The Crosstex Energy companies, Crosstex Energy, L.P.
(NASDAQ:XTEX) (the Partnership) and Crosstex Energy, Inc.
(NASDAQ:XTXI) (the Corporation), today reported results for the
third quarter of 2013.
Third Quarter 2013 Compared with Third Quarter 2012 —
Crosstex Energy, L.P. Financial Results
The Partnership realized adjusted EBITDA of $52.5 million and
distributable cash flow of $32.8 million for the third quarter of
2013, compared with adjusted EBITDA of $55.2 million and
distributable cash flow of $27.0 million for the third quarter of
2012. The Partnership’s net loss for the third quarter of 2013 was
$78.8 million versus a net loss of $16.1 million for the third
quarter of 2012. The net loss for the third quarter of 2013 was
primarily the result of an impairment expense on the Eunice
processing plant.
The Partnership’s third quarter 2013 gross operating margin of
$100.0 million increased $0.2 million compared to a gross operating
margin of $99.8 million for the third quarter of 2012. Adjusted
EBITDA, distributable cash flow and gross operating margin are
explained in greater detail under “Non-GAAP Financial Information,”
and reconciliations of these measures to their most directly
comparable GAAP measures are included in the tables at the end of
this news release.
“We are pleased with our solid financial performance in the
third quarter,” said Barry E. Davis, Crosstex President and Chief
Executive Officer. “With the announced combination with Devon’s
midstream assets, the completion of phase one of the Cajun-Sibon
expansion project and our newly announced natural gas gathering and
processing complex in the Permian basin, we are achieving our
objective for greater scale and diversity, and we believe the
prospects for growth at Crosstex are stronger than ever.”
The Partnership reports results by operating segment principally
based on regions served. Reportable segments consist of natural gas
gathering, processing and transmission operations in the Barnett
Shale in north Texas and in the Permian Basin in west Texas (NTX);
gas pipelines and gas processing plants in Louisiana (LIG); gas
processing and NGL assets, including NGL fractionation and
marketing activities in south Louisiana (PNGL); and rail, truck,
pipeline and barge facilities in the Ohio River Valley (ORV).
Each business segment’s contribution to the third quarter 2013
gross operating margin compared with the third quarter of 2012, and
the factors affecting those contributions, are described below:
- The PNGL segment’s gross operating
margin increased by $9.1 million primarily due to increased margins
from NGL fractionation and marketing activities, increased south
Louisiana processing margins and increased crude oil terminal
activity.
- The ORV segment's gross operating
margin increased by $2.8 million primarily due to increased crude
oil and condensate handling activities and a slight increase in
brine disposal and handling activity.
- The LIG segment’s gross operating
margin decreased by $5.1 million primarily due to lower margins
from the gathering and transmission assets due to lost opportunity
sales volumes from lower processing margins, a reduction in
treating and blending volumes and lost sales volumes related to the
Bayou Corne sinkhole.
- The NTX segment’s gross operating
margin decreased by $6.6 million primarily due to decreased
transmission and gathering margins from a decline in throughput
volumes combined with a reduction in gathering rates under certain
contracts, including a contract with a major producer in North
Texas.
The Partnership’s third quarter 2013 operating expenses were
$39.1 million, an increase of $3.5 million, or 10.0%, from the
third quarter of 2012. The increase was primarily due to a higher
employee headcount for increased activity in the PNGL and ORV
segments. General and administrative expenses decreased $0.9
million, or 5.3%, versus the third quarter of 2012 largely due to
reduced labor and benefits expenses. Depreciation and amortization
expense for the third quarter of 2013 decreased $11.9 million, or
26.3%, compared with the third quarter of 2012 primarily due to
accelerated depreciation of the Sabine Pass Plant in the third
quarter of 2012 and decreased intangible amortization. Impairment
expense was $72.6 million in the third quarter of 2013 due to the
termination of customer contracts associated with the Eunice
processing plant which was shut-down in August 2013. Interest
expense for the third quarter of 2013 decreased $6.8 million to
$16.4 million primarily due to greater capitalized interest in the
third quarter of 2013.
The net loss per limited partner common unit for the third
quarter of 2013 was $0.95 compared with a net loss of $0.34 per
common unit for the third quarter of 2012.
Third Quarter 2013 Compared with Third Quarter 2012 —
Crosstex Energy, Inc. Financial Results
The Corporation reported a net loss of $11.2 million for the
third quarter of 2013 compared with a net loss of $4.3 million for
the third quarter of 2012.
Excluding cash and debt held by the Partnership and E2, the
compression and stabilization company in which the Corporation has
invested, the Corporation had cash on hand of approximately $1.4
million and $47.3 million of borrowings outstanding under the bank
credit facility of the Corporation's subsidiary as of the end of
the third quarter of 2013.
Crosstex to Hold Earnings Conference Call on November 8,
2013
The Partnership and the Corporation will hold a conference call
to discuss third quarter 2013 financial results on Friday, November
8, 2013, at 10:00 a.m. Central time (11:00 a.m. Eastern time). The
dial-in number for the call is 1-888-713-4218. Callers outside the
United States should dial 1-617-213-4870. The passcode is 10414574
for all callers. Investors are advised to dial in to the call at
least 10 minutes prior to the call time to register. Participants
may preregister for the call at
https://www.theconferencingservice.com/prereg/key.process?key=PYUA8DR7F.
Preregistrants will be issued a pin number to use when dialing
in to the live call, which will provide quick access to the
conference by bypassing the operator upon connection. Interested
parties also can access the live webcast of the call on the
Investors page of Crosstex’s website at www.crosstexenergy.com.
After the conference call, a replay can be accessed until
January 30, 2014, by dialing 1-888-286-8010. International callers
should dial 1-617-801-6888 for a replay. The passcode for all
callers listening to the replay is 29464843. Interested parties
also can visit the Investors page of Crosstex’s website to listen
to a replay of the call.
About the Crosstex Energy Companies
Crosstex Energy, L.P. (NASDAQ: XTEX) is an integrated midstream
energy partnership headquartered in Dallas that offers diversified,
tailored customer solutions spanning the energy value chain with
services and infrastructure that link energy production with
consumption. XTEX operates approximately 3,500 miles of natural
gas, natural gas liquids and oil pipelines, 10 natural gas
processing plants and four fractionators, as well as barge and rail
terminals, product storage facilities, brine disposal wells and an
extensive truck fleet. XTEX has the right platform, the right
opportunities and the right people to pursue its growth-focused
business strategy.
Crosstex Energy, Inc. (NASDAQ: XTXI) owns the general
partner interest, the incentive distribution rights and a portion
of the limited partner interests in Crosstex Energy, L.P. as well
as the majority interest in a services company focused on the Utica
Shale play in the Ohio River Valley.
Additional information about the Crosstex companies can be found
at www.crosstexenergy.com.
Non-GAAP Financial Information
This press release contains non-generally accepted accounting
principle financial measures that the Partnership refers to as
gross operating margin, adjusted EBITDA and distributable cash
flow. Gross operating margin is defined as revenue less the cost of
purchased gas, NGL and crude oil. Adjusted EBITDA is defined as net
income plus interest expense, provision for income taxes,
depreciation and amortization expense, impairments, stock-based
compensation, (gain) loss on non-cash derivatives, distribution
from a limited liability company and non-controlling interest; less
gain on sale of property and equity in income (loss) of a limited
liability company. Distributable cash flow is defined as earnings
before certain noncash charges and the gain on the sale of assets
less maintenance capital expenditures. The amounts included in the
calculation of these measures are computed in accordance with
generally accepted accounting principles (GAAP) with the exception
of maintenance capital expenditures. Maintenance capital
expenditures are capital expenditures made to replace partially or
fully depreciated assets in order to maintain the existing
operating capacity of the assets and to extend their useful
lives.
The Partnership believes these measures are useful to investors
because they may provide users of this financial information with
meaningful comparisons between current results and prior-reported
results and a meaningful measure of the Partnership’s cash flow
after it has satisfied the capital and related requirements of its
operations.
Gross operating margin, adjusted EBITDA and distributable cash
flow, as defined above, are not measures of financial performance
or liquidity under GAAP. They should not be considered in isolation
or as an indicator of the Partnership’s performance. Furthermore,
they should not be seen as measures of liquidity or a substitute
for metrics prepared in accordance with GAAP. Reconciliations of
these measures to their most directly comparable GAAP measures are
included in the following tables.
This press release contains forward-looking statements within
the meaning of the federal securities laws. These statements are
based on certain assumptions made by the Partnership and the
Corporation based upon management’s experience and perception of
historical trends, current conditions, expected future developments
and other factors the Partnership and the Corporation believe are
appropriate in the circumstances. These statements include, but are
not limited to, statements with respect to the Partnership’s and
the Corporation’s guidance and future outlook, distribution and
dividend guidelines and future estimates and results of operations.
Such statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond the control of the
Partnership and the Corporation, which may cause the Partnership’s
and the Corporation’s actual results to differ materially from
those implied or expressed by the forward-looking statements. These
risks include the following: (1) the Partnership’s
profitability is dependent upon prices and market demand for
natural gas, NGL, condensate and crude oil; (2) the
Partnership’s substantial indebtedness could limit its flexibility
and adversely affect its financial health; (3) the Partnership
may not be able to obtain funding, which would impair its ability
to grow; (4) the Partnership and the Corporation do not have
diversified assets; (5) the Partnership may not be successful
in balancing its purchases and sales; (6) drilling levels may
decrease due to deterioration in the credit and commodity markets;
(7) the Partnership’s credit risk management efforts may fail
to adequately protect against customer non-payment; (8) the
amount of natural gas, NGL, condensate and crude oil transported
may decline as a result of reduced drilling by producers,
competition for supplies, reserve declines and reduction in demand
from key customers and markets; (9) the level of the
Partnership’s processing, fractionation, crude oil handling and
brine disposal operations may decline for similar reasons;
(10) the successful execution of major projects is subject to
factors beyond the control of the Partnership; (11) operational,
regulatory and other asset-related risks, including weather
conditions, exist because a significant portion of the
Partnership’s assets are located in southern Louisiana and the Ohio
River Valley; (12) the Partnership’s use of derivative financial
instruments does not eliminate its exposure to fluctuations in
commodity prices and interest rates; (13) failure to satisfy
closing conditions with respect to the combination with Devon; (14)
the risks that the Partnership’s, the Corporation’s and Devon’s
businesses will not be integrated successfully or that such
integration may take longer than anticipated; (15) the possibility
that expected synergies of the combination with Devon will not be
realized or will not be realized within the expected time frame;
and (16) other factors discussed in the Partnership’s and the
Corporation’s Annual Reports on Form 10-K for the year ended
December 31, 2012, Quarterly Reports on Form 10-Q for the
quarters ended March 31, 2013, June 30, 2013 and
September 30, 2013 (when they are available) and other filings
with the Securities and Exchange Commission. The Partnership and
the Corporation have no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events or otherwise.
CROSSTEX ENERGY, L.P. Selected Financial
Data
(All amounts in thousands except per unit
amounts)
Three Months Ended September 30,
Nine Months Ended September 30, 2013
2012 2013
2012 (Unaudited)
(Unaudited) Revenues $ 468,362 $ 444,947 $ 1,368,640 $
1,265,308 Purchased gas, NGLs and crude oil 368,349
345,202 1,068,464 975,507
Gross operating margin 100,013 99,745 300,176 289,801 Operating
costs and expenses: Operating expenses 39,090 35,551 113,204 93,928
General and administrative 15,605 16,470 50,053 44,398 (Gain) loss
on sale of property (270 ) 109 (175 ) (395 ) (Gain) loss on
derivatives 1,634 759 1,662 (1,977 ) Depreciation and amortization
33,205 45,059 101,566 110,107 Impairment 72,576
— 72,576 — Total
operating costs and expenses 161,840 97,948 338,886 246,061
Operating income (loss) (61,827 ) 1,797 (38,710 ) 43,740 Interest
expense, net of interest income (16,430 ) (23,229 ) (54,874 )
(63,932 ) Equity in income (loss) of limited liability company (65
) 1,511 (106 ) 1,511 Other income 38 4,439
368 4,464 Total other expense
(16,457 ) (17,279 ) (54,612 ) (57,957 ) Loss before non-controlling
interest and income taxes (78,284 ) (15,482 ) (93,322 ) (14,217 )
Income tax provision (554 ) (672 ) (2,097 )
(1,507 ) Net Loss (78,838 ) (16,154 ) (95,419 ) (15,724 )
Less: Net loss attributable to the non-controlling interest
— (54 ) — (163 ) Net Loss
attributable to Crosstex Energy, L.P. $ (78,838 ) $ (16,100 ) $
(95,419 ) $ (15,561 ) Preferred interest in net loss attributable
to Crosstex Energy, L.P. $ 8,286 $ 5,640 $ 23,497
$ 15,346 General partner interest in net loss $
(1,451 ) $ (309 ) $ (3,007 ) $ (420 ) Limited partners’ interest in
net loss attributable to Crosstex Energy, L.P. $ (85,673 ) $
(21,431 ) $ (115,909 ) $ (30,487 ) Net loss attributable to
Crosstex Energy, L.P. per limited partner unit: Basic and diluted
common units $ (0.95 ) $ (0.34 ) $ (1.38 ) $ (0.53 ) Weighted
average limited partners’ units outstanding: Basic and diluted
common units 89,229 62,027
82,623 56,315
CROSSTEX
ENERGY, L.P. Reconciliation of Net Loss to Adjusted EBITDA
and Distributable Cash Flow
(All amounts in thousands except ratios
and per unit amounts)
Three Months Ended September 30,
Nine Months Ended September 30, 2013
2012 2013
2012 (Unaudited)
(Unaudited) Net loss attributable to Crosstex Energy, L.P. $
(78,838 ) $ (16,100 ) $ (95,419 ) $ (15,561 ) Depreciation and
amortization 33,205 45,059 101,566 110,107 Impairment 72,576 —
72,576 — Stock-based compensation 3,022 2,503 11,078 7,496 Interest
expense, net 16,430 23,229 54,874 63,932 (Gain) loss on sale of
property (270 ) 109 (175 ) (395 ) Equity in (income) loss of
limited liability company 65 (1,511 ) 106 (1,511 ) Distribution
received from Howard Energy Partners 4,339 — 13,095 — Non-cash
derivatives, taxes and other 1,980 1,895
3,234 (1,731 ) Adjusted EBITDA 52,509
55,184 160,935 162,337 Interest expense (16,263 ) (23,150 ) (54,316
) (63,977 ) Cash taxes and other (654 ) (797 ) (1,920 ) (1,514 )
Maintenance capital expenditures (2,803 ) (4,222 )
(10,150 ) (10,800 ) Distributable cash flow $ 32,789
$ 27,015 $ 94,549 $ 86,046 Actual
declared distribution (common units and preferred units) $ 33,094 $
23,804 $ 92,767 $ 74,231 Distribution coverage 0.99x 1.13x 1.02x
1.16x Distributions declared per limited partner unit $ 0.34
$ 0.33 $ 1.00 $ 0.99
CROSSTEX
ENERGY, L.P. Operating Data Three
Months Ended September 30, Nine Months
Ended September 30, 2013 2012
2013 2012 Pipeline Throughput (MMBtu/d)
LIG 457,000 741,000 494,000 814,000 NTX - Gathering 694,000 819,000
722,000 824,000 NTX - Transmission 338,000 344,000
338,000 353,000
Total Gathering and Transmission
Volume 1,489,000 1,904,000 1,554,000 1,991,000
Natural Gas Processed (MMBtu/d) PNGL 392,000 602,000 416,000
769,000 LIG 256,000 215,000 254,000 241,000 NTX 374,000
386,000 388,000 353,000
Total Gas Volumes
Processed 1,022,000 1,203,000 1,058,000 1,363,000
Crude Oil Handling (Bbls/d) (1) 14,000 12,000 11,000 12,000
Brine Disposal (Bbls/d) 8,000 8,000 8,000 8,000
NGLs Fractionated (Gal/d) 1,187,000 1,350,000 1,171,000
1,284,000 Realized weighted average Natural Gas Liquids price
($/gallon) (2) 1.01 1.04 0.99 1.09 Actual weighted average Natural
Gas Liquids-to-Gas price ratio 288 % 378 % 271 % 445 %
North Texas Gathering (3) Wells connected 11 17 51 101 (1)
Crude oil handling includes barrels handled by both the ORV
and PNGL segments. (2) Ethane represents 36 percent and 37 percent
of NGL gallons sold at realized prices of $0.25/gal and $0.27/gal
for the three and nine months ended September 30, 2013, and 34
percent and 40 percent of NGL gallons sold at realized prices of
$0.33/gal and $0.44/gal for the three and nine months ended
September 30, 2012. (3) North Texas Gathering wells connected are
as of the last day of the period and include centralized delivery
point connections where the Partnership connects multiple wells at
a single meter station.
CROSSTEX ENERGY, INC.
Selected Financial Data
(All amounts in thousands except per share
amounts)
Three Months Ended September 30,
Nine Months Ended September 30, 2013
2012 2013
2012 (Unaudited)
(Unaudited) Revenues $ 468,643 $ 444,947 $ 1,369,069 $
1,265,308 Purchased gas, NGLs and crude oil 368,349 345,202
1,068,465 975,507 Gross operating margin 100,294 99,745 300,604
289,801 Operating costs and expenses: Operating expenses 39,412
35,551 113,608 93,928 General and administrative 16,364 17,349
53,930 46,729 (Gain) loss on sale of property (270 ) 109 (175 )
(395 ) (Gain) loss on derivatives 1,634 759 1,662 (1,977 )
Depreciation and amortization 33,411 45,078 101,828 110,163
Impairment 72,576 — 72,576
— Total operating costs and expenses 163,127
98,846 343,429 248,448 Operating income (loss) (62,833 ) 899
(42,825 ) 41,353 Interest expense, net of interest income (16,157 )
(23,228 ) (55,149 ) (63,926 ) Equity in income (loss) of limited
liability company (65 ) 1,511 (106 ) 1,511 Other income 37
4,440 367 4,464
Total other expense (16,185 ) (17,277 ) (54,888 ) (57,951 ) Loss
before non-controlling interest and income taxes (79,018 ) (16,378
) (97,713 ) (16,598 ) Income tax benefit 6,152
1,824 8,333 2,612 Net loss
(72,866 ) (14,554 ) (89,380 ) (13,986 ) Less: Net loss attributable
to the non-controlling Interest (61,617 ) (10,240 )
(70,529 ) (7,176 ) Net loss attributable to Crosstex
Energy, Inc. $ (11,249 ) $ (4,314 ) $ (18,851 ) $ (6,810 ) Net loss
per common share: Basic and diluted $ (0.23 ) $ (0.09 ) $ (0.38 ) $
(0.14 ) Weighted average shares outstanding: Basic and diluted
47,724 47,396 47,634
47,372
CROSSTEX ENERGY, INC.
Calculation of Cash Available for Dividends
(All amounts in thousands except per share
amounts)
Three Months Ended September 30,
Nine Months Ended September 30, 2013
2012 2013
2012 Distributions declared by
Crosstex Energy, L.P. associated with: General Partner Interest
$ 454 $ 417 $ 1,331 $ 1,369 Incentive Distribution Rights 1,635
1,024 4,257 3,176 L.P. Units Owned 5,581 5,417
16,415 16,251 Total share of
distributions declared $ 7,670 $ 6,858 $ 22,003 $ 20,796
Other
non-partnership uses: General and administrative expenses (392
) (890 ) (1,837 ) (1,794 ) Cash reserved * (728 )
(597 ) (2,017 ) (1,900 ) Cash available for dividends
$ 6,550 $ 5,371 $ 18,149 $ 17,102
Dividend declared per share $ 0.13 $ 0.12 $ 0.37
$ 0.36 * Cash reserved represents a cash
holdback by the Corporation to cover tax payments, equity-matching
investments in the Partnership and other miscellaneous cash
expenditures. The amount is currently estimated at 10 percent of
the Corporation’s share of Partnership distributions declared, net
of non-partnership general and administrative expenses.
Crosstex EnergyJill McMillan,
214-721-9271Director, Public & Industry
AffairsJill.McMillan@CrosstexEnergy.com
Crosstex Energy, Inc. (MM) (NASDAQ:XTXI)
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