Dakota Plains Holdings, Inc. Reports Second Quarter 2013 Financial Results

WAYZATA, Minn., Aug. 8, 2013 /PRNewswire/ -- Dakota Plains Holdings, Inc. ("Dakota Plains" and "DAKP"), (OTC: DAKP), today announced financial results for the three and six months ended June 30, 2013. 

Second Quarter 2013 Operational and Financial Highlights

• Net loss was $(0.6) million compared to net income of $0.6 million sequentially and $3.4 million for the same period in 2012.
• Adjusted EBITDA was $1.5 million compared to $2.4 million sequentially and $6.3 million for the same period in 2012.
• JV transloading volumes of 2.3 million barrels of oil were down slightly from 2.4 million barrels sequentially and up 27% from 1.8 million barrels for the same period in 2012.
• JV marketing volumes sold of 2.6 million barrels of oil were flat sequentially and increased 34% from 1.9 million barrels in the same period in 2012.
• JV trucking volumes, which commenced in the third quarter of 2012, were 1.3 million barrels of oil up from 1.1 million barrels sequentially.
• The Pioneer Terminal expansion commenced on March 25 and is on schedule to increase throughput capacity to 80,000 barrels per day by year-end 2013.
• Paradigm Midstream announced a new 70 mile pipeline with up to 120,000 barrels per day of takeaway capacity that will connect McKenzie and Dunn Counties, ND, to the Pioneer Terminal in 2014.
• Executed new credit facility to finance Dakota Plains' $25 million share of the Pioneer Terminal expansion.
• Subsequent to the second quarter, announced agreement with UNIMIN to operate a 750,000 ton per year frac sand terminal to be constructed by UNIMIN at the Pioneer Terminal.
• Restricted cash totals $28.5 million, a portion of which will be utilized for funding of the Pioneer Terminal expansion.

Chairman and Chief Executive Officer, Craig McKenzie, said, "Despite macro-economic conditions that resulted in a collapsed spread between Brent and WTI oil pricing, we continue to grow the company efficiently.  We were very pleased to work with Paradigm Midstream and jointly announce the planned construction of a new crude oil pipeline to the Pioneer Terminal.  We secured financing for the Pioneer Terminal expansion, increased our fleet of trucks from 14 to 22, negotiated our first inbound commodity supply business with UNIMIN, and equally as important we demonstrated the strength of our location during a highly competitive period."

Mr. McKenzie continued, "The volumes available to rail were down substantially by the end of the second quarter.  During the second quarter, DAKP's volumes were resilient and resulted in an improved market share as we remained competitive with our low cost structure and vertical integration.  We believe the longer term outlook for crude production growth in the Williston Basin and the continued reliance on transport by rail underpin our strategy to grow and fully build out the Pioneer Terminal." 

Second Quarter 2013 Financial Results
The Company reported a net loss of $(0.6) million for the three months ended June 30, 2013, compared to net income of $3.4 million for the three months ended June 30, 2012. The net loss for the second quarter was driven by a significant decrease in margins experienced within our marketing joint venture primarily as a result of the narrowing of the price spread between Brent and WTI.  General and administrative expenses were $2.5 million for the three months ended June 30, 2013, compared to $0.6 million for the three months ended June 30, 2012.  The increase was mostly due to the recognition of share-based compensation to the board of directors and new employees.  Of the $2.5 million expense, non-cash and one-time provisions represent approximately $1.6 million. 

Income from the Company's investment in the transloading joint venture was $1.4 million for the three months ended June 30, 2013, compared to $1.0 million for the three months ended June 30, 2012. The total volume transloaded by the transloading joint venture increased 27% to 2.3 million barrels of oil compared to 1.8 million barrels of oil for the three months ended June 30, 2012. Income from the Company's investment in the marketing joint venture was $0.9 million for the three months ended June 30, 2013, compared to $5.7 million for the three months ended June 30, 2012. The decrease primarily was due to a decline in marketing margins for the quarter.  The total number of barrels sold by the marketing joint venture increased 34% to 2.6 million barrels of oil, compared to 1.9 million barrels of oil for the three months ended June 30, 2012.  Income from the Company's investment in the trucking joint venture was $136,000 for the three months ended June 30, 2013, during which time the joint venture hauled 1.3 million barrels of oil. The trucking joint venture increased its fleet of trucks from 14 to 22 for the three months ended June 30, 2013, in preparation for trucking for third parties to destinations other than New Town, North Dakota. The trucking joint venture was not operational during the second quarter of 2012.

The Company recognized rental income of $100,000 for the three months ended June 30, 2013, compared to $78,000 for the three months ended June 30, 2012. The increase in rental income was due to the June 2012 and January 2013 renegotiations of the lease agreement to reflect the additional acreage added to the Pioneer Terminal.

Adjusted EBITDA for the second quarter ended June 30, 2013 was $1.5 million compared to $6.3 million for the second quarter of 2012. 

Restricted and free cash was $29.5 million at the end of June 30, 2013.

Year-to-Date 2013 Financial Results
Net loss for the six months ended June 30, 2013 was $5,000, or $0.00 per diluted share compared to a net loss of $12.5 million, or $(0.32) per diluted share in the same period of 2012, which was primarily due to interest expense recorded in the first half of 2012 related to the additional payment provision of the derivative liability equal to $28.3 million, recorded in the first half of 2012. The net loss for the six months year-to-date of 2013 was primarily the result of the decrease in margins within our marketing joint venture, as well as increases in our non-cash and one-time general and administrative expenses. Transloading income increased 35% to $2.8 million from $2.1 million during the same period last year. Trucking income was $198,000 with no comparable period in 2012 since this joint venture commenced in September 2012. Marketing income decreased to $2.7 million from $7.6 million last year, due to a decrease in margins in the joint venture as a result of the significant narrowing of the price spread between Brent and WTI experienced in the second quarter. Adjusted EBITDA for the six months ended June 30, 2013 was $3.9 million compared to $8.6 million for the same period in 2012. The decrease was primarily due to the decrease in the income from our investments in our marketing joint venture which occurred in the second quarter of 2013.

Adjusted EBITDA
Adjusted EBITDA is a non-GAAP measure. A reconciliation of this measure to its most directly comparable GAAP measure is included in the accompanying financial tables found later in this release. Management believes the use of this non-GAAP financial measure provides useful information to investors to gain an overall understanding of current financial performance. Specifically, management believes the non-GAAP results included herein provide useful information to both management and investors by excluding certain expenses and gains and losses on the extinguishment of debt that management believes are not indicative of Dakota Plains' core operating results. In addition, this non-GAAP financial measure is used by management for budgeting and forecasting as well as subsequently measuring Dakota Plains' performance, and management believes it is providing investors with a financial measure that most closely aligns to its internal measurement processes.

About Dakota Plains Holdings, Inc.
Dakota Plains Holdings, Inc. ("Dakota Plains") (OTC: DAKP) is an integrated midstream energy company, which competes through its 50/50 joint ventures to provide customers with crude oil off take services that include marketing, transloading and trucking of crude oil and related products.  Direct and indirect company assets include a proprietary trucking fleet, a transloading facility located in Mountrail County, North Dakota, which is centrally located within the Bakken formation, and over 1,000 railroad tank cars.

Dakota Plains is uniquely positioned to exploit crude oil 'export' opportunities within the Williston Basin of North Dakota and Montana, which is the largest onshore oil production source in North America, where the lack of available pipeline capacity provides a long-term and increasing surplus of crude oil available for core business of the company.

Cautionary Note Regarding Forward Looking Statements
This announcement contains forward-looking statements that reflect the current views of Dakota Plains, including, but not limited to, statements regarding our future growth and plans for our business and operations.  We do not undertake to update our forward-looking statements.  These statements involve risks and uncertainties.  Our actual results could differ materially from those anticipated in these forward-looking statements as a result of lack of diversification, dependency upon strategic relationships, dependency on a limited number of major customers, competition for the loading, marketing and transporting of crude oil and related products, difficulty in obtaining additional capital that will be needed to implement business plans, difficulties in attracting and retaining talented personnel, risks associated with building and operating a transloading facility, changes in commodity prices and the demand for crude oil and natural gas, competition from other energy sources, inability to obtain necessary facilities, difficulty in obtaining crude oil to transport, increases in our operating expenses, an economic downturn or change in government policy that negatively impacts demand for our services, penalties we may incur, costs imposed by environmental laws and regulations, inability to obtain or maintain necessary licenses, challenges to our properties, technological unavailability or obsolescence, and future acts of terrorism or war, as well as the threat of war and other factors described from time to time in the company's reports filed with the U.S. Securities and Exchange Commission, including our annual report on Form 10-K, filed March 14, 2013, as may be amended and supplemented by subsequent reports from time to time.

SOURCE Dakota Plains Holdings, Inc.