Noble Midstream Partners LP (NYSE: NBLX) (Noble Midstream
or the Partnership) today reported second quarter 2019 financial
and operational results. The Partnership’s consolidated results
include noncontrolling interests which represent equity ownership
interests that are not attributable to the Partnership; however,
certain results are shown as “attributable to the Partnership,”
which exclude the aforementioned noncontrolling interests. Noble
Midstream believes the results “attributable to the Partnership”
provide the best representation of the ongoing operations from
which the Partnership’s unitholders will benefit.
Second Quarter Highlights Include:
- Net Income of $53 million, or $36 million attributable to the
Partnership
- Adjusted EBITDA¹ of $81 million, a 25% increase over the second
quarter of 2018
- Adjusted EBITDA¹ attributable to the Partnership of $56
million, a 13% increase over the second quarter of 2018
- Organic capital expenditures attributable to the Partnership of
$29 million, a 59% reduction compared to the second quarter of
2018
- Declared a 20% annual increase in distribution per unit to
$0.6418, with DCF¹ of $41 million and a distribution coverage
ratio¹ of 1.4x
- Record oil and gas gathering and sales volumes of 295 thousand
barrels of oil equivalent per day (MBoe/d), up 54% versus the
second quarter of 2018
- Record produced water gathering volumes of 164 thousand barrels
of water per day (MBw/d), nearly double the second quarter of
2018
“Capital efficiency momentum continued in the second quarter of
2019, with the Partnership delivering quarterly throughput and
EBITDA consistent with guidance on capital that was below
expectations. The team has delivered meaningful and sustainable
capital savings and we are pleased to be in a position to lower
annual capital guidance today. At the same time, DJ and Delaware
throughput and EBITDA growth is underway in the third quarter as
planned. With the strength in our base business and the
construction of the EPIC Crude, EPIC Y-Grade and Delaware Crossing
projects progressing according to schedule and budget, we remain
confident in the company's strong multi-year cash flow growth
profile,” Terry R. Gerhart, Chief Executive Officer of Noble
Midstream stated.
1 Adjusted EBITDA, DCF and Distribution Coverage Ratio are not
Generally Accepted Accounting Principles (GAAP) measures.
Definitions and reconciliations of these non-GAAP measures to their
most directly comparable GAAP reporting measures appear in Schedule
4 of the financial tables which follow.
Second Quarter 2019 Results
Actual results were consistent with or better than guidance
across all operational and financial categories in the second
quarter of 2019.
Second quarter revenue totaled $158 million, increasing 7%
compared to the first quarter of 2019. An increase in revenue from
gathering and crude oil sales was somewhat offset by lower fresh
water delivery revenue.
The second quarter investment loss of $1.8 million was primarily
comprised of a loss from the Delaware Crossing, EPIC Crude and EPIC
Y-Grade joint ventures of $4.6 million driven by startup expenses
prior to service commencement; this was offset by income of
approximately $2.8 million from the Partnership’s minority
ownership in White Cliffs Pipeline LLC and from the Partnership’s
50% ownership in the Advantage Pipeline, LLC.
Net income of $53 million was slightly above the high end of
guidance during the quarter due to lower interest expense. Adjusted
EBITDA¹ was $81 million while Adjusted EBITDA¹ attributable to the
Partnership was $56 million in the second quarter, both consistent
with guidance. The sequential decline in Adjusted EBITDA¹
attributable to the Partnership was driven by lower Wells Ranch
gathering volumes as well as a $4 million credit issued to Noble
Energy, Inc. (Noble Energy) related to the Wells Ranch fresh water
minimum volume commitment (MVC).
Versus the first quarter of 2019, second quarter cash interest
expense attributable to the Partnership increased $1.5 million to
$8 million on higher debt levels. Distributions from joint ventures
declined from $7 million to $0.3 million as forecasted. Maintenance
capital expenditures attributable to the Partnership totaled $5.8
million during the second quarter of 2019. This resulted in lower
distributable cash flow¹ attributable to the Partnership of $41
million and a distribution coverage ratio¹ of 1.4x.
Strong Volume Performance Versus Guidance
In the gathering business, oil and gas throughput came in at the
high-end of guidance while produced water gathering volumes were
consistent with expectations.
Gross oil and gas gathering and sales volumes of 295 MBoe/d were
up 3% from the first quarter of 2019 as an increase in the Delaware
Basin was offset by planned lower volumes in the DJ Basin. Produced
water gathering throughput was up 16% compared to the first quarter
of 2019 driven primarily by new well connections in the Delaware
Basin.
Fresh water delivery volumes came in above guidance for the
quarter as customer completion activity was higher than forecasted.
Average fresh water delivered in the second quarter was 179
thousand barrels of water per day (MBw/d), down from 220 MBw/d in
the first quarter of 2019. The sequential decline in fresh water
volumes reflects water delivery to approximately 2.3 completion
crews on dedicated acreage in the DJ Basin during the quarter,
compared to approximately 4 in the first quarter of 2019.
Cost Focus Driving Enhanced Capital Efficiencies
Capital expenditures in the second quarter primarily reflected
spending for customer well connections in the DJ Basin and Delaware
Basin. Second quarter gross capital expenditures of $57 million and
capital expenditures attributable to the partnership of $29 million
were below guidance due primarily to a consistent cost focus and to
a lesser extent, the timing of customer activity. Cost saving
initiatives include optimization of infrastructure designs and
construction processes as well as an enhanced contracting strategy.
In addition, the Partnership had additions to investments totaling
$144 million during the second quarter of 2019. This primarily
included capital contributions of $113 million related to the EPIC
Crude and $26 million for the EPIC Y-Grade joint ventures.
2Q 2019 Capital Expenditures
(in millions)
DevCo
Basin
NBLX Ownership
Gross
Net
Laramie River *
DJ
100%
$
28
$
17
Blanco River
Delaware
40%
$
17
$
7
Trinity River
Delaware
100%
$
—
$
—
Colorado River
DJ
100%
$
3
$
3
San Juan River
DJ
25%
$
—
$
—
Green River
DJ
25%
$
9
$
2
Total Capital Expenditures
$
57
$
29
Additions to Investments
$
144
$
144
Capital Expenditures and
Investments
$
201
$
173
* Includes capital expenditures for Black Diamond, which is
54.4% owned by Noble Midstream.
Green River DevCo Leading DJ Basin Throughput Growth
Green River results during the second quarter of 2019 reflect
record oil, gas and produced water throughput for Noble Energy’s
Mustang development in the DJ Basin. The Partnership connected 20
wells during the second quarter of 2019, driving average oil and
gas gathering throughput to approximately 49 MBoe/d, up 41% from
the prior quarter. Average produced water volumes of 17 MBw/d were
up 62% compared to the first quarter of 2019. Fresh water
deliveries in Mustang during the second quarter of 2019 totaled 71
MBw/d, down from 120 MBw/d in the first quarter of 2019. Completion
activity and water concentration levels both declined
quarter-over-quarter.
Laramie River and Colorado River DevCo Throughput Declines as
Planned
Laramie River oil and gas gathering and sales volumes during the
second quarter of 2019 were down 3% compared to the first quarter
of 2019. Second quarter Black Diamond Gathering throughput averaged
86 thousand barrels of oil per day (MBbl/d), representing a 7%
decline over the first quarter and a 56% increase since the Black
Diamond Gathering acquisition close in January 2018. The sequential
decline reflects third-party downtime and lower levels of well
connections in the first half of 2019. The Partnership connected a
combined 66 wells during the quarter on Black Diamond Gathering's
system and the Partnership’s wholly-owned third party gathering
system for oil gathering.
Consistent with guidance, Colorado River oil and gas gathering
volumes were down 11% in the second quarter of 2019 compared to the
first quarter of 2019, totaling 77 MBoe/d. An increase in East Pony
volume was offset by a decline in Wells Ranch with fewer well
connections and planned maintenance at the central gathering
facility. No new wells were connected during the first quarter and
a total of 16 wells were brought online during the second quarter;
throughput from the second quarter wells brought online continues
to ramp in the third quarter.
Inflection Point in Permian Basin Contribution
Oil and gas gathering volumes at Blanco River of 59 MBoe/d for
the second quarter of 2019 were up 16% compared to the first
quarter of 2019 while produced water gathering volumes were up 18%
on a sequential basis. The growth in gathering throughput reflects
26 new well connections during the quarter, including one
third-party customer well. Average CGF availability was 98%.
In the Trinity River DevCo, quarterly volumes on the Advantage
Pipeline system totaled 66 MBbl/d, compared to 95 MBbl/d during the
first quarter. The sequential decline was primarily driven by a key
volume commitment shipper temporarily utilizing volume credits
earned in 2018; these credits are anticipated to expire by year-end
2019, with the shipper anticipated to resume volume matching at
that time.
Maintaining Prudent Liquidity and Balance Sheet While
Executing Opportunities
As of June 30, 2019, the Partnership had $439 million of
liquidity with $9 million in cash on hand and $430 million
available under its unsecured revolving credit facility. In
addition, the revolving credit facility has a $350 million
accordion feature. The balance of the preferred equity commitment
for the EPIC Crude pipeline was $99.6 million at the end of the
second quarter, up from $96.8 million in the first quarter. The
increase reflects the Partnership’s decision to accrue its $3
million second quarter dividend (6.5% annual dividend rate) rather
than pay in cash. As previously disclosed, during any quarter in
which a dividend is accrued, the accreted value of the preferred
equity will be increased by the accrued but unpaid dividend. The
preferred equity is reported net of offering costs as mezzanine
equity on the Partnership’s balance sheet.
Consistent Quarterly Distribution Increase
On July 25, 2019, the board of directors of Noble Midstream’s
general partner, Noble Midstream GP LLC, declared a second quarter
cash distribution of $0.6418 per unit, a 20% increase from the
second quarter 2018 and 71% above the minimum quarterly cash
distribution. The second quarter distribution is payable on August
12, 2019, to unitholders of record as of August 5, 2019. On May 14,
as the requirements for the conversion of all subordinated units
were satisfied under the Partnership agreement, all subordinated
units converted to common units in accordance with the First
Amended and Restated Limited Partnership Agreement of Noble
Midstream and now participate on terms equal with all other common
units in distributions of available cash. The conversion did not
impact the amount of the cash distributions paid by the Partnership
or the total units outstanding.
Third Quarter 2019 and Full Year Guidance
The Partnership has lowered full-year organic net capital
expectations due to year to-date progress on sustainable costs
savings. At the midpoint, full-year net capital expenditures are
now estimated $45 million below original plan, or 23% lower. For
the third quarter of 2019, organic net capital expenditures are
anticipated between $40 million and $50 million. Investments in
equity investments in 2019 are still anticipated within original
guidance of $570 million to $615 million, with the bulk of the
remaining spend anticipated in the third quarter of 2019.
Full year 2019 Adjusted EBITDA¹ attributable to the Partnership
is anticipated to be $245 million to $255 million compared to prior
guidance of $245 million to $270 million. This is based on year
to-date performance as well as the Partnership's updated outlook
for DJ Basin third-party customer gathering volumes, fresh water
delivery volumes, and contributions from equity investments.
Adjusted EBITDA¹ attributable to the partnership is anticipated to
increase 11% in the second half of 2019 compared to the first half
of the year. This reflects higher gross gathering throughput as
well as more activity in the 100% owned Colorado River DevCo. Full
year 2019 DCF coverage¹ remains unchanged at 1.5x to 1.6x.
Tightened volume guidance ranges for the full-year of 2019
result in midpoint expectations which are largely unchanged for
combined oil and gas gathering, produced water gathering and fresh
water delivery volumes.
We anticipate continued gathering volume growth throughout this
year, with the second and third quarters representing the periods
with the most well connections for the Partnership. This should
drive combined oil and gas gathering and sales volume up 9% in the
second half of 2019 above the first half average. Produced water
gathering volumes are also expected to continue to set records,
growing 22% over the first half average.
Based on strong year to-date performance, full year 2019 fresh
water delivery volumes are now anticipated between 145 MBw/d and
170 MBw/d compared to prior guidance of 140 MBw/d to 170 MBw/d.
Updated fresh water delivery volumes reflect potential reductions
in customer activity in the second half of the year, particularly
during the fourth quarter of 2019. The financial impact of any
decline would be mitigated by the 50 MBbl/d MVC for Wells Ranch
fresh water delivery from Noble Energy.
Guidance
1Q19
2Q19
3Q19
2019
Gross
Volumes
Oil Gathered (MBbl/d)¹
228
226
230
-
240
230
-
240
Gas Gathered (MMcf/d)
353
413
425
-
445
415
-
425
Oil and Gas Gathered (MBoe/d)¹
287
295
301
-
314
299
-
311
Produced Water Gathered (MBw/d)
142
164
175
-
185
165
-
175
Fresh Water Delivered (MBw/d)
220
179
135
-
155
145
-
170
Financials
($MM)
Net Income
$63
$53
$57
-
$66
$237
-
$247
Gross Adjusted EBITDA2
$91
$81
$89
-
$94
$355
-
$365
Net Adjusted EBITDA2
$63
$56
$59
-
$64
$245
-
$255
Distributable Cash Flow2
$54
$41
$44
-
$46.5
$190
-
$195
Distribution Coverage Ratio2,3
1.9x
1.4x
1.4x
-
1.4x
1.5x
-
1.6x
Gross Capital, Excluding Investments
$76
$57
$81
-
$91
$285
-
$315
Net Capital, Excluding Investments
$36
$29
$40
-
$50
$140
-
$160
Further details with respect to the second quarter results and
guidance can be found in the supplemental presentation on the
Partnership's website, www.nblmidstream.com.
1 Includes crude oil sales volume
2 Results “attributable to the Partnership” exclude the
non-controlling interests in the DevCos retained by Noble Energy.
Adjusted EBITDA, DCF, and Distribution Coverage Ratio are not
financial measures calculated in accordance with Generally Accepted
Accounting Principles (“GAAP”). For definitions of these non-GAAP
measures, see “Non-GAAP Financial Measures” below.
3 Assumes 20% annualized distribution growth
Conference Call
Noble Midstream will host a webcast and conference call today at
10:00 a.m. Central Time to discuss second quarter 2019 financial
and operational results. Conference call numbers for participation
are 877-883-0383, or 412-902-6506 for international calls. The
passcode number is 0765742. The live audio webcast and related
presentation material is accessible on the ‘Investors’ page of the
Partnership’s website at www.nblmidstream.com. A replay of the
conference call will be available at the same web location
following the event.
About Noble Midstream
Noble Midstream is a growth-oriented master limited partnership
formed by Noble Energy, Inc. to own, operate, develop and acquire
domestic midstream infrastructure assets. Noble Midstream currently
provides crude oil, natural gas, and water-related midstream
services in the DJ Basin in Colorado and the Delaware Basin in
Texas. For more information, please visit www.nblmidstream.com.
Forward Looking Statements
This news release contains certain “forward-looking statements”
within the meaning of federal securities law.
Words such as “anticipates”, “believes”, “expects”, “intends”,
“will”, “should”, “may”, “estimates”, and similar expressions may
be used to identify forward-looking statements. Forward-looking
statements are not statements of historical fact and reflect the
Partnership’s current views about future events. No assurances can
be given that the forward-looking statements contained in this news
release will occur as projected and actual results may differ
materially from those projected. Forward-looking statements are
based on current expectations, estimates and assumptions that
involve a number of risks and uncertainties that could cause actual
results to differ materially from those projected. These risks
include, without limitation, the Partnership's customers’ ability
to meet their drilling and development plans, changes in general
economic conditions, competitive conditions in the Partnership’s
industry, actions taken by third-party operators, gatherers,
processors and transporters, the demand for crude oil and natural
gas gathering and processing services, the Partnership’s ability to
successfully implement its business plan, the Partnership’s ability
to complete internal growth projects on time and on budget, the
ability of third parties to complete construction of pipelines in
which the Partnership holds equity interests on time and on budget,
the price and availability of debt and equity financing, the
availability and price of crude oil and natural gas to the consumer
compared to the price of alternative and competing fuels, and other
risks inherent in the Partnership’s business, including those
described under “Risk Factors” and “Forward-Looking Statements” in
the Partnership’s most recent Annual Report on Form 10-K and in
other reports we file with the Securities and Exchange Commission.
These reports are also available from the Partnership’s office or
website, www.nblmidstream.com. Forward-looking statements are based
on the estimates and opinions of management at the time the
statements are made. Noble Midstream does not assume any obligation
to update forward-looking statements should circumstances,
management’s estimates, or opinions change.
This news release also contains certain non-GAAP measures of
financial performance that management believes are useful tools for
internal use and the investment community in evaluating Noble
Midstream’s overall financial performance. Please see the attached
schedules for reconciliations of the non-GAAP financial measures
used in this news release to the most directly comparable GAAP
financial measures.
This release serves as a qualified notice to nominees and
brokers as provided for under Treasury Regulation Section
1.1446-4(b) that 100% of the Partnership’s distributions to foreign
investors are attributable to income that is effectively connected
with a United States trade or business. Accordingly, the
Partnership’s distributions to foreign investors are subject to
federal income tax withholding at the highest effective tax rate.
Nominees, and not the Partnership, are treated as withholding
agents responsible for withholding on the distributions received by
them on behalf of foreign investors.
Schedule 1
Noble Midstream Partners
LP
Revenue and Throughput Volume
Statistics
(unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Colorado River DevCo LP
Crude Oil Gathering Volumes (Bbl/d)
46,047
65,289
49,340
65,910
Natural Gas Gathering Volumes
(MMBtu/d)
239,429
217,202
251,297
212,551
Produced Water Gathering Volumes
(Bbl/d)
11,550
20,829
12,460
18,537
Fresh Water Delivery Volumes (Bbl/d)
78,925
1,116
46,715
51,219
Gathering and Fresh Water Delivery
Revenues — Affiliate (in thousands)
$
40,429
$
39,236
$
84,130
$
91,510
San Juan River DevCo LP
Fresh Water Delivery Volumes (Bbl/d)
—
—
20,007
—
Gathering and Fresh Water Delivery
Revenues — Affiliate (in thousands)
$
546
$
(779
)
$
8,267
$
(332
)
Green River DevCo LP
Crude Oil Gathering Volumes (Bbl/d)
28,929
108
26,042
54
Natural Gas Gathering Volumes
(MMBtu/d)
156,854
172
124,075
87
Produced Water Gathering Volumes
(Bbl/d)
16,999
236
13,761
119
Fresh Water Delivery Volumes (Bbl/d)
70,543
112,379
95,359
67,437
Gathering and Fresh Water Delivery
Revenues — Affiliate (in thousands)
$
23,385
$
17,888
$
44,999
$
21,332
Blanco River DevCo LP
Crude Oil Gathering Volumes (Bbl/d)
42,128
21,506
40,314
17,978
Natural Gas Gathering Volumes
(MMBtu/d)
132,550
48,743
115,694
44,248
Produced Water Gathering Volumes
(Bbl/d)
122,595
59,682
113,471
42,927
Gathering Revenues — Affiliate and Third
Party (in thousands)
$
19,229
$
9,018
$
36,558
$
15,776
Laramie River DevCo LP
Crude Oil Gathering and Sales Volumes
(Bbl/d) (1)
109,259
70,761
111,347
61,787
Natural Gas Gathering Volumes
(MMBtu/d)
8,099
1,970
6,942
1,489
Produced Water Gathering Volumes
(Bbl/d)
13,282
5,665
13,727
5,222
Fresh Water Delivery Volumes (Bbl/d)
29,821
46,379
37,309
45,132
Gathering and Fresh Water Delivery
Revenues — Third Party (in thousands)
$
70,212
$
54,446
$
124,308
$
87,028
Total Gathering Systems
Crude Oil Gathering and Sales Volumes
(Bbl/d) (1)
226,363
157,664
227,043
145,729
Natural Gas Gathering Volumes
(MMBtu/d)
536,932
268,087
498,008
258,375
Barrels of Oil Equivalent (Boe/d)
295,200
192,034
290,890
178,854
Produced Water Gathering Volumes
(Bbl/d)
164,426
86,412
153,419
66,805
Gathering Revenues (in thousands)
$
135,382
$
98,216
$
250,121
$
169,920
Total Fresh Water Delivery
Fresh Water Delivery Volumes (Bbl/d)
179,289
159,874
199,390
163,788
Fresh Water Delivery Revenues (in
thousands)
$
20,821
$
22,175
$
52,217
$
46,361
(1)
Includes crude oil gathering volumes as well as crude oil that
is sold to customers and transported on our gathering systems.
Schedule 2
Noble Midstream Partners
LP
Consolidated Statement of
Operations
(in thousands, except per unit
amounts, unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Revenues
Crude Oil, Natural Gas and Produced Water
Gathering — Affiliate
$
66,749
$
46,871
$
130,322
$
89,895
Crude Oil, Natural Gas and Produced Water
Gathering — Third Party
16,851
$
9,767
35,147
16,337
Fresh Water Delivery — Affiliate
18,367
19,074
45,954
39,358
Fresh Water Delivery — Third Party
2,454
3,101
6,263
7,003
Crude Oil Sales — Third Party
51,782
41,578
84,652
63,688
Other — Affiliate
766
979
1,602
1,934
Other — Third Party
1,292
601
2,281
1,489
Total Revenues
158,261
121,971
306,221
219,704
Costs and Expenses
Cost of Crude Oil Sales
48,079
40,012
78,977
61,451
Direct Operating
27,697
18,393
55,134
35,541
Depreciation and Amortization
20,285
16,371
39,636
27,700
General and Administrative
4,838
4,980
8,861
15,422
Total Operating Expenses
100,899
79,756
182,608
140,114
Operating Income
57,362
42,215
123,613
79,590
Other Expense (Income)
Interest Expense, Net of Amount
Capitalized
2,325
1,681
7,555
2,714
Investment Loss (Income)
1,748
(4,091
)
(593
)
(6,959
)
Total Other Expense (Income)
4,073
(2,410
)
6,962
(4,245
)
Income Before Income Taxes
53,289
44,625
116,651
83,835
State Income Tax Provision
91
183
198
257
Net Income
53,198
44,442
116,453
83,578
Less: Net Income Attributable to
Noncontrolling Interests
16,789
7,858
36,485
7,633
Net Income Attributable to Noble
Midstream Partners LP
36,409
36,584
79,968
75,945
Less: Net Income Attributable to Incentive
Distribution Rights
4,640
1,134
8,147
1,953
Net Income Attributable to Limited
Partners
$
31,769
$
35,450
$
71,821
$
73,992
Net Income Attributable to Limited
Partners Per Limited Partner Unit — Basic and
Diluted
Common Units
$
0.79
$
0.90
$
1.77
$
1.87
Subordinated Units
$
0.84
$
0.90
$
1.91
$
1.87
Weighted Average Limited Partner Units
Outstanding — Basic
Common Units
32,090
23,686
27,916
23,684
Subordinated Units
7,514
15,903
11,685
15,903
Total Limited Partner Units
39,604
39,589
39,601
39,587
Weighted Average Limited Partner Units
Outstanding — Diluted
Common Units
32,121
23,700
27,944
23,699
Subordinated Units
7,514
15,903
11,685
15,903
Total Limited Partner Units
39,635
39,603
39,629
39,602
Schedule 3
Noble Midstream Partners
LP
Consolidated Balance
Sheet
(in thousands,
unaudited)
June 30, 2019
December 31, 2018
ASSETS
Current Assets
Cash and Cash Equivalents
$
9,388
$
10,740
Accounts Receivable — Affiliate
38,697
31,613
Accounts Receivable — Third Party
25,852
23,091
Other Current Assets
8,805
5,875
Total Current Assets
82,742
71,319
Property, Plant and Equipment
Total Property, Plant and Equipment,
Gross
1,621,885
1,500,609
Less: Accumulated Depreciation and
Amortization
(102,338
)
(79,357
)
Total Property, Plant and Equipment,
Net
1,519,547
1,421,252
Intangible Assets, Net
294,184
310,202
Goodwill
109,734
109,734
Investments
487,383
82,317
Other Noncurrent Assets
4,941
3,093
Total Assets
$
2,498,531
$
1,997,917
LIABILITIES, MEZZANINE EQUITY
AND EQUITY
Current Liabilities
Accounts Payable — Affiliate
$
534
$
2,778
Accounts Payable — Trade
101,094
92,756
Other Current Liabilities
8,144
9,217
Total Current Liabilities
109,772
104,751
Long-Term Liabilities
Long-Term Debt
870,047
559,021
Asset Retirement Obligations
19,009
17,330
Other Long-Term Liabilities
1,143
582
Total Liabilities
999,971
681,684
Mezzanine Equity
Redeemable Noncontrolling Interest,
Net
99,616
—
Equity
Limited Partner
Common Units (39,753 and 23,759 units
outstanding, respectively)
606,575
699,866
Subordinated Units (15,903 units
outstanding as of December 31, 2018)
—
(130,207
)
General Partner
4,640
2,421
Total Partners’ Equity
611,215
572,080
Noncontrolling Interests
787,729
744,153
Total Equity
1,398,944
1,316,233
Total Liabilities, Mezzanine Equity and
Equity
$
2,498,531
$
1,997,917
Schedule 4 Noble Midstream Partners LP
Reconciliations of GAAP Financial Measures to Non-GAAP Financial
Measures
Non-GAAP Financial Measures
This news release, the financial tables and other supplemental
information include Adjusted EBITDA, Distributable Cash Flow, and
Distribution Coverage Ratio, all of which are non-GAAP measures
which may be used periodically by management when discussing our
financial results with investors and analysts.
As a result of our increased investment in midstream entities
during first quarter 2019, we have refined our presentation of
Adjusted EBITDA to adjust for items with respect to our equity
method investments. We now define Adjusted EBITDA as net income
before income taxes, net interest expense, depreciation and
amortization, transaction expenses, unit-based compensation and
certain other items that we do not view as indicative of our
ongoing performance. Additionally, Adjusted EBITDA reflects the
adjusted earnings impact of our equity method investments by
adjusting our equity earnings or losses from our equity method
investments to reflect our proportionate share of the EBITDA of
such equity method investments. Prior period Adjusted EBITDA has
been reclassified to conform to the current period
presentation.
Adjusted EBITDA is used as a supplemental financial measure by
management and by external users of our financial statements, such
as investors, industry analysts, lenders and ratings agencies, to
assess:
- our operating performance as compared to those of other
companies in the midstream energy industry, without regard to
financing methods, historical cost basis or capital structure;
- the ability of our assets to generate sufficient cash flow to
make distributions to our partners;
- our ability to incur and service debt and fund capital
expenditures;
- and the viability of acquisitions and other capital expenditure
projects and the returns on investment of various investment
opportunities.
As a result of our increased investment in midstream entities
during first quarter 2019, we have also refined our presentation of
distributable cash flow to adjust for items with respect to our
equity method investments. We now define distributable cash flow as
Adjusted EBITDA plus distributions received from our equity method
investments less our proportionate share of Adjusted EBITDA from
such equity method investments, estimated maintenance capital
expenditures and cash interest paid. Prior period distributable
cash flow has been reclassified to conform to the current period
presentation.
Distributable Cash Flow is used by management to evaluate our
overall performance. Our partnership agreement requires us to
distribute all available cash on a quarterly basis, and
Distributable Cash Flow is one of the factors used by the board of
directors of our general partner to help determine the amount of
available cash that is available to our unitholders for a given
period. We define Distribution Coverage Ratio as Distributable Cash
Flow divided by total distributions declared. The Distribution
Coverage Ratio is used by management to illustrate our ability to
make our distributions each quarter.
We believe that the presentation of Adjusted EBITDA,
Distributable Cash Flow, and Distribution Coverage Ratio provide
information useful to investors in assessing our financial
condition and results of operations. The GAAP measure most directly
comparable to Adjusted EBITDA, Distributable Cash Flow and
Distribution Coverage Ratio is net income. Adjusted EBITDA,
Distributable Cash Flow and Distribution Coverage Ratio should not
be considered alternatives to net income or any other measure of
financial performance or liquidity presented in accordance with
GAAP. Adjusted EBITDA, Distributable Cash Flow and Distribution
Coverage Ratio exclude some, but not all, items that affect net
income, and these measures may vary from those of other companies.
As a result, Adjusted EBITDA, Distributable Cash Flow and
Distribution Coverage Ratio as presented herein may not be
comparable to similarly titled measures of other companies.
Noble Midstream does not provide guidance on the reconciling
items between forecasted Net Income, forecasted Adjusted EBITDA,
forecasted Distributable Cash Flow and forecasted Distribution
Coverage Ratio due to the uncertainty regarding timing and
estimates of these items. Noble Midstream provides a range for the
forecasts of Net Income, Adjusted EBITDA, Distributable Cash Flow
and Distribution Coverage Ratio to allow for the variability in
timing and uncertainty of estimates of reconciling items between
forecasted Net Income, forecasted Adjusted EBITDA, forecasted
Distributable Cash Flow and forecasted Distribution Coverage Ratio.
Therefore, the Partnership cannot reconcile forecasted Net Income
to forecasted Adjusted EBITDA, forecasted Distributable Cash Flow
or forecasted Distribution Coverage Ratio without unreasonable
effort.
In addition to Net Income, the GAAP measure most directly
comparable to Adjusted EBITDA and Distributable Cash Flow is net
cash provided by operating activities. Adjusted EBITDA and
Distributable Cash Flow should not be considered alternatives to
net income, net cash provided by operating activities or any other
measure of financial performance or liquidity presented in
accordance with GAAP. Due to the forward-looking nature of net cash
provided by operating activities, management cannot reliably
predict certain of the necessary components of the most directly
comparable forward-looking GAAP measures, such as future
impairments and future changes in working capital. Accordingly,
Noble Midstream is unable to present a quantitative reconciliation
of the aforementioned forward-looking non-GAAP financial measures
to net cash provided by operating activities. Amounts excluded from
these non-GAAP measures in future periods could be significant.
Schedule 4 (Continued)
Noble Midstream Partners
LP
Reconciliations of GAAP
Financial Measures to Non-GAAP Financial Measures
Reconciliation of Net Income
(GAAP) to Adjusted EBITDA and Distributable Cash Flow
(Non-GAAP)
(in thousands,
unaudited)
Three Months Ended June 30,
2019
2018
Reconciliation from Net Income
(GAAP)
Net Income (GAAP)
$
53,198
$
44,442
Add:
Depreciation and Amortization
20,285
16,371
Interest Expense, Net of Amount
Capitalized
2,325
1,681
State Income Tax Provision
91
183
Transaction and Integration Expenses
12
1,280
Proportionate Share of Equity Method
Investment EBITDA Adjustments
4,570
638
Unit-Based Compensation
466
393
Adjusted EBITDA (Non-GAAP)
80,947
64,988
Less:
Adjusted EBITDA Attributable to
Noncontrolling Interests
25,326
15,691
Adjusted EBITDA Attributable to Noble
Midstream Partners LP (Non-GAAP)
55,621
49,297
Add:
Distributions from Equity Method
Investments
285
1,265
Less:
Proportionate Share of Equity Method
Investment Adjusted EBITDA
1,459
3,574
Cash Interest Paid
7,991
4,030
Maintenance Capital Expenditures
5,815
4,772
Distributable Cash Flow of Noble
Midstream Partners LP (Non-GAAP)
$
40,641
$
38,186
Distributions (Declared)
$
30,057
$
22,306
Distribution Coverage Ratio
(Declared)
1.4x
1.7x
Reconciliation of Net Cash
Provided by Operating Activities (GAAP) to Adjusted EBITDA
and Distributable Cash Flow
(Non-GAAP)
(in thousands,
unaudited)
Three Months Ended June 30,
2019
2018
Reconciliation from Net Cash Provided
by Operating Activities (GAAP)
Net Cash Provided by Operating
Activities (GAAP)
$
88,805
$
59,469
Add:
Interest Expense, Net of Amount
Capitalized
2,325
1,681
Changes in Operating Assets and
Liabilities
(11,041
)
228
Transaction and Integration Expenses
12
1,280
Equity Method Investment EBITDA
Adjustments
1,174
2,309
Other Adjustments
(328
)
21
Adjusted EBITDA (Non-GAAP)
80,947
64,988
Less:
Adjusted EBITDA Attributable to
Noncontrolling Interests
25,326
15,691
Adjusted EBITDA Attributable to Noble
Midstream Partners LP (Non-GAAP)
55,621
49,297
Add:
Distributions from Equity Method
Investments
285
1,265
Less:
Proportionate Share of Equity Method
Investment Adjusted EBITDA
1,459
3,574
Cash Interest Paid
7,991
4,030
Maintenance Capital Expenditures
5,815
4,772
Distributable Cash Flow of Noble
Midstream Partners LP (Non-GAAP)
$
40,641
$
38,186
Distributions (Declared)
$
30,057
$
22,306
Distribution Coverage Ratio
(Declared)
1.4x
1.7x
Schedule 4 (Continued)
Noble Midstream Partners
LP
Reconciliations of GAAP
Financial Measures to Non-GAAP Financial Measures
Reconciliation of 2019 GAAP
Guidance to 2019 Non-GAAP Guidance
(in millions,
unaudited)
2019 Guidance
3Q19
Full Year
Reconciliation from Net Income (GAAP)
to Distributable Cash Flow (Non-GAAP)
Net Income (GAAP)
$57- $66
$237 - $247
Add:
Depreciation and Amortization
21
83
Interest Expense, Net of Amount
Capitalized
4
17
Unit-Based Compensation and Other
0.7
2.5
Transaction Expenses
—
—
Income Tax Provision (Benefit)
0
0.4
Proportionate Share of Equity Method
Investment EBITDA Adjustments
4.6
15
Adjusted EBITDA (Non-GAAP)
$89 - $94
$355 - $365
Adjusted EBITDA Attributable to
Noncontrolling Interests
30
110
Adjusted EBITDA Attributable to Noble
Midstream Partners LP
$59 - $64
$245 - $255
Plus:
Distributions from Equity Method
Investments
2
11-12
Less:
Proportionate Share of Equity Method
Investment Adjusted EBITDA
1-5
7-15
Maintenance Capital Expenditures and Cash
Interest Paid
14.5- 16
57-59
Distributable Cash Flow of Noble Midstream
Partners LP
$44 - $46.5
$190 - $195
Distribution Coverage Ratio
1.4x
1.5x - 1.6x
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190802005062/en/
Megan Repine Investor Relations (832) 639-7380
megan.repine@nblmidstream.com
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