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PVR Partners Announces Fourth Quarter and Full Year 2012 Results



       PVR Partners Announces Fourth Quarter and Full Year 2012 Results

PR Newswire

RADNOR, Pa., Feb. 20, 2013

RADNOR, Pa., Feb. 20, 2013 /PRNewswire/ -- PVR Partners, L.P. (NYSE: PVR)
("PVR") today reported financial and operational results for the three months
and the full year ended December 31, 2012.

(Logo: http://photos.prnewswire.com/prnh/20110224/PH54022LOGO )

Full Year 2012 Results

Full year 2012 highlights and results, with comparisons to full year 2011
results, included the following:

  o Adjusted EBITDA of $239.0 million as compared to $242.9 million.

  o Distributable cash flow ("DCF") of $119.1 million as compared to $143.8
    million.

  o Average daily natural gas throughput volumes of 1,018 million cubic feet
    per day ("MMcfd") as compared with 535 MMcfd.

  o Coal royalty tons of 30.2 million as compared with 38.4 million.

Adjusted EBITDA and distributable cash flow are not Generally Accepted
Accounting Principles ("GAAP") measures.  Definitions and reconciliations of
these non-GAAP measures to GAAP reporting measures appear in the financial
tables which follow.

Fourth Quarter Results

Fourth quarter 2012 highlights and results, with comparisons to fourth quarter
2011 results, included the following:

  o Adjusted EBITDA of $67.8 million as compared to $58.9 million.

  o DCF of $34.0 million as compared to $36.7 million.

  o Average daily natural gas throughput volumes of 1,388 MMcfd as compared
    with 683 MMcfd.

  o Coal royalty tons of 6.6 million as compared with 8.9 million.

Quarterly Distribution

As previously announced, the Board of Directors of PVR GP, LLC, the general
partner of PVR, declared a quarterly distribution of $0.55 per unit payable in
cash on February 14, 2013 to common unitholders of record at the close of
business on February 8, 2013.  This distribution equates to an annualized rate
of $2.20 per unit, and represents a 1.9% increase over the prior quarter and a
7.8% increase over the distribution paid with respect to the fourth quarter of
2011.

Management Comment

"Our Eastern Midstream Segment continued to demonstrate solid growth during
the fourth quarter," said Bill Shea, President and CEO of PVR's general
partner.  "The volume gains and operating results of our Eastern Midstream
Segment benefited from the start of service of the Wyoming County trunkline at
the beginning of the quarter, and the continuing build-out of our other
projects in the Marcellus.

"Our overall operating results continue to be affected by weak coal demand in
our Coal and Natural Resource Management Segment, and low commodity prices in
the Midcontinent Midstream Segment," continued Mr. Shea.  "We believe these
factors will continue to impact our business during 2013, and have adjusted
our financial guidance accordingly for the year."

Eastern Midstream Segment

The Eastern Midstream Segment reported fourth quarter 2012 results, with
comparisons to fourth quarter 2011 results, as follows:

  o Adjusted EBITDA of $33.1 million as compared to $8.9 million, primarily
    due to the continued development of internal growth projects and the
    acquisition of Chief Gathering LLC.

  o Quarterly average throughput volumes of 967 million cubic feet per day
    ("MMcfd"), as compared to 243 MMcfd.  The volume growth reflects the
    expansion of business on PVR's existing systems, as well as the
    acquisition and expansion of the Chief Gathering systems.

Midcontinent Midstream Segment

The Midcontinent Midstream Segment reported fourth quarter 2012 results, with
comparisons to fourth quarter 2011 results, as follows:

  o Adjusted EBITDA of $14.2 million as compared to $15.3 million, primarily
    due to low commodity prices, the migration to lower-margin fee-based
    contracts, and the sale of our Crossroads system, partially offset by
    increased volumes.  EBITDA adjustments include the netting of an $8.7
    million equity investment impairment recognized in segment revenues.

  o Quarterly average throughput volumes of 421 MMcfd, as compared to 440
    MMcfd.  Fourth quarter 2011 volumes include approximately 47 MMcfd
    attributable to the Crossroads system that was sold on July 3, 2012.

Coal and Natural Resource Management Segment

The Coal and Natural Resource Management Segment reported fourth quarter 2012
results, with comparisons to fourth quarter 2011 results, as follows:

  o Adjusted EBITDA of $20.5 million as compared to $34.6 million, primarily
    due to decreased coal production and pricing.

  o Coal royalty tons of 6.6 million tons, as compared to 8.9 million tons.

  o Coal royalties revenue of $23.0 million, or $3.47 per ton, as compared to
    $38.4 million, or $4.33 per ton.

Capital Investment and Resources

We invested $209.4 million on internal growth projects in our midstream
businesses during the fourth quarter of 2012, of which $175.8 million was
invested in the Eastern Midstream Segment.  Full year 2012 internal growth
project investment totaled $528.8 million, including $410.6 million in the
Eastern Midstream Segment.

As of December 31, 2012, we had borrowings of $590.0 million under our $1.0
billion revolving credit facility, with remaining borrowing capacity of $402.1
million after adjusting for outstanding letters of credit.

Expansion Projects Update

The Phase III extension and the Canton Lateral on our Lycoming County,
Pennsylvania gas trunkline and water line began full commercial operation at
the end of the fourth quarter.  These projects gather gas and deliver water
for affiliates of Southwestern Energy Company and Royal Dutch Shell.  We are
also currently flowing volumes on the initial phase of the new gathering
system in Lycoming County to service the acreage dedications of Inflection
Energy.  The build-out of that project continues to proceed on schedule.

Financial Guidance for 2013

Based on current expectations, management has updated its Adjusted EBITDA
guidance for 2013.  2013 Adjusted EBITDA for the Eastern Midstream Segment is
expected to be in the range of $190 - $230 million, the Midcontinent Midstream
Segment is expected to be in the range of $70 to $80 million and the Coal and
Natural Resource Management Segment is expected to be in the range of $75 to
$85 million.  Based on current expectations, management believes that 2013
maintenance capital expenditures will be in the range of $14 to $18 million
and internal growth capital will be in the range of $350 to $400 million.
 Management will discontinue providing financial guidance for distributable
cash flow.

PVR's financial guidance is based on numerous assumptions about future events
and conditions and, therefore, could vary materially from actual results. 
These estimates, including capital expenditure plans, are meant to provide
guidance only and are subject to revision for acquisitions or operating
environment changes.  Adjusted EBITDA is a non-GAAP measure; reconciliations
of non-GAAP measures to GAAP reporting measures appear in the financial tables
which follow.

Fourth Quarter / Full Year 2012 Financial and Operational Results Conference
Call

A conference call and webcast, during which management will discuss full year
and fourth quarter 2012 financial and operational results, is scheduled for
Wednesday, February 20, 2013 at 11:00 a.m. Eastern Time.  Prepared remarks by
members of company management will be followed by a question and answer
period.  Interested parties may listen via webcast at
http://www.videonewswire.com/event.asp?id=92137 or by logging on using the
link posted on our website, www.pvrpartners.com.  Participants who would like
to ask questions may join the conference via phone by dialing 800-860-2442
(international 412-858-4600) five to ten minutes before the scheduled start of
the conference call (reference the PVR Partners' call).  An on-demand replay
of the webcast will be available on our website shortly after the conclusion
of the call.  A telephonic replay of the call will be available through
February 27 by dialing 877-344-7529 (international: 412-317-0088) and using
conference playback number 10024845.

******

PVR Partners, L.P. (NYSE: PVR) is a publicly traded limited partnership which
owns and operates a network of natural gas midstream pipelines and processing
plants, and owns and manages coal and natural resource properties.  Our
midstream assets, located principally in Texas, Oklahoma and Pennsylvania,
provide gathering, transportation, compression, processing, dehydration and
related services to natural gas producers.  Our coal and natural resource
properties, located in the Appalachian, Illinois and San Juan basins, are
leased to experienced operators in exchange for royalty payments.  More
information about PVR is available on our website at www.pvrpartners.com.

******

This release is intended to be a qualified notice under Treasury Regulation
Section 1.1446-4(b).  Brokers and nominees should treat one hundred percent
(100.0%) of the Partnership's distributions to non-U.S. investors as being
attributable to income that is effectively connected with a United States
trade or business.  Accordingly, the Partnership's distributions to non-U.S.
investors are subject to federal income tax withholding at the highest
applicable effective tax rate.

******

This press release includes "forward-looking statements" within the meaning of
federal securities laws. All statements, other than statements of historical
facts, included in this release that address activities, events or
developments that the Partnership expects, believes or anticipates will or may
occur in the future are forward-looking statements.  These forward-looking
statements rely on a number of assumptions concerning future events and are
subject to a number of uncertainties, factors and risks, many of which are
outside the Partnership's ability to control or predict, which could cause
results to differ materially from those expected by management. Such risks and
uncertainties include, but are not limited to, regulatory, economic and market
conditions, our ability realize the anticipated benefits from the acquisition
of Chief Gathering LLC, the timing and success of business development efforts
and other uncertainties.  Additional information concerning these and other
factors can be found in our press releases and public periodic filings with
the Securities and Exchange Commission, including our Annual Report on Form
10-K for the year ended December 31, 2011 and most recently filed Quarterly
Reports on Form 10-Q.  Readers should not place undue reliance on
forward-looking statements, which reflect management's views only as of the
date hereof.  We undertake no obligation to revise or update any
forward-looking statements, or to make any other forward-looking statements,
whether as a result of new information, future events or otherwise.

Contact: Stephen R. Milbourne
         Director - Investor Relations
         Phone: 610-975-8204
         E-Mail: invest@pvrpartners.com

 

PVR PARTNERS, L.P.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - unaudited
(in thousands, except per unit data)
                            Three Months Ended         Year Ended
                            December 31,               December 31,
                            2012          2011         2012         2011
Revenues
     Natural gas            $             $            $            $  
                             99,462        102,243      315,242      426,690
     Natural gas liquids    108,377       126,379      424,538      500,658
     Gathering fees         19,736        7,734        53,831       20,409
     Trunkline  fees        18,609        5,957        47,002       17,454
     Coal royalties         22,983        38,369       114,133      162,915
     Other  (1)             411           7,092        53,008       31,849
Total revenues              269,578       287,774      1,007,754    1,159,975
Expenses
     Cost of gas            176,802       204,642      630,345      817,937
purchased
     Operating              20,786        14,499       68,316       57,611
     General and            12,878        9,780        47,452       41,480
administrative
     Acquisition related    -             -            14,049       -
costs
     Impairments            -             -            124,845      -
     Depreciation,
depletion and               43,043        24,019       127,344      89,376
amortization
Total expenses              253,509       252,940      1,012,351    1,006,404
Operating income (loss)     16,069        34,834       (4,597)      153,571
Other income (expense)
     Interest expense       (23,157)      (10,481)     (68,773)     (44,287)
     Derivatives            90            (7,153)      2,291        (13,442)
     Interest income and    128           117          457          501
other
Net income (loss)           (6,870)       17,317       (70,622)     96,343
Net loss (income)
attributable to             -             -            -            664
noncontrolling interests
(pre-merger)
Net income (loss)           $             $            $            $    
attributable to PVR          (6,870)       17,317       (70,622)     97,007
Partners', L.P.
Earnings (loss) per         $             $            $            $        
common unit, basic and       (0.30)        0.23         (1.43)       1.45
diluted
Weighted average number
of common units             93,333        76,207       86,222       66,342
outstanding, basic and
diluted
Weighted average number
of Class B units            22,149                     13,630
outstanding
Weighted average number
of Special units            10,346                     6,473
outstanding
Other data by segment:
Eastern Midstream:
Gathered volumes (MMcfd)    562           154          389          74
Trunkline volumes           405           89           197          40
(MMcfd) (2)
Midcontinent Midstream:
Daily throughput volumes    421           440          432          421
(MMcfd) 
Coal and Natural
Resource Management:
Coal royalty tons (in       6,630         8,856        30,214       38,357
thousands)
(1) Includes a $31.3 second quarter gain on sale of plant and a $8.7 million
impairment charge related to an equity investment in the fourth quarter of
2012.
(2) Trunkline volumes
include a significant
portion of gathered
volumes.

 

PVR PARTNERS, L.P.
CONDENSED CONSOLIDATED BALANCE SHEETS - unaudited
(in thousands)
                        December 31,    December 31,
                        2012            2011
Assets
     Cash and cash      $               $          
equivalents             14,713          8,640
     Accounts           133,546         101,340
receivable
     Assets held for    11,450          -
sale
     Other current      5,446           5,640
assets
         Total current  165,155         115,620
assets
     Property, plant    1,989,346       1,282,297
and equipment, net
     Other long-term    844,208         196,075
assets
          Total assets  $    2,998,709  $  
                                         1,593,992
Liabilities and
Partners' Capital
     Accounts payable   $               $      
and accrued             197,034         124,082
liabilities
     Deferred income    3,788           3,416
     Derivative         -               12,042
liabilities
         Total current  200,822         139,540
liabilities
     Other long-term    35,468          31,748
liabilities
     Senior notes       900,000         300,000
     Revolving credit   590,000         541,000
facility
     Partners' capital  1,272,419       581,704
          Total                         $  
liabilities and         $    2,998,709   1,593,992
partners' capital
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - unaudited
(in thousands)
                        Three Months Ended            Year Ended
                        December 31,                  December 31,
                        2012            2011          2012         2011
Cash flows from
operating activities
     Net income (loss)  $               $             $            $        
                         (6,870)        17,317         (70,622)    96,343
     Adjustments to
reconcile net income
(loss) to
          net cash
provided by operating
activities:
     Gain on sale of    -               -             (31,292)     -
plant
     Depreciation,
depletion and           43,043          24,019        127,344      89,376
amortization
     Impairments        -               -             124,845      -
     Commodity
derivative contracts:
     Total derivative
(gains) losses          (90)            7,153         (2,291)      13,442
included in net income
     Cash payments to
settle derivatives for  (1,701)         (6,211)       (10,279)     (25,688)
the period
     Non-cash interest  1,607           1,044         5,824        5,779
expense
     Non-cash
unit-based              (215)           1,040         4,428        3,845
compensation
     Equity earnings,
net of distributions    11,166          3,825         11,308       8,460
received
     Other              (103)           (76)          (1,032)      (985)
     Changes in
operating assets and    (36,368)        (89)          (12,972)     (242)
liabilities
Net cash provided by    10,469          48,022        145,261      190,330
operating activities
Cash flows from
investing activities
Acquisitions, net of    -               (23,868)      (850,156)    (146,003)
cash acquired
Additions to property,  (163,926)       (88,803)      (512,375)    (230,599)
plant and equipment
Joint venture capital   (15,300)        (500)         (37,200)     (500)
contributions
Proceeds from sale of   -               -             62,271       -
plant
Other                   378             317           1,286        2,875
Net cash used in        (178,848)       (112,854)     (1,336,174)  (374,227)
investing activities
Cash flows from
financing activities
Net proceeds from       165,705         189,164       743,448      189,164
equity offerings
Proceeds from issuance  -               -             600,000      -
of senior notes
Distributions to        (47,740)        (35,600)      (176,256)    (135,296)
partners
Proceeds from
(repayments of)         55,000          (94,000)      49,000       133,000
borrowings, net
Cash paid for debt      -               -             (19,206)     (3,675)
issuance costs
Cash paid for merger    -               -             -            (6,620)
Net cash provided by    172,965         59,564        1,196,986    176,573
financing activities
Net increase
(decrease) in cash and  4,586           (5,268)       6,073        (7,324)
cash equivalents
Cash and cash
equivalents -           10,127          13,908        8,640        15,964
beginning of period
Cash and cash           $               $             $            $          
equivalents - end of    14,713          8,640         14,713       8,640
period

 

PVR PARTNERS, L.P.
CERTAIN NON-GAAP FINANCIAL MEASURES - unaudited
(in thousands)
                 Three Months Ended  Year Ended
                 December 31,        December 31,         Guidance Range
                 2012      2011      2012       2011      Full Year 2013
Reconciliation
of Non-GAAP
"Segment
Adjusted EBITDA"
to GAAP "Net
income (loss)":
Segment
Adjusted EBITDA
(a):
Eastern          $         $         $          $         $          $
Midstream         33,104    8,886     82,164     23,433    190,000    230,000
Midcontinent     14,167    15,326    52,168     66,410    70,000     80,000
Midstream
Coal and
Natural          20,541    34,641    104,717    153,104   75,000     85,000
Resource
Management
Total segment    $         $         $          $         $          $
adjusted EBITDA   67,812    58,853    239,049    242,947   335,000    395,000
Adjustments to
reconcile total
Segment
Adjusted EBITDA
to Net income
(loss)
Depreciation,
depletion and    (43,043)  (24,019)  (127,344)  (89,376)  (170,000)  (180,000)
amortization
Impairments on
PP&E and equity  (8,700)   -         (133,545)  -         -          -
investments
Acquisition      -         -         (14,049)   -         -          -
related costs
Gain on sale of  -         -         31,292     -         -          -
plant
Interest         (23,157)  (10,481)  (68,773)   (44,287)  (95,000)   (100,000)
expense
Derivatives      90        (7,153)   2,291      (13,442)  -          -
Other            128       117       457        501       -          -
Net income       $         $         $          $         $          $
(loss)            (6,870)   17,317    (70,622)   96,343    70,000     115,000
Reconciliation
of GAAP "Net
income (loss)"
to Non-GAAP
"Distributable
cash flow":
Net income       $         $         $          $    
(loss)            (6,870)   17,317    (70,622)   96,343
Depreciation,
depletion and    43,043    24,019    127,344    89,376
amortization
Impairments on
PP&E and equity  8,700     -         133,545    -
investments 
Acquisition      -         -         14,049     -
related costs
Gain on sale of  -         -         (31,292)   -
plant
Derivative
contracts:
  Derivative
losses included  (90)      7,153     (2,291)    13,442
in net income
  Cash payments
to settle        (1,701)   (6,211)   (10,279)   (25,688)
derivatives for
the period
Equity earnings
from joint
ventures, net    2,466     3,825     2,608      8,460
of
distributions 
Maintenance
capital          (4,821)   (2,679)   (17,018)   (11,211)
expenditures
Replacement
capital          (6,725)   (6,725)   (26,900)   (26,900)
expenditures
Distributable    $         $         $          $  
cash flow (b)     34,002    36,699    119,144    143,822
Distribution to
Partners:
Total cash
distribution     $         $         $          $  
paid during the   47,740    35,600    176,256    135,296
period
Reconciliation
of GAAP "Net
income (loss)"
to Non-GAAP
"Net income as
adjusted":
Net income       $         $         $          $    
(loss)            (6,870)   17,317    (70,622)   96,343
Impairments on
PP&E and equity  8,700     -         133,545    -
investments 
Acquisition      -         -         14,049     -
related costs
Gain on sale of  -         -         (31,292)   -
plant
Adjustments for
derivatives:
Derivative
losses included  (90)      7,153     (2,291)    13,442
in net income
Cash payments
to settle        (1,701)   (6,211)   (10,279)   (25,688)
derivatives for
the period
Net income       $         $         $          $    
(loss), as             39   18,259    33,110     84,097
adjusted (c)
(a)  Adjusted EBITDA, or earnings before interest, tax and depreciation,
depletion and amortization ("DD&A"), represents operating income plus DD&A,
plus impairments on both PP&E and equity investments, plus acquisition related
costs, minus gains on sale of plant.  We believe EBITDA or a version of
Adjusted EBITDA is commonly used by investors and professional research
analysts in the valuation, comparison, rating and investment recommendations
of companies in the natural gas midstream and coal industries. We use this
information for comparative purposes within the industry. EBITDA is not a
measure of financial performance under GAAP and should not be considered as a
measure of liquidity or as an alternative to net income.

 

(b)  Distributable cash flow represents net income plus DD&A, plus impairments
on both PP&E and equity investments, plus acquisition related costs, minus
gain on sale of plant, plus (minus) derivative losses (gains) included in net
income, plus (minus) cash received (paid) for derivative settlements, minus
equity earnings in joint ventures, plus cash distributions from joint
ventures, minus maintenance capital expenditures, minus replacement capital
expenditures.  Distributable cash flow is also the quantitative standard used
by investors and professional research analysts in the valuation, comparison,
rating and investment recommendations of publicly traded partnerships.
Distributable cash flow is presented because we believe it is a useful adjunct
to net cash provided by operating activities under GAAP. Distributable cash
flow is not a measure of financial performance under GAAP and should not be
considered as an alternative to cash flows from operating, investing or
financing activities, as an indicator of cash flows, as a measure of liquidity
or as an alternative to net income.

 

(c)  Net income, as adjusted, represents net income adjusted to exclude the
effects impairments on both PP&E and equity investments, one-time charges
related to acquisitions, gains on sale of plant, and non-cash changes in the
fair value of derivatives. We believe this presentation is commonly used by
investors and professional research analysts in the valuation, comparison,
rating and investment recommendations of companies in the natural gas
midstream industry. We use this information for comparative purposes within
the industry. Net income, as adjusted, is not a measure of financial
performance under GAAP and should not be considered as a measure of liquidity
or as an alternative to net income.

 

PVR PARTNERS, L.P.
QUARTERLY SEGMENT INFORMATION - unaudited
(in thousands)
                          Eastern Midstream
                          Three Months Ended          Year Ended
                          December 31,                December 31,
                          2012         2011           2012          2011
Revenues
     Gathering fees       $            $              $             $        
                           18,658       3,631         46,975          8,716
     Trunkline fees       18,609       5,957          47,002        17,454
     Other                2,686        -              5,373         -
        Total revenues    39,953       9,588          99,350        26,170
Expenses
     Operating            3,121        601            7,332         1,499
     General and          3,728        101            9,854         1,238
administrative
     Acquisition          -            -              14,049        -
related costs
     Depreciation,
depletion and             20,391       2,092          42,713        4,243
amortization
       Total expenses     27,240       2,794          73,948        6,980
Operating income          $            $              $             $        
                           12,713       6,794         25,402        19,190
                          Midcontinent Midstream
                          Three Months Ended          Year Ended
                          December 31,                December 31,
                          2012         2011           2012          2011
Revenues
     Natural gas          $            $              $             $      
                           99,462       102,243       315,242       426,690
     Natural gas          108,377      126,379        424,538       500,658
liquids
     Gathering fees       1,078        4,103          6,856         11,693
     Other (1)            (8,247)      937            25,087        5,811
        Total revenues    200,670      233,662        771,723       944,852
Expenses
     Cost of gas          176,802      204,642        630,345       817,937
purchased
     Operating            12,567       8,546          44,209        38,945
     General and          5,834        5,148          22,409        21,560
administrative
     Impairments          -            -              124,845       -
     Depreciation,
depletion and             14,609       12,728         51,829        47,956
amortization
       Total expenses     209,812      231,064        873,637       926,398
Operating income          $            $              $             $        
(loss)                     (9,142)      2,598          (101,914)    18,454
                          Coal and Natural Resource Management
                          Three Months Ended          Year Ended
                          December 31,                December 31,
                          2012         2011           2012          2011
Revenues
     Coal royalties       $            $              $             $      
                           22,983       38,369        114,133       162,915
     Coal services        1,038        2,100          5,621         8,839
     Timber               1,620        1,197          5,904         5,031
     Oil and gas          691          928            2,856         3,944
royalties
     Other                2,623        1,930          8,167         8,224
        Total revenues    28,955       44,524         136,681       188,953
Expenses
     Operating            5,098        5,352          16,775        17,167
     General and          3,316        4,531          15,189        18,682
administrative
     Depreciation,
depletion and             8,043        9,199          32,802        37,177
amortization
       Total expenses     16,457       19,082         64,766        73,026
Operating income          $            $              $             $      
                           12,498       25,442        71,915        115,927
(1) Includes a $31.3 second quarter gain on sale of plant and a $8.7 million
impairment charge related to an equity investment in the fourth quarter of
2012.

 

 

SOURCE PVR Partners, L.P.

Website: http://www.pvrpartners.com
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