Copano Energy Reports Second Quarter 2010 Results
Total Distributable Cash Flow Increases 8% Over First Quarter
HOUSTON, Aug. 5 /PRNewswire-FirstCall/ -- Copano Energy, L.L.C. (Nasdaq: CPNO) today announced its financial results for the three and six months ended June 30, 2010.
"We are pleased with the sequential improvement in our second quarter distributable cash flow," said Bruce Northcutt, Copano Energy's President and Chief Executive Officer. "Despite declining NGL prices during the quarter, second quarter distribution coverage was higher than first quarter coverage primarily due to the successful start up of the fractionation facility at our Houston Central plant and continued volume growth behind our Saint Jo plant."
"As we move into the second half of the year, we believe producer activity behind our pipelines in the Eagle Ford Shale, Barnett Shale Combo Play and Woodford Shale will drive growth in our distributable cash flow and distribution coverage," Northcutt added.
Second Quarter Financial Results
Revenue for the second quarter of 2010 increased 28% to $230.1 million compared to $180.2 million for the second quarter of 2009. Total segment gross margin increased to $56.8 million for the second quarter of 2010 compared to $51.1 million for the first quarter of 2010 and to $52.3 million for the second quarter of 2009, increases of 11% and 9%, respectively.
Adjusted EBITDA for the second quarter of 2010 increased to $39.7 million compared to $35.7 million for the first quarter of 2010 and to $39.0 million for the second quarter of 2009. Non-cash amortization expense relating to the option component of Copano's risk management portfolio, which is not added back in determining adjusted EBITDA, totaled $8.1 million, $8.0 million and $9.3 million, respectively, for the second quarter of 2010, the first quarter of 2010 and the second quarter of 2009.
Total distributable cash flow for the second quarter of 2010 increased to $33.5 million from $30.9 million in the first quarter, an increase of 8%, and from $32.9 million for the second quarter of 2009, an increase of 2%. Second quarter 2010 total distributable cash flow represents 87% coverage of the second quarter distribution of $0.575 per unit, based on total common units outstanding on the distribution record date.
Net loss for the second quarter of 2010 totaled $21.1 million, or $0.32 per unit on a diluted basis, and includes a non-cash impairment charge of $25.0 million related to Copano's investment in its unconsolidated affiliate, Bighorn Gas Gathering, L.L.C. (Bighorn). Net income was $6.0 million, or $0.10 per unit on a diluted basis, for the second quarter of 2009. Drivers of the $27.1 million decrease primarily included:
- a $25.8 million decrease in equity in earnings of unconsolidated affiliates as a result of the non-cash impairment charge mentioned above. The non-cash impairment charge primarily resulted from a continued weak Rocky Mountains pricing environment for natural gas, lack of drilling activity in Wyoming's Powder River Basin and a downward shift in the Colorado Interstate Gas forward price curve;
- a $2.2 million decrease in earnings related to additional depreciation and amortization expenses primarily related to expanded operations in Texas;
- a $2.4 million increase in general and administrative expenses ($1.6 million), property and other taxes ($0.5 million) and operations and maintenance expenses ($0.3 million);
- a $1.3 million increase in interest and other financing costs primarily related to (i) an unrealized gain on interest rate swaps for 2010 of $0.9 million compared to a $2.1 million gain in 2009 and (ii) an increase of $0.1 million in interest expense related to Copano's senior credit facility;
offset by:
- a $4.6 million increase in total segment gross margin consisting of a $13.2 million increase in combined operating segment gross margins primarily reflecting average NGL price increases of 42% on the Conway index and 43% on the Mt. Belvieu index, offset in part by lower overall service throughput volumes and a decrease of $8.6 million from Copano's commodity risk management activities.
Weighted average diluted units outstanding totaled 65.5 million for the second quarter of 2010 as compared to 57.9 million for the same period in 2009.
Segment gross margin, total segment gross margin, EBITDA, adjusted EBITDA and total distributable cash flow are non-GAAP financial measures that are reconciled to the most directly comparable GAAP measures at the end of this news release.
Second Quarter Operating Results by Segment
Copano manages its business in three geographical operating segments: Oklahoma, which provides midstream natural gas services in central and east Oklahoma; Texas, which provides midstream natural gas services in Texas and also includes a processing plant in southwest Louisiana; and the Rocky Mountains, which provides services to producers in Wyoming's Powder River Basin and includes managing member interests in Bighorn of 51% and in Fort Union Gas Gathering, L.L.C. (Fort Union) of 37.04%.
Oklahoma
Segment gross margin for Oklahoma increased 25% for the second quarter of 2010 to $21.8 million, compared to $17.5 million for the second quarter of 2009. The increase resulted primarily from a 28% increase in realized margins on service throughput compared to the second quarter of 2009 ($0.92 per MMBtu in 2010 compared to $0.72 per MMBtu in 2009), reflecting higher NGL and natural gas prices. During the second quarter of 2010, weighted-average NGL prices on the Conway index, based on Copano's product mix for the period, were $36.34 per barrel compared to $25.57 per barrel during the second quarter of 2009, an increase of 42%. During the second quarter of 2010, natural gas prices on the CenterPoint East index averaged $3.86 per MMBtu compared to $2.70 per MMBtu during the second quarter of 2009, an increase of 43%.
The Oklahoma segment gathered an average of 259,972 MMBtu/d of natural gas, processed an average of 156,204 MMBtu/d of natural gas and produced an average of 16,653 Bbls/d of NGLs at its own plants and third-party plants during the second quarter of 2010. In comparison to the second quarter of 2009, this represents a 3% decrease in service throughput, a 6% decrease in plant inlet volumes and a 4% increase in NGLs produced. The decrease in service throughput is primarily attributable to reduced drilling in rich gas areas, normal production declines and weather related issues during 2010.
Texas
Segment gross margin for Texas increased 36% for the second quarter of 2010 to $31.8 million, compared to $23.3 million for the second quarter of 2009. The increase resulted primarily from a 51% increase in realized margins on service throughput compared to the second quarter of 2009 ($0.62 per MMBtu in 2010 compared to $0.41 per MMBtu in 2009), reflecting higher NGL prices and the impact of the start up of Copano's fractionation facilities. During the second quarter of 2010, weighted-average NGL prices on the Mt. Belvieu index, based on Copano's product mix for the period, were $43.14 per barrel compared to $30.12 per barrel during the second quarter of 2009, an increase of 43%. During the second quarter of 2010, natural gas prices on Houston Ship Channel index averaged $4.04 per MMBtu compared to $3.44 per MMBtu during the second quarter of 2009, an increase of 17%.
The increase in realized margins for the Texas segment was offset by decreased service throughput and processing volumes. During the second quarter of 2010, the Texas segment provided gathering, transportation and processing services for an average of 559,876 MMBtu/d of natural gas compared to 630,674 MMBtu/d for the second quarter of 2009, a decrease of 11%. The Texas segment gathered an average of 327,839 MMBtu/d of natural gas, processed an average of 469,019 MMBtu/d of natural gas at its plants and third-party plants and produced an average of 18,382 Bbls/d of NGLs at its plants and third-party plants during the second quarter of 2010, representing an increase of 13% of volumes gathered, a decrease of 16% of volumes processed and flat NGL production as compared to the second quarter of 2009. Volumes originating from the Texas segment and delivered to the Houston Central plant decreased 6% from the second quarter of 2009. Lower margin volumes delivered to the Houston Central plant and originating from sources other than the Texas segment decreased 29% from the second quarter of 2009 primarily as a result of a third party pipeline diverting volumes away from the Houston Central plant during the quarter.
Rocky Mountains
Segment gross margin for Rocky Mountains totaled $1.1 million in the second quarter of 2010 compared to $0.7 million for the second quarter of 2009. The increase in segment gross margin was the result of higher compressor rental income from Bighorn, which began during the second quarter of 2009.
The Rocky Mountains segment results do not include the financial results and volumes associated with Copano's interests in Bighorn and Fort Union, which are accounted for under the equity method of accounting and are shown in Copano's financial statements under "Equity in earnings from unconsolidated affiliates." Average pipeline throughput for Bighorn and Fort Union on a combined basis decreased 8% to 900,047 MMBtu/d in the second quarter of 2010 as compared to 980,694 MMBtu/d in the second quarter of 2009 as the weak Rocky Mountains pricing environment has continued to delay drilling activity.
Corporate and Other
Corporate and other gross margin includes Copano's commodity risk management activities. These activities contributed a gain of $2.1 million for the second quarter of 2010 compared to $10.8 million for the second quarter of 2009. The gain for the second quarter of 2010 included $8.1 million of non-cash amortization expense relating to the option component of Copano's risk management portfolio offset by $9.5 million of net cash settlements received for expired commodity derivative instruments and $0.7 million of unrealized gains on undesignated economic hedges. The second quarter 2009 gain included $20.8 million of net cash settlements received for expired commodity derivative instruments offset by $0.7 million of unrealized mark-to-market losses on undesignated economic hedges and $9.3 million of non-cash amortization expense relating to the option component of Copano's risk management portfolio.
Year to Date Financial Results
Revenue for the six months ended June 30, 2010 increased 30% to $496.7 million compared to $381.3 million for the same period last year. Total segment gross margin was $108.0 million for the first six months of 2010 compared to $104.0 million for the same period in 2009.
Adjusted EBITDA for the six months ended June 30, 2010 decreased 5% to $75.3 million compared to $79.5 million for the same period last year. Non-cash amortization expense relating to the option component of Copano's risk management portfolio, which is not added back in determining adjusted EBITDA, totaled $16.0 million and $18.5 million, respectively, for the six months ended June 30, 2010 and 2009.
Total distributable cash flow for the first six months of 2010 decreased to $64.3 million from $68.0 million for the same period in 2009, primarily because 2009 results included a $3.9 million gain on the retirement of debt in 2009.
Net loss for the six months ended June 30, 2010 totaled $22.4 million, or $0.36 per unit on a diluted basis, and includes a non-cash impairment charge of $25.0 million related to Copano's investment in Bighorn. Net income was $11.9 million, or $0.21 per unit on a diluted basis, for the six months ended June 30, 2009. Drivers of the $34.3 million decrease primarily included:
- a $25.4 million decrease in equity in earnings of unconsolidated affiliates as a result of the non-cash impairment charge mentioned above;
- a $3.9 million decrease in earnings related to the gain on the retirement of debt in 2009;
- $4.3 million of additional depreciation and amortization expenses primarily related to expanded operations in Texas;
- a $2.0 million increase in general and administrative expenses and property and other taxes;
- a $0.8 million decrease in discontinued operations and taxes;
- a $1.8 million increase in interest and other financing costs primarily related to (i) an unrealized gain on interest rate swaps for 2010 of $0.8 million compared to a $2.2 million gain in 2009 and (ii) a decrease of capitalized interest of $1.0 million, offset in part by a decrease in interest expense ($0.2 million) and amortization of debt issuance costs ($0.4 million) related to Copano's senior unsecured notes;
offset by:
- a $3.9 million increase in total segment gross margin consisting of a $30.1 million increase in combined operating segment gross margins primarily reflecting average NGL price increases of 62% on the Conway index and 61% on the Mt. Belvieu index, offset in part by lower overall service throughput volumes and a decrease of $26.2 million from Copano's commodity risk management activities.
Weighted average diluted units outstanding totaled 61.9 million for the six months ended June 30, 2010 as compared to 57.9 million for the same period in 2009.
Cash Distributions
On July 14, 2010, Copano announced its second quarter 2010 cash distribution of $0.575 per unit, or $2.30 per unit on an annualized basis, for all of its outstanding common units. This distribution is unchanged from the first quarter of 2010 and will be paid on August 12, 2010 to common unitholders of record at the close of business on August 2, 2010.
Conference Call Information
Copano will hold a conference call to discuss its second quarter 2010 financial results and recent developments on August 6, 2010 at 10:00 a.m. Eastern Time (9:00 a.m. Central Time). To participate in the call, dial (480) 629-9821 and ask for the Copano call 10 minutes prior to the start time, or access it live over the internet at www.copanoenergy.com on the "Investor Overview" page of the "Investor Relations" section of Copano's website.
A replay of the audio webcast will be available shortly after the call on Copano's website. A telephonic replay will be available through August 13, 2010 by calling (303) 590-3030 and using the pass code 4334792#.
Use of Non-GAAP Financial Measures
This news release and the accompanying schedules include the non-generally accepted accounting principles, or non-GAAP, financial measures of segment gross margin, total segment gross margin, EBITDA, adjusted EBITDA and total distributable cash flow. The accompanying schedules provide reconciliations of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States, or GAAP. Non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income (loss), operating income (loss), income (loss) from continuing operations, cash flows from operating activities or any other GAAP measure of liquidity or financial performance. Copano uses non-GAAP financial measures as measures of its core profitability, liquidity position or to assess the financial performance of its assets. Copano believes that investors benefit from having access to the same financial measures that its management uses in evaluating Copano's core profitability, liquidity position or financial performance.
Houston-based Copano Energy, L.L.C. is a midstream natural gas company with operations in Oklahoma, Texas, Wyoming and Louisiana. Its assets include approximately 6,400 miles of active natural gas gathering and transmission pipelines, 250 miles of NGL pipelines and eight natural gas processing plants, with more than one billion cubic feet per day of combined processing capacity and 22,000 barrels per day of fractionation capacity. For more information, please visit www.copanoenergy.com.
This press release includes "forward-looking statements," as defined by the Securities and Exchange Commission. Statements that address activities, or events that Copano believes will or may occur in the future are forward-looking statements. These statements include, but are not limited to, statements about future producer activity and Copano's total distributable cash flow and distribution coverage. These statements are based on management's experience and perception of historical trends, current conditions, expected future developments and other factors management believes are reasonable. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the following risks and uncertainties, many of which are beyond Copano's control: The volatility of prices and market demand for natural gas and natural gas liquids; Copano's ability to continue to obtain new sources of natural gas supply and retain its key customers; the impact on volumes and resulting cash flow of technological, economic and other uncertainties inherent in estimating future production and producers' ability to drill and successfully complete and attach new natural gas supplies and the availability of downstream transportation systems and other facilities for natural gas and NGLs; higher construction costs or project delays due to inflation, limited availability of required resources, or the effects of environmental, legal or other uncertainties; general economic conditions; the effects of government regulations and policies; and other financial, operational and legal risks and uncertainties detailed from time to time in Copano's filings with the Securities and Exchange Commission.
Contacts: |
Carl Luna, SVP & CFO |
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Copano Energy, L.L.C. |
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713-621-9547 |
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Jack Lascar / [email protected] |
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Anne Pearson / [email protected] |
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DRG&E / 713-529-6600 |
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– financial statements to follow –
COPANO ENERGY, L.L.C. AND SUBSIDIARIES |
|||||
Three Months Ended June 30, |
Six Months Ended June 30, |
||||
2010 |
2009 |
2010 |
2009 |
||
(In thousands, except per unit information) |
|||||
Revenue: |
|||||
Natural gas sales |
$ 84,819 |
$ 64,517 |
$205,035 |
$159,496 |
|
Natural gas liquids sales |
114,802 |
91,463 |
234,120 |
172,294 |
|
Transportation, compression and processing fees |
16,516 |
13,913 |
29,630 |
28,912 |
|
Condensate and other |
13,914 |
10,290 |
27,932 |
20,559 |
|
Total revenue |
230,051 |
180,183 |
496,717 |
381,261 |
|
Costs and expenses: |
|||||
Cost of natural gas and natural gas liquids (1) |
167,613 |
122,178 |
377,478 |
265,497 |
|
Transportation (1) |
5,603 |
5,744 |
11,279 |
11,728 |
|
Operations and maintenance |
13,230 |
12,890 |
25,333 |
25,562 |
|
Depreciation and amortization |
15,583 |
13,389 |
30,784 |
26,494 |
|
General and administrative |
10,900 |
9,321 |
21,442 |
20,046 |
|
Taxes other than income |
1,181 |
727 |
2,343 |
1,513 |
|
Equity in loss (earnings) from unconsolidated affiliates |
23,632 |
(2,099) |
21,837 |
(3,583) |
|
Total costs and expenses |
237,742 |
162,150 |
490,496 |
347,257 |
|
Operating (loss) income |
(7,691) |
18,033 |
6,221 |
34,004 |
|
Other income (expense): |
|||||
Interest and other income |
37 |
7 |
44 |
53 |
|
Gain on retirement of unsecured debt |
— |
— |
— |
3,939 |
|
Interest and other financing costs |
(13,351) |
(12,001) |
(28,296) |
(26,449) |
|
(Loss) income before income taxes and discontinued operations |
(21,005) |
6,039 |
(22,031) |
11,547 |
|
Provision for income taxes |
(106) |
(571) |
(340) |
(735) |
|
(Loss) income from continuing operations |
(21,111) |
5,468 |
(22,371) |
10,812 |
|
Discontinued operations, net of tax |
— |
570 |
— |
1,131 |
|
Net (loss) income |
$ (21,111) |
$ 6,038 |
$ (22,371) |
$ 11,943 |
|
Basic net (loss) income per common unit: |
|||||
(Loss) income per common unit from continuing operations |
$ (0.32) |
$ 0.10 |
$ (0.36) |
$ 0.20 |
|
Income per common unit from discontinued operations |
— |
0.01 |
— |
0.02 |
|
Net (loss) income per common unit |
$ (0.32) |
$ 0.11 |
$ (0.36) |
$ 0.22 |
|
Weighted average number of common units |
65,516 |
54,356 |
61,941 |
54,185 |
|
Diluted net (loss) income per common unit: |
|||||
(Loss) income per common unit from continuing operations |
$ (0.32) |
$ 0.09 |
$ (0.36) |
$ 0.19 |
|
Income per common unit from discontinued operations |
— |
0.01 |
— |
0.02 |
|
Net (loss) income per common unit |
$ (0.32) |
$ 0.10 |
$ (0.36) |
$ 0.21 |
|
Weighted average number of common units |
65,516 |
57,946 |
61,941 |
57,933 |
|
(1) Exclusive of operations and maintenance and depreciation and amortization shown separately below. |
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COPANO ENERGY, L.L.C. AND SUBSIDIARIES |
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Six Months Ended June 30, |
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2010 |
2009 |
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(In thousands) |
|||
Cash Flows From Operating Activities: |
|||
Net (loss) income |
$ (22,371) |
$ 11,943 |
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities: |
|||
Depreciation and amortization |
30,784 |
27,000 |
|
Amortization of debt issue costs |
1,790 |
2,165 |
|
Equity in loss (earnings) from unconsolidated affiliates |
21,837 |
(3,583) |
|
Distributions from unconsolidated affiliates |
10,993 |
11,439 |
|
Gain on retirement of unsecured debt |
— |
(3,939) |
|
Non-cash gain on risk management activities, net |
(1,049) |
(1,636) |
|
Equity-based compensation |
4,688 |
4,317 |
|
Deferred tax provision |
(98) |
373 |
|
Other non-cash items |
(369) |
296 |
|
Changes in assets and liabilities: |
|||
Accounts receivable |
12,231 |
24,805 |
|
Prepayments and other current assets |
2,605 |
2,080 |
|
Risk management activities |
6,002 |
18,479 |
|
Accounts payable |
(3,151) |
(12,338) |
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Other current liabilities |
1,522 |
(1,773) |
|
Net cash provided by operating activities |
65,414 |
79,628 |
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Cash Flows From Investing Activities: |
|||
Additions to property, plant and equipment |
(59,438) |
(37,380) |
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Additions to intangible assets |
(930) |
(698) |
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Acquisitions |
— |
(2,840) |
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Investment in unconsolidated affiliates |
(1,538) |
(2,774) |
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Distributions from unconsolidated affiliates |
1,997 |
2,788 |
|
Proceeds from the sale of assets |
266 |
— |
|
Other |
523 |
(995) |
|
Net cash used in investing activities |
(59,120) |
(41,899) |
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Cash Flows From Financing Activities: |
|||
Proceeds from longterm debt |
80,000 |
50,000 |
|
Repayment of longterm debt |
(170,000) |
— |
|
Retirement of unsecured debt |
— |
(14,286) |
|
Distributions to unitholders |
(69,430) |
(62,505) |
|
Proceeds from public offering of common units, net of underwriting discounts and commissions of $7,223 |
164,786 |
— |
|
Equity offering costs |
(531) |
— |
|
Proceeds from option exercises |
991 |
61 |
|
Net cash provided by (used in) financing activities |
5,816 |
(26,730) |
|
Net increase in cash and cash equivalents |
12,110 |
10,999 |
|
Cash and cash equivalents, beginning of year |
44,692 |
63,684 |
|
Cash and cash equivalents, end of period |
$ 56,802 |
$ 74,683 |
|
COPANO ENERGY, L.L.C. AND SUBSIDIARIES |
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As of |
||||
June 30, 2010 |
December 31, 2009 |
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(In thousands, except unit information) |
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ASSETS |
||||
Current assets: |
||||
Cash and cash equivalents |
$ 56,802 |
$ 44,692 |
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Accounts receivable, net |
79,267 |
91,156 |
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Risk management assets |
34,506 |
36,615 |
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Prepayments and other current assets |
2,332 |
4,937 |
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Total current assets |
172,907 |
177,400 |
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Property, plant and equipment, net |
890,533 |
841,323 |
||
Intangible assets, net |
185,357 |
190,376 |
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Investment in unconsolidated affiliates |
584,870 |
618,503 |
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Escrow cash |
1,859 |
1,858 |
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Risk management assets |
25,097 |
15,381 |
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Other assets, net |
20,523 |
22,571 |
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Total assets |
$1,881,146 |
$1,867,412 |
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LIABILITIES AND MEMBERS' CAPITAL |
||||
Current liabilities: |
||||
Accounts payable |
$ 116,894 |
$ 111,021 |
||
Accrued interest |
10,645 |
11,921 |
||
Accrued tax liability |
456 |
672 |
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Risk management liabilities |
5,169 |
9,671 |
||
Other current liabilities |
18,695 |
9,358 |
||
Total current liabilities |
151,859 |
142,643 |
||
Longterm debt (includes $588 and $628 bond premium as of June 30, 2010 and December 31, 2009, respectively) |
762,778 |
852,818 |
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Deferred tax provision |
1,763 |
1,862 |
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Risk management and other noncurrent liabilities |
6,019 |
10,063 |
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Members' capital: |
||||
Common units, no par value, 65,563,244 and 54,670,029 units issued and outstanding as of June 30, 2010 and December 31, 2009, respectively |
1,157,201 |
879,504 |
||
Class D units, no par value, 0 and 3,245,817 units issued and outstanding as of June 30, 2010 and December 31, 2009, respectively |
— |
112,454 |
||
Paid-in capital |
47,379 |
42,518 |
||
Accumulated deficit |
(250,675) |
(158,267) |
||
Accumulated other comprehensive income (loss) |
4,822 |
(16,183) |
||
958,727 |
860,026 |
|||
Total liabilities and members' capital |
$1,881,146 |
$1,867,412 |
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COPANO ENERGY, L.L.C. AND SUBSIDIARIES |
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Three Months Ended June 30, |
Six Months Ended June 30, |
||||
2010 |
2009 |
2010 |
2009 |
||
($ in thousands) |
|||||
Total segment gross margin(1) (2) |
$ 56,835 |
$52,261 |
$107,960 |
$104,036 |
|
Operations and maintenance expenses(2) |
13,230 |
12,890 |
25,333 |
25,562 |
|
Depreciation and amortization(2) |
15,583 |
13,389 |
30,784 |
26,494 |
|
General and administrative expenses |
10,900 |
9,321 |
21,442 |
20,046 |
|
Taxes other than income |
1,181 |
727 |
2,343 |
1,513 |
|
Equity in loss (earnings) from unconsolidated affiliates(3) (4) (5) (6) |
23,632 |
(2,099) |
21,837 |
(3,583) |
|
Operating (loss) income(2) (3) |
(7,691) |
18,033 |
6,221 |
34,004 |
|
Gain on retirement of unsecured debt |
— |
— |
— |
3,939 |
|
Interest and other financing costs, net |
(13,314) |
(11,994) |
(28,252) |
(26,396) |
|
Provision for income taxes |
(106) |
(571) |
(340) |
(735) |
|
Discontinued operations, net of tax |
— |
570 |
— |
1,131 |
|
Net (loss) income |
$(21,111) |
$ 6,038 |
$(22,371) |
$ 11,943 |
|
Total segment gross margin: |
|||||
Oklahoma(2) |
$ 21,821 |
$17,473 |
$ 46,096 |
$ 31,773 |
|
Texas |
31,751 |
23,320 |
58,916 |
43,900 |
|
Rocky Mountains(7) |
1,148 |
711 |
2,251 |
1,510 |
|
Segment gross margin(2) |
54,720 |
41,504 |
107,263 |
77,183 |
|
Corporate and other(8) |
2,115 |
10,757 |
697 |
26,853 |
|
Total segment gross margin(1) (2) |
$ 56,835 |
$52,261 |
$107,960 |
$104,036 |
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Segment gross margin per unit: |
|||||
Oklahoma: |
|||||
Service throughput ($/MMBtu) (2) |
$ 0.92 |
$ 0.72 |
$ 1.00 |
$ 0.65 |
|
Texas: |
|||||
Service throughput ($/MMBtu) |
$ 0.62 |
$ 0.41 |
$ 0.57 |
$ 0.38 |
|
Volumes: |
|||||
Oklahoma: (9) |
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Service throughput (MMBtu/d) (10) |
259,972 |
267,576 |
254,386 |
269,389 |
|
Plant inlet volumes (MMBtu/d) |
156,204 |
166,846 |
154,208 |
163,532 |
|
NGLs produced (Bbls/d) |
16,653 |
15,981 |
15,994 |
15,647 |
|
Texas: (11) |
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Service throughput (MMBtu/d) (10) |
559,876 |
630,674 |
571,358 |
637,565 |
|
Pipeline throughput (MMBtu/d) |
327,839 |
290,005 |
322,423 |
296,932 |
|
Plant inlet volumes (MMBtu/d) |
469,019 |
559,597 |
463,158 |
558,900 |
|
NGLs produced (Bbls/d) |
18,382 |
18,425 |
16,869 |
17,667 |
|
Capital expenditures: |
|||||
Maintenance capital expenditures |
$ 1,649 |
$ 3,895 |
$ 3,080 |
$ 6,046 |
|
Expansion capital expenditures |
51,536 |
14,301 |
71,942 |
24,836 |
|
Total capital expenditures |
$ 53,185 |
$18,196 |
$ 75,022 |
$ 30,882 |
|
Operations and maintenance expenses: |
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Oklahoma(2) |
$ 5,670 |
$ 5,608 |
$ 11,103 |
$ 11,224 |
|
Texas |
7,497 |
7,280 |
14,066 |
14,334 |
|
Rocky Mountains |
63 |
2 |
164 |
4 |
|
Total operations and maintenance expenses(2) |
$ 13,230 |
$12,890 |
$ 25,333 |
$ 25,562 |
|
(1) Total segment gross margin is a non-GAAP financial measure. For a reconciliation of total segment gross margin to |
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(2) Excludes results attributable to Copano's crude oil pipeline and related assets for the three and six months ended |
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(3) During the three months ended June 30, 2010, Copano recorded a $25 million non-cash impairment charge relating |
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(4) Includes results and volumes associated with Copano's interests in Bighorn and Fort Union. Combined volumes |
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(5) Includes results and volumes associated with Copano's interest in Southern Dome. For the three months ended |
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(6) Includes results and volumes associated with Copano's interest in Webb Duval. Gross volumes transported by |
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(7) Rocky Mountains segment gross margin includes results from producer services, including volumes purchased for |
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(8) Corporate and other includes results attributable to Copano's commodity risk management activities. |
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(9) Plant inlet volumes and NGLs produced represent total volumes processed and produced by the Oklahoma |
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(10) "Service throughput" means the volume of natural gas delivered to Copano's wholly owned processing plants by |
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(11) Plant inlet volumes and NGLs produced represent total volumes processed and produced by the Texas segment at |
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Non-GAAP Financial Measures |
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The following table presents a reconciliation of the non-GAAP financial measures of (i) total segment gross margin (which consists of the sum |
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Three Months Ended |
Six Months Ended |
||||
2010 |
2009 |
2010 |
2009 |
||
($ in thousands) |
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Reconciliation of total segment gross margin to operating (loss) income: |
|||||
Operating (loss) income |
$ (7,691) |
$18,033 |
$ 6,221 |
$ 34,004 |
|
Add: Operations and maintenance expenses |
13,230 |
12,890 |
25,333 |
25,562 |
|
Depreciation and amortization |
15,583 |
13,389 |
30,784 |
26,494 |
|
General and administrative expenses |
10,900 |
9,321 |
21,442 |
20,046 |
|
Taxes other than income |
1,181 |
727 |
2,343 |
1,513 |
|
Equity in loss (earnings) from unconsolidated affiliates |
23,632 |
(2,099) |
21,837 |
(3,583) |
|
Total segment gross margin |
$ 56,835 |
$52,261 |
$107,960 |
$104,036 |
|
Reconciliation of EBITDA and adjusted EBITDA to net (loss) income: |
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Net (loss) income |
$(21,111) |
$ 6,038 |
$ (22,371) |
$ 11,943 |
|
Add: Depreciation and amortization(1) |
15,583 |
13,835 |
30,784 |
27,000 |
|
Interest and other financing costs |
13,351 |
12,001 |
28,296 |
26,449 |
|
Provision for income taxes |
106 |
571 |
340 |
735 |
|
EBITDA |
7,929 |
32,445 |
37,049 |
66,127 |
|
Add: Amortization of difference between the carried investment and the underlying equity in net assets of equity investments and impairment |
29,645 |
4,785 |
34,290 |
9,603 |
|
Copano's share of depreciation and amortization included in equity in earnings from unconsolidated affiliates |
1,603 |
1,776 |
3,140 |
3,333 |
|
Copano's share of interest and other financing costs incurred by equity method investments |
494 |
(30) |
865 |
478 |
|
Adjusted EBITDA |
$ 39,671 |
$38,976 |
$ 75,344 |
$ 79,541 |
|
Reconciliation of EBITDA and adjusted EBITDA to cash flows from operating activities: |
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Cash flow provided by operating activities |
$ 36,250 |
$44,230 |
$ 65,414 |
$ 79,628 |
|
Add: Cash paid for interest and other financing costs |
12,455 |
11,106 |
26,505 |
24,284 |
|
Equity in (loss) earnings from unconsolidated affiliates |
(23,632) |
2,099 |
(21,837) |
3,583 |
|
Distributions from unconsolidated affiliates |
(5,228) |
(6,068) |
(10,993) |
(11,439) |
|
Risk management activities |
(5,405) |
(9,291) |
(6,002) |
(18,479) |
|
Changes in working capital and other |
(6,511) |
(9,631) |
(16,038) |
(11,450) |
|
EBITDA |
7,929 |
32,445 |
37,049 |
66,127 |
|
Add: Amortization of difference between the carried investment and the underlying equity in net assets of equity investments and impairment |
29,645 |
4,785 |
34,290 |
9,603 |
|
Copano's share of depreciation and amortization included in equity in earnings from unconsolidated affiliates |
1,603 |
1,776 |
3,140 |
3,333 |
|
Copano's share of interest and other financing costs incurred by equity method investments |
494 |
(30) |
865 |
478 |
|
Adjusted EBITDA |
$ 39,671 |
$38,976 |
$ 75,344 |
$ 79,541 |
|
Reconciliation of net (loss) income to total distributable cash flow: |
|||||
Net (loss) income |
$(21,111) |
$ 6,038 |
$(22,371) |
$ 11,943 |
|
Add: Depreciation and amortization(1) |
15,583 |
13,835 |
30,784 |
27,000 |
|
Amortization of commodity derivative options |
8,070 |
9,291 |
16,048 |
18,479 |
|
Amortization of debt issue costs |
895 |
895 |
1,790 |
2,165 |
|
Equity-based compensation |
2,686 |
2,296 |
5,401 |
4,255 |
|
Distributions from unconsolidated affiliates |
6,254 |
7,296 |
12,991 |
14,227 |
|
Unrealized loss associated with line fill contributions and gas imbalances |
756 |
361 |
2,338 |
527 |
|
Unrealized gain on derivatives |
(1,582) |
(1,396) |
(1,049) |
(1,636) |
|
Deferred taxes and other |
(68) |
325 |
(369) |
672 |
|
Less: Equity in loss (earnings) from unconsolidated affiliates |
23,632 |
(2,099) |
21,837 |
(3,583) |
|
Maintenance capital expenditures |
(1,649) |
(3,895) |
(3,080) |
(6,046) |
|
Total distributable cash flow(2) |
$ 33,466 |
$32,947 |
$ 64,320 |
$ 68,003 |
|
Actual quarterly distribution ("AQD") |
$ 38,295 |
$31,869 |
|||
Total distributable cash flow coverage of AQD |
87% |
103% |
|||
________________________ |
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(1) Includes depreciation and amortization related to the discontinued operations. |
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(2) Prior to any retained cash reserves established by Copano's Board of Directors. |
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SOURCE Copano Energy, L.L.C.
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