PVR Partners Announces Fourth Quarter and Full Year 2012 Results

RADNOR, Pa., Feb. 20, 2013 /PRNewswire/ -- PVR Partners, L.P. (NYSE: PVR) ("PVR") today reported financial and operational results for the three months and the full year ended December 31, 2012.

(Logo: http://photos.prnewswire.com/prnh/20110224/PH54022LOGO )

Full Year 2012 Results

Full year 2012 highlights and results, with comparisons to full year 2011 results, included the following:

  • Adjusted EBITDA of $239.0 million as compared to $242.9 million.

  • Distributable cash flow ("DCF") of $119.1 million as compared to $143.8 million.

  • Average daily natural gas throughput volumes of 1,018 million cubic feet per day ("MMcfd") as compared with 535 MMcfd.

  • Coal royalty tons of 30.2 million as compared with 38.4 million.

Adjusted EBITDA and distributable cash flow are not Generally Accepted Accounting Principles ("GAAP") measures.  Definitions and reconciliations of these non-GAAP measures to GAAP reporting measures appear in the financial tables which follow.

Fourth Quarter Results

Fourth quarter 2012 highlights and results, with comparisons to fourth quarter 2011 results, included the following:

  • Adjusted EBITDA of $67.8 million as compared to $58.9 million.

  • DCF of $34.0 million as compared to $36.7 million.

  • Average daily natural gas throughput volumes of 1,388 MMcfd as compared with 683 MMcfd.

  • Coal royalty tons of 6.6 million as compared with 8.9 million.

Quarterly Distribution

As previously announced, the Board of Directors of PVR GP, LLC, the general partner of PVR, declared a quarterly distribution of $0.55 per unit payable in cash on February 14, 2013 to common unitholders of record at the close of business on February 8, 2013.  This distribution equates to an annualized rate of $2.20 per unit, and represents a 1.9% increase over the prior quarter and a 7.8% increase over the distribution paid with respect to the fourth quarter of 2011.

Management Comment

"Our Eastern Midstream Segment continued to demonstrate solid growth during the fourth quarter," said Bill Shea, President and CEO of PVR's general partner.  "The volume gains and operating results of our Eastern Midstream Segment benefited from the start of service of the Wyoming County trunkline at the beginning of the quarter, and the continuing build-out of our other projects in the Marcellus.

"Our overall operating results continue to be affected by weak coal demand in our Coal and Natural Resource Management Segment, and low commodity prices in the Midcontinent Midstream Segment," continued Mr. Shea.  "We believe these factors will continue to impact our business during 2013, and have adjusted our financial guidance accordingly for the year."

Eastern Midstream Segment

The Eastern Midstream Segment reported fourth quarter 2012 results, with comparisons to fourth quarter 2011 results, as follows:

  • Adjusted EBITDA of $33.1 million as compared to $8.9 million, primarily due to the continued development of internal growth projects and the acquisition of Chief Gathering LLC.

  • Quarterly average throughput volumes of 967 million cubic feet per day ("MMcfd"), as compared to 243 MMcfd.  The volume growth reflects the expansion of business on PVR's existing systems, as well as the acquisition and expansion of the Chief Gathering systems.

Midcontinent Midstream Segment

The Midcontinent Midstream Segment reported fourth quarter 2012 results, with comparisons to fourth quarter 2011 results, as follows:

  • Adjusted EBITDA of $14.2 million as compared to $15.3 million, primarily due to low commodity prices, the migration to lower-margin fee-based contracts, and the sale of our Crossroads system, partially offset by increased volumes.  EBITDA adjustments include the netting of an $8.7 million equity investment impairment recognized in segment revenues.

  • Quarterly average throughput volumes of 421 MMcfd, as compared to 440 MMcfd.  Fourth quarter 2011 volumes include approximately 47 MMcfd attributable to the Crossroads system that was sold on July 3, 2012.

Coal and Natural Resource Management Segment

The Coal and Natural Resource Management Segment reported fourth quarter 2012 results, with comparisons to fourth quarter 2011 results, as follows:

  • Adjusted EBITDA of $20.5 million as compared to $34.6 million, primarily due to decreased coal production and pricing.

  • Coal royalty tons of 6.6 million tons, as compared to 8.9 million tons.

  • Coal royalties revenue of $23.0 million, or $3.47 per ton, as compared to $38.4 million, or $4.33 per ton.

Capital Investment and Resources

We invested $209.4 million on internal growth projects in our midstream businesses during the fourth quarter of 2012, of which $175.8 million was invested in the Eastern Midstream Segment.  Full year 2012 internal growth project investment totaled $528.8 million, including $410.6 million in the Eastern Midstream Segment.

As of December 31, 2012, we had borrowings of $590.0 million under our $1.0 billion revolving credit facility, with remaining borrowing capacity of $402.1 million after adjusting for outstanding letters of credit.

Expansion Projects Update

The Phase III extension and the Canton Lateral on our Lycoming County, Pennsylvania gas trunkline and water line began full commercial operation at the end of the fourth quarter.  These projects gather gas and deliver water for affiliates of Southwestern Energy Company and Royal Dutch Shell.  We are also currently flowing volumes on the initial phase of the new gathering system in Lycoming County to service the acreage dedications of Inflection Energy.  The build-out of that project continues to proceed on schedule.

Financial Guidance for 2013

Based on current expectations, management has updated its Adjusted EBITDA guidance for 2013.  2013 Adjusted EBITDA for the Eastern Midstream Segment is expected to be in the range of $190 - $230 million, the Midcontinent Midstream Segment is expected to be in the range of $70 to $80 million and the Coal and Natural Resource Management Segment is expected to be in the range of $75 to $85 million.  Based on current expectations, management believes that 2013 maintenance capital expenditures will be in the range of $14 to $18 million and internal growth capital will be in the range of $350 to $400 million.  Management will discontinue providing financial guidance for distributable cash flow.

PVR's financial guidance is based on numerous assumptions about future events and conditions and, therefore, could vary materially from actual results.  These estimates, including capital expenditure plans, are meant to provide guidance only and are subject to revision for acquisitions or operating environment changes.  Adjusted EBITDA is a non-GAAP measure; reconciliations of non-GAAP measures to GAAP reporting measures appear in the financial tables which follow.

Fourth Quarter / Full Year 2012 Financial and Operational Results Conference Call

A conference call and webcast, during which management will discuss full year and fourth quarter 2012 financial and operational results, is scheduled for Wednesday, February 20, 2013 at 11:00 a.m. Eastern Time.  Prepared remarks by members of company management will be followed by a question and answer period.  Interested parties may listen via webcast at http://www.videonewswire.com/event.asp?id=92137 or by logging on using the link posted on our website, www.pvrpartners.com.  Participants who would like to ask questions may join the conference via phone by dialing 800-860-2442 (international 412-858-4600) five to ten minutes before the scheduled start of the conference call (reference the PVR Partners' call).  An on-demand replay of the webcast will be available on our website shortly after the conclusion of the call.  A telephonic replay of the call will be available through February 27 by dialing 877-344-7529 (international: 412-317-0088) and using conference playback number 10024845.

******

PVR Partners, L.P. (NYSE: PVR) is a publicly traded limited partnership which owns and operates a network of natural gas midstream pipelines and processing plants, and owns and manages coal and natural resource properties.  Our midstream assets, located principally in Texas, Oklahoma and Pennsylvania, provide gathering, transportation, compression, processing, dehydration and related services to natural gas producers.  Our coal and natural resource properties, located in the Appalachian, Illinois and San Juan basins, are leased to experienced operators in exchange for royalty payments.  More information about PVR is available on our website at www.pvrpartners.com.

******

This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b).  Brokers and nominees should treat one hundred percent (100.0%) of the Partnership's distributions to non-U.S. investors as being attributable to income that is effectively connected with a United States trade or business.  Accordingly, the Partnership's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.

******

This press release includes "forward-looking statements" within the meaning of federal securities laws. All statements, other than statements of historical facts, included in this release that address activities, events or developments that the Partnership expects, believes or anticipates will or may occur in the future are forward-looking statements.  These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of uncertainties, factors and risks, many of which are outside the Partnership's ability to control or predict, which could cause results to differ materially from those expected by management. Such risks and uncertainties include, but are not limited to, regulatory, economic and market conditions, our ability realize the anticipated benefits from the acquisition of Chief Gathering LLC, the timing and success of business development efforts and other uncertainties.  Additional information concerning these and other factors can be found in our press releases and public periodic filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2011 and most recently filed Quarterly Reports on Form 10-Q.  Readers should not place undue reliance on forward-looking statements, which reflect management's views only as of the date hereof.  We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.

Contact:

Stephen R. Milbourne


Director - Investor Relations


Phone: 610-975-8204


E-Mail: invest@pvrpartners.com

 

PVR PARTNERS, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - unaudited

(in thousands, except per unit data)






























Three Months Ended


Year Ended



December 31,


December 31,



2012


2011


2012


2011

Revenues







     Natural gas 


$      99,462


$    102,243


$    315,242


$    426,690

     Natural gas liquids


108,377


126,379


424,538


500,658

     Gathering fees


19,736


7,734


53,831


20,409

     Trunkline  fees


18,609


5,957


47,002


17,454

     Coal royalties


22,983


38,369


114,133


162,915

     Other  (1)


411


7,092


53,008


31,849

Total revenues


269,578


287,774


1,007,754


1,159,975










Expenses









     Cost of gas purchased


176,802


204,642


630,345


817,937

     Operating


20,786


14,499


68,316


57,611

     General and administrative


12,878


9,780


47,452


41,480

     Acquisition related costs


-


-


14,049


-

     Impairments


-


-


124,845


-

     Depreciation, depletion and amortization


43,043


24,019


127,344


89,376

Total expenses


253,509


252,940


1,012,351


1,006,404










Operating income (loss)


16,069


34,834


(4,597)


153,571










Other income (expense)









     Interest expense


(23,157)


(10,481)


(68,773)


(44,287)

     Derivatives


90


(7,153)


2,291


(13,442)

     Interest income and other


128


117


457


501

Net income (loss) 


(6,870)


17,317


(70,622)


96,343

Net loss (income) attributable to noncontrolling interests (pre-merger)


-


-


-


664

Net income (loss) attributable to PVR Partners', L.P.


$      (6,870)


$      17,317


$    (70,622)


$      97,007



















Earnings (loss) per common unit, basic and diluted


$        (0.30)


$          0.23


$        (1.43)


$          1.45










Weighted average number of common units outstanding, basic and diluted


93,333


76,207


86,222


66,342










Weighted average number of Class B units outstanding


22,149




13,630



Weighted average number of Special units outstanding


10,346




6,473





















Other data by segment:


















Eastern Midstream:









Gathered volumes (MMcfd)


562


154


389


74

Trunkline volumes (MMcfd) (2)


405


89


197


40

Midcontinent Midstream:









Daily throughput volumes (MMcfd) 


421


440


432


421

Coal and Natural Resource Management:









Coal royalty tons (in thousands)


6,630


8,856


30,214


38,357










(1) Includes a $31.3 second quarter gain on sale of plant and a $8.7 million impairment charge related to an equity investment in the fourth quarter of 2012.

(2) Trunkline volumes include a significant portion of gathered volumes.









 

PVR PARTNERS, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS - unaudited

(in thousands)












December 31,


December 31,







2012


2011














Assets









     Cash and cash equivalents


$         14,713


$           8,640





     Accounts receivable


133,546


101,340





     Assets held for sale


11,450


-





     Other current assets


5,446


5,640





         Total current assets


165,155


115,620





     Property, plant and equipment, net


1,989,346


1,282,297





     Other long-term assets


844,208


196,075





          Total assets


$    2,998,709


$    1,593,992














Liabilities and Partners' Capital









     Accounts payable and accrued liabilities


$       197,034


$       124,082





     Deferred income


3,788


3,416





     Derivative liabilities


-


12,042





         Total current liabilities


200,822


139,540





     Other long-term liabilities


35,468


31,748





     Senior notes 


900,000


300,000





     Revolving credit facility


590,000


541,000





     Partners' capital


1,272,419


581,704





          Total liabilities and partners' capital


$    2,998,709


$    1,593,992























CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - unaudited

(in thousands)












Three Months Ended


Year Ended



December 31,


December 31,



2012


2011


2012


2011

Cash flows from operating activities





     Net income (loss)


$          (6,870)


$         17,317


$        (70,622)


$         96,343

     Adjustments to reconcile net income (loss) to









          net cash provided by operating activities:









     Gain on sale of plant


-


-


(31,292)


-

     Depreciation, depletion and amortization


43,043


24,019


127,344


89,376

     Impairments


-


-


124,845


-

     Commodity derivative contracts:









     Total derivative (gains) losses included in net income


(90)


7,153


(2,291)


13,442

     Cash payments to settle derivatives for the period


(1,701)


(6,211)


(10,279)


(25,688)

     Non-cash interest expense


1,607


1,044


5,824


5,779

     Non-cash unit-based compensation


(215)


1,040


4,428


3,845

     Equity earnings, net of distributions received


11,166


3,825


11,308


8,460

     Other


(103)


(76)


(1,032)


(985)

     Changes in operating assets and liabilities


(36,368)


(89)


(12,972)


(242)

Net cash provided by operating activities


10,469


48,022


145,261


190,330










Cash flows from investing activities









Acquisitions, net of cash acquired


-


(23,868)


(850,156)


(146,003)

Additions to property, plant and equipment


(163,926)


(88,803)


(512,375)


(230,599)

Joint venture capital contributions


(15,300)


(500)


(37,200)


(500)

Proceeds from sale of plant


-


-


62,271


-

Other


378


317


1,286


2,875

Net cash used in investing activities


(178,848)


(112,854)


(1,336,174)


(374,227)










Cash flows from financing activities









Net proceeds from equity offerings


165,705


189,164


743,448


189,164

Proceeds from issuance of senior notes


-


-


600,000


-

Distributions to partners


(47,740)


(35,600)


(176,256)


(135,296)

Proceeds from (repayments of) borrowings, net


55,000


(94,000)


49,000


133,000

Cash paid for debt issuance costs


-


-


(19,206)


(3,675)

Cash paid for merger


-


-


-


(6,620)

Net cash provided by financing activities


172,965


59,564


1,196,986


176,573










Net increase (decrease) in cash and cash equivalents


4,586


(5,268)


6,073


(7,324)

Cash and cash equivalents - beginning of period


10,127


13,908


8,640


15,964

Cash and cash equivalents - end of period


$         14,713


$           8,640


$         14,713


$           8,640