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|Azure Midstream Partners, LP Reports $83 Million Drop Down Acquisition and Second Quarter 2015 Financial Results|
The Partnership also announced financial and operating results for the three months ended June 30, 2015. Adjusted EBITDA for second quarter 2015 was
"ETG begins the strategy of growing the Partnership through accretive acquisitions that are supported by minimum volume commitments from our substantial asset portfolio at our parent company,
Overview of the East Texas Gathering System
The acquired ETG system includes approximately 250 miles of gathering pipelines, three owned treating plants, 10 MMcf/d of processing capacity and four interconnections with major interstate pipelines providing 1.75 Bcf per day of access to downstream markets. A total of 336,000 gross acres in the
The Acquisition is expected to be accretive to 2015 Adjusted EBITDA and DCF. ETG will be financed with an
The terms of the Acquisition were approved by the board of directors of the General Partner, and by the Partnership's conflicts committee. The conflicts committee engaged
Because of common control aspects, the Acquisition is expected to be deemed a transaction between entities under common control and, as such, will be accounted for on an "as if pooled" basis for all periods in which common control existed.
Following Azure Midstream Energy's negotiation of the combination with
The Partnership is well positioned to manage through industry down cycles; however, the Partnership is not immune to negative impacts of major changes in commodity prices that affect similar changes in its customer's production and drilling levels. As a reflection of lower production activity, and based on its current forecast of operational volumes and prices for natural gas and natural gas liquids, the Partnership has reduced the midpoint of its 2015 adjusted EBITDA guidance by 10% to
The Partnership is committed to maintaining and growing its distributions while maintaining balance sheet stability. The annualized distribution coverage ratio during the guidance period is expected to be between 1.0 to 1.2 times.
Second Quarter 2015 Segment Results
Gathering & Processing Segment: Gross margin for the gathering and processing segment for the second quarter 2015 was
Logistics Segment: Gross margin for the logistics segment for the second quarter 2015 was
The Partnership's second quarter 2015 operating expenses were
For accounting purposes, Azure's Legacy System is the acquirer in the business combination because its General Partner obtained control of the Partnership. As a result,
Second Quarter 2015 Conference Call and Webcast
Azure will host a conference call to discuss second quarter 2015 results at
Interested parties can listen to a live webcast of the call from the Events & Presentations page of the Azure Investor Relations website at http://investor.azuremidstreampartners.com/phoenix.zhtml?c=253822&p=irol-calendar. An archived replay of the webcast will be available for 12 months following the live presentation.
The call can be accessed live over the telephone by dialing 1-877-815-2357, 1-330-968-0354 for international callers. The conference ID for the call is 85600648. A telephonic replay of the call will be available for 7 days and can be accessed by dialing 1-855-859-2056 or 1-404-537-3406 for international callers, with conference ID number 85600648.
The following table presents a reconciliation of the non-GAAP financial measure Adjusted EBITDA to the GAAP financial measure of net income.
The following table presents a reconciliation of net income to Adjusted EBITDA and DCF for second quarter 2015.
Additional information about
Azure is a midstream company with a focus on owning, operating, developing and acquiring midstream energy infrastructure in core producing areas in
Use of Non-GAAP Financial Measures
We report financial results in accordance with GAAP. We also present adjusted EBITDA and distributable cash flow each of which are non-GAAP financial measures. We define gross margin as total revenues less cost of natural gas and NGLs. We define Adjusted EBITDA as net income (loss), plus interest expense, income tax expense, depreciation and amortization expense, certain non-cash charges (such as non-cash equity based compensation, impairments, gains and losses on the sale of assets), transaction-related costs and selected charges that are unusual and non-recurring; less interest income, income tax benefit and select gains that are unusual or non-recurring.
We define distributable cash flow as adjusted EBITDA plus cash interest income, less cash interest paid, income tax expense and maintenance capital expenditures. Our definitions of these non-GAAP financial measures may differ from the definitions of similar measures used by other companies. Management uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating our financial performance. Furthermore, management believes that these non-GAAP financial measures may provide users with additional meaningful comparisons between current results and results of prior periods as they are expected to be reflective of our core ongoing business. These measures have limitations, and investors should not consider them in isolation or as a substitute for analysis of our results as reported under GAAP. Reconciliations of GAAP to non-GAAP financial measures are attached to this release.
This press release contains forward-looking statements. These forward-looking statements are identified as any statement that does not relate strictly to historical or current facts. In particular, statements, express or implied, concerning future actions, conditions or events, future operating results or the ability to generate revenues, income or cash flow or to make distributions are forward-looking statements. The forward-looking statements in this press release include statements regarding Azure and its affiliates, including statements about (1) the benefits of the recent transactions described herein, including Azure's ability to successfully make future acquisitions, to maintain or increase future distributions, and to capitalize on certain commercial and operational synergies, (2) future expectations and projections of results of operations or financial condition and (3) the anticipated financial performance of Azure for the fiscal year 2015. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Future actions, conditions or events and future results of operations of Azure may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results are beyond Azure's ability to control or predict. These statements are necessarily based upon various assumptions involving judgments with respect to the future, including, among others, conditions in the capital and credit markets; the ability to achieve synergies and revenue growth; national, international, regional and local economic, competitive and regulatory conditions and developments; technological developments; inflation rates; interest rates; the political and economic stability of oil producing nations; energy markets; commodity prices; weather conditions; environmental conditions; business and regulatory or legal decisions; the timing and success of business development efforts; terrorism; and other uncertainties. In addition, an extensive list of specific material risks and uncertainties affecting Azure is contained in its 2014 Annual Report on Form 10-K, as amended, and in our other public filings and press releases. There is no assurance that any of the actions, events or results of the forward-looking statements will occur, or if any of them do, what impact they will have on Azure's results of operations or financial condition. Because of these uncertainties, you are cautioned not to put undue reliance on any forward-looking statement.
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Institutional Investor Contact: Azure Midstream Partners, LP, Eric T. Kalamaras - Chief Financial Officer, (214) 206-9499; Retail Investor Contact: Azure Midstream Partners, LP, Stephen Ciupak - Director of Financial Strategy, (214) 646-1583; Media Relations Contact: Steven C. Sullivan, (518) 587-5995