Crestwood Announces Third Quarter 2012 Results

Crestwood Announces Third Quarter 2012 Results 
Reports Record Adjusted EBITDA and Adjusted Distributable Cash Flow
on Higher Gathering Volumes 
HOUSTON, TX -- (Marketwire) -- 11/06/12 --  Crestwood Midstream
Partners LP (NYSE: CMLP) ("Crestwood" or the "Partnership") reported
today its unaudited financial results for the three months ended
September 30, 2012. Key financial and operating results with respect
to the third quarter 2012 included the following: 
Third Quarter 2012 Financial Highlights 


 
--  Reported record adjusted earnings before interest, taxes,
    depreciation, amortization and accretion ("Adjusted EBITDA") of $32.0
    million, up 12% from the $28.5 million reported in the second quarter
    2012, on 9% higher gathering volumes on Crestwood's 100% owned
    gathering systems and 13% higher gathering volumes on Crestwood's 35%
    owned Marcellus Shale pipelines.
--  Reported record adjusted distributable cash flow of $25.2 million, up
    22% from the $20.6 million reported for the second quarter 2012.
--  Announced a quarterly distribution increase with respect to the third
    quarter 2012 of $0.51 per common unit (equivalent to $2.04 per common
    unit on an annualized basis), representing a 6.3% increase compared to
    the distribution paid with respect to the third quarter 2011.
--  Crestwood's third quarter 2012 performance resulted in an improvement
    in distribution coverage ratio to 1.0x for the current quarter
    compared to 0.85x in the second quarter 2012.
--  Reported adjusted net income of $12.0 million, or $0.17 of adjusted
    earnings per limited partner unit, compared to analyst consensus
    estimates of $0.18 per limited partner unit.

  
Third Quarter 2012 Operational Highlights 


 
--  In the rich gas portion of the Barnett Shale, Crestwood completed the
    acquisition of Devon Energy Corporation's ("Devon") West Johnson
    County gas gathering system and processing plant for $87 million.
    Crestwood is currently connecting the acquired system to its Cowtown
    rich gas gathering system and processing plants which will make the
    acquired processing plant available in the fourth quarter 2012 for
    redeployment in other rich gas areas where Crestwood is developing
    projects. In conjunction with the transaction, Crestwood entered into
    a 20 year gathering and processing agreement with Devon.
--  In the Marcellus Shale region, Crestwood continued to expand its
    operations group and completed its first major gathering system
    expansion since taking over operations from Antero Resources
    Appalachian Corporation ("Antero") in the second quarter 2012. During
    the third quarter 2012, gathering volumes increased to 289 million
    cubic feet per day ("MMcf/d") compared to 257 MMcf/d in the second
    quarter 2012, based on increased drilling activity by Antero and
    improved results from completed wells. October 2012 volumes averaged
    362 MMcf/d and November 1, 2012 spot volumes totaled 376 MMcf/d.
--  Other activities impacting Crestwood's volumes during the third
    quarter 2012 compared to the second quarter 2012 were a 26% increase
    in processing volumes, 21% higher gathering volumes in the
    Fayetteville and Granite Wash segments and 10% higher volumes in the
    Barnett Shale segment despite lower volumes on the Lake Arlington
    system and a temporary shut-in of volumes on the Cowtown system due to
    a fire at our Corvette processing plant.

  
"We are pleased to deliver record Adjusted EBITDA and adjusted
distributable cash flow in the third quarter as each of our business
segments showed improvement over the second quarter of 2012," stated
Robert G. Phillips, Chairman, President and Chief Executive Officer
of Crestwood's general partner. "In general, we saw increased
drilling activity in all of our operating areas except the dry gas
areas of the Barnett Shale and the Haynesville/Bossier Shale. Our
2012 rich gas acquisitions, the Antero Marcellus assets and the Devon
Barnett assets, added significantly to our third quarter results and
should continue to contribute sequential growth in future quarters
based on current producer drilling and development plans. We continue
to look for bolt-on acquisitions around our existing assets and
opportunities to expand our rich gas exposure through organic
development projects or diversifying acquisitions," stated Phillips. 
Summary Third Quarter 2012 Financial and Operating Results 
Crestwood's Adjusted EBITDA for the third quarter 2012 totaled $32.0
million, a 10% increase from Adjusted EBITDA of $29.1 million in the
third quarter 2011. The increase in Adjusted EBITDA was primarily
attributable to the contribution from Crestwood Marcellus Midstream
("CMM") due to growth of our rich gas volumes in the Marcellus Shale
and assets acquired from Devon in the rich gas area of the Barnett
Shale in the third quarter 2012. Also contributing to the increase
was a 23% increase in Crestwood's Barnett and Granite Wash processing
volumes, higher volumes in the Fayetteville segment and the
contribution from our Haynesville assets which were acquired in the
fourth quarter 2011. 
Volumes on Crestwood's 100% owned gathering systems averaged 604
MMcf/d in the third quarter 2012, down 2% from 619 MMcf/d gathered in
the third quarter 2011, but 8% higher than the 561 MMcf/d gathered in
the second quarter 2012. Gathered volumes on the newly acquired
assets in the rich gas area of the Barnett averaged 78 MMcf/d since
closing on August 24, 2012, and contributed approximately $2.0
million of revenue during the quarter. Volumes gathered on the CMM
systems (35% owned and operated by Crestwood) totaled 289 MMcf/d
during the third quarter 2012. CMM had 100% Adjusted EBITDA of $6.4
million and contributed Adjusted EBITDA of $2.2 million to Crestwood
during the third quarter 2012, up 19% from the second quarter 2012.
Total gathering volumes for all systems operated by Crestwood for the
third quarter 2012 were 893 MMcf/d. 
Third Quarter 2012 Segment Performance 
Barnett Segment 
Operating revenues, net of product purchases, in the Barnett segment
totaled $33.3 million in the third quarter 2012, compared with $36.9
million in the third quarter 2011, but 6% higher than the $31.5
million reported in the second quarter 2012. Gathering volumes
totaled 438 MMcf/d in 2012, compared with 507 MMcf/d in 2011, but 9%
over the 401 MMcf/d reported in the second quarter 2012. The
year-to-year gathering volume decrease was primarily due to lower
drilling activity on the Lake Arlington and Alliance systems but was
partially offset by a 23% increase in higher margin processing
volumes which totaled 160 MMcf/d, compared with 130 MMcf/d in the
prior year and 129 MMcf/d in the second quarter of 2012. Third
quarter 2012 revenues were negatively impacted by approximately $0.5
million due to system down-time following a compressor fire at the
Corvette facility in September 2012. Operating and maintenance
expenses totaled $7.0 million, an increase of $1.0 million from the
third quarter 2011 which was primarily attributable to the addition
of the new Devon assets and $0.5 million of additional clean-up
expenses at the Corvette facility during the third quarter 2012. 
Fayetteville Segment 
Operating revenues in the Fayetteville segment, net of product
purchases, totaled $7.0 million in the third quarter 2012, compared
with $6.6 million in the third quarter 2011, but 13% higher than the
$6.2 million reported in the second quarter 2012. Gathering volumes
totaled 91 MMcf/d during the third quarter 2012, compared to 85
MMcf/d in the third quarter 2011 and 78 MMcf/d in the second quarter
2012. Crestwood connected 9 new wells from 3 new pads in the third
quarter 2012 and new wells continue to show improved initial
production performance. Operating and maintenance expenses totaled
$1.9 million for the third quarter 2012, a decrease of $2.1 million
from 2011 due primarily to lower expenses for leased compression and
decreased costs for right-of-way maintenance. 
Granite Wash 
Operating revenues in the Granite Wash segment, net of product
purchases, totaled $1.2 million in the third quarter 2012, compared
to $1.4 million in the third quarter 2011, but 23% higher than the
second quarter 2012. The year-to-year decrease reflects lower resale
prices due to lower gas and NGL prices in 2012 despite higher
volumes. Compared to the second quarter 2012, gathering and
processing volumes were up 5 MMcf/d to 20 MMcf/d due to increased
drilling by LeNorman Operating LLC in the area of our Indian Creek
assets. Operating and maintenance expenses totaled $0.6 million, an
increase of $0.1 million from the third quarter 2011. 
Other Operations 
Other operating revenues, net of product purchases, totaled $3.2
million and include the Sabine gathering system in the
Haynesville/Bossier Shale, which was acquired in the fourth quarter
2011, and the Las Animas system in the Avalon Shale trend acquired in
the first quarter 2011. Gathering volumes on the Sabine and Las
Animas systems totaled 45 MMcf/d and 9 MMcf/d, respectively, during
the third quarter 2012. Operating and maintenance expenses related to
these assets totaled $0.7 million during the third quarter 2012. 
CMM Contribution 
Equity earnings from Crestwood's investment in CMM totaled $1.8
million for the third quarter 2012, which represents a 35% ownership
interest in CMM. Crestwood's pro-rata portion of CMM's Adjusted
EBITDA totaled $2.2 million. Volumes gathered by CMM during the third
quarter 2012 averaged 289 MMcf/d, an increase of 12% over the second
quarter 2012. During the third quarter 2012, Antero had an average of
6 drilling rigs running on acreage dedicated to CMM and completed 16
new Marcellus Shale wells which were connected to the CMM gathering
systems. Wells added during the third quarter 2012 have ramped up to
an October 2012 average of 362 MMcf/d and a November 1, 2012 spot
volume of 376 MMcf/d indicating the prolific nature of the Antero
wells after system debottlenecking and the addition of system
compression. 
General and Administrative Expenses 
General and administrative expenses totaled $5.8 million in the third
quarter 2012 (including $0.5 million of non-recurring costs primarily
related to the acquisition of assets from Devon), compared to $5.6
million in the third quarter 2011. General and administrative
expenses incurred by CMM totaled $0.8 million during the third
quarter 2012. 
Capital Investment and Resources 
At September 30, 2012, Crestwood had approximately $533 million of
debt outstanding, comprised of $200 million principal amount of 7.75
percent fixed-rate senior notes and approximately $333 million of
borrowings under its $500 million revolving credit facility. During
the third quarter 2012, Crestwood issued 4.6 million common units in
an underwritten public offering. Net proceeds of approximately $115
million were used to fund the Devon acquisition, with the remaining
proceeds used to reduce the outstanding balance of the revolving
credit facility. In addition, CMM (which is an unconsolidated
affiliate) had $19.5 million of debt outstanding under its $200
million revolving credit facility at September 30, 2012. 
Capital spending for the nine months ended September 30, 2012,
totaled $29.0 million (excluding acquisition capital), comprised of
$26.1 million of growth capital and $2.9 million of maintenance
capital. Growth capital was used to construct pipeline laterals and
compression equipment in the Fayetteville and Barnett segments. Total
capital spending for the full year 2012 is expected to be
approximately $35 million, comprised of $30 million for growth
projects and $5 million on maintenance. Growth capital spending by
CMM, which is funded under its revolving credit facility, totaled
$5.4 million since commencing operations at the end of March 2012.
Growth capital spending by CMM for the full year 2012 is expected to
total approximately $20 million. 
Non-GAAP Financial Measures 
Adjusted net income, adjusted net income per unit, Adjusted EBITDA
and adjusted distributable cash flow are non-generally accepted
accounting principles ("non-GAAP") financial measures. The
accompanying schedules of this news release provide reconciliations
of these non-GAAP financial measures to their most directly
comparable financial measures calculated and presented in accordance
with generally accepted accounting principles in the United States of
America ("GAAP"). Our non-GAAP financial measures should not be
considered as alternatives to GAAP measures such as net income or
operating income or any other GAAP measure of liquidity or financial
performance. 
Conference Call 
Crestwood will host a conference call for investors and analysts on
Tuesday, November 6, 2012, beginning at 10:00 a.m. Central Time, to
discuss the third quarter 2012 performance. Interested parties may
participate by joining the conference call at 888-600-4861 and
entering passcode 8380645. The conference call will also be webcast
live and can be accessed through the Investor Relations section of
our website at www.crestwoodlp.com. A replay will be available for 30
days following the conference call by dialing 888-203-1112 and
entering the replay passcode 8380645. 
About Crestwood Midstream Partners LP 
Houston, Texas based Crestwood is a growth-oriented, midstream master
limited partnership which owns and operates predominately fee-based
gathering, processing, treating and compression assets servicing
natural gas producers in the Barnett Shale in north Texas, the
Fayetteville Shale in northwest Arkansas, the Granite Wash in the
Texas Panhandle, the Marcellus Shale in northern West Virginia, the
emerging Avalon Shale trend in southeastern New Mexico, and the
Haynesville/Bossier Shale in western Louisiana. For more information
about Crestwood, visit www.crestwoodlp.com. 
Forward-Looking Statements 
The statements in this news release regarding future events,
occurrences, circumstances, activities, performance, outcomes and
results are forward-looking statements. Although these statements
reflect the current views, assumptions and expectations of
Crestwood's management, the matters addressed herein are subject to
numerous risks and uncertainties which could cause actual activities,
performance, outcomes and results to differ materially from those
indicated. Such forward-looking statements include, but are not
limited to, statements about the future financial and operating
results, objectives, expectations and intentions and other statements
that are not historical facts. Factors that could result in such
differences or otherwise materially affect Crestwood's financial
condition, results of operations and cash flows including, without
limitation, changes in general economic conditions; fluctuations in
oil, natural gas and NGL prices; the extent and success of drilling
efforts, as well as the extent and quality of natural gas volumes
produced within proximity of our assets; failure or delays by our
customers in achieving expected production in their natural gas
projects; competitive conditions in our industry and their impact on
our ability to connect natural gas supplies to our gathering and
processing assets or systems; actions or inactions taken or
non-performance by third parties, including suppliers, contractors,
operators, processors, transporters and customers; our ability to
consummate acquisitions, successfully integrate the acquired
businesses, realize any cost savings and other synergies from any
acquisition; changes in the availability and cost of capital;
operating hazards, natural disasters, weather-related delays,
casualty losses and other matters beyond our control; timely receipt
of necessary government approvals and permits, our ability to control
the costs of construction, including costs of materials, labor and
right-of-way and other factors that may impact our ability to
complete projects within budget and on schedule; the effects of
existing and future laws and governmental regulations, including
environmental and climate change requirements; the effects of
existing and future litigation; and risks related to our substantial
indebtedness, as well as other factors disclosed in Crestwood's
filings with the U.S. Securities and Exchange Commission. You should
read our filings with the U.S. Securities and Exchange Commission,
including our Annual Report on Form 10-K for the year ended December
31, 2011, and our most recent Quarterly Reports and Current Reports
for a more extensive list of factors that could affect results. 


 
                                                                            
                       CRESTWOOD MIDSTREAM PARTNERS LP                      
                      CONSOLIDATED STATEMENTS OF INCOME                     
                  (In thousands, except for per unit data)                  
                                 (Unaudited)                                
                                                                            
                                                                      Three 
                                                                     Months 
                            Three Months Ended   Nine Months Ended    Ended 
                               September 30,       September 30,    June 30,
                            ------------------  ------------------  --------
                              2012      2011      2012      2011      2012  
                            --------  --------  --------  --------  --------
Operating revenues                                                          
  Gathering revenue -                                                       
   related party            $ 21,658  $ 27,840  $ 67,120  $ 75,706  $ 21,616
  Gathering revenue           13,739     8,007    36,310    17,908    10,734
  Processing revenue -                                                      
   related party               6,298     7,183    19,619    21,723     6,550
  Processing revenue           2,271       692     4,665     1,867     1,198
  Product sales               11,071    14,893    29,258    29,326     8,104
                            --------  --------  --------  --------  --------
    Total operating                                                         
     revenues                 55,037    58,615   156,972   146,530    48,202
                            --------  --------  --------  --------  --------
                                                                            
Operating expenses                                                          
  Product purchases           10,341    13,482    26,755    26,010     7,441
  Operations and                                                            
   maintenance                10,127    10,573    28,725    26,165     8,887
  General and                                                               
   administrative              5,777     5,566    19,451    17,996     6,936
  Depreciation,                                                             
   amortization and                                                         
   accretion                  10,943     9,595    32,427    23,981    10,838
                            --------  --------  --------  --------  --------
    Total operating                                                         
     expenses                 37,188    39,216   107,358    94,152    34,102
                            --------  --------  --------  --------  --------
                                                                            
Gain from exchange of                                                       
 property, plant and                                                        
 equipment                         -     1,106         -     1,106         -
                            --------  --------  --------  --------  --------
                                                                            
Operating income              17,849    20,505    49,614    53,484    14,100
                                                                            
Earnings from                                                               
 unconsolidated affiliate      1,764         -     2,205         -       441
                                                                            
Interest and debt expense     (8,202)   (7,100)  (24,045)  (19,925)  (8,286)
                            --------  --------  --------  --------  --------
                                                                            
Income before income taxes    11,411    13,405    27,774    33,559     6,255
                                                                            
Income tax expense               306       347       884       898       275
                            --------  --------  --------  --------  --------
                                                                            
Net income                  $ 11,105  $ 13,058  $ 26,890  $ 32,661  $  5,980
                            ========  ========  ========  ========  ========
                                                                            
  General partner's                                                         
   interest in net income   $  4,240  $  2,426  $ 10,944  $  4,942  $  3,336
  Limited partners'                                                         
   interest in net income   $  6,865  $ 10,632  $ 15,946  $ 27,719  $  2,644
                                                                            
  Basic income per unit:                                                    
    Net income per limited                                                  
     partner unit           $   0.15  $   0.27  $   0.36  $   0.76  $   0.06
                                                                            
  Diluted income per unit:                                                  
    Net income per limited                                                  
     partner unit           $   0.15  $   0.27  $   0.36  $   0.76  $   0.06
                                                                            
Weighted-average number of                                                  
 limited partner units:                                                     
  Basic                       46,564    39,388    44,206    36,424    43,333
  Diluted                     46,767    39,504    44,395    36,540    43,534
Distributions declared per                                                  
 limited partner unit                                                       
 (attributable to the                                                       
 period ended)              $   0.51  $   0.48  $   1.51  $   1.38  $   0.50
                                                                            
                                                                            
                                                                            
                       CRESTWOOD MIDSTREAM PARTNERS LP                      
                         CONSOLIDATED BALANCE SHEETS                        
                    (In thousands, except for unit data)                    
                                 (Unaudited)                                
                                                                            
                                                September 30,   December 31,
                                                     2012           2011    
                                                -------------  -------------
                     ASSETS                                                 
Current assets                                                              
  Cash and cash equivalents                     $          12  $         797
  Accounts receivable - related party                  22,632         27,312
  Accounts receivable                                  14,063         11,926
  Prepaid expenses and other                            5,567          1,935
                                                -------------  -------------
    Total current assets                               42,274         41,970
                                                                            
Investment in unconsolidated affiliate                129,603              -
Property, plant and equipment, net of                                       
 accumulated depreciation of $116,486 in 2012                               
 and $89,860 in 2011                                  785,404        746,045
Intangible assets, net of accumulated                                       
 amortization of $7,342 in 2012 and $2,440 in                               
 2011                                                 165,839        127,760
Goodwill                                               95,031         93,628
Deferred financing costs, net                          13,604         16,699
Other assets                                              694            790
                                                -------------  -------------
    Total assets                                $   1,232,449  $   1,026,892
                                                =============  =============
                                                                            
       LIABILITIES AND PARTNERS' CAPITAL                                    
Current liabilities                                                         
  Accrued additions to property, plant and                                  
   equipment                                            1,899          7,500
  Capital leases                                        3,658          2,693
  Accounts payable - related party                        408          1,308
  Accounts payable, accrued expenses and other                              
   liabilities                                         36,280         31,794
                                                -------------  -------------
    Total current liabilities                          42,245         43,295
                                                                            
Long-term debt                                        533,200        512,500
Long-term capital leases                                3,429          3,929
Asset retirement obligations                           13,002         11,545
Commitments and contingent liabilities                                      
                                                                            
Partners' capital                                                           
  Common unitholders (41,158,228 and 32,997,696                             
   units issued and outstanding at September                                
   30, 2012 and December 31, 2011)                    462,377        286,945
  Class C unitholders (6,991,589 and 6,596,635                              
   units issued and outstanding at September                                
   30, 2012 and December 31, 2011)                    159,800        157,386
  General partner                                      18,396         11,292
                                                -------------  -------------
    Total partners' capital                           640,573        455,623
                                                -------------  -------------
    Total liabilities and partners' capital     $   1,232,449  $   1,026,892
                                                =============  =============
                                                                            
                                                                            
                                                                            
                      CRESTWOOD MIDSTREAM PARTNERS LP                       
                   CONSOLIDATED STATEMENTS OF CASH FLOWS                    
                               (In thousands)                               
                                (Unaudited)                                 
                                                                            
                                                       Nine Months Ended    
                                                         September 30,      
                                                   ------------------------ 
                                                       2012         2011    
                                                   -----------  ----------- 
Cash flows from operating activities                                        
  Net income                                       $    26,890  $    32,661 
    Adjustments to reconcile net income to net                              
     cash provided by operating activities:                                 
      Depreciation, amortization and accretion          32,427       23,981 
      Equity-based compensation                          1,528          851 
      Amortization/accretion of deferred financing                          
       costs and capital lease obligations               3,110        2,542 
      Gain from exchange of property, plant and                             
       equipment                                             -       (1,106)
    Changes in assets and liabilities:                                      
      Accounts receivable - related party                4,680       (5,675)
      Accounts receivable                               (2,137)      (5,359)
      Prepaid expenses and other assets                    783         (447)
      Accounts payable - related party                    (900)      (2,349)
      Accounts payable, accrued expenses and other                          
       liabilities                                       3,758       23,366 
                                                   -----------  ----------- 
Net cash provided by operating activities               70,139       68,465 
                                                   -----------  ----------- 
                                                                            
Cash flows from investing activities                                        
      Capital expenditures                             (28,968)     (31,256)
      Acquisitions, net of cash acquired               (87,269)    (349,662)
      Proceeds from exchange of property, plant                             
       and equipment                                         -        5,943 
      Investment in unconsolidated affiliate          (131,250)           - 
      Capital distributions from unconsolidated                             
       affiliate                                         1,647            - 
                                                   -----------  ----------- 
Net cash used in investing activities                 (245,840)    (374,975)
                                                   -----------  ----------- 
                                                                            
Cash flows from financing activities                                        
      Proceeds from issuance of senior notes                 -      200,000 
      Proceeds from credit facility                    350,200      100,200 
      Repayments of credit facility                   (329,500)    (155,704)
      Payments on capital leases                        (2,155)           - 
      Deferred financing costs paid                       (161)      (6,982)
      Proceeds from issuance of Class C units, net           -      152,671 
      Proceeds from issuance of common units, net      217,508       53,550 
      Contributions from partners                        5,930        8,741 
      Distributions to partners                        (66,500)     (45,910)
      Taxes paid for equity-based compensation                              
       vesting                                            (406)           - 
                                                   -----------  ----------- 
Net cash provided by financing activities              174,916      306,566 
                                                   -----------  ----------- 
                                                                            
Change in cash and cash equivalents                       (785)          56 
                                                                            
Cash and cash equivalents at beginning of period           797            2 
                                                   -----------  ----------- 
Cash and cash equivalents at end of period         $        12  $        58 
                                                   ===========  =========== 
                                                                            
                                                                            
                                                                            
                       CRESTWOOD MIDSTREAM PARTNERS LP                      
                            OPERATING STATISTICS                            
                               (In thousands)                               
                                 (Unaudited)                                
                                                                            
                                                                      Three 
                                                                     Months 
                            Three Months Ended   Nine Months Ended    Ended 
                               September 30,       September 30,    June 30,
                            ------------------  ------------------  --------
                              2012      2011      2012      2011      2012  
                            --------  --------  --------  --------  --------
Barnett:                                                                    
Gathering revenues          $ 24,737  $ 29,042  $ 74,567  $ 79,892  $ 23,771
Processing revenues            8,540     7,842    24,156    23,553     7,732
Product sales                     69         -        69         -         -
                            --------  --------  --------  --------  --------
  Total operating revenues  $ 33,346  $ 36,884  $ 98,792  $103,445  $ 31,503
Product purchases                 60         -        60         -         -
Operations and maintenance                                                  
 expense                       6,963     6,015    18,438    18,528     5,345
                            --------  --------  --------  --------  --------
  EBITDA                    $ 26,323  $ 30,869  $ 80,294  $ 84,917  $ 26,158
                            ========  ========  ========  ========  ========
                                                                            
Gathering volumes (in MMcf)   40,252    46,642   117,434   126,471    36,529
Processing volumes (in                                                      
 MMcf)                        14,671    11,975    38,493    36,028    11,765
                                                                            
Fayetteville:                                                               
Gathering revenues          $  7,043  $  6,534  $ 20,037  $ 13,095  $  6,228
Product sales                    131       547       331     1,069       102
                            --------  --------  --------  --------  --------
  Total operating revenues  $  7,174  $  7,081  $ 20,368  $ 14,164  $  6,330
Product purchases                137       454       343     1,012       124
Operations and maintenance                                                  
 expense                       1,855     3,965     6,399     6,356     2,231
                            --------  --------  --------  --------  --------
  EBITDA                    $  5,182  $  2,662  $ 13,626  $  6,796  $  3,975
                            ========  ========  ========  ========  ========
                                                                            
Gathering volumes (in MMcf)    8,403     7,813    23,049    15,146     7,112
                                                                            
Granite Wash:                                                               
Gathering revenues          $    465  $    113  $    874  $    208  $    270
Processing revenues               29        33       128        37        16
Product sales                 10,208    12,529    27,019    24,965     7,436
                            --------  --------  --------  --------  --------
  Total operating revenues  $ 10,702  $ 12,675  $ 28,021  $ 25,210  $  7,722
Product purchases              9,481    11,264    24,514    21,739     6,732
Operations and maintenance                                                  
 expense                         560       499     1,619       998       541
                            --------  --------  --------  --------  --------
  EBITDA                    $    661  $    912  $  1,888  $  2,473  $    449
                            ========  ========  ========  ========  ========
                                                                            
Gathering volumes (in MMcf)    1,856     1,473     4,576     3,011     1,367
Processing volumes (in                                                      
 MMcf)                         1,859     1,475     4,566     2,941     1,362
                                                                            
Other:                                                                      
Gathering revenues          $  3,152  $    158  $  7,952  $    419  $  2,081
Product sales                    663     1,817     1,839     3,292       566
                            --------  --------  --------  --------  --------
  Total operating revenues  $  3,815  $  1,975  $  9,791  $  3,711  $  2,647
Product purchases                663     1,764     1,838     3,259       585
Operations and maintenance                                                  
 expense                         749        94     2,269       283       770
                            --------  --------  --------  --------  --------
  EBITDA                    $  2,403  $    117  $  5,684  $    169  $  1,292
                            ========  ========  ========  ========  ========
                                                                            
Gathering volumes (in MMcf)    5,041     1,037    17,148     2,655     6,044
                                                                            
                                                                            
                                                                            
                      CRESTWOOD MIDSTREAM PARTNERS LP                       
               RECONCILIATION OF NON-GAAP FINANCIAL MEASURES                
                  (In thousands, except for per unit data)                  
                                (Unaudited)                                 
                                                                            
                                                                     Three  
                                                                    Months  
                           Three Months Ended   Nine Months Ended    Ended  
                              September 30,       September 30,    June 30, 
                           ------------------  ------------------  -------- 
                             2012      2011      2012      2011      2012   
                           --------  --------  --------  --------  -------- 
                                                                            
Net income                 $ 11,105  $ 13,058  $ 26,890  $ 32,661  $  5,980 
Items impacting net                                                         
 income:                                                                    
  Non-recurring expenses        932       129     2,710     3,166     1,727 
  Gain from exchange of                                                     
   property, plant and                                                      
   equipment                      -    (1,106)        -    (1,106)        - 
  Non-cash interest                                                         
   expense (write-off of                                                    
   deferred financing                                                       
   costs)                         -         -       370         -         - 
  Interest expense (bridge                                                  
   loan fees)                     -         -         -     2,500         - 
                           --------  --------  --------  --------  -------- 
  Adjusted net incom
e      $ 12,037  $ 12,081  $ 29,970  $ 37,221  $  7,707 
                           ========  ========  ========  ========  ======== 
                                                                            
Net income per limited                                                      
 partner unit (diluted                                                      
 basis)                    $   0.15  $   0.27  $   0.36  $   0.76  $   0.06 
Items impacting net income     0.02     (0.03)     0.07      0.12      0.04 
                           --------  --------  --------  --------  -------- 
  Adjusted net income per                                                   
   limited partner unit                                                     
   (diluted basis)         $   0.17  $   0.24  $   0.43  $   0.88  $   0.10 
                           ========  ========  ========  ========  ======== 
                                                                            
                                                                     Three  
                                                                    Months  
                           Three Months Ended   Nine Months Ended    Ended  
                              September 30,       September 30,    June 30, 
                           ------------------  ------------------  -------- 
                             2012      2011      2012      2011      2012   
                           --------  --------  --------  --------  -------- 
                                                                            
Net income                 $ 11,105  $ 13,058  $ 26,890  $ 32,661  $  5,980 
Depreciation, amortization                                                  
 and accretion expense       10,943     9,595    32,427    23,981    10,838 
Income tax expense              306       347       884       898       275 
Amortization of deferred                                                    
 financing fees                 931       932     3,256     2,542     1,023 
Non-cash equity                                                             
 compensation                   534       286     1,528       851       500 
Maintenance capital                                                         
 expenditures                (1,279)     (320)   (2,872)   (1,025)   (1,079)
                           --------  --------  --------  --------  -------- 
  Distributable cash flow    22,540    23,898    62,113    59,908    17,537 
Add: Non-recurring                                                          
 expenses                       932       129     2,710     3,166     1,727 
Add: Non-recurring                                                          
 deficiency payment           1,426         -     1,426         -         - 
Add: Interest expense                                                       
 (bridge loan fees)               -         -         -     2,500         - 
Less: Gain from exchange                                                    
 of property, plant and                                                     
 equipment                        -    (1,106)        -    (1,106)        - 
Less: Equity earnings from                                                  
 unconsolidated affiliate    (1,764)        -    (2,205)        -      (441)
Add: Adjusted DCF from                                                      
 unconsolidated affiliate     2,062         -     3,812         -     1,750 
                           --------  --------  --------  --------  -------- 
  Adjusted distributable                                                    
   cash flow               $ 25,196  $ 22,921  $ 67,856  $ 64,468  $ 20,573 
                           ========  ========  ========  ========  ======== 
                                                                            
                                                                     Three  
                                                                    Months  
                           Three Months Ended   Nine Months Ended    Ended  
                              September 30,       September 30,    June 30, 
                           ------------------  ------------------  -------- 
                             2012      2011      2012      2011      2012   
                           --------  --------  --------  --------  -------- 
                                                                            
Total operating revenues   $ 55,037  $ 58,615  $156,972  $146,530  $ 48,202 
Product purchases            10,341    13,482    26,755    26,010     7,441 
Operations and maintenance                                                  
 expense                     10,127    10,573    28,725    26,165     8,887 
General and administrative                                                  
 expense                      5,777     5,566    19,451    17,996     6,936 
Gain from exchange of                                                       
 property, plant and                                                        
 equipment                        -     1,106         -     1,106         - 
Earnings from                                                               
 unconsolidated affiliate     1,764         -     2,205         -       441 
                           --------  --------  --------  --------  -------- 
  EBITDA                     30,556    30,100    84,246    77,465    25,379 
Items impacting EBITDA:                                                     
Add: Non-recurring                                                          
 expenses                       932       129     2,710     3,166     1,727 
Less: Gain from exchange                                                    
 of property, plant and                                                     
 equipment                        -    (1,106)        -    (1,106)        - 
Less: Equity earnings from                                                  
 unconsolidated affiliate    (1,764)        -    (2,205)        -      (441)
Add: Adjusted earnings                                                      
 from unconsolidated                                                        
 affiliate                    2,237         -     4,113         -     1,876 
                           --------  --------  --------  --------  -------- 
  Adjusted EBITDA            31,961    29,123    88,864    79,525    28,541 
Less:                                                                       
  Depreciation,                                                             
   amortization and                                                         
   accretion expense         10,943     9,595    32,427    23,981    10,838 
  Interest and debt                                                         
   expense                    8,202     7,100    24,045    19,925     8,286 
  Income tax expense            306       347       884       898       275 
  Items impacting EBITDA      1,405      (977)    4,618     2,060     3,162 
                           --------  --------  --------  --------  -------- 
    Net income             $ 11,105  $ 13,058  $ 26,890  $ 32,661  $  5,980 
                           ========  ========  ========  ========  ======== 
                                                                            
                                                                            
                                                                            
                     CRESTWOOD MARCELLUS MIDSTREAM LLC                      
                            OPERATING STATISTICS                            
                               (In thousands)                               
                                (Unaudited)                                 
                                                                            
                                                               Year to Date 
                      
             Three Months  Three Months      (from    
                                       Ended         Ended       inception  
                                     June 30,      September    of February 
                                       2012        30, 2012      23, 2012)  
                                   ------------  ------------  ------------ 
Operating revenue                                                           
  Gathering revenue                $      7,027  $      7,976  $     15,003 
                                   ------------  ------------  ------------ 
    Total operating revenue               7,027         7,976        15,003 
                                   ------------  ------------  ------------ 
                                                                            
Operating expenses                                                          
  Operations and maintenance                513           815         1,328 
  General and administrative              1,721           793         2,514 
  Depreciation, amortization and                                            
   accretion                              2,857           625         3,482 
                                   ------------  ------------  ------------ 
    Total operating expenses              5,091         2,233         7,324 
                                   ------------  ------------  ------------ 
                                                                            
Operating income                          1,936         5,743         7,679 
                                                                            
Interest and debt expense                  (677)         (703)       (1,380)
                                   ------------  ------------  ------------ 
                                                                            
                                                                            
Net income                         $      1,259  $      5,040  $      6,299 
                                   ------------  ------------  ------------ 
                                                                            
Add:                                                                        
Interest and debt expense                   677           703         1,380 
Depreciation, amortization and                                              
 accretion                                2,857           625         3,482 
                                   ------------  ------------  ------------ 
                                                                            
EBITDA                             $      4,793  $      6,368  $     11,161 
                                                                            
Non-recurring expenses                      568            22           590 
                                   ------------  ------------  ------------ 
                                                                            
Adjusted EBITDA                    $      5,361  $      6,390  $     11,751 
                                   ============  ============  ============ 
                                                                            
Volumes:                                                                    
Gathering volumes (in MMcf)              23,424        26,585        50,009 
                                                                            
CMLP's 35% Interest in Crestwood                                            
 Marcellus Midstream LLC:                                                   
                                                                            
Equity earnings                    $        441  $      1,764  $      2,205 
EBITDA                             $      1,678  $      2,229  $      3,907 
Adjusted EBITDA                    $      1,876  $      2,237  $      4,113 
Gathering volumes (in MMcf)               8,198         9,305        17,503 

  
Investor Contact: 
Mark Stockard
832-519-2207
mstockard@crestwoodlp.com