RICE ENERGY INC CANONSBURG, Pa., May 3, 2017 /PRNewswire/ -- Rice Midstream Partners LP (NYSE: RMP) ("RMP" or the "Partnership") today reported first quarter 2017 financial and operating results. Highlights include:
-- Gathering throughput averaged 1,235 MDth/d, a 3% increase from fourth
quarter 2016
-- Freshwater delivery volumes averaged 365 MMGal, a 14% increase over 4Q16
-- Net income attributable to limited partners of $36.4 million, or $0.36
per unit
-- Adjusted EBITDA((1)) of $48.8 million, a 5% increase relative to fourth
quarter 2016
-- Distributable cash flow ("DCF")((1)) of $42.4 million, resulting in DCF
coverage ratio((1)) of 1.52x
-- Raised first quarter distribution to $0.2608 per common unit, an
increase of 24% over the first quarter 2016
-- Exited the quarter with low leverage((1)) of 1.1x
-- Reaffirming 20% annual distribution growth target through 2023
-- Targeting approximately 1.4x DCF coverage ratio((1) )and leverage less
than 2.5x through 2019
Commenting on the results, Daniel J. Rice IV, Chief Executive Officer, said, "Our strong first quarter results highlight the strength of our low-risk, high-growth profile and anchoring relationships with our sponsor and third party customers. Our top-tier annual distribution growth and long-term DCF coverage targets are supported by Rice Energy's strong three-year growth outlook, targeting 27% - 33% compound annual Appalachia net production growth through 2019. We are excited to continue executing our plan to drive long-term value for our unitholders."
1. Please see Supplemental "Non-GAAP
Financial Measures" for a description
of Adjusted EBITDA, distributable
cash flow, DCF coverage ratio and
related reconciliations to the
comparable GAAP financial measures.
Leverage is defined as the ratio of
net debt to last twelve months
Adjusted EBITDA.
Three-Year Growth Outlook
We are reaffirming our top-tier annual distribution growth target of 20% through 2023. Driven by continued strong growth from Rice Energy and our third party customers, we are targeting DCF coverage((1)) of approximately 1.4x and leverage of less than 2.5x through 2019.
1. Please see Supplemental "Non-GAAP
Financial Measures" for a
description of DCF coverage ratio.
First Quarter 2017 Results
RMP Results (in thousands, except volumes) Three Months
Ended
March 31, 2017
--------------
Operating volumes (MDth/d)
Gathering volumes
Affiliate 1,003
Third-party 232
---
Total 1,235
Compression volumes
Affiliate 594
Third-party 232
---
Total 826
Water services assets (MMGal)
Pennsylvania Water 224
Ohio Water 141
---
Total 365
Operating revenues
Gathering $36,220
Compression $5,782
Water $20,748
-------
Total $62,750
Total operating expenses $22,154
Operating income $40,596
Net income attributable to limited partners $36,376
Net income per limited partner unit:
Common units (basic) $0.36
Common units (diluted) $0.36
Subordinated units (basic and diluted) $0.36
Adjusted EBITDA(1) $48,762
DCF(1) $42,444
DCF coverage ratio(1) 1.52
Capital expenditures (in millions)
Gas gathering and compression $29
Water services assets $3
Financial position (in millions)
Liquidity $673
Cash and cash equivalents $13
Revolving credit facility $190
Leverage(1) 1.1
RMP 1Q17 Quarterly Distribution $0.2608
% Growth YoY 24%
% Growth QoQ 4%
First quarter gathering throughput averaged 1,235 MDth/d, consisting of 1,003 MDth/d affiliate volumes and 232 MDth/d third party volumes. There were no third party wells turned to sales during the first quarter. Strong first quarter Adjusted EBITDA((1)) of $48.8 million and DCF((1)) of $42.4 million, driven by accelerated sponsor well completion activity within our water services segment.
As of March 31, 2017, RMP's concentrated gathering and compression acreage dedication in the Marcellus Shale core covered approximately 218,000 acres in Washington and Greene Counties with approximately 29,000 acres dedicated from high quality, third party customers.
1. Please see Supplemental "Non-GAAP
Financial Measures" for a description
of Adjusted EBITDA, distributable
cash flow, DCF coverage ratio and
related reconciliations to the
comparable GAAP financial measures.
Leverage is defined as the ratio of
net debt to last twelve months
Adjusted EBITDA.
Quarterly Cash Distribution
On April 21, 2017, we declared a quarterly distribution of $0.2608 per unit for the first quarter 2017, an increase of $0.0103 per unit, or 4%, relative to fourth quarter 2016. The distribution will be payable on May 18, 2017 to unitholders of record as of May 9, 2017. In addition, a cash distribution of $1.2 million will be made to GP Holdings on May 18, 2017 related to its incentive distribution rights in the Partnership based upon the level of distribution paid per common and subordinated unit.
Conference Call
RMP will host a conference call on May 4, 2017 at 11:00 a.m. Eastern time (10:00 a.m. Central time) to discuss first quarter 2017 financial and operating results. To listen to a live audio webcast of the conference call, please visit RMP's website at www.ricemidstream.com. A replay of the conference call will be available following the call for two weeks and can be accessed from www.ricemidstream.com.
Rice Energy will host a conference call on May 4, 2017 at 10:00 a.m. Eastern time (9:00 a.m. Central time) to discuss first quarter 2017 financial and operating results, and we encourage RMP investors to listen-in. To listen to a live audio webcast of the conference call, please visit Rice Energy's website at www.riceenergy.com. A replay of the conference call will be available for two weeks and can also be accessed from www.riceenergy.com.
About Rice Midstream Partners
Rice Midstream Partners LP is a fee-based, growth-oriented limited partnership formed by Rice Energy Inc. (NYSE: RICE) to own, operate, develop and acquire midstream assets in the Appalachian basin. RMP provides midstream services to Rice Energy and third-party companies through its natural gas gathering, compression and water assets in the rapidly developing dry gas cores of the Marcellus and Utica Shales.
For more information, please visit www.ricemidstream.com.
Forward Looking Statements
This release includes forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. All statements, other than historical facts included in this release, that address activities, events or developments that we expect or anticipate will or may occur in the future, including such things as, forecasted gathering volumes, revenues, Adjusted EBITDA, distribution growth, and distributable cash flow, Rice Energy's targeted production growth and other operational results, the terms, timing and completion of any sale of a portion of Rice Olympus Midstream LLC to RMP, the timing of completion of midstream projects, future capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, competitive strengths, goals, expansion and growth of our business and operations, plans, market conditions, references to future success, references to intentions as to future matters and other such matters are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although we believe that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions or expectations will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.
We caution you that these forward-looking statements are subject to risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to our gathering and compression and water services businesses. These risks include, but are not limited to: commodity price volatility; inflation; environmental risks; regulatory changes; the uncertainty inherent in projecting future throughput volumes, cash flow and access to capital; and the timing of development expenditures of Rice Energy or our other customers. Information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our Forms 10-K, 10-Q and 8-K. Consequently, all of the forward-looking statements made in this news release are qualified by these cautionary statements and there can be no assurances that the actual results or developments anticipated by us will be realized, or even if realized, that they will have the expected consequences to or effects on us, our business or operations. We have no intention, and disclaim any obligation, to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise.
Rice Midstream Partners LP
Statements of Operations
(Unaudited)
Three Months Ended
March 31,
(in thousands, except unit data) 2017 2016
---- ----
Operating revenues:
Affiliate $52,797 $44,385
Third-party 9,953 10,158
Total operating revenues 62,750 54,543
Operating expenses:
Operation and maintenance expense 8,179 8,545
Equity compensation expense 132 986
General and administrative expense 5,707 3,756
Depreciation expense 7,621 5,370
Acquisition costs - 73
Amortization of intangible assets 402 408
Other expense (income) 113 (212)
--- ----
Total operating expenses 22,154 18,926
------ ------
Operating income 40,596 35,617
Other income 11 -
Interest expense (1,943) (1,047)
Amortization of deferred finance costs (1,049) (144)
Net income $37,615 $34,426
======= =======
Calculation of limited partner interest
in net income:
Net income $37,615 $34,426
Less: General partner interest in net
income attributable to incentive
distribution rights 1,239 -
----- ---
Net income attributable to limited
partners $36,376 $34,426
======= =======
Weighted average limited partner units
(in millions)
Common units (basic) 73.5 42.2
Common units (diluted) 73.5 42.4
Subordinated units (basic and diluted) 28.8 28.8
Net income attributable to RMP per
limited partner unit
Common units (basic) $0.36 $0.49
Common units (diluted) $0.36 $0.48
Subordinated units (basic and diluted) $0.36 $0.49
Adjusted EBITDA (1) $48,762 $42,242
Distributable cash flow (2) $42,444 $38,395
Quarterly distribution per unit $0.2608 $0.2100
Distributions declared:
Limited partner units - Public $19,173 $8,854
Limited partner units - GP Holdings 7,500 6,039
Incentive distribution rights -General
Partner 1,239 -
----- ---
Total distributions declared $27,912 $14,893
DCF coverage ratio (3) 1.52 2.58
1. We define Adjusted EBITDA as net
income (loss) before interest
expense, depreciation expense,
amortization expense, non-cash
equity compensation expense,
amortization of deferred financing
costs and other non-recurring items.
Please read Supplemental "Non-GAAP
Financial Measures."
2. We define distributable cash flow as
Adjusted EBITDA less interest
expense and estimated maintenance
capital expenditures. Please read
Supplemental "Non-GAAP Financial
Measures."
3. We define DCF coverage ratio as
distributable cash flow divided by
total distributions declared. Please
read Supplemental "Non-GAAP
Financial Measures."
Rice Midstream Partners LP
Segment Results of Operations
(Unaudited)
Gathering and Compression Segment
Three Months Ended
March 31,
(in thousands) 2017 2016
---- ----
Gathering volumes (MDth/d):
Affiliate 1,003 618
Third-party 232 217
--- ---
Total gathering volumes 1,235 835
Compression volumes (MDth/d):
Affiliate 594 9
Third-party 232 143
Total compression volumes 826 152
Operating results:
Operating revenues:
Affiliate $32,049 $17,306
Third-party 9,953 9,494
Total operating revenues 42,002 26,800
Operating expenses:
Operation and maintenance
expense 2,729 1,791
Equity compensation expense 114 742
General and administrative
expense 4,837 2,954
Depreciation expense 3,270 1,935
Acquisition costs - 73
Amortization of intangible
assets 402 408
Other expense (income) 113 (212)
Total operating expenses 11,465 7,691
Operating income $30,537 $19,109
Water Services Segment
Three Months Ended
March 31,
(in thousands) 2017 2016
---- ----
Water services volumes (MMGal):
Affiliate 365 445
Third-party - 18
--- ---
Total water services volumes 365 463
Operating results:
Operating revenues:
Affiliate $20,748 $27,079
Third-party - 664
Total operating revenues 20,748 27,743
Operating expenses:
Operation and maintenance expense 5,450 6,754
Equity compensation expense 18 244
General and administrative expense 870 802
Depreciation expense 4,351 3,435
Total operating expenses 10,689 11,235
Operating income $10,059 $16,508
Rice Midstream Partners LP
Supplemental Non-GAAP Financial Measures
(Unaudited)
Adjusted EBITDA, distributable cash flow and DCF coverage ratio are non-GAAP supplemental financial measures that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess the financial performance of our assets, without regard to financing methods, capital structure or historical cost basis; our operating performance and return on capital as compared to other companies in the midstream energy sector, without regard to historical cost basis or, in the case of Adjusted EBITDA, financing or capital structure; our ability to incur and service debt and fund capital expenditures; the ability of our assets to generate sufficient cash flow to make distributions to our unitholders; and the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
We define Adjusted EBITDA as net income (loss) before interest expense, depreciation expense, amortization of intangible assets, non-cash equity compensation expense, amortization of deferred financing costs and other non-recurring items. Adjusted EBITDA is not a measure of net income as determined by GAAP. We define distributable cash flow as Adjusted EBITDA less cash interest expense and estimated maintenance capital expenditures. We define DCF coverage ratio as distributable cash flow divided by total distributions declared. Distributable cash flow does not reflect changes in working capital balances and is not a presentation made in accordance with GAAP.
We believe that the presentation of Adjusted EBITDA, distributable cash flow and DCF coverage ratio will provide useful information to investors in assessing our financial condition and results of operations. The GAAP measure most directly comparable to Adjusted EBITDA and distributable cash flow is net income. Our non-GAAP financial measures of Adjusted EBITDA and distributable cash flow should not be considered as alternatives to GAAP net income. Each of Adjusted EBITDA and distributable cash flow has important limitations as an analytical tool because they exclude some but not all items that affect net income. You should not consider Adjusted EBITDA, distributable cash flow or DCF coverage ratio in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA, distributable cash flow and DCF coverage ratio may be defined differently by other companies in our industry, our definitions of Adjusted EBITDA, distributable cash flow and DCF coverage ratio may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.
(in
thousands) Three Months Ended Twelve Months Ended
March 31, 2017
March 31, 2017
--------------
Reconciliation
of Net
Income
to
Adjusted
EBITDA
and
DCF:
Net
income $37,615 $124,799
Interest
expense 1,943 4,827
Acquisition
costs - 52
Depreciation
expense 7,621 27,421
Amortization
of
intangible
assets 402 1,628
Non-
cash
equity
compensation
expense 132 2,019
Amortization
of
deferred
finance
costs 1,049 2,384
Adjusted
EBITDA $48,762 $163,130
======= ========
Adjusted
EBITDA $48,762 $163,130
Cash
interest
expense (1,943) (4,827)
Estimated
maintenance
capital
expenditures (4,375) (12,775)
------ -------
Distributable
cash
flow $42,444 $145,528
======= ========
Total
distributions
declared $27,912 $97,304
DCF
coverage
ratio 1.52 1.50
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SOURCE Rice Midstream Partners LP
