PVR Partners Announces Fourth Quarter And Full Year 2013 Results

Feb 13, 2014, 08:00 ET from PVR Partners, L.P.

RADNOR, Pa., Feb. 13, 2014 /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, 2013.

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

Full Year 2013 Results

Full year 2013 highlights and results, with comparisons to full year 2012 results, included the following:

  • Adjusted EBITDA of $314.5 million as compared to $239.0 million.
  • Distributable cash flow ("DCF") of $199.5 million as compared to $146.0 million.
  • Average daily natural gas throughput volumes of 1.8 billion cubic feet per day ("Bcfd") as compared to 1.0 Bcfd.
  • Coal royalty tons of 25.1 million as compared to 30.2 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 2013 highlights and results, with comparisons to fourth quarter 2012 results ("last year") and the third quarter of 2013 ("last quarter"), included the following:

  • Adjusted EBITDA of $82.4 million as compared to $67.8 million last year and $79.9 million last quarter.
  • DCF of $51.1 million as compared to $40.7 million last year and $49.5 million last quarter.
  • Average daily natural gas throughput volumes of 2.0 Bcfd as compared to 1.4 Bcfd last year and 1.8 Bcfd last quarter.
  • Coal royalty tons of 6.1 million as compared to 6.6 million last year and 5.7 million last quarter.

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 13, 2014 to common unitholders of record at the close of business on February 7, 2014.

Management Comment

"PVR's fourth quarter financial and operating results were in line with our expectations," said Bill Shea, President and CEO of PVR's general partner.  "Adjusted EBITDA for the quarter increased by 21.5% from the fourth quarter of 2012, with the gain driven by new business and additional well connections in our Eastern Midstream segment."

Eastern Midstream Segment

The Eastern Midstream Segment reported fourth quarter 2013 results, with comparisons to fourth quarter 2012 results and the third quarter of 2013, as follows:

  • Adjusted EBITDA of $49.9 million as compared to $33.1 million last year and $43.5 million last quarter.
  • Quarterly average throughput volumes of 1.6 Bcfd, as compared to 1.0 Bcfd last year and 1.4 Bcfd last quarter.  The volume increase reflected the continuing growth of business on PVR's gathering and trunkline systems and completion of internal growth projects.

Midcontinent Midstream Segment

The Midcontinent Midstream Segment reported fourth quarter 2013 results, with comparisons to fourth quarter 2012 results and the third quarter of 2013, as follows:

  • Adjusted EBITDA of $14.7 million as compared to $14.2 million last year and $17.1 million last quarter.
  • Quarterly average throughput volumes of 361 million cubic feet per day ("MMcfd"), as compared to 421 MMcfd last year and 381 MMcfd last quarter.  Throughput volumes in the fourth quarter of 2013 were negatively impacted primarily by weather conditions.

Coal and Natural Resource Management Segment

The Coal and Natural Resource Management Segment reported fourth quarter 2013 results, with comparisons to fourth quarter 2012 results and third quarter 2013 results, as follows:

  • Adjusted EBITDA of $17.8 million as compared to $20.5 million last year and $19.3 million last quarter.  The variances were due to both volume and realized prices received.
  • Coal royalty tons of 6.1 million tons, as compared to 6.6 million tons last year and 5.7 million tons last quarter.
  • Coal royalties revenue of $21.1 million, or $3.45 per ton, as compared to $23.0 million, or $3.47 per ton last year and $20.8 million or $3.66 per ton last quarter.

Capital Investment and Resources

We invested $60.5 million on internal growth projects in our midstream businesses during the fourth quarter of 2013, of which $51.2 million was invested in the Eastern Midstream Segment.  Full year 2013 internal growth project investment totaled $338.4 million, including $286.2 million in the Eastern Midstream Segment.

In September and October of 2013, we issued a total of 6.1 million common units, including the over allotment exercise by the underwriter, representing limited partner interests in PVR in a registered public offering. Total net proceeds were approximately $138.0 million, after deducting estimated fees and expenses and underwriting discounts and commissions.  In December 2013, we redeemed $127.4 million of our 8.375% Senior Notes.  As a result of this redemption, we incurred a charge of $13.7 million related to the call premium and the write-off of unamortized debt issuance costs.

As of December 31, 2013, we had borrowings of $562.5 million under our $1.0 billion revolving credit facility.

Fourth Quarter / Full Year 2013 Financial and Operational Results Conference Call

A conference call and webcast, during which management will discuss full year and fourth quarter 2013 financial and operational results, is scheduled for Thursday, February 13, 2014 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=98002 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 20 by dialing 877-344-7529 (international: 412-317-0088) and using conference playback number 10040867.

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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 to complete the proposed merger with Regency Energy Partners L.P., 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, 2012 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,

2013

2012

2013

2012

Revenues

     Natural gas 

$      91,396

$      99,462

$    374,226

$    315,242

     Natural gas liquids

115,058

108,377

413,621

424,538

     Gathering fees

31,640

19,736

105,115

53,831

     Trunkline  fees

28,704

18,609

98,847

47,002

     Coal royalties

21,085

22,983

88,075

114,133

     Gain on sale of assets

-

-

-

31,292

     Other 

3,763

411

37,602

21,716

Total revenues

291,646

269,578

1,117,486

1,007,754

Expenses

     Cost of gas purchased

177,133

176,802

666,239

630,345

     Operating

17,951

20,786

67,977

68,316

     General and administrative

14,149

12,878

54,508

47,452

     Merger and acquisition costs

8,138

-

8,138

14,049

     Impairments

-

-

-

124,845

     Depreciation, depletion and amortization

49,909

43,043

187,941

127,344

Total expenses

267,280

253,509

984,803

1,012,351

Operating income (loss)

24,366

16,069

132,683

(4,597)

Other income (expense)

     Interest expense

(27,886)

(23,157)

(106,248)

(68,773)

     Loss on extinguishment of debt

(13,703)

-

(13,703)

-

     Derivatives

(510)

90

(1,070)

2,291

     Interest income and other

94

128

1,332

457

Net income (loss) 

$    (17,639)

$      (6,870)

$      12,994

$    (70,622)

Earnings (loss) per common unit, basic 

$        (0.35)

$        (0.30)

$        (0.83)

$        (1.43)

Earnings (loss) per common unit, diluted

$        (0.37)

$        (0.30)

$        (0.83)

$        (1.43)

Weighted average number of common units outstanding, basic

108,268

93,333

99,304

86,222

Weighted average number of common units outstanding, diluted 

112,429

93,333

99,304

86,222

Weighted average number of Class B units outstanding

24,094

22,149

23,372

13,630

Weighted average number of Special units outstanding

4,161

10,346

8,787

6,473

Other data by segment:

Eastern Midstream:

Gathered volumes (MMcfd)

776

562

649

389

Trunkline volumes (MMcfd) (1)

820

405

742

197

Midcontinent Midstream:

Daily throughput volumes (MMcfd) 

361

421

379

432

Coal and Natural Resource Management:

Coal royalty tons (in thousands)

6,119

6,630

25,142

30,214

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

 

PVR PARTNERS, L.P.

CONDENSED CONSOLIDATED BALANCE SHEETS - unaudited

(in thousands)

December 31,

December 31,

2013

2012

Assets

     Cash and cash equivalents

$           7,298

$         14,713

     Accounts receivable

147,978

133,546

     Assets held for sale

-

11,450

     Other current assets

6,821

5,446

         Total current assets

162,097

165,155

     Property, plant and equipment, net

2,189,278

1,989,346

     Other long-term assets

774,295

844,208

          Total assets

$    3,125,670

$    2,998,709

Liabilities and Partners' Capital

     Accounts payable and accrued liabilities

$       142,225

$       197,034

     Deferred income

6,214

3,788

         Total current liabilities

148,439

200,822

     Other long-term liabilities

30,595

35,468

     Senior notes 

1,172,600

900,000

     Revolving credit facility

562,500

590,000

     Partners' capital

1,211,536

1,272,419

          Total liabilities and partners' capital

$    3,125,670

$    2,998,709

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - unaudited

(in thousands)

Three Months Ended

Year Ended

December 31,

December 31,

2013

2012

2013

2012

Cash flows from operating activities

     Net income (loss)

$        (17,639)

$          (6,870)

$         12,994

$        (70,622)

     Adjustments to reconcile net income (loss) to

          net cash provided by operating activities:

     Loss on extinguishment of debt

13,703

-

13,703

-

     Gain on sale of assets

-

-

(14,302)

(31,292)

     Depreciation, depletion and amortization

49,909

43,043

187,941

127,344

     Impairments

-

-

-

124,845

     Commodity derivative contracts:

     Total derivative losses (gains) included in net income

510

(90)

1,070

(2,291)

     Cash receipts (payments) to settle derivatives for the period

(453)

(1,701)

(766)

(10,279)

     Non-cash interest expense

1,907

1,607

7,306

5,824

     Non-cash unit-based compensation

803

(215)

4,159

4,428

     Equity earnings, net of distributions received

2,007

11,166

7,642

11,308

     Other

(101)

(103)

(3,460)

(1,032)

     Changes in operating assets and liabilities

(26,313)

(36,368)

(12,841)

(12,972)

Net cash provided by operating activities

24,333

10,469

203,446

145,261

Cash flows from investing activities

Acquisitions

-

-

(2,334)

(850,156)

Additions to property, plant and equipment

(69,348)

(163,926)

(413,451)

(512,375)

Joint venture capital contributions

(5,100)

(15,300)

(15,800)

(37,200)

Proceeds from sale of assets

-

-

70,592

62,271

Other

412

378

2,530

1,286

Net cash used in investing activities

(74,036)

(178,848)

(358,463)

(1,336,174)

Cash flows from financing activities

Distributions to partners

(56,140)

(47,740)

(214,442)

(176,256)

Net proceeds from equity offering

13,401

165,705

138,044

743,448

Proceeds from issuance of senior notes

-

-

400,000

600,000

Payment to extinguish debt

(138,070)

-

(138,070)

-

Repayments (proceeds) from borrowings, net

230,000

55,000

(27,500)

49,000

Cash paid for debt issuance costs

(77)

-

(9,772)

(19,206)

Other

(14)

-

(658)

-

Net cash provided by financing activities

49,100

172,965

147,602

1,196,986

Net increase (decrease) in cash and cash equivalents

(603)

4,586

(7,415)

6,073

Cash and cash equivalents - beginning of period

7,901

10,127

14,713

8,640

Cash and cash equivalents - end of period

$           7,298

$         14,713

$           7,298

$         14,713

 

PVR PARTNERS, L.P.

CERTAIN NON-GAAP FINANCIAL MEASURES - unaudited

(in thousands)

Three Months Ended

Year Ended

December 31,

December 31,

2013

2012

2013

2012

Reconciliation of Non-GAAP "Total Segment Adjusted EBITDA" to GAAP "Net income (loss)":

Segment Adjusted EBITDA (a):

Eastern Midstream

$      49,931

$      33,104

$    169,227

$      82,164

Midcontinent Midstream

14,650

14,167

62,383

52,168

Coal and Natural Resource Management

17,832

20,541

82,850

104,717

Total segment adjusted EBITDA

$      82,413

$      67,812

$    314,460

$    239,049

Adjustments to reconcile total Segment Adjusted EBITDA to Net income (loss)

Depreciation, depletion and amortization

(49,909)

(43,043)

(187,941)

(127,344)

Impairments on PP&E and equity investments

-

(8,700)

-

(133,545)

Merger and acquisition costs

(8,138)

-

(8,138)

(14,049)

Gain on sale of assets

-

-

14,302

31,292

Interest expense

(27,886)

(23,157)

(106,248)

(68,773)

Loss on extinguishment of debt

(13,703)

-

(13,703)

-

Derivatives

(510)

90

(1,070)

2,291

Other

94

128

1,332

457

Net income (loss)

$    (17,639)

$      (6,870)

$      12,994

$    (70,622)

Reconciliation of GAAP "Net income (loss)" to Non-GAAP "Distributable cash flow":

Net income (loss)

$    (17,639)

$      (6,870)

$      12,994

$    (70,622)

Depreciation, depletion and amortization

49,909

43,043

187,941

127,344

Impairments on PP&E and equity investments

-

8,700

-

133,545

Merger and acquisition costs

8,138

-

8,138

14,049

Gain on sale of assets

-

-

(14,302)

(31,292)

Loss on extinguishment of debt

13,703

-

13,703

-

Derivative contracts:

  Derivative (gains) losses included in net income

510

(90)

1,070

(2,291)

  Cash payments to settle derivatives for the period

(453)

(1,701)

(766)

(10,279)

Equity earnings from joint ventures, net of distributions 

2,007

2,466

7,642

2,608

Maintenance capital expenditures

(5,047)

(4,821)

(16,905)

(17,018)

Distributable cash flow (b)

$      51,128

$      40,727

$    199,515

$    146,044

Distribution to Partners:

Total cash distribution paid during the period

$      56,140

$      47,740

$    214,442

$    176,256

Reconciliation of GAAP "Net income (loss)" to Non-GAAP "Net income as adjusted":

Net income (loss)

$    (17,639)

$      (6,870)

$      12,994

$    (70,622)

Impairments on PP&E and equity investments 

-

8,700

-

133,545

Acquisition related costs

8,138

-

8,138

14,049

Gain on sale of assets

-

-

(14,302)

(31,292)

Loss from extinguishment of debt

13,703

-

13,703

-

Adjustments for derivatives:

Derivative (gains) losses included in net income

510

(90)

1,070

(2,291)

Cash payments to settle derivatives for the period

(453)

(1,701)

(766)

(10,279)

Net income, as adjusted (c)

$        4,259

$             39

$      20,837

$      33,110

(a) 

Segment Adjusted EBITDA, or earnings before interest, tax and depreciation, depletion and amortization ("DD&A"), represents net income plus DD&A, plus impairments, plus merger and acquisition costs, minus gain on sale of assets, plus interest expense, plus loss on extinguishment of debt, (plus) minus derivative (losses) gains and minus other items included in net income.  We believe EBITDA or a version of Adjusted EBITDA is commonly used by investors and professional research analysts in the valuation, comparison, rating and investment recommendations of companies in the natural gas midstream and coal industries. We use this information for comparative purposes within the industry.  Adjusted EBITDA is not a measure of financial performance under GAAP and should not be considered as a measure of liquidity or as an alternative to net income.

(b) 

Distributable cash flow represents net income (loss) plus DD&A, plus impairments, plus merger and acquisition costs, minus gain on sale of assets, plus loss on extinguishment of debt, plus (minus) derivative losses (gains) included in net income, plus (minus) cash received (paid) for derivative settlements, minus equity earnings in joint ventures, plus cash distributions from joint ventures, minus maintenance capital expenditures.  At management's discretion, a fixed amount of $1.8 million per quarter in 2013 and $1.3 million per quarter in 2012 has been included in maintenance capital for well connects. Distributable cash flow is also the quantitative standard used by investors and professional research analysts in the valuation, comparison, rating and investment recommendations of publicly traded partnerships. Distributable cash flow is presented because we believe it is a useful adjunct to net cash provided by operating activities under GAAP. Distributable cash flow is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities, as an indicator of cash flows, as a measure of liquidity or as an alternative to net income. For comparative purposes, prior year amounts exclude replacement capital expenditures.

(c) 

Net income, as adjusted, represents net income adjusted to exclude the effects of non-cash  impairment charges, one-time charges related to merger and acquisition costs,  minus gain on sale of assets, plus loss from extinguishment of debt, and changes in the fair value of derivatives. We believe this presentation is commonly used by investors and professional research analysts in the valuation, comparison, rating and investment recommendations of companies in the natural gas midstream industry. We use this information for comparative purposes within the industry. Net income, as adjusted, is not a measure of financial performance under GAAP and should not be considered as a measure of liquidity or as an alternative to net income.

PVR PARTNERS, L.P.

QUARTERLY SEGMENT INFORMATION - unaudited

(in thousands)

Eastern Midstream

Three Months Ended

Year Ended

December 31,

December 31,

2013

2012

2013

2012

Revenues

     Gathering fees

$          30,999

$          18,659

$       102,161

$         46,975

     Trunkline fees

28,704

18,608

98,847

47,002

     Other

(540)

2,686

(791)

5,373

        Total revenues

59,163

39,953

200,217

99,350

Expenses

     Operating 

3,128

3,121

11,173

7,332

     General and administrative

6,104

3,728

19,817

9,854

     Merger and acquisition costs

2,713

-

2,713

14,049

     Depreciation, depletion and amortization

26,512

20,391

97,973

42,713

       Total expenses

38,457

27,240

131,676

73,948

Operating income 

$          20,706

$          12,713

$         68,541

$         25,402

Midcontinent Midstream

Three Months Ended

Year Ended

December 31,

December 31,

2013

2012

2013

2012

Revenues

     Natural gas

$          91,396

$          99,462

$       374,226

$       315,242

     Natural gas liquids

115,058

108,377

413,621

424,538

     Gathering fees

641

1,078

2,954

6,856

     Gain on sale of plant

-

-

-

31,292

     Other (1)

181

(8,247)

16,364

(6,205)

        Total revenues

207,276

200,670

807,165

771,723

Expenses

     Cost of gas purchased

177,133

176,802

666,239

630,345

     Operating 

10,922

12,567

43,441

44,209

     General and administrative

4,571

5,834

20,800

22,409

     Merger and acquisition costs

2,713

-

2,713

-

     Impairments

-

-

-

124,845

     Depreciation, depletion and amortization

16,130

14,609

61,809

51,829

       Total expenses

211,469

209,812

795,002

873,637

Operating income (loss) 

$          (4,193)

$          (9,142)

$         12,163

$      (101,914)

Coal and Natural Resource Management

Three Months Ended

Year Ended

December 31,

December 31,

2013

2012

2013

2012

Revenues

     Coal royalties

$          21,085

$          22,983

$         88,075

$       114,133

     Coal services

146

1,038

2,698

5,621

     Timber

1,176

1,620

5,644

5,904

     Oil and gas royalties

1,165

691

3,410

2,856

     Other

1,635

2,623

10,277

8,167

        Total revenues

25,207

28,955

110,104

136,681

Expenses

     Operating 

3,901

5,098

13,363

16,775

     General and administrative

3,474

3,316

13,891

15,189

     Merger and acquisition costs

2,712

-

2,712

-

     Depreciation, depletion and amortization

7,267

8,043

28,159

32,802

       Total expenses

17,354

16,457

58,125

64,766

Operating income

$            7,853

$          12,498

$         51,979

$         71,915

(1) Includes a $14.3 million third quarter 2013 gain on sale of assets and a $8.7 million impairment charge related to an equity investment in the fourth quarter of 2012.

 

PVR PARTNERS, L.P.

OPERATING STATISTICS

($ Amounts in 000s)

Three Months Ended

 Year Ended

December 31,

 December 31,

2013

2012

2013

2012

EASTERN MIDSTREAM

Volumes (MMcfd)

Lycoming Trunkline

303

200

318

146

Wyoming Trunkline

517

205

424

51

Total Trunkline Volume

820

405

742

197

Lycoming Gathering

286

246

249

170

Wyoming Gathering

308

205

225

154

East Lycoming Gathering

122

92

117

53

Bradford Gathering

52

15

50

9

Preston Gathering

1

-

-

-

Greene Gathering

7

4

8

3

Total Gathering

776

562

649

389

Total Throughput

1,596

967

1,391

586

Total Trunkline Fees

$         28,704

$         18,608

$         98,847

$         47,002

Total Gathering Fees

$         30,999

$         18,659

$       102,161

$         46,975

Trunkline Fees / Mcf

$            0.38

$            0.50

$            0.36

$            0.65

Gathering Fees / Mcf

$            0.43

$            0.36

$            0.43

$            0.33

 

MIDCONTINENT MIDSTREAM

Volumes (MMcfd)

Panhandle System

310

369

327

354

Crossroads System (1)

-

-

-

27

Crescent System

29

28

29

25

Hamlin System

6

6

6

7

Total Processing Systems

345

403

362

413

Arkoma System

8

9

9

9

North Texas System

8

9

8

10

Total Gathering Only Systems

16

18

17

19

Total All Systems

361

421

379

432

Total Gathering and Processing Fees, Net(2)

$         29,962

$         32,115

$       124,562

$       116,291

Fees Per Mcf

$            0.90

$            0.83

$            0.90

$            0.74

(1) Crossroads System was sold July 3, 2012

(2) Processing fees include revenues from natural gas,  natural gas liquids and gathering fees less cost of gas purchased

COAL PRODUCTION

Coal royalty tons by region (000s)

Central Appalachia

2,251

2,830

10,261

13,920

Northern Appalachia

938

1,093

3,320

4,004

Illinois Basin

629

782

2,382

3,682

San Juan Basin

2,301

1,925

9,179

8,608

Total Tons

6,119

6,630

25,142

30,214

Total Coal Royalties

$         21,085

$         22,983

$         88,075

$       114,133

Average Coal Royalty per ton

$            3.45

$            3.47

$            3.50

$            3.78

 

SOURCE PVR Partners, L.P.



RELATED LINKS

http://www.pvrpartners.com