CONE Midstream Reports First Quarter Results And Increases 2015 Guidance

CANONSBURG, Pa., May 11, 2015 /PRNewswire/ -- CONE Midstream Partners LP (NYSE: CNNX) ("CONE Midstream" or the "Partnership") today reported financial and operational results for the three months ending March 31, 2015.⁽¹⁾

First Quarter Results

Highlights of first quarter 2015 results attributable to the Partnership include:

• Net income of $14.2 million
• Average daily throughput volumes of 549 billion Btu per day (BBtu/d)
• EBITDA⁽²⁾ of $16.1 million
• Distributable cash flow (DCF)⁽²⁾ of $14.1 million.

Management Comment

"Financial and operational results for the first quarter were good and exceeded our expectations," said John T. Lewis, Chairman of the Board and Chief Executive Officer of CONE Midstream GP LLC (the "General Partner").  "I am pleased that, as a result, we are increasing and narrowing the range of our financial guidance for full year 2015 results. Our current expectation is that 2015 EBITDA attributable to CNNX will be in the range of $66 - $72 million and full year DCF will be in the range of $55 - $62 million.  With our good first quarter results, the continued progress on volume and cost initiatives, and increasing clarity on our Sponsors' 2015 plan, we are increasingly bullish on this year's performance.

"Although the commodity price environment has changed since our IPO, we remain committed to multi-year distribution growth in the 15%-20% range.  CNNX was designed for growth, and our development company structure provides the potential for acquisition and dropdown opportunities to supplement our organic growth.  We anticipate that if our business results materialize in line with our current expectations, management would be prepared to recommend beginning to increase our quarterly cash distribution in the second half of this year."

Quarterly Distribution

As previously announced, the Board of Directors of the General Partner declared a quarterly cash distribution of $0.2125 per unit with respect to the first quarter of 2015.  The distribution payment will made on May 15, 2015 to unitholders of record at the close of business on May 4, 2015.

Capital Investment and Resources

CONE Midstream's allocated first quarter 2015 share of investment in expansion projects was $21.6 million. Total expansion capital investment at the three development companies in which CONE Midstream holds controlling interests was $58.7 million, with individual development company totals as follows:

• Anchor Systems (Development Company 1): Expansion investments totaled $26.7 million and were primarily expended for continued gathering system extensions and compression capacity expansions at both McQuay and Majorsville fields.
• Growth Systems (Development Company 2): Expansion investments totaled $11.4 million and primarily were expended to complete the connection of two well pads in Barbour County (WV), and the connection of one well pad in Lewis County (WV).
• Additional Systems (Development Company 3): Expansion investments totaled $20.6 million for the continued construction of Shirley Station, purchase of materials associated with our Sherwood South gathering system that will support development of the Oxford area, and an extension to a new pad in Pennsboro field. Additional line clearing work was also completed in these areas as well as the Moundsville and Allegheny County Airport project areas.

CONE Midstream's respective share of maintenance capital expenditures for the three development companies for first quarter 2015 was $2.0 million.  Maintenance capital expenditures in the aggregate for the development companies in which CONE Midstream holds controlling interests totaled $3.2 million.

As of March 31, 2015, CONE Midstream had outstanding borrowings of $7.5 million under its $250 million revolving credit facility.

2015 Guidance

Based on current expectations, management is providing the following updated guidance for 2015.  Full year 2015 EBITDA attributable to the Partnership, previously projected to be in the range of $62 - $70 million, is now expected to be in the range of $66 - $72 million.  Full year Distributable Cash Flow attributable to the Partnership, previously projected to be in the range of $50 - $60 million, is now expected to be in the range of $55 - $62 million.  CONE Midstream's financial guidance is based on numerous assumptions about future events and conditions and, therefore, could vary materially from actual results. These estimates are meant to provide guidance only and are subject to revision for acquisitions or operating environment changes.

First Quarter Financial and Operational Results Conference Call

A conference call and webcast, during which management will discuss first quarter 2015 financial and operational results, is scheduled for May 11, 2015 at 4:00 p.m. Eastern Time.  Prepared remarks by members of management will be followed by a question and answer period.  Interested parties may listen via webcast at www.videonewswire.com/event.asp?id=102134  or by using the link posted on the "Events" page of our website, www.conemidstream.com. Participants who would like to ask questions may join the conference by phone at 888-349-0097 (international 412-902-0126) five to ten minutes prior to the scheduled start time (reference the CONE Midstream call).  An on-demand replay of the webcast will be also be available at www.videonewswire.com/event.asp?id=102134  shortly after the conclusion of the conference.  A telephonic replay will be available through May 18, 2015 by dialing 877-344-7529 (international: 412-317-0088) and using the conference playback number 10064247.

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CONE Midstream Partners is a master limited partnership formed by CONSOL Energy, Inc. (NYSE: CNX) and Noble Energy, Inc. (NYSE: NBL), referred to as our Sponsors, to own, operate, develop and acquire natural gas gathering and other midstream energy assets to service our Sponsors' production in the Marcellus Shale in Pennsylvania and West Virginia.  Our assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on our website www.conemidstream.com.

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This press release is intended to be a qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of CONE Midstream's distributions to non-U.S. investors as being attributed to income that is effectively connected with a United States trade or business.  Accordingly, CONE Midstream's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate.  Nominees, and not CONE Midstream, are treated as withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.

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This press release contains forward-looking statements within the meaning of the federal securities laws.  Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words "believe," "expect," "anticipate," "intend," "estimate" and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements.  Forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, and there can be no assurance that actual outcomes and results will not differ materially from those expected by our management.  These forward-looking statements involve certain risks and uncertainties, including, among others, that our business plans may change as circumstances warrant.  For more information concerning factors that could cause actual results to differ materially from those conveyed in the forward-looking statements, please refer to the "Risk Factors" section of the prospectus included in the registration statement on Form S-1, in the form last filed with the SEC as wells as our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.  We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.

CONE MIDSTREAM PARTNERS LP
RECONCILIATION OF NET INCOME TO EBITDA AND DISTRIBUTABLE CASH FLOW
(in thousands)

Definition of Non-GAAP Financial Measures

EBITDA

We define EBITDA as net income (loss) before income taxes, net interest expense, depreciation and amortization. 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.

We believe that the presentation of EBITDA provides information useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to EBITDA are net income and net cash provided by operating activities. EBITDA should not be considered an alternative to net income, net cash provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA excludes some, but not all, items that affect net income or net cash, and these measures may vary from those of other companies. As a result, EBITDA as presented below may not be comparable to similarly titled measures of other companies.

Distributable Cash Flow

We define distributable cash flow as EBITDA less net cash interest paid and maintenance capital expenditures. Distributable cash flow does not reflect changes in working capital balances.

Distributable cash flow 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:

• the ability of our assets to generate cash sufficient to support our indebtedness and make future cash distributions to our unitholders; and
• the attractiveness of capital projects and acquisitions and the overall rates of return on alternative investment opportunities.

We believe that the presentation of distributable cash flow in this report provides information useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to distributable cash flow are net income and net cash provided by operating activities. Distributable cash flow should not be considered an alternative to net income, net cash provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Distributable cash flow excludes some, but not all, items that affect net income or net cash, and these measures may vary from those of other companies. As a result, our distributable cash flow may not be comparable to similarly titled measures of other companies.

The following tables present a reconciliation of EBITDA to net income and net cash provided by operating activities, the most directly comparable GAAP financial measures, on a historical basis, for each of the periods indicated.

SOURCE CONE Midstream Partners LP