PVR Partners Announces First Quarter 2013 Results and Declares Cash Distribution

RADNOR, Pa., April 25, 2013 /PRNewswire/ -- PVR Partners, L.P. (NYSE: PVR) ("PVR") today reported financial and operational results for the three months ended March 31, 2013.  In addition, PVR declared a quarterly distribution of $0.55 per unit.

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First Quarter Results

First quarter 2013 highlights and results, with comparisons to first quarter 2012 results ("last year") and the fourth quarter of 2012 ("last quarter"), included the following:

• Adjusted EBITDA of $76.0 million as compared to $53.0 million last year and $67.8 million last quarter.
• Distributable Cash Flow ("DCF") of $49.9 million as compared to $35.8 million last year and $40.7 million last quarter.
• Average daily natural gas throughput volumes of 1,619 million cubic feet per day ("MMcfd") as compared with 744 MMcfd last year and 1,388 MMcfd last quarter.

Adjusted EBITDA and DCF 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.

Quarterly Distribution

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 May 14, 2013 to common unitholders of record at the close of business on May 8, 2013.  This distribution equates to an annualized rate of $2.20 per unit, which is unchanged from the distribution paid with respect to the fourth quarter of 2012 and represents 5.8% increase over the distribution paid with respect to the first quarter of 2012.

Management Comment

"We were pleased with our overall results for the first quarter, particularly with the continuing growth of our Eastern midstream business.  Our Eastern Midstream Segment results reflected the impact of our acquisition of Chief Gathering and the continuing build-out of our growth projects in the Marcellus," said Bill Shea, President and CEO of PVR's general partner.

"Our average Eastern trunkline volumes increased by approximately 60% from the fourth quarter of 2012, and by 600% compared to the first quarter a year ago.  Eastern midstream gathering volumes this quarter were up by about 4% compared to last quarter and rose by more than 175% compared to the first quarter last year.  Adjusted EBITDA for the Eastern Segment increased by approximately 14% over last quarter and was up by more than 275% compared to the first quarter of 2012.

"The Midcontinent Midstream Segment Adjusted EBITDA improved by 27% as compared to last year before making any adjustment for the sale of our Crossroads System," continued Mr. Shea.  "The improved results reflected the additional throughput capacity from our investments in the expansion of the Antelope Hills plant.

"The coal business performed in-line with our expectations, with first quarter production approximately equal to production during the fourth quarter of last year.  The lower average royalty rate for this year's first quarter versus the first quarter of 2012 primarily reflected the proportionally larger decline in higher-royalty rate Central Appalachian production," concluded Mr. Shea.

Eastern Midstream Segment

The Eastern Midstream Segment reported first quarter 2013 results, with comparisons to first quarter 2012 results ("last year") and the fourth quarter of 2012 ("last quarter"), as follows:

• Adjusted EBITDA of $37.7 million as compared to $10.0 million last year and $33.1 million last quarter, primarily due to the continued development of internal growth projects and the acquisition of Chief Gathering LLC.
• Quarterly average throughput volumes of 1,228 MMcfd as compared to 302 MMcfd last year and 967 MMcfd last quarter.  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 first quarter 2013 results, with comparisons to first quarter 2012 results ("last year") and the fourth quarter of 2012 ("last quarter"), as follows:

• Adjusted EBITDA of $15.7 million as compared to $12.3 million last year and $14.2 million last quarter.
• Quarterly average throughput volumes of 391 MMcfd as compared to 442 MMcfd last year and 421 MMcfd last quarter.  First quarter 2012 volumes include approximately 57 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 first quarter 2013 results, with comparisons to first quarter 2012 results ("last year") and the fourth quarter of 2012 ("last quarter"), as follows:

• Adjusted EBITDA of $22.7 million as compared to $30.7 million last year and $20.5 million last quarter.  The year-over-year decline was primarily due to decreased coal production and pricing.
• Coal royalty tons of 6.4 million tons as compared to 8.1 million tons last year and 6.6 million tons last quarter.
• Coal royalties revenue of $23.0 million, or $3.56 per ton, as compared to $33.2 million, or $4.09 per ton last year and $23.0 million or $3.47 per ton last quarter.

Capital Investment and Resources

We invested $90.1 million on internal growth projects in our midstream businesses during the first quarter of 2013, of which $72.7 million was invested in the Eastern Midstream Segment.

As of March 31, 2013, we had borrowings of $700.0 million under our $1.0 billion revolving credit facility, with remaining borrowing capacity thereunder of $292.1 million after adjusting for outstanding letters of credit.

Expansion Projects Update

The development and build-out of important growth projects in the Marcellus, Utica, Cline and Mississippian Lime continued during the first quarter of 2013.

• Construction of a major new compressor facility and central delivery point on the Wyoming County Trunkline is expected to be completed and begin operation late in the second quarter of this year.
• We completed 30 new well connections in the Eastern Midstream Segment during the first quarter.
• We completed 53 new well connections in the Midcontinent Midstream Segment during the first quarter.
• We continue to build additional phases of the East Lycoming gathering system for which Inflection Energy is the primary shipper.
• Our project to extend our original Wyoming County Gathering System also continued during the first quarter.
• We executed an agreement with a major producer in the Utica Shale to share early stage development costs for a gathering and trunkline system similar to our systems in the Marcellus Shale.
• Work on construction of our gathering system in Greene County, Pennsylvania also continued to progress during the quarter.
• We executed an agreement with a major producer in the Cline Shale formation for gathering and processing services at our Hamlin plant.
• We continue to add new wells in our Crescent System as the Mississippian Lime formation develops.

First Quarter 2013 Financial and Operational Results Conference Call

A conference call and webcast, during which management will discuss first quarter 2013 financial and operational results, is scheduled for Thursday, April 25, 2013 at 11:00 a.m. Eastern Daylight 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=93357 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 May 1 by dialing 877-344-7529 (international: 412-317-0088) and using conference playback number 10027573.

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, 2012.  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: [email protected]

Our exposure profile with respect to commodity prices depends on many factors, including inlet volumes, plant operational efficiencies, contractual terms, and the price relationship between ethane and natural gas.

We anticipate operating our plants in "ethane rejection" for the entirety of 2013. Under this operational mode, we estimate that for every $1.00 per MMBtu change in the natural gas price, our natural gas midstream gross margin and operating income for the remainder of 2013 would change by $6.6 million, excluding the effect of the natural gas hedges described above, and all other factors remaining constant. The natural gas hedges described above would reduce the net impact to $5.1 million.

Similarly, for every $5.00 per barrel change in crude oil prices, with all other factors remaining constant, and excluding the effect of the 2013 crude oil derivative described above, we estimate that our natural gas midstream gross margin and operating income would change by $1.3 million. The crude oil hedge described above would reduce the net impact to $0.6 million.

For every $0.10 per gallon increase in the price of ethane with all other factors remaining constant, we estimate that our gross margin and operating income will decrease by $3.2 million while operating in ethane rejection. Finally, for every $0.10 per gallon increase in the price of other NGLs with all other factors remaining constant, we estimate that our gross margin and operating income will increase by $3.1 million.

(1) The natural gas swaps settle against the monthly index price reported in Inside FERC's Natural Gas Market Report for Southern Star Central Gas Pipeline (Texas, Oklahoma, Kansas), which has historically tended to be settled at a lower price than the Henry Hub national benchmark. A significant portion of our physical gas sales are also priced using this reported monthly index.

SOURCE PVR Partners, L.P.