Provides Updated 2020 Guidance Highlighting
Improved Capital Efficiency
Noble Midstream Partners LP (NASDAQ: NBLX) (Noble
Midstream or the Partnership) today reported fourth quarter and
full year 2019 financial and operational results. The Partnership’s
results are consolidated to include the non-controlling interests
in the Partnership’s development companies (DevCos) retained by
Noble Energy, Inc. (Noble Energy) as well as Greenfield Midstream,
LLC’s (Greenfield Midstream) 45.6% ownership of Black Diamond
Gathering, LLC (Black Diamond Gathering).
Certain results are shown as “attributable to the Partnership,”
which exclude the aforementioned non-controlling interests retained
by Noble Energy and Greenfield Midstream. 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. Due to the acquisition of
the remaining DevCo interests during the quarter, results to the
Partnership include 45 days of the Partnership's previous ownership
in the acquired DevCos, including 25% ownership in Green River
DevCo and San Juan River DevCo and 40% ownership in Blanco River
DevCo.
Fourth-Quarter, Full-Year 2019 and Recent Highlights
- Invested $48 million in fourth-quarter 2019, well below the low
end of guidance of $60 to $70 million
- Executed a $149 million net capital program in 2019 with
material well-connect savings
- Achieved record gross oil and gas gathering throughput of 355
thousand barrels of oil and gas equivalent per day (MBoe/d) and 219
thousand barrels of produced water per day (Mbw/d), in
fourth-quarter 2019; increased gross annual combined gathering and
sales volumes for oil, gas and produced water more than 40%
- Generated $51 million in net income or $39 million attributable
to the Partnership, and $95 million of Gross EBITDA1 or $73 million
of Adjusted Net EBITDA1 attributable to the Partnership
- Completed the simplification transaction, which eliminated the
General Partner's Incentive Distribution Rights
- Acquired substantially all the remaining DevCo interests from
Noble Energy, increasing the Partnership's exposure to high margin
growth opportunities in the DJ and Delaware Basins
- Exercised accordion feature of the Partnership's unsecured
revolving credit facility and ended 2019 with $568 million in
liquidity
2020 Investment Program and Guidance Highlights
- $190 to $230 million in 2020 net organic Capital Expenditures,
approximately 25% below original 2020 guidance provided in November
2019
- 348 to 377 MBoe/d of oil and gas gathering volumes, an annual
increase of 13% at the midpoint in 2020
- 185 to 205 Mbw/d of produced water volumes, adjusted lower from
previous guidance to account for the sale of certain water
assets
- $500 million to $540 million in Adjusted EBITDA attributable to
the Partnership, updated to reflect most recent customer plans and
partnership forecasts
- $325 million to $355 million of Distributable Cash Flow1 (DCF)
with coverage ratio of 1.2x to 1.4x
- Acquired 20% ownership of the Saddlehorn Pipeline in the DJ
Basin through Black Diamond joint venture, effective February 1,
2020
“2019 marked an impressive year for Noble Midstream, whereby we
continued to grow the core business, progressed our equity method
investments and positioned the partnership for success into the
next decade through the elimination of the Incentive Distribution
Rights and acquisition of the remaining DevCo interests. Our
performance in 2019 showcases our ability to enhance cost
efficiencies and create sustainable unitholder value in 2020. We
have the talent in place and portfolio to grow the business
efficiently and set ourselves on a path to generate free cash flow
longer term,” stated Brent J. Smolik, Chief Executive Officer of
the general partner of Noble Midstream.
1 Adjusted EBITDA and DCF 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.
Strong Throughput Enabled Record Quarterly Gathering
During the fourth quarter, Noble Midstream achieved record oil
and gas volumes of 355 MBoe/d from its core gathering business, up
11% sequentially and above the top end of guidance. Produced water
gathering throughput was up 22% sequentially and came in above the
top end of guidance. Fresh water delivered in fourth-quarter 2019
averaged 126 MBw/d, down 7% from the third quarter due to lower
operator activity levels at the end of the year.
Fourth-quarter 2019 revenue totaled $191 million, up 12%
compared to the third quarter. An increase in revenue from
gathering and crude oil sales was partially offset by lower fresh
water delivery revenue and lower equity method income from
investments. Fourth-quarter 2019 net income of $51 million and
Adjusted EBITDA attributable to the Partnership of $73 million were
impacted by a $10 million EBITDA loss on EPIC interim oil service
due to lower than forecasted interim service volumes and realized
tariffs, as well as other one-time accruals.
Maintenance capital expenditures attributable to the Partnership
totaled $7.0 million during the fourth-quarter 2019. Along with the
strong operational performance, this resulted in DCF attributable
to the Partnership of $65 million and a Distribution Coverage Ratio
of 1.1x, or 1.3x pro-forma for the acquisition.
Enhanced Capital Efficiency
Capital expenditures in the fourth quarter primarily reflected
spending for customer well connections in the DJ Basin and Delaware
Basin. Fourth-quarter gross capital expenditures of $67 million and
capital expenditures attributable to the Partnership of $48 million
were below guidance and reflect 2019's progress on reduced costs
and increased capital efficiency through contracting practices,
pipeline installation costs, and the use of existing facility and
infrastructure.
The Partnership contributed $105 million to equity investments
during fourth-quarter 2019 at the low end of guidance. This
primarily included capital contributions of $83 million related to
the EPIC Crude, $3 million for the EPIC Y-Grade, and $19 million
for the Delaware Crossing joint ventures.
4Q 2019 Capital Expenditures
(in millions)
DevCo
Basin
NBLX Ownership**
Gross
Net
Colorado River
DJ
100%
$
7
$
7
Green River
DJ
25%
$
13
$
9
Laramie River *
DJ
100%
$
33
$
21
Blanco River
Delaware
40%
$
10
$
7
Trinity River
Delaware
100%
$
4
$
4
Total Capital Expenditures
$
67
$
48
Additions to Equity Investments
$
105
$
105
Capital Expenditures and
Investments
$
172
$
153
*
Includes capital expenditures for Black
Diamond, in which Noble Midstream owns 54.4%
**
As of November 15, 2019, all DevCo
interests increased to 100%
Continued DJ Basin Activity
In the Partnership's wholly-owned DJ Basin assets, oil and gas
gathering throughput was 166 MBoe/d, up 3% sequentially. Average
produced water volumes of 37 MBw/d were down from 42 MBw/d in the
third-quarter 2019. The Partnership connected 37 wells in the
fourth quarter, including 25 Noble Energy wells, focused in East
Pony and Wells Ranch. Completion activity in the Mustang
development area resumed in the fourth-quarter 2019. The
Partnership delivered fresh water volumes of 126 MBw/d to two crews
during the quarter. In 2020, the fresh water minimum volume
commitment at Wells Ranch will increase from 50 MBw/d to 60 MBw/d,
effective through 2021.
Fourth-quarter 2019 Black Diamond oil gathering and sales
volumes averaged 103 thousand barrels of oil per day (MBo/d), up
12% from the third-quarter 2019. The Partnership connected a
combined 35 wells during the fourth quarter on Black Diamond's
gathering system, lower than the prior quarter due to timing of pad
completions. As a result, the Partnership expects the first-quarter
2020 volumes to trend lower before inflecting mid-year 2020.
Increasing Third-Party Volumes in the Delaware Basin
In the Delaware Basin, oil and gas gathering throughput was a
record 85 MBoe/d of oil and gas during fourth-quarter 2019, up 13%
sequentially. Produced water gathering volumes were also up more
than 25% on a sequential basis. The growth in gathering throughput
reflects 15 new well connections during the quarter, including 2
third-party customer wells. Volumes also reflect contributions from
nine third-party wells that came online on the last day of the
third-quarter 2019. The Partnership completed 11 third-party well
connections in the second half of 2019, compared to two in the
first half of the year. In 2020, third-party volume contribution is
expected to approach 10% to 15% of total Delaware Basin
volumes.
Fourth-quarter 2019 volumes on the Advantage Pipeline system
totaled 80 MBo/d, compared to 70 MBo/d during the third quarter.
The Partnership expects 2020 annual volumes to remain flat with the
partner on the pipeline returning to match volumes late in the
fourth quarter.
Permian Basin Equity Investments Nearing Completion
EPIC interim crude service first oil volumes were transported in
July and increased in the back half of 2019 on the EPIC Y-Grade
pipeline via the Advantage Crane West interconnect. While
lower-than-expected tariffs and utilization rates impacted
financials in fourth-quarter 2019, the Partnership expects an
improvement from interim service in first-quarter 2020.
The Delaware Crossing JV construction is progressing as planned
with the completion of the Wink crude terminal during the quarter.
The Partnership assumed operatorship during the fourth quarter and
is currently transporting dedicated volumes on the northern portion
of the pipeline. The Liberty Terminal is more than 90% complete and
the 16-inch mainline connecting the two terminals is beginning line
fill later this month. Associated gathering projects are
progressing as planned. All core infrastructure construction was
completed in early January 2020.
Balance Sheet Management while Executing Growth
Opportunities
As of December 31, 2019, the Partnership had $13 million in cash
on hand. During the quarter, Noble Midstream exercised the $350
million accordion feature on its unsecured revolving credit
facility, expanding the facility to $1.15 billion and increasing
liquidity at year end 2019 to $568 million.
The balance of the preferred equity commitment for the EPIC
Crude pipeline was $106 million at the end of the fourth quarter,
up from $103 million in the third quarter.
Quarterly Distribution Realigned with Current Market
Environment
Concurrent with the IDR simplification and acquisition during
the quarter, Noble Midstream has restated its distribution growth
rate from 20% to 10% per unit.
As a result, on January 23, 2020, the board of directors of
Noble Midstream’s general partner, Noble Midstream GP LLC, declared
a fourth quarter cash distribution of $0.6878 per unit, a 17%
increase from the fourth quarter 2018 and a 2.4% sequential
increase.
Reduced Full-Year 2020 Capital Outlook on Continued Capital
Efficiency Gains
Noble Midstream expects 2020 organic capital expenditures of
$190 to $230 million. The Partnership has lowered previously-issued
full-year 2020 organic net capital expectations by 25%, due to 2019
progress on sustainable costs savings and better line of sight to
customer activity.
In addition, Noble Midstream expects combined equity investments
of $220 to $260 million, including the Saddlehorn commitment. This
is an increase to 2020 guidance as a result of scope changes,
phasing of investments from 2019 to 2020, and cost assumptions to
complete the projects.
First-quarter 2020 organic net capital expectations are $60 to
$70 million and equity investment capital expectations are $180 to
$220 million. The Partnership's 2020 gross total capital
expectations are expected to decrease more than 50% annually as
continued efficiencies are realized within core operating areas and
equity investments start up in the first half of the year.
2020 gathering throughput growth will be driven by Mustang and
Wells Ranch in the DJ Basin, as well as additional completion
activity in the Delaware Basin. The Partnership expects to connect
more than 500 wells in 2020. Noble Midstream anticipates 348 to 377
MBoe/d 2020 gross oil and gas gathering and sales volumes, up 13%
annually. In 2020, the Partnership expects 160 to 170 well
connections in the wholly-owned DJ Basin assets. We anticipate 110
to 120 Noble Energy connections, driven mostly by Mustang with 80
to 90 wells online and Wells Ranch with 20 to 30 wells. Activity is
expected to pick up in Mustang in first-quarter 2020 with 10 to 14
connections. Completion activity is expected to increase in 2020 on
Black Diamond with 250 to 300 well connections.
In the Delaware Basin, the Partnership anticipates similar
activity levels to 2019 with 60 to 75 well connections, including
10 to 15 third-party wells. Overall, the 2020 connection schedule
in the Delaware and DJ Basin will be more weighted to the second
and third-quarter 2020 and drive a second-half volume ramp.
Produced water gathering throughput is anticipated to be 185 to
205 MBw/d, a slight increase to 2019 volumes. These volumes have
been adjusted due to accounting changes on the commercial terms of
certain produced water assets in the Permian Basin.
Full-year 2020 Adjusted EBITDA attributable to the Partnership
is anticipated to be $500 million to $540 million, compared to
prior guidance of $500 million to $560 million. This update
reflects better visibility into operator activity and forecasts in
the DJ and Delaware Basin as well as deferred capital projects.
First-quarter 2020 Adjusted EBITDA attributable to the
Partnership is expected to increase to a range of $94 to $101
million. Full-year 2020 Distribution Coverage Ratio remains
unchanged at 1.2x to 1.4x. First-quarter 2020 fresh water delivery
volumes are anticipated to be 210 to 230 MBw/d. The Partnership
expects fresh water delivered volumes to increase in first-half
2020 as completion activity resumes.
Noble Midstream expects to delever through 2020 as equity
investment projects generate income and anticipates Net Debt to
Trailing 12 Month (TTM) 2020 EBITDA of 3.3x to 3.7x.
Conference Call
Noble Midstream will host a webcast and conference call today at
10:30 a.m. Central Time to discuss fourth quarter and full year
2019 financial and operational results as well as 2020 guidance.
The live audio webcast and related presentation material is
accessible on the ‘Investors’ page of the Partnership’s website at
www.nblmidstream.com. Conference call numbers for participation are
877-883-0383, or 412-902-6506 for international calls. The passcode
number is 6304607. A replay of the conference call will be
available at the same web location following the event.
About Noble Midstream Partners
Noble Midstream is a growth-oriented Delaware master limited
partnership formed by Noble Energy, 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 good 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 December
31,
Year Ended December 31,
2019
2018
2019
2018
DJ Basin
Crude Oil Sales Volumes (Bbl/d)
10,935
6,027
9,354
6,129
Crude Oil Gathering Volumes (Bbl/d)
190,216
184,246
182,121
143,095
Natural Gas Gathering Volumes
(MMBtu/d)
531,559
351,717
476,605
308,929
Natural Gas Processing Volumes
(MMBtu/d)
47,712
59,076
50,039
61,766
Produced Water Gathering Volumes
(Bbl/d)
37,122
39,611
39,629
29,903
Fresh Water Delivery Volumes (Bbl/d)
125,823
179,653
164,524
175,754
Delaware Basin
Crude Oil Gathering Volumes (Bbl/d)
59,671
47,266
49,842
34,032
Natural Gas Gathering Volumes
(MMBtu/d)
200,491
120,556
155,155
78,875
Produced Water Gathering Volumes
(Bbl/d)
181,581
121,852
148,886
91,312
Total Gathering Systems
Crude Oil Sales Volumes (Bbl/d)
10,935
6,027
9,354
6,129
Crude Oil Gathering Volumes (Bbl/d)
249,887
231,512
231,963
177,127
Natural Gas Gathering Volumes
(MMBtu/d)
732,050
472,273
631,760
387,804
Total Barrels of Oil Equivalent
(Boe/d)
354,675
298,087
322,312
232,974
Natural Gas Processing Volumes
(MMBtu/d)
47,712
59,076
50,039
61,766
Produced Water Gathering Volumes
(Bbl/d)
218,703
161,463
188,515
121,215
Total Fresh Water Delivery
Fresh Water Services Volumes (Bbl/d)
125,823
179,653
164,524
175,754
Schedule 2
Noble Midstream Partners
LP
Consolidated Statements of
Operations
(in thousands, except per unit
amounts, unaudited)
Three Months Ended December
31,
Year Ended December 31,
2019
2018
2019
2018
Midstream Services Revenues
Gathering and Processing — Affiliate
$
92,985
$
76,660
$
337,086
$
265,505
Gathering and Processing — Third Party
22,381
20,779
76,645
54,017
Fresh Water Delivery — Affiliate
10,765
12,492
77,566
69,266
Fresh Water Delivery — Third Party
4,196
6,413
12,591
19,345
Crude Oil Sales — Third Party
57,938
31,709
189,772
141,490
Other — Affiliate
790
996
3,183
3,976
Other — Third Party
1,710
2,101
6,958
5,136
Total Midstream Services Revenues
190,765
151,150
703,801
558,735
Costs and Expenses
Cost of Crude Oil Sales
56,173
30,538
181,390
136,368
Direct Operating
27,763
27,209
116,675
95,852
Depreciation and Amortization
25,396
22,815
96,981
79,568
General and Administrative
11,789
5,014
25,777
25,910
Other Operating Expense
—
1,806
(488
)
2,159
Total Operating Expenses
121,121
87,382
420,335
339,857
Operating Income
69,644
63,768
283,466
218,878
Other (Income) Expense
Interest Expense, Net of Amount
Capitalized
4,734
4,261
16,236
10,447
Investment Loss (Income)
12,720
(5,464
)
17,748
(16,289
)
Total Other (Income) Expense
17,454
(1,203
)
33,984
(5,842
)
Income Before Income Taxes
52,190
64,971
249,482
224,720
Income Tax Provision
796
1,946
4,015
8,001
Net Income
51,394
63,025
245,467
216,719
Less: Net Income Prior to the Drop-Down
and Simplification
1,692
6,430
12,929
27,843
Net Income Subsequent to the Drop-Down
and Simplification
49,702
56,595
232,538
188,876
Less: Net Income Attributable to
Noncontrolling Interests
10,306
14,423
72,542
26,142
Net Income Attributable to Noble
Midstream Partners LP
39,396
42,172
159,996
162,734
Less: Net Income Attributable to Incentive
Distribution Rights
—
2,421
13,967
5,836
Net Income Attributable to Limited
Partners
$
39,396
$
39,751
$
146,029
$
156,898
Net Income Attributable to Limited
Partners Per Limited Partner Unit — Basic
Common Units
$
0.65
$
1.00
$
3.09
$
3.96
Subordinated Units
$
—
$
1.00
$
3.86
$
3.96
Net Income Attributable to Limited
Partners Per Limited Partner Unit — Diluted
Common Units
$
0.65
$
1.00
$
3.08
$
3.96
Subordinated Units
$
—
$
1.00
$
3.86
$
3.96
Weighted Average Limited Partner Units
Outstanding — Basic
Common Units
60,431
23,688
40,083
23,686
Subordinated Units
—
15,903
5,795
15,903
Weighted Average Limited Partner Units
Outstanding — Diluted
Common Units
60,454
23,703
40,105
23,701
Subordinated Units
—
15,903
5,795
15,903
Schedule 3
Noble Midstream Partners
LP
Consolidated Balance
Sheets
(in thousands,
unaudited)
December 31, 2019
December 31, 2018
ASSETS
Current Assets
Cash and Cash Equivalents
$
12,676
$
14,761
Accounts Receivable — Affiliate
42,428
41,812
Accounts Receivable — Third Party
44,093
23,459
Other Current Assets
8,730
5,875
Total Current Assets
107,927
85,907
Property, Plant and Equipment
Total Property, Plant and Equipment,
Gross
2,006,995
1,752,122
Less: Accumulated Depreciation and
Amortization
(244,038
)
(181,199
)
Total Property, Plant and Equipment,
Net
1,762,957
1,570,923
Investments
660,778
82,317
Intangible Assets, Net
277,900
310,202
Goodwill
109,734
109,734
Other Noncurrent Assets
6,786
33,095
Total Assets
$
2,926,082
$
2,192,178
LIABILITIES, MEZZANINE EQUITY
AND EQUITY
Current Liabilities
Accounts Payable — Affiliate
$
8,155
$
7,182
Accounts Payable — Trade
107,705
94,265
Other Current Liabilities
11,680
13,790
Total Current Liabilities
127,540
115,237
Long-Term Liabilities
Long-Term Debt
1,495,679
559,021
Asset Retirement Obligations
37,842
30,533
Other Long-Term Liabilities
4,160
832
Total Liabilities
1,665,221
705,623
Mezzanine Equity
Redeemable Noncontrolling Interest,
Net
106,005
—
Equity
Parent Net Investment
—
170,322
Partners’ Equity
Limited Partner
Common Units (90,136 and 23,759 units
outstanding, respectively)
813,999
699,866
Subordinated Units (15,903 units
outstanding as of December 31, 2018)
—
(130,207
)
General Partner
—
2,421
Total Partners’ Equity and Parent Net
Investment
813,999
742,402
Noncontrolling Interests
340,857
744,153
Total Equity
1,154,856
1,486,555
Total Liabilities, Mezzanine Equity and
Equity
$
2,926,082
$
2,192,178
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. The tables below also reflect
Adjusted EBITDA prior to Drop-Down and Simplification Transaction.
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. The tables below also reflect
Adjusted EBITDA prior to Drop-Down and Simplification Transaction.
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 (Non-GAAP)
and Distributable Cash Flow
(Non-GAAP)
(in thousands,
unaudited)
Three Months Ended December
31,
2019
2018
Reconciliation from Net Income
(GAAP)
Net Income (GAAP)
$
51,394
$
63,025
Add:
Depreciation and Amortization
25,396
22,815
Interest Expense, Net of Amount
Capitalized
4,734
4,261
Tax Provision
796
1,946
Transaction and Integration Expenses
6,163
52
Proportionate Share of Equity Method
Investment EBITDA Adjustments
6,330
(221
)
Unit-Based Compensation and Other
369
1,335
Adjusted EBITDA (Non-GAAP)
95,182
93,213
Less:
Adjusted EBITDA Prior to Drop-Down and
Simplification Transaction
4,593
11,892
Adjusted EBITDA subsequent to Drop-Down
and Simplification Transaction (Non-GAAP)
90,589
81,321
Less:
Adjusted EBITDA Attributable to
Noncontrolling Interests
17,202
22,393
Adjusted EBITDA Attributable to Noble
Midstream Partners LP (Non-GAAP)
73,387
58,928
Add:
Distribution from Equity Method
Investments
1,480
2,900
Less:
Proportionate Share of Equity Method
Investment Adjusted EBITDA
(7,247
)
4,090
Cash Interest Paid
9,772
5,065
Maintenance Capital Expenditures
7,011
5,721
Distributable Cash Flow of Noble
Midstream Partners LP (Non-GAAP)
$
65,331
$
46,952
Distributions (Declared)
$
62,004
$
25,613
Distribution Coverage Ratio
(Declared)
1.1x
1.8x
Schedule 4 (Continued)
Noble Midstream Partners
LP
Reconciliations of GAAP
Financial Measures to Non-GAAP Financial Measures
Reconciliation of Net Cash
Provided by Operating Activities (GAAP) to
Adjusted EBITDA (Non-GAAP) and
Distributable Cash Flow (Non-GAAP)
(in thousands,
unaudited)
Three Months Ended December
31,
2019
2018
Reconciliation from Net Cash Provided
by Operating Activities (GAAP)
Net Cash Provided by Operating
Activities (GAAP)
$
95,106
$
85,608
Add:
Interest Expense, Net of Amount
Capitalized
4,734
4,272
Changes in Operating Assets and
Liabilities
(5,261
)
7,526
Transaction and Integration Expenses
6,163
52
Equity Method Investment EBITDA
Adjustments
(8,729
)
(1,609
)
Other Adjustments
3,169
(2,636
)
Adjusted EBITDA (Non-GAAP)
95,182
$
93,213
Less:
Adjusted EBITDA Prior to Drop-Down and
Simplification Transaction
4,593
11,892
Adjusted EBITDA subsequent to Drop-Down
and Simplification Transaction (Non-GAAP)
90,589
81,321
Less:
Adjusted EBITDA Attributable to
Noncontrolling Interests
17,202
22,393
Adjusted EBITDA Attributable to Noble
Midstream Partners LP (Non-GAAP)
73,387
58,928
Add:
Distribution from Equity Method
Investments
1,480
2,900
Less:
Proportionate Share of Equity Method
Investment Adjusted EBITDA
(7,247
)
4,090
Cash Interest Paid
9,772
5,065
Maintenance Capital Expenditures
7,011
5,721
Distributable Cash Flow of Noble
Midstream Partners LP (Non-GAAP)
$
65,331
$
46,952
Distributions (Declared)
$
62,004
$
25,613
Distribution Coverage Ratio
(Declared)
1.1x
1.8x
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200212005204/en/
Park Carrere Investor Relations (281) 872-3208
park.carrere@nblenergy.com
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