Sanchez Midstream Partners LP (NYSE American: SNMP) (“SNMP” or the
“Partnership”) today reported second quarter 2018 results.
Highlights from the report include:
- The Partnership reported a net loss of $1.8 million for the
second quarter 2018, which compares to net income of $0.6 million
for the second quarter 2017;
- Adjusted EBITDA (a non-GAAP financial measure) was $17.6
million for the second quarter 2018, which is approximately 15
percent higher when compared to the Partnership’s second quarter
2017 Adjusted EBITDA of $15.3 million;
- A second quarter 2018 cash distribution on common units of
$0.4508 per unit ($1.8032 per unit annualized) has been declared by
the Partnership, which is payable Aug. 31, 2018; and
- The Partnership’s second quarter 2018 cash available for
distribution (a non-GAAP financial measure) was approximately $7.7
million, resulting in a distribution coverage ratio of
approximately 1.1 times.
MANAGEMENT COMMENTARY“The
Partnership continues to execute its 2018 operating and financial
plan,” said Gerry Willinger, Chief Executive Officer of the general
partner of SNMP. “Despite lower than expected throughput volumes on
our midstream assets, our second quarter 2018 Adjusted EBITDA
increased by approximately 15 percent when compared to Adjusted
EBITDA for the second quarter 2017. As a result, our cash
available for distribution in the second quarter 2018 was
approximately $7.7 million, which covered our distribution on
common units by approximately 1.1 times.
“During the quarter, we also announced the
execution of a series of agreements with Targa Resources Corp.
(“Targa”) (NYSE: TRGP) to form an expanded 50/50 midstream joint
venture, operated by Targa, in South Texas. The “Carnero JV”
enhances our midstream strategy, secures and expands our
third-party volumes, and is expected to provide additional stable,
fee-based cash flow to the Partnership. The structure of the
transaction greatly simplifies our previous joint ventures with
Targa, facilitates greater operating efficiencies, and provides a
solid platform to capture benefits that are expected to increase
over time as the joint venture services the needs of Sanchez Energy
Corporation (NYSE: SN) (“Sanchez Energy”) and other producers and
marketers in South Texas. Importantly, with additional
volumes expected through our expanded system in 2018 and the years
to come, we have preemptively put ourselves in a position to
continue to grow the Partnership while being disciplined with
capital. Accordingly, we see the Carnero JV as a key step in
positioning the Partnership for continued growth in South
Texas.”
FINANCIAL RESULTS The
Partnership’s revenue totaled $17.0 million during the second
quarter 2018. Included in total revenue for the second
quarter 2018 is $14.8 million from the midstream activities of
Western Catarina Midstream and the Seco Pipeline and approximately
$5.9 million from production activities. The balance of the
Partnership’s second quarter 2018 total revenue came from a loss on
hedge settlements ($0.5 million) and a loss on mark-to-market
activities ($3.2 million), which is a non-cash item.
Earnings from the Carnero JV totaled $3.1
million during the second quarter 2018. The Partnership’s
cash distributions from the Carnero JV related to second quarter
2018 operating results total approximately $5.5 million.
On a GAAP basis, the Partnership recorded a net
loss of $1.8 million for the second quarter 2018, which compares to
net income of $1.4 million for the first quarter 2018 and net
income of $0.6 million in the second quarter 2017.
The Partnership’s Adjusted EBITDA (a non-GAAP
financial measure) for the second quarter 2018 was $17.6 million,
which compares to Adjusted EBITDA of approximately $18.6 million
for the first quarter 2018 and Adjusted EBITDA of $15.3 million for
the second quarter 2017. The Partnership’s calculation of
Adjusted EBITDA is discussed in further detail below.
LIQUIDITY UPDATE As of June 30,
2018, the Partnership had $184 million in debt outstanding under
its credit facility, which has a current borrowing base of $310
million and an elected commitment amount of $210 million. The
midstream portion of the borrowing base is $275 million, which
results in the Partnership’s midstream collateral covering the $210
million elected commitment amount by approximately 1.3 times.
The Partnership had approximately $2.5 million in cash and cash
equivalents as of June 30, 2018.
HEDGE UPDATEFor the full year
2018, the Partnership has hedged approximately 497,328 million
British thermal units (“MMBtu”) of its natural gas production at an
effective NYMEX fixed price of approximately $3.00 per
MMBtu and approximately 259.6 thousand barrels of its crude oil
production at an effective NYMEX fixed price of
approximately $59.73 per barrel. The Partnership
has additional hedges covering a portion of its production in 2019
and 2020. Additional information about SNMP’s hedges can be
found in the Partnership’s documents on file with the U.S.
Securities and Exchange Commission (www.sec.gov) and in the
“Investor Presentation” available on the Partnership’s website
(www.sanchezmidstream.com).
DISTRIBUTIONSOn Aug. 8, 2018,
the Partnership declared a second quarter 2018 cash distribution on
its common units of $0.4508 per unit ($1.8032 per unit
annualized). The Partnership also declared a second quarter
2018 distribution to the holders of its Class B preferred units
equal to 310,009 Class B Preferred PIK Units and a cash
distribution of $0.22580 per Class B preferred unit.
Based on second quarter 2018 Adjusted EBITDA of
$17.6 million, cash interest expense of approximately $2.5 million,
maintenance capital of $0.4 million, and $7.0 million in preferred
unit distributions made in cash, the Partnership generated
approximately $7.7 million in cash available for distribution (a
non-GAAP financial measure) during the second quarter 2018,
resulting in a distribution coverage ratio of approximately 1.1
times.
CONFERENCE CALL INFORMATIONThe
Partnership will host a conference call at 10:00 a.m. Central Time
(11:00 a.m. Eastern Time) on Thursday, Aug. 9, 2018 to discuss
second quarter 2018 results.
To participate in the conference call, analysts,
investors, media and the public in the U.S. may dial (844) 824-3837
shortly before 10:00 a.m. Central Time (11:00 a.m. Eastern
Time). The international phone number is (412)
317-5161. Callers should request the “Sanchez Midstream
Partners Second Quarter 2018 Conference Call” once reaching the
operator.
A live audio webcast of the conference call and
the earnings release will be available on the Partnership’s website
(www.sanchezmidstream.com) under the Investor Relations page.
A replay will be available approximately three hours after the call
through Aug. 16, 2018, at 10:59 p.m. Central Time (11:59 p.m.
Eastern Time). The replay may be accessed by dialing (844) 512-2921
(U.S.) or (412) 317-6671 (International), and referencing the
replay passcode: 10122666.
ABOUT THE PARTNERSHIP Sanchez
Midstream Partners LP (NYSE American: SNMP) is a growth-oriented
publicly-traded limited partnership focused on the acquisition,
development, ownership and operation of midstream and other energy
related assets in North America. The Partnership has
ownership stakes in oil and natural gas gathering systems, natural
gas pipelines, and a natural gas processing facility, all located
in the Western Eagle Ford in South Texas.
ADDITIONAL INFORMATION
Additional information about SNMP can be found in the Partnership’s
documents on file with the U.S. Securities and Exchange Commission
(www.sec.gov) and in the “Investor Presentation” available on the
Partnership’s website (www.sanchezmidstream.com).
The Partnership will provide any unitholder with
a hard copy of its annual report on Form 10-K, which includes the
Partnership’s complete audited financial statements, free of charge
at any time upon request. Requests can be directed in writing
to SNMP Investor Relations, 1000 Main Street, Suite 3000, Houston,
TX 77002 or by email to IR@sanchezmidstream.com.
NON-GAAP
MEASURESWe present Adjusted EBITDA and cash
available for distribution, non-GAAP financial measures, in
addition to our reported net income (loss), the most comparable
GAAP financial measure, in this news release.
Adjusted EBITDA is a non-GAAP financial measure
that is defined as net income (loss) adjusted by: (i) interest
(income) expense, net, which includes interest expense, interest
expense net (gain) loss on interest rate derivative contracts, and
interest (income); (ii) income tax expense (benefit);
(iii) depreciation, depletion and amortization;
(iv) asset impairments; (v) accretion expense;
(vi) (gain) loss on sale of assets; (vii) unit-based
compensation expense; (viii) unit-based asset management fees;
(ix) distributions in excess of equity earnings; (x) (gain)
loss on mark-to-market activities; (xi) commodity derivatives
settled early; (xii) (gain) loss on embedded derivatives; and
(xiii) acquisition and divestiture costs. For a
reconciliation of Adjusted EBITDA to Net Income (Loss), the most
directly comparable GAAP measure, see the tables at the end of this
news release. Cash available for distribution is defined as
Adjusted EBITDA less cash interest expense; distributions on
preferred units; and maintenance capital. For a
reconciliation of cash available for distribution to Net Income
(Loss), the most directly comparable GAAP measure, see the tables
at the end of this news release.
Adjusted EBITDA and cash available for
distribution are significant performance metrics used by our
management to indicate (prior to the establishment of any cash
reserves by the board of directors of our general partner) the
distributions that we would expect to pay to our unitholders.
Specifically, these financial measures indicate to investors
whether or not we are generating cash flow at a level that can
sustain or support a quarterly distribution or any increase in our
quarterly distribution rates. Adjusted EBITDA and cash available
for distribution are also used as quantitative standards by our
management and by external users of our financial statements such
as investors, research analysts, our lenders and others to assess:
(i) the financial performance of our assets without regard to
financing methods, capital structure or historical cost basis;
(ii) the ability of our assets to generate cash sufficient to
pay interest costs and support our indebtedness; and (iii) our
operating performance and return on capital as compared to those of
other companies in our industry, without regard to financing or
capital structure.
We believe that the presentation of Adjusted
EBITDA and cash available for distribution provides useful
information to investors in assessing our financial condition and
results of operations. The GAAP measure most directly comparable to
Adjusted EBITDA and cash available for distribution is net income
(loss). Our non-GAAP financial measures of Adjusted EBITDA and cash
available for distribution should not be considered as an
alternative to GAAP net income (loss). Adjusted EBITDA and cash
available for distribution have important limitations as analytical
tools because they exclude some but not all items that affect net
income (loss). Adjusted EBITDA and cash available for distribution
should not be considered in isolation or as substitutes for
analysis of our results as reported under GAAP. Because Adjusted
EBITDA and cash available for distribution may be defined
differently by other companies in our industry, our definition of
Adjusted EBITDA and cash available for distribution may not be
comparable to similarly titled measures of other companies, thereby
diminishing their utility. For reconciliations of Adjusted EBITDA
and cash available for distribution to net income (loss), the most
comparable GAAP financial metric, please see the tables below.
FORWARD-LOOKING STATEMENTS This
news release contains, and the officers and representatives of the
Partnership and its general partner may from time to time make,
statements that are considered forward–looking statements within
the meaning of the Securities Act of 1933 and the Securities
Exchange Act of 1934. These forward-looking statements are subject
to a number of risks and uncertainties, many of which are beyond
our control, which may include statements about our business
strategy; our acquisition strategy; our financing strategy; our
ability to make, maintain and grow distributions; our future
operating results; the ability of our customers to meet their
drilling and development plans on a timely basis, or at all, and
perform under gathering, processing and other agreements; the
ability of our partners to perform under our joint ventures and
partnerships; our future capital expenditures; and our plans,
objectives, expectations, forecasts, outlook and intentions. All of
these types of statements, other than statements of historical fact
included in this news release, are forward-looking statements. In
some cases, forward-looking statements can be identified by
terminology such as “may,” “could,” “should,” “expect,” “plan,”
“project,” “intend,” “anticipate,” “believe,” “estimate,”
“predict,” “potential,” “pursue,” “target,” “continue,” the
negative of such terms or other comparable terminology.
The forward-looking statements contained in this
news release are largely based on our expectations, which reflect
estimates and assumptions made by the management of our general
partner. These estimates and assumptions reflect our best judgment
based on currently known market conditions and other factors.
Although we believe such estimates and assumptions to be
reasonable, they are inherently uncertain and involve a number of
risks and uncertainties that are beyond our control.
Important factors that could cause our actual results to differ
materially from the expectations listed in the forward-looking
statements include, among others, our ability to successfully
execute our business, acquisition and financing strategies; our
ability to make, maintain and grow distributions; the ability of
our customers to meet their drilling and development plans on a
timely basis, or at all, and perform under gathering, processing
and other agreements; the ability of our partners to perform under
our joint ventures and partnerships; the timing and extent of
changes in prices for, and demand for, natural gas, natural gas
liquids and oil; our ability to successfully execute our hedging
strategy and the resulting realized prices therefrom; the credit
worthiness and performance of our counterparties, including
financial institutions, operating partners and other parties; and
other factors described in the Partnership’s most recent Annual
Report on Form 10-K and any updates to those risk factors set forth
in the Partnership’s Quarterly Reports on Form 10-Q or Current
Reports on Form 8-K. The Partnership's filings with the U.S.
Securities and Exchange Commission are available on our website at
www.sanchezmidstream.com and on the SEC’s website at www.sec.gov.
Management’s assumptions about future events may prove to be
inaccurate. Management cautions all readers that the
forward-looking statements contained in this news release are not
guarantees of future performance, and we cannot assure any reader
that such statements will be realized or the forward-looking events
and circumstances will occur. Actual results may differ materially
from those anticipated or implied in forward-looking statements.
The forward-looking statements speak only as of the date made, and
other than as required by law, we do not intend to publicly update
or revise any forward-looking statements as a result of new
information, future events or otherwise. These cautionary
statements qualify all forward-looking statements attributable to
us or persons acting on our behalf.
PARTNERSHIP CONTACTKevin
SmithVP of Investor Relations(281) 925-4828
General Inquiries: (713)
783-8000 www.sanchezmidstream.com
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PRESS
RELEASE |
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Sanchez
Midstream Partners LP |
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Operating
Statistics |
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
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2018 |
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2017 |
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2018 |
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2017 |
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Gathering and
Transportation Throughput: |
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Seco
Pipeline |
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Natural
gas (MMcf) |
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4,792 |
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— |
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10,906 |
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— |
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Western
Catarina Midstream |
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Oil
(MBbls) |
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1,094 |
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|
1,044 |
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|
2,121 |
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|
2,065 |
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Oil
(MBbls/d) |
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12 |
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11 |
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12 |
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11 |
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Natural
gas (MMcf) |
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14,145 |
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|
15,432 |
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|
27,798 |
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|
29,088 |
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Natural
gas (MMcf/d) |
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|
155 |
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|
170 |
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|
154 |
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|
161 |
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Net Production
in MBoe: |
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Total production
(MBoe) |
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118 |
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290 |
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|
259 |
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|
600 |
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Average daily
production (Boe/d) |
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1,297 |
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|
3,187 |
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|
1,431 |
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|
3,315 |
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Average Sales
Price per Boe: |
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Net realized price,
including hedges (1) |
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$ |
45.84 |
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$ |
32.93 |
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$ |
44.97 |
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$ |
32.87 |
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Net realized price,
excluding hedges (2) |
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$ |
50.21 |
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$ |
26.49 |
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$ |
47.85 |
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$ |
27.14 |
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(1) Excludes
impact of mark-to-market gains (losses). |
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(2) Excludes the
impact of all hedging gains (losses). |
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Sanchez
Midstream Partners LP |
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Condensed
Consolidated Statements of Operations |
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Three Months Ended
June 30, |
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Six Months Ended
June 30, |
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2018 |
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2017 |
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2018 |
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2017 |
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($ in thousands, except per unit
amounts) |
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Oil, liquids, and gas
sales |
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$ |
5,925 |
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$ |
7,640 |
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$ |
12,393 |
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$ |
16,181 |
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Gathering and
transportation sales |
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1,661 |
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14,176 |
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3,349 |
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25,387 |
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Gathering and
transportation lease revenues |
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13,168 |
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— |
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25,486 |
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— |
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Gain (loss) on
mark-to-market activities |
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(3,715 |
) |
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3,213 |
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(5,653 |
) |
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9,268 |
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Total
revenues |
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17,039 |
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25,029 |
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35,575 |
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50,836 |
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Operating
expenses: |
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Lease
operating expenses |
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2,007 |
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3,881 |
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3,978 |
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8,864 |
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Transportation operating expenses |
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3,071 |
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3,032 |
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5,918 |
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6,328 |
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Cost of
sales |
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— |
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40 |
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— |
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|
77 |
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Production taxes |
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287 |
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353 |
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609 |
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826 |
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General
and administrative |
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6,919 |
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6,353 |
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12,084 |
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|
11,962 |
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Unit-based compensation expense |
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1,347 |
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|
780 |
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2,785 |
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|
1,320 |
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(Gain)
loss on sale of assets |
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(2,388 |
) |
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|
— |
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|
|
(2,388 |
) |
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— |
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Depreciation, depletion and amortization |
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6,545 |
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8,937 |
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13,173 |
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21,118 |
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Asset
impairments |
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— |
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— |
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— |
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|
4,688 |
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Accretion
expense |
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123 |
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240 |
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|
249 |
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|
498 |
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Total
operating expenses |
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17,911 |
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23,616 |
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36,408 |
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55,681 |
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Other (income)
expense: |
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Interest
expense, net |
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2,780 |
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1,896 |
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5,379 |
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3,779 |
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Earnings
from equity investments |
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(3,111 |
) |
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(1,042 |
) |
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(7,383 |
) |
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(1,524 |
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Other
expense |
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|
1,254 |
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|
— |
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|
1,524 |
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|
— |
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Total
expenses, net |
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18,834 |
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24,470 |
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35,928 |
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57,936 |
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Income (loss) before
income taxes |
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(1,795 |
) |
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|
559 |
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|
(353 |
) |
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|
(7,100 |
) |
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Income
tax expense |
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|
— |
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|
— |
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— |
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|
— |
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Net income (loss) |
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(1,795 |
) |
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|
559 |
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|
|
(353 |
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(7,100 |
) |
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Less: |
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Preferred
unit paid-in-kind distributions |
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(3,500 |
) |
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— |
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(3,500 |
) |
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(2,625 |
) |
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Preferred
unit distributions |
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(7,000 |
) |
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(8,750 |
) |
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|
(15,750 |
) |
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|
(15,750 |
) |
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Preferred
unit amortization |
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|
(568 |
) |
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|
(433 |
) |
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|
(1,099 |
) |
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|
(837 |
) |
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Net loss attributable
to common unitholders |
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$ |
(12,863 |
) |
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$ |
(8,624 |
) |
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$ |
(20,702 |
) |
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$ |
(26,312 |
) |
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|
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|
Adjusted EBITDA |
|
$ |
17,601 |
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|
$ |
15,336 |
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|
$ |
36,179 |
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|
$ |
25,874 |
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Net loss per unit |
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|
|
|
|
|
Common
units - Basic |
|
$ |
(0.85 |
) |
|
$ |
(0.62 |
) |
|
$ |
(1.38 |
) |
|
$ |
(1.92 |
) |
|
|
Weighted Average Units
Outstanding |
|
|
|
|
|
|
|
|
|
|
Common
units - Basic |
|
|
15,199,779 |
|
|
|
13,939,993 |
|
|
|
14,997,058 |
|
|
|
13,671,557 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sanchez
Midstream Partners LP |
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets |
|
|
|
|
|
|
|
|
|
|
|
|
June 30, |
|
Dec. 31, |
|
|
|
|
|
|
|
|
2018 |
|
2017 |
|
|
|
|
|
|
|
|
($ in thousands) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
$ |
11,875 |
|
|
$ |
17,527 |
|
|
|
|
|
|
|
Midstream and
production assets, net |
|
|
204,738 |
|
|
|
213,145 |
|
|
|
|
|
|
|
Other assets |
|
|
286,809 |
|
|
|
297,751 |
|
|
|
|
|
|
|
Total
assets |
|
$ |
503,422 |
|
|
$ |
528,423 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities |
|
$ |
14,149 |
|
|
$ |
13,413 |
|
|
|
|
|
|
|
Long-term debt, net of
debt issuance costs |
|
|
183,040 |
|
|
|
187,808 |
|
|
|
|
|
|
|
Other long-term
liabilities |
|
|
15,739 |
|
|
|
12,598 |
|
|
|
|
|
|
|
Total
liabilities |
|
|
212,928 |
|
|
|
213,819 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mezzanine equity |
|
|
346,761 |
|
|
|
343,912 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Partners' deficit |
|
|
(56,267 |
) |
|
|
(29,308 |
) |
|
|
|
|
|
|
Total partners'
deficit |
|
|
(56,267 |
) |
|
|
(29,308 |
) |
|
|
|
|
|
|
Total
liabilities and partners' capital |
|
$ |
503,422 |
|
|
$ |
528,423 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sanchez
Midstream Partners LP |
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Net Income (Loss) to Adjusted EBITDA and Cash Available for
Distribution |
|
|
|
|
|
Three Months |
|
|
|
|
|
|
Three Months Ended
June 30, |
|
Ended |
|
Six Months Ended
June 30, |
|
|
|
March 31, |
|
|
|
2018 |
|
2017 |
|
2018 |
|
2018 |
|
2017 |
|
|
($ in thousands) |
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
(1,795 |
) |
|
$ |
559 |
|
|
$ |
1,442 |
|
|
$ |
(353 |
) |
|
$ |
(7,100 |
) |
Adjusted by: |
|
|
|
|
|
|
|
|
|
|
Interest
expense, net |
|
|
2,780 |
|
|
|
1,896 |
|
|
|
2,599 |
|
|
|
5,379 |
|
|
|
3,779 |
|
Depreciation, depletion and amortization |
|
|
6,545 |
|
|
|
8,937 |
|
|
|
6,628 |
|
|
|
13,173 |
|
|
|
21,118 |
|
Asset
impairments |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
4,688 |
|
Accretion
expense |
|
|
123 |
|
|
|
240 |
|
|
|
126 |
|
|
|
249 |
|
|
|
498 |
|
Gain on
sale of assets |
|
|
(2,388 |
) |
|
|
— |
|
|
|
— |
|
|
|
(2,388 |
) |
|
|
— |
|
Unit-based compensation expense |
|
|
1,347 |
|
|
|
1,479 |
|
|
|
1,438 |
|
|
|
2,785 |
|
|
|
2,019 |
|
Unit-based asset management fees |
|
|
2,647 |
|
|
|
2,345 |
|
|
|
2,279 |
|
|
|
4,926 |
|
|
|
4,375 |
|
Distributions in excess of equity earnings |
|
|
2,360 |
|
|
|
803 |
|
|
|
1,837 |
|
|
|
4,197 |
|
|
|
1,771 |
|
(Gain)
loss on mark-to-market activities |
|
|
4,453 |
|
|
|
(1,347 |
) |
|
|
1,978 |
|
|
|
6,431 |
|
|
|
(5,827 |
) |
Acquisition and divestiture costs |
|
|
1,529 |
|
|
|
424 |
|
|
|
251 |
|
|
|
1,780 |
|
|
|
553 |
|
Adjusted EBITDA
(1) |
|
$ |
17,601 |
|
|
$ |
15,336 |
|
|
$ |
18,578 |
|
|
$ |
36,179 |
|
|
$ |
25,874 |
|
Adjusted by: |
|
|
|
|
|
|
|
|
|
|
Maintenance capital expenditures(2) |
|
|
(400 |
) |
|
|
(600 |
) |
|
|
(400 |
) |
|
|
(800 |
) |
|
|
(1,200 |
) |
Cash
interest expense |
|
|
(2,488 |
) |
|
|
(1,871 |
) |
|
|
(2,300 |
) |
|
|
(4,788 |
) |
|
|
(3,458 |
) |
Preferred
unit distributions |
|
|
(7,000 |
) |
|
|
(8,750 |
) |
|
|
(8,750 |
) |
|
|
(15,750 |
) |
|
|
(15,750 |
) |
Cash available for
distribution |
|
$ |
7,713 |
|
|
$ |
4,115 |
|
|
$ |
7,128 |
|
|
$ |
14,841 |
|
|
$ |
5,466 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) To supplement our financial results and guidance
presented in accordance with U.S. generally accepted accounting
principles (“GAAP”), we use Adjusted EBITDA, a non-GAAP financial
measure, in this quarterly report. We believe that non-GAAP
financial measures are helpful in understanding our past financial
performance and potential future results, particularly in light of
the effect of various transactions effected by us. We define
Adjusted EBITDA as net income (loss) adjusted by: (i) interest
(income) expense, net, which includes interest expense, interest
expense net, (gain) loss on interest rate derivative contracts, and
interest (income); (ii) income tax expense (benefit); (iii)
depreciation, depletion and amortization; (iv) asset impairments;
(v) accretion expense; (vi) (gain) loss on sale of assets; (vii)
unit-based compensation expense; (viii) unit-based asset management
fees; (ix) distributions in excess of equity earnings; (x) (gain)
loss on mark-to-market activities; (xi) commodity derivatives
settled early; (xii) (gain) loss on embedded derivatives; and
(xiii) acquisition and divestiture costs. |
|
(2) Represents estimated maintenance capital
expenditures attributable to our controlling interest in our
midstream and production assets. Maintenance capital expenditures
are cash expenditures made to maintain, over the long-term, our
operating capacity, operating income or asset base. Examples of
maintenance capital expenditures are expenditures to develop and
replace our oil and natural gas reserves as well as the repair,
refurbishment and replacement of gathering and transportation
assets, to maintain equipment reliability, integrity and safety and
to address environmental laws and regulations. |
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