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- Third-quarter 2019 net loss of
$6.8 million , compared to net income of$3.9 million for second-quarter 2019 and net income of$0.4 million for third-quarter 2018; - Third-quarter 2019 Adjusted EBITDA (a non-GAAP financial measure) of
$17.4 million , compared to Adjusted EBITDA of$17.5 million for second-quarter 2019 and$18.4 million for third-quarter 2018; and - The Partnership has reduced debt by
$28 million (15.2 percent) sinceSept. 30, 2018 .
FINANCIAL RESULTS
The Partnership’s third-quarter 2019 revenues totaled
Earnings from
On a GAAP basis, the Partnership reported a net loss of
Adjusted EBITDA was approximately
LIQUIDITY AND CREDIT FACILITY UPDATE
The Partnership had approximately
As of
Since
COMMON UNITS
The Partnership had 20,088,015 common units issued and outstanding as of
CLASS C DISTRIBUTIONS
As required by the Third Amended and Restated Agreement of Limited Partnership of the Partnership, if a quarterly distribution on the Partnership’s Class C preferred units cannot be paid in cash, it must be paid 100 percent in Class C Preferred PIK Units. Accordingly, on
ABOUT THE PARTNERSHIP
ADDITIONAL INFORMATION
Additional information about SNMP can be found in our documents on file with the
NON-GAAP FINANCIAL MEASURES
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 press release. 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 affected 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.
Adjusted EBITDA is used as a quantitative standard 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 provides useful information to investors in assessing our financial condition and results of operations. The GAAP measure most directly comparable to Adjusted EBITDA is net income (loss). Our non-GAAP financial measure of Adjusted EBITDA should not be considered as an alternative to GAAP net income (loss). Adjusted EBITDA has important limitations as an analytical tool because it excludes some but not all items that affect net income (loss). Adjusted EBITDA should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA may be defined differently by other companies in our industry, our definition of Adjusted EBITDA may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.
For a reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP financial metric, please see the tables below.
FORWARD-LOOKING STATEMENTS
This press 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” as defined by the
The forward-looking statements contained in this press 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. In addition, management’s assumptions about future events may prove to be inaccurate. 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; 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 creditworthiness and performance of our counterparties, including financial institutions, operating partners, customers and other counterparties; our ability to grow enterprise value; the ability of our partners to perform under our joint ventures and partnerships; the availability, proximity and capacity of, and costs associated with, gathering, processing, compression and transportation facilities; our ability to utilize the services, personnel and other assets of the sole member of our general partner (“Manager”) pursuant to a services agreement; Manager’s ability to retain personnel to perform its obligations under its shared services agreement with
PARTNERSHIP CONTACT
Chief Financial Officer
ir@sanchezmidstream.com
(877) 847-0009
General Inquiries: (713) 783-8000
www.sanchezmidstream.com
Sanchez Midstream Partners LP | |||||||||||||
Operating Statistics | |||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||
Gathering and Transportation Throughput: | |||||||||||||
Seco Pipeline | |||||||||||||
Natural gas (MMcf) | — | 1,475 | 692 | 12,381 | |||||||||
Western Catarina Midstream | |||||||||||||
Oil (MBbls) | 890 | 1,180 | 3,224 | 3,301 | |||||||||
Oil (MBbls/d) | 10 | 13 | 12 | 12 | |||||||||
Natural gas (MMcf) | 11,249 | 14,271 | 37,952 | 42,070 | |||||||||
Natural gas (MMcf/d) | 122 | 155 | 139 | 154 | |||||||||
Net Production in MBoe: | |||||||||||||
Total production (MBoe) | 85 | 98 | 236 | 357 | |||||||||
Average daily production (Boe/d) | 924 | 1,065 | 864 | 1,308 | |||||||||
Average Sales Price per Boe: | |||||||||||||
Net realized price, including hedges (1) | $ | 48.32 | $ | 53.60 | $ | 49.72 | $ | 47.34 | |||||
Net realized price, excluding hedges (2) | $ | 44.81 | $ | 59.72 | $ | 46.89 | $ | 51.11 | |||||
(1) Excludes impact of mark-to-market gains (losses). | |||||||||||||
(2) Excludes the impact of all hedging gains (losses). | |||||||||||||
Sanchez Midstream Partners LP | |||||||||||||||||||||||||
Condensed Consolidated Statements of Operations | |||||||||||||||||||||||||
Three Months | Three Months | ||||||||||||||||||||||||
Three Months Ended | Ended | Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | March 31, | June 30, | September 30, | ||||||||||||||||||||||
2019 | 2018 | 2019 | 2019 | 2019 | 2018 | ||||||||||||||||||||
($ in thousands, except per unit amounts) | |||||||||||||||||||||||||
Oil, liquids, and gas sales | $ | 4,107 | $ | 5,853 | $ | 4,384 | $ | 3,242 | $ | 11,733 | $ | 18,245 | |||||||||||||
Gathering and transportation sales | 1,720 | 1,582 | 1,683 | 1,702 | 5,105 | 4,931 | |||||||||||||||||||
Gathering and transportation lease revenues | 14,135 | 13,148 | 16,257 | 15,969 | 46,361 | 38,634 | |||||||||||||||||||
Gain (loss) on mark-to-market activities | 954 | (2,431 | ) | (4,834 | ) | 942 | (2,938 | ) | (8,083 | ) | |||||||||||||||
Total revenues | 20,916 | 18,152 | 17,490 | 21,855 | 60,261 | 53,727 | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||||
Lease operating expenses | 2,105 | 1,905 | 1,715 | 2,065 | 5,885 | 5,883 | |||||||||||||||||||
Transportation operating expenses | 2,752 | 3,061 | 2,676 | 3,048 | 8,476 | 8,979 | |||||||||||||||||||
Production taxes | 165 | 292 | 183 | 141 | 489 | 901 | |||||||||||||||||||
General and administrative | 4,317 | 5,109 | 4,749 | 4,171 | 13,237 | 17,193 | |||||||||||||||||||
Unit-based compensation expense | 271 | 155 | 635 | 175 | 1,081 | 2,940 | |||||||||||||||||||
Gain on sale of assets | — | (238 | ) | — | — | — | (2,626 | ) | |||||||||||||||||
Depreciation, depletion and amortization | 6,441 | 6,507 | 6,429 | 6,174 | 19,044 | 19,680 | |||||||||||||||||||
Accretion expense | 132 | 123 | 133 | 126 | 391 | 372 | |||||||||||||||||||
Total operating expenses | 16,183 | 16,914 | 16,520 | 15,900 | 48,603 | 53,322 | |||||||||||||||||||
Other (income) expense: | |||||||||||||||||||||||||
Interest expense, net | 12,141 | 2,786 | 2,786 | 2,814 | 17,741 | 8,165 | |||||||||||||||||||
Earnings from equity investments | (780 | ) | (2,313 | ) | (1,442 | ) | (791 | ) | (3,013 | ) | (9,696 | ) | |||||||||||||
Other (income) expense | (31 | ) | 352 | (46 | ) | (21 | ) | (98 | ) | 1,876 | |||||||||||||||
Total expenses, net | 27,513 | 17,739 | 17,818 | 17,902 | 63,233 | 53,667 | |||||||||||||||||||
Income (loss) before income taxes | (6,597 | ) | 413 | (328 | ) | 3,953 | (2,972 | ) | 60 | ||||||||||||||||
Income tax expense | 213 | — | 46 | 76 | 335 | — | |||||||||||||||||||
Net income (loss) | (6,810 | ) | 413 | (374 | ) | 3,877 | (3,307 | ) | 60 | ||||||||||||||||
Less: | |||||||||||||||||||||||||
Preferred unit paid-in-kind distributions | (3,804 | ) | — | — | (10,605 | ) | (14,409 | ) | (3,500 | ) | |||||||||||||||
Preferred unit distributions | — | (8,838 | ) | (8,838 | ) | — | (8,838 | ) | (24,588 | ) | |||||||||||||||
Preferred unit amortization | (266 | ) | (608 | ) | (697 | ) | (745 | ) | (1,708 | ) | (1,707 | ) | |||||||||||||
Deemed distribution | 103,773 | — | — | — | 103,773 | — | |||||||||||||||||||
Net income (loss) attributable to common unitholders - Basic | 92,893 | (9,033 | ) | (9,909 | ) | (7,473 | ) | 75,511 | (29,735 | ) | |||||||||||||||
Mark-to-market on warrant | 3,097 | — | — | — | 3,097 | — | |||||||||||||||||||
Net income (loss) attributable to common unitholders - Diluted | 95,990 | (9,033 | ) | (9,909 | ) | (7,473 | ) | 78,608 | (29,735 | ) | |||||||||||||||
Adjusted EBITDA (1) | $ | 17,404 | $ | 18,355 | $ | 18,554 | $ | 17,519 | $ | 53,477 | $ | 54,534 | |||||||||||||
Net income (loss) per unit | |||||||||||||||||||||||||
Common units - Basic | $ | 4.99 | $ | (0.59 | ) | $ | (0.73 | ) | $ | (0.42 | ) | $ | 4.31 | $ | (1.97 | ) | |||||||||
Common units - Diluted | $ | 4.54 | $ | (0.59 | ) | $ | (0.73 | ) | $ | (0.42 | ) | $ | 4.13 | $ | (1.97 | ) | |||||||||
Weighted Average Units Outstanding | |||||||||||||||||||||||||
Common units - Basic | 18,617,385 | 15,398,453 | 16,173,858 | 17,684,563 | 17,500,886 | 15,114,671 | |||||||||||||||||||
Common units -Diluted | 21,141,065 | 15,398,453 | 16,173,858 | 17,684,563 | 19,011,877 | 15,114,671 | |||||||||||||||||||
(1) Adjusted EBITDA is a non-GAAP financial measure. For more information, see the NON-GAAP FINANCIAL MEASURES section of this press release. |
Sanchez Midstream Partners LP | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
September 30, | December 31, | |||||||
2019 | 2018 | |||||||
($ in thousands) | ||||||||
Current assets | $ | 14,054 | $ | 13,886 | ||||
Midstream and production assets, net | 190,214 | 198,334 | ||||||
Other assets | 254,457 | 274,465 | ||||||
Total assets | $ | 458,725 | $ | 486,685 | ||||
Current liabilities | $ | 10,269 | $ | 10,809 | ||||
Current liabilities - short-term debt, net of debt issuance costs | 161,245 | — | ||||||
Long-term debt, net of debt issuance costs | — | 178,582 | ||||||
Class C preferred units | 262,113 | — | ||||||
Other long-term liabilities | 13,333 | 12,057 | ||||||
Total liabilities | 446,960 | 201,448 | ||||||
Mezzanine equity | — | 349,857 | ||||||
Partners' capital (deficit) | 11,765 | (64,620 | ) | |||||
Total partners' capital (deficit) | 11,765 | (64,620 | ) | |||||
Total liabilities and partners' capital | $ | 458,725 | $ | 486,685 | ||||
Sanchez Midstream Partners LP | |||||||||||||||||||||||||
Reconciliation of Net Income (Loss) to Adjusted EBITDA | |||||||||||||||||||||||||
Three Months | Three Months | ||||||||||||||||||||||||
Three Months Ended | Ended | Ended | Nine Months Ended | ||||||||||||||||||||||
September 30, | March 31, | June 30, | September 30, | ||||||||||||||||||||||
2019 | 2018 | 2019 | 2019 | 2019 | 2018 | ||||||||||||||||||||
($ in thousands) | |||||||||||||||||||||||||
Net income (loss) | $ | (6,810 | ) | $ | 413 | $ | (374 | ) | $ | 3,877 | $ | (3,307 | ) | $ | 60 | ||||||||||
Adjusted by: | |||||||||||||||||||||||||
Interest expense, net | 12,141 | 2,786 | 2,786 | 2,814 | 17,741 | 8,165 | |||||||||||||||||||
Income tax expense | 213 | — | 46 | 76 | 335 | — | |||||||||||||||||||
Depreciation, depletion and amortization | 6,441 | 6,507 | 6,429 | 6,174 | 19,044 | 19,680 | |||||||||||||||||||
Accretion expense | 132 | 123 | 133 | 126 | 391 | 372 | |||||||||||||||||||
Gain on sale of assets | — | (238 | ) | — | — | — | (2,626 | ) | |||||||||||||||||
Unit-based compensation expense | 271 | 155 | 635 | 175 | 1,081 | 2,940 | |||||||||||||||||||
Unit-based asset management fees | 1,922 | 2,365 | 2,032 | 1,839 | 5,793 | 7,291 | |||||||||||||||||||
Distributions in excess of equity earnings | 4,079 | 4,061 | 2,064 | 3,412 | 9,555 | 8,258 | |||||||||||||||||||
(Gain) loss on mark-to-market activities | (985 | ) | 2,183 | 4,803 | (974 | ) | 2,844 | 8,614 | |||||||||||||||||
Acquisition and divestiture costs | — | — | — | — | — | 1,780 | |||||||||||||||||||
Adjusted EBITDA (1) | $ | 17,404 | $ | 18,355 | $ | 18,554 | $ | 17,519 | $ | 53,477 | $ | 54,534 | |||||||||||||
(1) Adjusted EBITDA and cash available for distribution are non-GAAP financial measures. For more information, see the NON-GAAP FINANCIAL MEASURES section of this press release. | |||||||||||||||||||||||||
Source: Sanchez Midstream Partners LP