Access Midstream Partners, L.P. Reports Financial Results for the 2012 Fourth Quarter and Full Year

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Access Midstream Partners, L.P. Reports Financial Results for the 2012 Fourth Quarter and Full Year

Partnership Reports 2012 Fourth Quarter Adjusted EBITDA of $119 Million and Distributable Cash Flow of $82 Million

2012 Full Year Adjusted EBITDA of $478 Million and Distributable Cash Flow of $340 Million


Partnership Affirms 2013 and 2014 EBITDA Outlook and Capital Program

OKLAHOMA CITY--(BUSINESS WIRE)-- Access Midstream Partners, L.P. (NYS: ACMP) today announced financial results for the 2012 fourth quarter and full year. The Partnership's adjusted EBITDA for the 2012 fourth quarter was $119.0 million, up $9.0 million, or 8.2%, from 2011 fourth quarter adjusted EBITDA of $110.0 million. The 2012 fourth quarter results do not include any revenue associated with minimum volume commitments (MVC) as compared to $17.4 million of revenue associated with MVC recognized in the 2011 fourth quarter. After eliminating the 2011 MVC impact, the Partnership's 2012 fourth quarter adjusted EBITDA was up 22.7%. The 2012 fourth quarter net income attributable to the Partnership totaled $24.3 million, a decrease of $42.0 million, or 63.3%, from the 2011 fourth quarter due to interest and depreciation expense related to growth capital investments and transaction costs associated with the CMO acquisition. The 2012 fourth quarter financial results include twelve days of contribution from the assets acquired in the CMO transaction that closed on December 20, 2012.

The Partnership's 2012 full year adjusted EBITDA was $477.9 million, an increase of $128.4 million, or 36.7%, compared to 2011 full year adjusted EBITDA of $349.5 million. Net income attributable to the Partnership for the 2012 full year was $178.5 million, down $15.8 million, or 8.1%, compared to 2011 full year net income of $194.3 million due to interest and depreciation expense related to growth capital investments and transaction costs associated with the CMO acquisition.

Adjusted distributable cash flow (Adjusted DCF) for the 2012 fourth quarter totaled $82.1 million, an increase of $3.1 million, or 3.9%, compared to the 2011 fourth quarter and resulted in a coverage ratio of 0.98. The 2012 fourth quarter coverage ratio was adversely impacted by Partnership equity issued in December to fund the CMO transaction, which will more fully contribute to financial performance starting in 2013. Adjusted DCF for the 2012 full year was $340.1 million and resulted in a full year coverage ratio of 1.23. Financial terms are defined on pages three and four of this release.

Partnership revenue for the 2012 fourth quarter totaled $148.3 million, a decrease of $20.8 million, or 12.3%, compared to 2011 fourth quarter revenue of $169.1 million. After eliminating revenue attributable to MVC in 2011, fourth quarter revenue was down 5.0%. For the 2012 full year, Partnership revenue was $608.4 million, an increase of $42.5 million or 7.5%, compared to 2011 full year revenue of $565.9 million. Revenue for the 2012 fourth quarter and 2012 full year excludes revenue attributable to the Partnership's Marcellus operations that is accounted for as part of an unconsolidated equity investment.

Throughput for the 2012 fourth quarter totaled 256 billion cubic feet (bcf) of natural gas, or 2.78 bcf per day, an increase of 19.8% from 2011 fourth quarter throughput of 2.32 bcf per day. For the 2012 full year, total throughput was 1,032 bcf of natural gas, or 2.82 bcf per day, an increase of 29.4% from 2011 full year throughput of 2.18 bcf per day. The increase was driven by throughput from gas gathering systems in the Marcellus Shale acquired in December 2011 as well as increased throughput in the Barnett Shale. The Partnership connected 104 new wells to its gathering systems during the 2012 fourth quarter. For the 2012 full year, the Partnership connected 659 wells to its systems, an increase of 8.0% compared to 2011. The Partnership's operating statistics exclude twelve days of results from the assets acquired in the CMO transaction due to immaterial contribution to 2012 results.

Capital expenditures during the 2012 fourth quarter totaled $212.6 million, including maintenance capital expenditures of $19.7 million. Capital expenditures for the 2012 full year totaled $734.9 million, including maintenance capital expenditures of $75.2 million. Total 2012 fourth quarter and full year capital expenditures include $93.7 million and $384.4 million, respectively, of capital expenditures in entities accounted for as equity investments.

Partnership Completes CMO Acquisition

On December 20, 2012, the Partnership closed its acquisition of Chesapeake Midstream Operating, L.L.C., acquiring natural gas gathering and processing assets in the Eagle Ford, Utica and Niobrara Shale regions and expanding the Partnership's existing position in both the Haynesville and Marcellus Shale regions. The CMO acquisition provides the Partnership immediate entry to gathering opportunities in key liquids-rich regions and to the processing and fractionation segments of the midstream value chain. At the end of 2012, total gross throughput for these systems was over 1.0 bcf per day.

Partnership Increases Cash Distribution

On January 25, 2013, the Board of Directors of the Partnership's general partner declared a quarterly cash distribution of $0.45 per unit for the 2012 fourth quarter, a $0.06, or 15.4%, increase over the 2011 fourth quarter distribution and a $0.015, or 3.4%, increase over the 2012 third quarter distribution. The distribution was paid on February 13, 2013 to unitholders of record at the close of business on February 6, 2013. DCF of $82.1 million for the 2012 fourth quarter provided distribution coverage of 0.98 times the amount required for the Partnership to fund the distribution to both the general and limited partners.

Outlook for 2013 and 2014 Unchanged

The Partnership is projecting EBITDA for the twelve months ending December 31, 2013 to be between $800 million and $850 million with growth capital expenditures between $1.6 billion and $1.7 billion and maintenance capital expenditures of approximately $110 million. The Partnership is also projecting EBITDA for the twelve months ending December 31, 2014 to be between $1.0 billion and $1.1 billion with growth capital expenditures between $1.0 billion and $1.1 billion and maintenance capital expenditures of approximately $110 million. The growth capital investment program and resulting EBITDA is expected to allow the Partnership to grow LP distributions by approximately 15 percent annually for each of 2013 and 2014.

Management Comments

J. Mike Stice, Access Midstream Partners' Chief Executive Officer, commented, "With another solid quarter behind us, we are very pleased to announce full year 2012 results achieved previously provided financial guidance. Our low risk business model continues to deliver predictable, growing cash flows for our investors. Now, as we turn our attention to 2013, we have transformed ACMP with the acquisition of a substantial new asset base and the addition of Williams alongside GIP as a general partner sponsor. We are focused on executing our 2013 organic capital plan of over $1.6 billion which will fuel continued strong EBITDA and distribution growth for the Partnership."

Conference Call Information

A conference call to discuss this release of financial results has been scheduled for Wednesday, February 20, 2013 at 9:00 a.m. EST. The telephone number to access the conference call is 913-312-0838 or toll-free 888-631-5913. The passcode for the call is 3709964. We encourage those who would like to participate in the call to dial the access number between 8:50 and 9:00 a.m. EST. For those unable to participate in the conference call, a replay will be available for audio playback from 12:00 p.m. EST on February 20, 2013 through 12:00 p.m. EST on March 6, 2013. The number to access the conference call replay is 719-457-0820 or toll-free 888-203-1112. The passcode for the replay is 3709964. The conference call will also be webcast live on the Internet and can be accessed by going to the Partnership's website at www.accessmidstream.com in the "Events" subsection of the "Investors" section of the website. An archive of the conference call webcast will also be available on the website.

Use of Non-GAAP Financial Measures

This press release and accompanying schedules include the non-GAAP financial measures of adjusted EBITDA, DCF and adjusted DCF. The accompanying schedules provide reconciliations of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with GAAP. Non-GAAP financial measures should not be considered as an alternative to GAAP measures such as net income, net cash provided by operating activities or any other measure of liquidity or financial performance calculated and presented in accordance with GAAP. Investors should not consider adjusted EBITDA, DCF or adjusted DCF in isolation or as a substitute for analysis of the Partnership's results as reported under GAAP. Because these non-GAAP financial measures may be defined differently by other companies in our industry, the Partnership's definition of adjusted EBITDA, DCF and adjusted DCF may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

Adjusted EBITDA. The Partnership agreement defines adjusted EBITDA as net income (loss) before income tax expense, interest expense, depreciation and amortization expense and certain other items management believes affect the comparability of operating results. Adjusted EBITDA is a non-GAAP financial measure that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess:

  • The Partnership's operating performance as compared to other publicly traded partnerships in the midstream energy industry, without regard to capital structure, historical cost basis or financing methods;
  • The Partnership's ability to incur and service debt and fund capital expenditures;
  • The ability of the Partnership's assets to generate sufficient cash flow to make distributions to unitholders; and
  • The viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

Management believes it is appropriate to exclude certain items from EBITDA because management believes these items affect the comparability of operating results. The Partnership believes that the presentation of adjusted EBITDA in this press release provides information useful to investors in assessing its financial condition and results of operations. The GAAP measure most directly comparable to adjusted EBITDA is net income.

Distributable Cash Flow. The Partnership agreement defines DCF as adjusted EBITDA attributable to the Partnership adjusted for:

  • Addition of interest income;
  • Subtraction of net cash paid for interest expense;
  • Subtraction of maintenance capital expenditures; and
  • Subtraction of income taxes.

Management compares the DCF the Partnership generates to the cash distributions it expects to pay its partners. Using this metric, management computes a distribution coverage ratio. DCF is an important non-GAAP financial measure for our limited partners since it serves as an indicator of our success in providing a cash return on investment. Specifically, this financial measure indicates to investors whether or not the Partnership is generating cash flows at a level that can sustain or support an increase in its quarterly cash distributions. DCF is also a quantitative standard used by the investment community with respect to publicly traded partnerships because the value of a partnership unit is in part measured by its yield, which is based on the amount of cash distributions a partnership can pay to a unitholder. The GAAP measure most directly comparable to DCF is net cash provided by operating activities.

Adjusted Distributable Cash Flow. The Partnership includes the quarterly impact of contractual minimum volume commitments that are not recognized until the fourth quarter of each year in its calculation of adjusted DCF for the purpose of calculating the distribution coverage ratio.

Access Midstream Partners, L.P. (NYSE: ACMP) is the industry's largest gathering and processing master limited partnership as measured by throughput volume and invested capital.The Partnership owns, operates, develops and acquires natural gas gathering and processing systems and other midstream energy assets.Headquartered in Oklahoma City, the Partnership's operations are focused on the Barnett, Eagle Ford, Haynesville, Marcellus, Niobrara and Utica Shales and Mid-Continent region of the U.S.The Partnership's common units are listed on the New York Stock Exchange under the symbol ACMP.Further information is available atwww.accessmidstream.comwhere the Partnership routinely posts announcements, updates, events, investor information and presentations and all recent press releases.

This press release includes forward-looking statements. Forward-looking statements give our current expectations or forecasts of future events. They include but are not limited to our business strategy and plans and objectives for future operations. We caution you not to place undue reliance on our forward-looking statements, which speak only as of the date of this release, and we undertake no obligations to update this information. Although we believe the expectations and forecasts reflected in these and other forward-looking statements are reasonable, we can give no assurance they will prove to be correct. They can be affected by inaccurate assumptions or by known or unknown risks and uncertainties. Factors that could cause actual results to differ materially from expected results are described under "Risk Factors" in our 2011 Annual Report on Form 10-K and our other SEC filings.

 
Access Midstream Partners, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
($ in thousands, except per unit data)
(unaudited)
 
Three Months Ended

December 31,

2012  2011

Revenues, including revenues from affiliates(1)

$148,349$169,078
 
Operating expenses
Operating expenses, including expenses from affiliates

54,421

46,773

Depreciation and amortization expense45,19437,463

General and administrative expense, including expenses from affiliates

29,253

12,835

Other operating income (333) (84)
 
Total operating expenses 128,535  96,987 
 
Operating income19,81472,091
 
Other income (expense)
Income from unconsolidated affiliates22,860433
Interest expense(17,926)(5,357)
Other income 146  66 
 
Income before income tax expense24,89467,233
Income tax expense 707  928 
 
Net income24,18766,305
Net loss attributable to noncontrolling interests (68)  
 
Net income attributable to Access Midstream Partners, L.P.$24,255 $66,305 
 
Limited partner interest in net income
Net income attributable to Access Midstream Partners, L.P.24,25566,305
Less general partner interest in net income (2,934) (2,510)
 
Limited partner interest in net income 21,321  63,795 
 
Net income per limited partner unit - basic and diluted
Common units0.110.46
Subordinated units

0.14

0.46
Class B units

0.14

Class C units

0.14

 
Weighted average limited partner units outstanding used for net income per unit calculation - basic and diluted (in thousands)
Common units82,23069,678
Subordinated units69,07669,076
Class B units1,547
Class C units1,461
 
(1) Excludes revenue from Marcellus assets of $42.1 million for the three months ended December 31, 2012 that is included in Income from Unconsolidated Affiliates.
 
If either Chesapeake Energy Corporation ("Chesapeake") or Total E&P USA, Inc. ("Total") does not meet its minimum volume commitment to the Partnership in the Barnett Shale region or Chesapeake does not meet its minimum volume commitment in the Haynesville Shale region under the relevant gas gathering agreement for specified annual periods, Chesapeake or Total is obligated to pay the Partnership a fee equal to the applicable fee for each mcf by which the applicable party's minimum volume commitment for the year exceeds the actual volumes gathered on the Partnership's systems. Should payments be due under the minimum volume commitment with respect to any year, the Partnership recognizes the associated revenue in the fourth quarter of that year. The Partnership recognized $17.4 million in the 2011 fourth quarter. No revenue associated with minimum volume commitments was recognized in 2012 as volumes exceeded commitment levels.
 
 

Access Midstream Partners, L.P.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

($ in thousands, except per unit data)

(unaudited)

 
Twelve Months Ended

December 31,

2012  2011

Revenues, including revenues from affiliates(1)

$608,447$565,929
 
Operating expenses
Operating expenses, including expenses from affiliates197,639176,851
Depreciation and amortization expense165,517136,169

General and administrative expense, including expenses from affiliates

67,579

40,380

Other operating (income) expense (766) 739 
 
Total operating expenses 429,969  354,139 
 
Operating income178,478211,790
 
Other income (expense)
Income from unconsolidated affiliates67,542433
Interest expense(64,739)(14,884)
Other income 320  287 
 
Income before income tax expense181,601197,626
Income tax expense 3,214  3,289 
 
Net income178,387194,337
Net loss attributable to noncontrolling interests (68)  
 
Net income attributable to Access Midstream Partners, L.P.$178,455 $194,337 
 
Limited partner interest in net income
Net income attributable to Access Midstream Partners, L.P.178,455194,337
Less general partner interest in net income (8,481) (5,070)
 
Limited partner interest in net income 169,974  189,267 
 
Net income per limited partner unit - basic and diluted
Common units1.111.37
Subordinated units

1.14

1.37
Class B units

0.14

Class C units

0.14

 
Weighted average limited partner units outstanding used for net income per unit calculation - basic and diluted (in thousands)
Common units80,05969,371
Subordinated units69,07669,076
Class B units1,547
Class C units1,461
 

(1)

 

Excludes revenue from Marcellus assets of $140.5 million for the twelve months ended December 31, 2012 that is included in Income from Unconsolidated Affiliates.

 
    
Access Midstream Partners, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS
($ in thousands)
(unaudited)
 

As of

December 31,

2012

As of

December 31,

2011

Assets
 
Total current assets$215,257 $88,188 
 
Property, plant and equipment
Gathering systems5,130,2552,954,868
Other fixed assets96,91653,611
Less: Accumulated depreciation (590,614) (480,555)
 
Total property, plant and equipment, net 4,636,557  2,527,924 
 
Investment in unconsolidated affiliates1,297,811886,558
Intangible assets, net355,217
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