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
289 |
|
|
$ |
(12,902 |
) |
|
$ |
(3,040 |
) |
|
$ |
19,231 |
|
| Add: |
|
|
|
|
|
|
|
|
| Interest
expense, net |
|
|
2,347 |
|
|
|
1,548 |
|
|
|
8,341 |
|
|
|
5,093 |
|
|
Depreciation, depletion and amortization |
|
|
6,813 |
|
|
|
12,975 |
|
|
|
34,830 |
|
|
|
33,799 |
|
| Asset
impairments |
|
|
— |
|
|
|
6,337 |
|
|
|
4,688 |
|
|
|
7,646 |
|
| Accretion
expense |
|
|
126 |
|
|
|
226 |
|
|
|
773 |
|
|
|
1,127 |
|
| (Gain)
loss on sale of assets |
|
|
(1,604 |
) |
|
|
- |
|
|
|
(4,150 |
) |
|
|
219 |
|
|
Unit-based compensation programs |
|
|
723 |
|
|
|
322 |
|
|
|
3,373 |
|
|
|
1,941 |
|
|
Unit-based asset management fees |
|
|
2,342 |
|
|
|
2,081 |
|
|
|
8,820 |
|
|
|
6,984 |
|
|
Distributions in excess of equity earnings |
|
|
3,504 |
|
|
|
1,504 |
|
|
|
5,792 |
|
|
|
2,568 |
|
| Loss on
mark-to-market activities |
|
|
6,385 |
|
|
|
4,928 |
|
|
|
7,558 |
|
|
|
27,780 |
|
| Commodity
derivatives settled early |
|
|
— |
|
|
|
— |
|
|
|
(3,602 |
) |
|
|
(3,198 |
) |
| Gain on
embedded derivatives |
|
|
— |
|
|
|
(4,590 |
) |
|
|
— |
|
|
|
(47,794 |
) |
|
Acquisition and divestiture costs |
|
|
479 |
|
|
|
— |
|
|
|
1,646 |
|
|
|
— |
|
| Adjusted EBITDA
(1) |
|
|
21,404 |
|
|
|
12,429 |
|
|
|
65,029 |
|
|
|
55,396 |
|
| |
|
|
|
|
|
|
|
|
|
Maintenance capital expenditures(2) |
|
|
(600 |
) |
|
|
(600 |
) |
|
|
(2,400 |
) |
|
|
(2,400 |
) |
| Cash
interest expense |
|
|
(2,150 |
) |
|
|
(1,308 |
) |
|
|
(7,643 |
) |
|
|
(4,013 |
) |
| Preferred
unit distributions |
|
|
(8,750 |
) |
|
|
(9,625 |
) |
|
|
(33,250 |
) |
|
|
(39,375 |
) |
| Cash available for
distribution |
|
$ |
9,904 |
|
|
$ |
896 |
|
|
$ |
21,736 |
|
|
$ |
9,608 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| (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 settled
early; (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 |
|
|
|
|
|
|
|
|
| Reconciliation
of Net Income (Loss) to |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
Three Months |
|
Three Months |
|
Three Months |
|
Three Months |
| |
|
Ended |
|
Ended |
|
Ended |
|
Ended |
| |
|
March 31, |
|
June 30, |
|
Sept. 30, |
|
Dec. 31, |
| |
|
2017 |
|
2017 |
|
2017 |
|
2017 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
($ in thousands) |
| |
|
|
|
|
|
|
|
|
| Reconciliation
of Net Income (Loss) to |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA: |
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
(7,659 |
) |
|
$ |
559 |
|
|
$ |
3,771 |
|
|
$ |
289 |
|
| Add: |
|
|
|
|
|
|
|
|
| Interest
expense, net |
|
|
1,883 |
|
|
|
1,896 |
|
|
|
2,215 |
|
|
|
2,347 |
|
|
Depreciation, depletion and amortization |
|
|
12,181 |
|
|
|
8,937 |
|
|
|
6,899 |
|
|
|
6,813 |
|
| Asset
impairments |
|
|
4,688 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| Accretion
expense |
|
|
258 |
|
|
|
240 |
|
|
|
149 |
|
|
|
126 |
|
| Gain on
sale of assets |
|
|
— |
|
|
|
— |
|
|
|
(2,546 |
) |
|
|
(1,604 |
) |
|
Unit-based compensation programs |
|
|
540 |
|
|
|
1,479 |
|
|
|
631 |
|
|
|
723 |
|
|
Unit-based asset management fees |
|
|
2,030 |
|
|
|
2,345 |
|
|
|
2,103 |
|
|
|
2,342 |
|
|
Distributions in excess of equity earnings |
|
|
968 |
|
|
|
803 |
|
|
|
517 |
|
|
|
3,504 |
|
| (Gain)
loss on mark-to-market activities |
|
|
(4,480 |
) |
|
|
(1,347 |
) |
|
|
7,000 |
|
|
|
6,385 |
|
| Commodity
derivatives settled early |
|
|
— |
|
|
|
— |
|
|
|
(3,602 |
) |
|
|
— |
|
|
Acquisition and divestiture costs |
|
|
129 |
|
|
|
424 |
|
|
|
614 |
|
|
|
479 |
|
| Adjusted EBITDA
(1) |
|
$ |
10,538 |
|
|
$ |
15,336 |
|
|
$ |
17,751 |
|
|
$ |
21,404 |
|
| |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| (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 settled
early; (xii) (gain) loss on embedded derivatives; and (xiii)
acquisition and divestiture costs. |
| |
| |
|
|
|
|
|
|
|
|
| Sanchez
Midstream Partners LP |
|
|
|
|
|
|
|
|
| Operating
Statistics |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended Dec.
31, |
|
Year Ended Dec.
31, |
| |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
|
Gathering and Transportation Throughput: |
|
|
|
|
|
|
|
| Oil
(MBbls) |
|
1,169 |
|
1,195 |
|
4,219 |
|
4,862 |
| Gas
(MMcf) |
|
21,499 |
|
15,625 |
|
67,469 |
|
66,447 |
| Total throughput
(MBoe)(1) |
|
4,752 |
|
3,799 |
|
15,464 |
|
15,937 |
| Average daily
throughput (MBoe/D) |
|
52 |
|
41 |
|
42 |
|
44 |
| |
|
|
|
|
|
|
|
|
| (1) Excludes water
throughput. |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| |
|
Three Months Ended Dec.
31, |
|
Year Ended Dec.
31, |
| |
|
2017 |
|
2016 |
|
2017 |
|
2016 |
| Net Production
in MBoe: |
|
|
|
|
|
|
|
|
| Total production
(MBoe) |
|
149 |
|
261 |
|
936 |
|
1,133 |
| Average daily
production (Boe/D) |
|
1,620 |
|
2,841 |
|
2,565 |
|
3,096 |
| |
|
|
|
|
|
|
|
|
| Average Sales
Price per Boe: |
|
|
|
|
|
|
|
|
| Boe Net
realized price, including hedges (1) |
$43.93 |
|
$30.58 |
|
$40.19 |
|
$40.24 |
| Boe Net
realized price, excluding hedges (2) |
$41.28 |
|
$29.22 |
|
$30.41 |
|
$22.11 |
| |
|
|
|
|
|
|
|
|
| (1)
Excludes impact of mark-to-market gains (losses). |
|
|
|
|
|
|
|
| (2)
Excludes the impact of all hedging gains (losses). |
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|