Market Snapshot
  • U.S.
  • Europe
  • Asia
Ticker Volume Price Price Delta
DJIA 16,262.56 89.32 0.55%
S&P 500 1,842.98 12.37 0.68%
NASDAQ 4,034.16 11.47 0.29%
Ticker Volume Price Price Delta
STOXX 50 3,123.43 31.91 1.03%
FTSE 100 6,568.21 26.60 0.41%
DAX 9,257.22 83.51 0.91%
Ticker Volume Price Price Delta
NIKKEI 14,417.68 420.87 3.01%
TOPIX 1,166.55 30.46 2.68%
HANG SENG 22,696.01 24.75 0.11%

EQT Midstream Partners Reports Fourth Quarter 2012 Results



  EQT Midstream Partners Reports Fourth Quarter 2012 Results

Business Wire

PITTSBURGH -- January 24, 2013

EQT Midstream Partners, LP (NYSE: EQM), an EQT Corporation company, today
announced fourth quarter 2012 financial and operating results. Net income for
the quarter totaled $20.2 million and adjusted EBITDA was $22.8 million.
Distributable cash flow was $14.8 million for the quarter. Adjusted operating
income when compared to the same quarter last year was higher by about $2.3
million, or 14%, excluding a $2.5 million non-cash favorable adjustment to
fourth quarter selling, general and administrative expense related to the
reduction of a reserve on the collectability of long-term regulatory assets.
The non-GAAP financial measures are reconciled in the Non-GAAP Disclosures
section of this press release.

EQT Midstream Partners, LP (Partnership) closed its initial public offering
(IPO) on July 2, 2012. Results for periods prior to the IPO are attributable
to its predecessor, Equitrans, LP (Equitrans).

The Partnership has a capital lease with EQT Corporation (EQT) for the lease
of the Sunrise Pipeline (Sunrise), and operates the pipeline as part of its
transmission and storage system. Revenues and expenses associated with Sunrise
are included in the Partnership’s financial statements; however, the monthly
lease payment to EQT Corporation offsets the impact on the Partnership’s
distributable cash flow; therefore, fourth quarter 2012 results are discussed
on an adjusted basis, excluding Sunrise.

Adjusted operating revenues increased $4.2 million or 14% compared to
operating revenues for the same quarter last year. The increase was due to an
increase in contracted transmission capacity, including the Blacksville
Compressor project which was completed in September 2012, and increased system
throughput related to growth in Marcellus Shale development. Adjusted
operating expenses increased $1.9 million versus the fourth quarter of 2011,
after excluding a non-cash $2.5 million favorable regulatory reserve
reduction. The increase in adjusted operating expenses is consistent with the
transmission system growth and public company costs incurred in 2012 as a
result of the IPO.

Operating revenues are seasonal, and based on utility customer contracts, are
currently expected to be about $2 million per quarter higher in the first and
fourth quarters of each year. This was consistent with the fourth quarter 2012
results versus the third quarter 2012 results.

Quarterly Distribution

The Partnership announced a quarterly cash distribution of $0.35 per unit for
the fourth quarter of 2012. The distribution will be paid on February 14, 2013
to all unitholders of record at the close of business on February 4, 2013.

Guidance

The Partnership reiterates its previously announced 2013 forecast for adjusted
EBITDA of approximately $80 - $83 million and distributable cash flow of
approximately $61 - $64 million. The 2013 guidance does not include financial
impacts of potential acquisitions.

CAPITAL EXPENDITURES

Expansion

Fourth quarter expansion capital expenditures totaled $5.7 million, of which
$3.5 million related to new interconnects, with the remaining for the Low
Pressure East Pipeline project and other system upgrades. The Partnership
forecasts expansion capital expenditures of $38 million for 2013.
Approximately $25 million will be to complete the Low Pressure East Pipeline
project, which will upgrade nearly 26 miles of existing pipeline in Greene,
Washington and Allegheny counties of Pennsylvania. The project will add 150
MMcf per day of transmission capacity. The remaining expansion capital
expenditures will fund new interconnects and dehydration upgrades, adding 300
MMcf per day of transmission capacity.

Ongoing Maintenance

Ongoing maintenance capital expenditures are cash expenditures made to
maintain, over the long term, the Partnership’s operating capacity or
operating income. Ongoing maintenance capital expenditures are all maintenance
capital expenditures, other than funded regulatory compliance capital
expenditures and reimbursable maintenance capital expenditures. Fourth quarter
2012 included $4.4 million of ongoing maintenance capital expenditures. The
Partnership forecasts ongoing maintenance capital expenditures of $17.2
million for 2013. Maintenance-related capital expenditures are expected to
vary quarter-to-quarter, primarily based on more activity when weather is
favorable.

Reimbursable Maintenance

Plugging and abandonment and bare steel replacement capital expenditures are
referred to as reimbursable maintenance capital expenditures in the
Reconciliation table in the Non-GAAP Disclosures section of this press
release.

Plugging and abandonment

EQT has agreed, for ten years following the IPO, to reimburse the Partnership
for plugging and abandonment expenditures associated with certain identified
wells. Plugging and abandonment capital expenditures totaled $1.5 million in
the fourth quarter and totaled $1.6 million since IPO. EQT reimbursed the
Partnership for $1.6 million related to plugging and abandonment in 2012.

Bare Steel Replacement Program

EQT has agreed, for ten years following the IPO, to reimburse the Partnership
for bare steel replacement capital expenditures in the event that ongoing
maintenance capital expenditures and bare steel capital expenditures exceed
$17.2 million in any calendar year. EQT Corporation will reimburse the
Partnership for the lesser of (i) the amount of bare steel replacement capital
expenditures during such year; and (ii) the amount by which such ongoing
maintenance capital expenditures and bare steel capital expenditures exceed
$17.2 million. Fourth quarter 2012 bare steel capital expenditures totaled
$4.3 million.

In 2012, ongoing maintenance capital expenditures totaled $13.8 million and
bare steel replacement capital expenditures (post-IPO) totaled $6.1 million,
for a total of $19.9 million. As a result, the bare steel reimbursement was
$2.7 million in 2012.

The Partnership forecasts ongoing maintenance capital expenditures of $17.2
million plus bare steel capital expenditures of $6.0 million in 2013, which
results in a forecasted reimbursement of $6.0 million in 2013.

Funded Regulatory Compliance

Funded regulatory compliance capital expenditures relate to discrete
expenditures necessary to comply with certain regulatory and other legal
requirements. The Partnership has identified two specific regulatory
compliance initiatives, system segmentation and isolation; and valve pit
remediation. In order to fund these two initiatives, the Partnership retained
$32 million from the IPO. Funded regulatory compliance capital expenditures do
not impact the calculation of distributable cash flow. Fourth quarter 2012
included $3.8 million of funded regulatory compliance capital expenditures.
Since the IPO, the Partnership has incurred $6.8 million of funded regulatory
compliance capital expenditures and forecasts $12 million in 2013.

SUNRISE PIPELINE

On June 18, 2012, Equitrans transferred ownership of Sunrise, an approximately
40 mile Federal Energy Regulatory Commission (FERC) regulated transmission
pipeline, to EQT Corporation. At the time of the transfer, the Partnership
entered into a capital lease with EQT Corporation for the lease of the
pipeline. Under the lease, the Partnership operates the pipeline as part of
its transmission and storage system under the rates, terms and conditions of
its FERC-approved tariff. Sunrise was placed into service during the third
quarter of 2012. Revenues and expenses associated with Sunrise are included in
the Partnership’s financial statements. The lease payment, which totaled $6.0
million in the fourth quarter, is not expected to have a net positive or
negative impact on distributable cash flow. The revenues and expenses
associated with Sunrise are set forth in the Reconciliation table in the
Non-GAAP Disclosures section of this press release.

NON-GAAP DISCLOSURES

Adjusted EBITDA and Distributable Cash Flow

As used in this press release, adjusted EBITDA means net income (loss) plus
net interest expense, income tax expense, depreciation and amortization
expense, non-cash long-term compensation expense, and other non-cash
adjustments, less other income and the Sunrise lease payment. As used in this
press release, distributable cash flow means adjusted EBITDA less net cash
paid for interest expense, maintenance capital expenditures, and income taxes.
Adjusted EBITDA and distributable cash flow are non-GAAP supplemental
financial measures that management and external users of the Partnership’s
financial statements, such as industry analysts, investors, lenders, and
rating agencies, use to assess:

  * the Partnership’s operating performance as compared to other publicly
    traded partnerships in the midstream energy industry, without regard to
    historical cost basis or, in the case of adjusted EBITDA, financing
    methods;
  * the ability of the Partnership’s assets to generate sufficient cash flow
    to make distributions to the Partnership’s unitholders;
  * the Partnership’s ability to incur and service debt and fund capital
    expenditures; and
  * the viability of acquisitions and other capital expenditure projects and
    the returns on investment of various investment opportunities.

The Partnership believes that adjusted EBITDA and distributable cash flow
provide useful information to investors in assessing the Partnership’s
financial condition and results of operations. Adjusted EBITDA and
distributable cash flow should not be considered alternatives to net income,
operating income, cash flows from operating activities, or any other measure
of financial performance or liquidity presented in accordance with GAAP.
Adjusted EBITDA and distributable cash flow have important limitations as
analytical tools because they exclude some, but not all, items that affect net
income and net cash provided by operating activities. Additionally, because
adjusted EBITDA and distributable cash flow may be defined differently by
other companies in the industry, the Partnership’s definition of adjusted
EBITDA and distributable cash flow may not be comparable to similarly titled
measures of other companies, thereby diminishing their utility. The table
below reconciles adjusted EBITDA and distributable cash flow with net income
and net cash provided by operating activities as derived from the statements
of consolidated operations and the statements of consolidated cash flows, to
be included in the Partnership’s annual report on Form 10-K for the year ended
December 31, 2012.

Reconciliation of Adjusted EBITDA and Distributable Cash
Flow
                                                               
                                                              Q4 2012
                                                              (in thousands $)
Operating revenues:
Transmission and storage                                    $ 37,681
Gathering                                                     4,109
Total operating revenues                                      41,790
Operating expenses:
Operating and maintenance                                     8,110
Selling, general and administrative                           2,481
Depreciation and amortization                                 7,196
Total operating expenses                                      17,787
Operating income                                              24,003
Other income                                                  458
Interest expense                                              (4,301)
Net income                                                  $ 20,160
Add:
Depreciation and amortization                                 7,196
Interest expense                                              4,301
Non-cash long-term compensation expense                       132
Non-cash reserve adjustment                                   (2,508)
Less:
Other income                                                  (458)
Sunrise lease payment                                         (6,004)
Adjusted EBITDA                                             $ 22,819
Less:
Cash interest, net                                            (224)
Ongoing maintenance capital expenditures                      (4,416)
Reimbursable maintenance capital expenditures                 (5,765)
Add:
Reimbursement of reimbursable maintenance capital             2,382
expenditures
Distributable cash flow                                     $ 14,796
                                                               
Distributions declared (a)                                  $ 12,386
                                                               
Coverage ratio                                                1.19x
 

(a) Reflects quarterly cash distribution of $0.35 per unit for the fourth
quarter of 2012

                                                              Q4 2012
                                                              (in thousands $)
                                                               
Net cash provided by operating                              $ 25,721
activities
Add:
Interest expense, net                                         4,301
Sunrise pipeline lease payment                                (6,004)
Other, including changes in working                           (1,199)
capital
Adjusted EBITDA                                             $ 22,819

Adjusted Operating Revenues, Adjusted Operating Expenses, Adjusted Operating
Income and Adjusted Income Before Income Taxes

Adjusted operating revenues, adjusted operating expenses, adjusted operating
income and adjusted income before income taxes, all of which exclude the
impact associated with Sunrise, are non-GAAP supplemental financial measures
that are presented because they are important measures used by management to
evaluate the Partnership’s performance. Sunrise is not expected to have a net
positive or negative impact on the Partnership’s distributable cash flow.
Adjusted operating revenues, adjusted operating expenses, adjusted operating
income and adjusted income before income taxes should not be considered in
isolation or as a substitute for operating revenues, operating expenses,
operating income or income before income taxes. The table below reconciles
adjusted operating revenues, adjusted operating expenses, adjusted operating
income and adjusted income before income taxes with operating revenues,
operating expenses, operating income and income before income taxes as derived
from the statements of consolidated operations to be included in the
Partnership’s annual report on Form 10-K for the year ended December 31, 2012.

                         
                            Three Months Ending December 31,
                            2012                                      2011
                                         Adjustment     Adjusted
(in thousands $)            Reported     to exclude     Results       Reported
                            Results      Sunrise        (excludes     Results
                                                        Sunrise)
REVENUES:
Operating revenues        $ 32,095     $ (5,688)      $ 26,407      $ 23,909
– affiliate
Operating revenues          9,695        (1,509)        8,186         6,479
– third party
Total operating             41,790     $ (7,197)      $ 34,593      $ 30,388
revenues                  $
                                                                       
OPERATING EXPENSES:
Operating and             $ 8,110      $ (598)        $ 7,512       $ 6,734
maintenance
Selling, general            2,481        (595)          1,886         3,934
and administrative
Depreciation and            7,196        (3,643)        3,553         2,935
amortization
Total operating           $ 17,787     $ (4,836)      $ 12,951      $ 13,603
expenses
Operating income            24,003       (2,361)        21,642        16,785
Plus: Other income,         458          -              458           1,670
net
Less: Interest              4,301        (4,080)        221           700
expense, net
Income before             $ 20,160     $ 1,719        $ 21,879      $ 17,755
income taxes
                                                                       

Q4 2012 Webcast Information

EQT Midstream Partners will host a live webcast with security analysts today,
beginning at 11:30 a.m. Eastern Time. The topics of the webcast will be
financial results, operating results and other matters with respect to
year-end and fourth quarter of 2012. The webcast will be available via
www.eqtmidstreampartners.com; and a replay will be available for seven days
following the call.

EQT Corporation (EQT), which is the Partnership's general partner and majority
equity owner, will also host a teleconference with security analysts today,
beginning at 10:30 a.m. Eastern Time. The Partnership's unitholders are
encouraged to listen to the EQT teleconference, which is expected to cover
topics that are relevant to the Partnership, such as EQT's financial and
operational results and potential asset dropdown transactions involving the
Partnership. This teleconference may also include 2012 results and other
matters with respect to the Partnership. The webcast can be accessed via
www.eqt.com and will be available as a replay for seven days following the
call.

About EQT Midstream Partners:

EQT Midstream Partners, LP is a growth-oriented limited partnership formed by
EQT Corporation to own, operate, acquire and develop midstream assets in the
Appalachian basin. The Partnership provides midstream services to EQT
Corporation and third-party companies through two primary assets: the
Equitrans Transmission and Storage System and the Equitrans Gathering System.
The Partnership has a 700 mile FERC-regulated, interstate pipeline system and
more than 2,100 miles of FERC-regulated, low-pressure gathering lines.

Visit EQT Midstream Partners, LP at www.eqtmidstreampartners.com

Cautionary Statements

The Partnership is unable to provide a reconciliation of its projected
adjusted EBITDA and projected distributable cash flow to net income or net
cash provided by operating activities, the most comparable financial measures
calculated in accordance with generally accepted accounting principles,
because of uncertainties associated with projecting future net income and
changes in assets and liabilities.

Disclosures in this press release contain certain forward-looking statements.
Statements that do not relate strictly to historical or current facts are
forward-looking. Without limiting the generality of the foregoing,
forward-looking statements contained in this press release specifically
include the expectations of plans, strategies, objectives and growth and
anticipated financial and operational performance of the Partnership and its
subsidiaries, including guidance regarding the Partnership’s transmission and
storage and gathering revenue and volume growth; revenue projections;
infrastructure programs (including the timing, cost, capacity and sources of
funding with respect to such programs); natural gas production growth in the
Partnership’s operating areas; asset acquisitions, including the Partnership’s
ability to complete any asset purchases from EQT Corporation; internal rate of
return (IRR); compound annual growth rate (CAGR), capital commitments,
projected capital and operating expenditures, including the amount of capital
expenditures reimbursable by EQT, capital budget and sources of funds for
capital expenditures; liquidity and financing requirements, including sources
and availability; distribution rate and growth; projected adjusted EBITDA and
projected distributable cash flow, including the effect of the Sunrise lease
on distributable cash flow; future projected Sunrise lease payments; the
effects of government regulation; and tax position. These statements involve
risks and uncertainties that could cause actual results to differ materially
from projected results. Accordingly, investors should not place undue reliance
on forward-looking statements as a prediction of actual results. The
Partnership has based these forward-looking statements on current expectations
and assumptions about future events. While the Partnership considers these
expectations and assumptions to be reasonable, they are inherently subject to
significant business, economic, competitive, regulatory and other risks and
uncertainties, most of which are difficult to predict and many of which are
beyond the Partnership’s control. The risks and uncertainties that may affect
the operations, performance and results of the Partnership’s business and
forward-looking statements include, but are not limited to, those set forth
under Item 1A, “Risk Factors” of the Partnership’s Form 10-Q for the quarter
ended June 30, 2012, as updated the Partnership’s Form 10-K for the year ended
December 31, 2012 to be filed with the SEC, as updated by any subsequent form
10-Q’s. Any forward-looking statement speaks only as of the date on which such
statement is made and the Partnership does not intend to correct or update any
forward-looking statement, whether as a result of new information, future
events or otherwise.

Information in this press release regarding EQT Corporation and its
subsidiaries, other than the Partnership, is derived from publicly available
information published by EQT.

This release serves as qualified notice to nominees under Treasury Regulation
Sections 1.1446-4(b)(4) and (d). Please note that 100% of the Partnership’s
distributions to foreign investors are attributable to income that is
effectively connected with a United States trade or business. Accordingly, all
of the Partnership’s distributions to foreign investors are subject to federal
income tax withholding at the highest effective tax rate for individuals or
corporations, as applicable. Nominees, and not the Partnership, are treated as
the withholding agents responsible for withholding on the distributions
received by them on behalf of foreign investors.

EQT Midstream Partners, LP
Statements of Operations (unaudited)
                                            
                                               Three Months Ended December 31,
(in thousands, except per unit amounts)        2012                 2011
REVENUES:
Operating revenues – affiliate               $ 32,095           $   23,909
Operating revenues – third party               9,695                6,479
Total operating revenues                       41,790               30,388
                                                                     
OPERATING EXPENSES:
Operating and maintenance                      8,110                6,734
Selling, general and administrative            2,481                3,934
Depreciation and amortization                  7,196                2,935
Total operating expenses                       17,787               13,603
Operating income                               24,003               16,785
Other income, net                              458                  1,670
Interest expense, net                          (4,301)              (700)
Income before income taxes                     20,160               17,755
Income tax expense                             —                    (7,122)
Net income                                   $ 20,160           $   10,633
                                                                     
Net income per limited partner unit -        $ 0.57                 N/A
basic
Net income per limited partner unit -        $ 0.57                 N/A
diluted
                                                                     
Weighted average limited partner units         34,679               N/A
outstanding – basic
Weighted average limited partner units         34,743               N/A
outstanding – diluted
                                                                     
Operating Results
                                                
                                               Three Months Ended December 31,
                                               2012                 2011
OPERATING DATA (in BBtu per day):
Transmission pipeline throughput               794                  462
CAPITAL EXPENDITURES (in thousands):
Expansion capital expenditures, excluding    $ 5,741            $   9,069
Sunrise project
Sunrise project capital expenditures           —                    44,890
Maintenance capital expenditures:
Ongoing maintenance                            4,416                5,575
Funded regulatory compliance                   3,761                10
Reimbursable maintenance                       5,765                2,853
Total maintenance capital expenditures         13,942               8,438
Total capital expenditures                   $ 19,683           $   62,397

Contact:

EQT Midstream Partners, LP
Analyst inquiries please contact:
Nate Tetlow – Investor Relations Manager, 412-553-5834
ntetlow@eqtmidstreampartners.com
or
Patrick Kane – Chief Investor Relations Officer, 412-553-7833
pkane@eqtmidstreampartners.com
or
Media inquiries please contact:
Natalie Cox – Corporate Director, Communications, 412-395-3941
ncox@eqtmidstreampartners.com
Sponsored Links
Advertisement
Advertisements
Sponsored Links
Advertisement