Copano Energy Reports Fourth Quarter and Full Year 2012 Results - Updates 2013 Guidance PR Newswire HOUSTON, Feb. 28, 2013 HOUSTON, Feb.28, 2013 /PRNewswire/ --Copano Energy, L.L.C. (NASDAQ: CPNO) today announced its financial results for the three months and year ended December31, 2012 and its updated 2013 guidance. Fourth Quarter 2012 Highlights: oTotal distributable cash flow of $46.2million, a 9% increase from the fourth quarter of 2011 oTotal segment gross margin of $74.3million, a 20% increase from the prior year period oAdjusted EBITDA of $60.9million, a 6% increase from the prior year period oVolumes gathered from the Eagle Ford Shale play averaged 644,000MMBtu/d, a 104% increase from the prior year period oTexas segment natural gas liquids (NGL) production of over 56,000Bbls/d, a 67% increase from the prior year period 2013 Guidance Update: oAdjusted EBITDA and Total Distributable Cash Flow unchanged from previous guidance oCommon unit distribution to remain at $0.575 per quarter due to merger agreement with Kinder Morgan Energy Partners (KMP) oExpansion capital expenditures to increase to $400 to $450 million compared to previous guidance of $250 to $300 million primarily due to addition of the DK pipeline loop, a 65-mile, $100 million project to loop the DK pipeline from DeWitt County to Copano's Houston Central complex, as well as other new capital projects in Texas and Oklahoma "Our fourth quarter results demonstrate the momentum of our operations and success of our Eagle Ford strategy, and provided an excellent finish to an exciting and eventful 2012," said R. Bruce Northcutt, Copano's President and Chief Executive Officer. "Our recently announced transaction with Kinder Morgan Energy Partners positions Copano to continue executing on our strategy as part of a larger, more diversified company. We look forward to completing the transaction and moving ahead as part of KMP, which we expect to occur in the third quarter of 2013," Northcutt added. Fourth Quarter Financial Results Total distributable cash flow was $46.2million, a 9% increase from the fourth quarter of 2011, and a 19% decrease from the third quarter of 2012. The decrease from the third quarter of 2012 was primarily due to the one-time gain on the sale of the Lake Charles processing plant in the third quarter. The increase from the prior-year period was primarily due to increased throughput from the Eagle Ford Shale. These benefits were partially offset by lower NGL prices and higher operating expenses. Fourth-quarter 2012 total distributable cash flow represents 100% coverage of the fourth-quarter distribution of $0.575 per unit, based on common units outstanding on the distribution record date. Revenue for the fourth quarter of 2012 increased 12% from the fourth quarter of 2011 to $396.8million, and increased 8% from the third quarter of 2012. Total segment gross margin increased 20% from the fourth quarter of 2011 to $74.3million, and decreased 1% compared to the third quarter of 2012. Adjusted EBITDA increased 6% from the fourth quarter of 2011 to $60.9million, and decreased 17% from the third quarter of 2012. The decrease in Adjusted EBITDA from the third quarter of 2012 was primarily a result of the one-time gain on the sale of the Lake Charles processing plant in the third quarter. Net loss to common units was $50.7million for the fourth quarter of 2012 compared to a net loss of $1.2million for the fourth quarter of 2011. The net loss in the fourth quarter of 2012 includes a $66.3 million non-cash impairment charge related to Copano's investments in Bighorn Gas Gathering and Fort Union Gas Gathering. Corporate and other activities, which include Copano's commodity risk management efforts, resulted in a loss of $1.2million for the fourth quarter of 2012, consisting of $5.7million in non-cash amortization expense and $1.5million of unrealized losses on commodity derivative instruments, offset by $6.0million of net cash settlements received. Corporate and other activities for the fourth quarter of 2011 resulted in a $12.5million loss consisting of $7.5million of non-cash amortization expense, $2.9million of net cash settlements paid and $2.1million of unrealized mark-to-market losses on commodity derivative instruments. Corporate and other activities for the third quarter of 2012 resulted in a $3.7million loss consisting of $5.9million of non-cash amortization expense and $2.6million of unrealized losses on commodity derivative instruments, offset by $4.8million of net cash settlements received. Total distributable cash flow, total segment gross margin, adjusted EBITDA and segment gross margin are non-GAAP financial measures, which are reconciled to their most directly comparable GAAP measures at the end of this news release. Please read "Use of Non-GAAP Financial Measures" beginning on page7 of this news release. Current Expansion Projects Update oCopano's first 400 MMcf/d cryogenic expansion at its Houston Central complex is mechanically complete, and final preparations are underway for a projected in-service date late in the first quarter of 2013. Additionally, Formosa's fractionation expansion at its Point Comfort facility is underway and is expected to be in service in the second quarter of 2013. Copano will have 37,500 Bbls/d of fractionation capacity at Formosa's facility when the expansion is complete. oAn EPA permit application has been submitted and the public review and comment period recently ended for the second 400 MMcf/d cryogenic expansion at Houston Central. The 2014 cryogenic expansion is supported by long-term, fee-based capacity commitments with major producers. When the second cryogenic expansion is complete, Copano will have a total of 1 Bcf/d of highly efficient cryogenic processing capacity at its Houston Central complex. oConstruction on the 65-mile southwest extension of Copano's wholly-owned DK pipeline into McMullen County, Texas is nearing completion, and is expected to begin service in the first quarter of 2013. oCopano has approved a project to loop approximately 65 miles of its DK pipeline from DeWitt County to the Houston Central complex, along the same path as the existing DK pipeline. The project is expected to begin service in the fourth quarter of 2013 and is projected to cost approximately $100 million. The addition of the loop line creates a fuel reduction by reallocation of compression and provides increased pipeline capacity to serve the processing plant expansions at Houston Central. The project is supported by long-term, fee-based capacity commitments. oCopano, along with its joint venture partner, Magellan Midstream Partners, continues to make progress on the Double Eagle pipeline. The Three Rivers Terminal and the mainline between Three Rivers and the Magellan Terminal in Corpus Christi will be placed in service in March 2013. The eastern leg of the pipeline from Three Rivers to Karnes County is expected to be complete in March 2013 and the western leg from Three Rivers to Gardendale is scheduled to be complete by the third quarter of 2013. oIn Oklahoma, Copano has completed construction of a pipeline connecting Copano's Osage and Stroud systems in order to deliver rich Mississippi Lime gas gathered on the Osage system to the Paden processing plant, providing processing and nitrogen rejection services to producers in the Mississippi Lime. oIn the Woodbine Shale play in Texas, Copano has leased and is installing a 10 MMcf/d refrigeration unit, which is expected to begin processing gas early in the second quarter of 2013. Fourth Quarter Operating Results by Segment Texas Segment gross margin for Texas increased 12% from the fourth quarter of 2011 to $54.6million. The increase from the prior year period was primarily a result of volume growth from the Eagle Ford Shale, partially offset by a decline in leaner gas volumes at the Houston Central complex, which were displaced to accommodate richer Eagle Ford Gathering fee-based gas volumes. During the fourth quarter of 2012, Texas segment service throughput volumes averaged 814,684MMBtu/d of natural gas and were relatively unchanged when compared to the fourth quarter of 2011. The Texas segment gathered an average of 518,355MMBtu/d of natural gas, also were relatively unchanged when compared to the fourth quarter of 2011. Volumes processed at Copano's plants and third-party plants in Texas averaged 755,395MMBtu/d during the fourth quarter of 2012, an increase of 5% over the fourth quarter of 2011, primarily due to higher volumes processed at the Houston Central complex, partially offset by the volume impact of the sale of the Lake Charles plant in the third quarter of 2012. Fourth-quarter NGL production averaged 56,434Bbls/d at Copano-owned plants and third-party plants, an increase of 67% from the fourth quarter of 2011, reflecting a substantial increase in the NGL content of volumes and higher recovery rates at the Houston Central complex, and increased volumes at the Saint Jo plant in the north Barnett Shale Combo play in north Texas. Eagle Ford Gathering, Copano's unconsolidated joint venture with Kinder Morgan, provided gathering services for an average of 406,425MMBtu/d during the fourth quarter of 2012. Texas segment gross margin results do not include the financial results and volumes associated with Copano's interest in Eagle Ford Gathering, which is accounted for under the equity method of accounting and shown in Copano's financial statements under "Equity in loss (earnings) from unconsolidated affiliates." For the fourth quarter of 2012, equity earnings and distributions from Eagle Ford Gathering totaled $13.8million and $8.3million, respectively. Oklahoma Segment gross margin for Oklahoma was $21.2million for the fourth quarter of 2012, a decrease of 17% compared to the fourth quarter of last year. The year-over-year decrease was due primarily to lower NGL and natural gas prices, which resulted in a 16% decrease in realized margins on service throughput compared to the fourth quarter of 2011. The Oklahoma segment gathered an average of 303,645MMBtu/d of natural gas, a decrease of 1% compared to the fourth quarter of 2011, due primarily to lower lean gas volumes from the Woodford Shale. Volumes processed at wholly owned and third-party plants in Oklahoma increased 2% compared to the fourth quarter of 2011, averaging 162,057MMBtu/d. Fourth-quarter NGL production at wholly owned and third-party plants averaged 16,390Bbls/d, a decrease of 6% from the fourth quarter of 2011 primarily due to some of Copano's plants operating in ethane rejection during the fourth quarter of 2012. Rocky Mountains Segment gross margin for the Rocky Mountains segment was a loss of $0.2million in the fourth quarter of 2012 compared to a gain of $0.4million for the fourth quarter of 2011. Rocky Mountains segment gross margin results do not include the financial results and volumes associated with Copano's interest in Bighorn and Fort Union, which are accounted for under the equity method of accounting and shown in Copano's financial statements under "Equity in loss (earnings) from unconsolidated affiliates." Average pipeline throughput for Bighorn and Fort Union on a combined basis increased 7% to 675,662MMBtu/d in the fourth quarter of 2012 as compared to 630,843MMBtu/d in the fourth quarter of 2011. The volume increase is due primarily to producers increasing volumes on Fort Union to access downstream markets; however, because Fort Union has firm volume commitments from these producers, the increase did not have a material impact on Copano's equity earnings or distributions. For the fourth quarter of 2012, combined equity losses for Bighorn and Fort Union totaled $61.2million, which included a $66.3million non-cash impairment charge, compared to equity earnings of $3.7million for the same period in 2011. The fourth quarter of 2012 non-cash impairment charge was primarily the result of a decline in forecasted future volumes after a major producer in the region disclosed that some of their current and future production was being abandoned. Combined distributions from Bighorn and Fort Union totaled $4.4million in the fourth quarter of 2012 compared to $5.8million in the fourth quarter of the previous year. Year End Financial Results Revenue for 2012 increased 5% to $1.4billion compared to $1.3billion in 2011. Operating segment gross margin increased 1% to $293.7million in 2012 compared to $292.2million for 2011. Total segment gross margin increased 14% to $287.1million for 2012 compared to $252.6million for 2011. Adjusted EBITDA for 2012 was $242.6million compared to $211.3million for 2011. Net loss was $139.0million for 2012 compared to a net loss of $156.3million for 2011. Net loss for 2012 includes a $215.0million non-cash impairment charge relating to Copano's Rocky Mountains assets. Net loss for 2011 includes a loss on the refinancing of unsecured debt of $18.2million, a $170.0million non-cash impairment charge relating to Copano's Rocky Mountains assets and a $3.4million non-cash impairment charge relating to assets in south Texas. Net loss to common units for 2012 after deducting $36.1million of in-kind preferred unit distributions totaled $175.1million, or $2.39per unit on a diluted basis, compared to a net loss to common units for 2011 of $189.0million, or $2.86per unit on a diluted basis, for 2011. Weighted average diluted units outstanding totaled 73.2million for 2012 as compared to 66.2million for 2011. Cash Distributions On January10, 2013, Copano announced its fourth quarter 2012 cash distribution of $0.575 per unit, or $2.30 per unit on an annualized basis, which was paid on February14, 2013 to common unitholders of record at the close of business on January31, 2013. This distribution is unchanged from the third quarter of 2012. Updates to 2013 Guidance Copano announced today the following updates to its forecast for certain financial items for 2013: ($ in millions) Calendar 2013 Original Revised Adjusted EBITDA $300 to $330 No Change Total distributable cash flow $220 to $240 No Change Common unit distribution growth rate target 7% to 9% 0% ^(2) ^(1) Quarterly common unit distribution coverage 100% to 115% 110% to 120% ^(2) target Fee-based margin ^(3) 55% to 60% 60% to 65% Capital expenditures: Expansion $250 to $300 $400 to $450 ^(4) Maintenance $13 to $18 $18 to $23 (1) Based on annualized fourth quarter 2013 declared distribution Assumes consummation of Copano's merger with Kinder Morgan in 2013; (2) pursuant to the merger agreement, Copano is restricted from increasing its quarterly distribution above $0.575 per unit (3) Represents fee-based component of Copano's total segment gross margin and its share of gross margin from unconsolidated affiliates (4) Increase primarily due to addition of the $100 million DK pipeline loop project as well as other new capital projects in Texas and Oklahoma Use of Non-GAAP Financial Measures This news release and the accompanying schedules include non-generally accepted accounting principles, or non-GAAP, financial measures of total distributable cash flow, total segment gross margin, adjusted EBITDA and segment gross margin. The accompanying schedules provide reconciliations of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with accounting principles generally accepted in the United States, or GAAP. Non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income (loss), operating income (loss), cash flows from operating activities or any other GAAP measure of liquidity or financial performance. Copano's non-GAAP financial measures may not be comparable to similarly titled measures of other companies, who may not calculate their measures in the same manner. Copano's management team uses non-GAAP financial measures to evaluate its core profitability and to assess the financial performance of its assets. Subject to the limitations expressed above, Copano believes that investors and other market participants benefit from access to the various financial measures that its management uses in evaluating its performance because it allows them to independently evaluate Copano's performance with the same information used by management. Copano Energy, L.L.C. is a midstream natural gas company with operations in Texas, Oklahoma and Wyoming. For more information, please visit http://www.copano.com. This news release includes "forward-looking statements," as defined by the Securities and Exchange Commission. Statements that address activities or events that Copano believes will or may occur in the future are forward-looking statements. These statements include, but are not limited to, statements about future producer activity and Copano's total distributable cash flow and distribution coverage. These statements are based on management's experience and perception of historical trends, current conditions, expected future developments and other factors management believes are reasonable. Important factors that could cause actual results to differ materially from those in forward-looking statements include the following risks and uncertainties, many of which are beyond Copano's control: the volatility of prices and market demand for natural gas, crude oil, condensate and NGLs, and for products derived from these commodities; Copano's ability to continue to connect new sources of natural gas, crude oil and condensate, and the NGL content of new gas supplies; the ability of key producers to continue to drill and successfully complete and connect new natural gas and condensate volumes and such producers' performance under their contracts with Copano; Copano's ability to attract and retain key customers and contract with new customers, and such customers' performance under their contracts with Copano; Copano's ability to access or construct new pipeline capacity, gas processing and NGL fractionation and transportation capacity; the availability of local, intrastate and interstate transportation systems, trucks and other facilities and services for condensate, natural gas and NGLs; Copano's ability (and the ability of its third-party service providers) to meet in-service dates, cost expectations and operating performance standards for construction projects; Copano's ability to successfully integrate any acquired asset or operations; Copano's ability to access its revolving credit facility and to obtain additional financing on acceptable terms; the effectiveness of Copano's hedging program; general economic conditions; force majeure events such as the loss of a market or facility downtime; the effects of government regulations and policies; Copano's ability to complete the proposed merger with Kinder Morgan; and other financial, operational and legal risks and uncertainties detailed from time to time in Copano's quarterly and annual reports filed with the Securities and Exchange Commission. Copano does not undertake to update any forward-looking statement except as provided by law. Carl A. Luna, SVP and CFO Copano Energy, L.L.C. 713-621-9547 Contacts: Jack Lascarfirstname.lastname@example.org Anne Pearsonemail@example.com Dennard-Lascar Associates / 713-529-6600 –financial statements follow – COPANO ENERGY, L.L.C. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS ThreeMonthsEnded YearEnded December31, December31, 2012 2011 2012 2011 (In thousands, except per unit information) Revenue: ^ Natural gas sales^ $ 106,521 $ 104,188 $ 360,340 $ 452,726 Natural gas liquids 225,485 201,934 814,916 723,063 sales^ Transportation, compression and processing 59,876 38,925 192,270 121,631 fees^ Condensate and other 4,914 10,504 50,194 47,803 Total revenue^ 396,796 355,551 1,417,720 1,345,223 Costs and expenses: ^ Cost of natural gas and 316,046 288,437 1,105,415 1,068,423 natural gas liquids^(1) Transportation ^(1) 6,414 5,023 25,199 24,225 Operations and 21,772 18,373 77,943 65,326 maintenance^ Depreciation and 19,695 18,013 77,104 69,156 amortization ^ Impairment 742 3,409 29,486 8,409 General and 11,709 14,150 50,648 48,680 administrative^ Taxes other than income 1,933 1,101 7,392 5,130 Equity in loss (earnings) from unconsolidated 47,355 (13,257) 137,088 145,324 affiliates Gain on sale of operating (225) - (9,941) - assets Total costs and 425,441 335,249 1,500,334 1,434,673 expenses^ Operating (loss) income ^ (28,645) 20,302 (82,614) (89,450) Other income (expense): ^ Interest and other 16 29 586 60 income^ Loss on refinancing of - - - (18,233) unsecured debt ^ Interest and other (12,441) (12,737) (55,264) (47,187) financing costs (Loss) income before income (41,070) 7,594 (137,292) (154,810) taxes Provision for income taxes (272) (341) (1,678) (1,502) Net (loss) income (41,342) 7,253 (138,970) (156,312) Preferred unit distributions (9,366) (8,486) (36,117) (32,721) ^ Net loss to common units ^ $ (50,708) $ (1,233) $ (175,087) $ (189,033) Basic and diluted net loss to $ (0.66) $ (0.02) $ (2.39) $ (2.86) common units Weighted average number of common units - basic and 77,210 66,303 73,225 66,169 diluted ^ _________ ^ (1)Exclusive of operations and maintenance and depreciation, amortization and impairment shown separately below. COPANO ENERGY, L.L.C. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS YearEnded December31, 2012 2011 Cash Flows From Operating Activities: (In thousands) Net loss $ (138,970) $ (156,312) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 77,104 69,156 Impairment 29,486 8,409 Amortization of debt issue costs 3,999 3,764 Equity in loss from unconsolidated affiliates 137,088 145,324 Distributions from unconsolidated affiliates 43,031 31,623 Gain on sale of operating assets (9,941) - Loss on refinancing of unsecured debt - 18,233 Non-cash gain on risk management activities, (2,996) (3,523) net Equity-based compensation 8,195 11,558 Deferred tax provision 295 317 Other non-cash items, net 4,870 162 Changes in assets and liabilities: Accounts receivable (6,725) (19,475) Prepayments and other current assets (441) 245 Risk management activities 10,627 18,343 Accounts payable (6,999) 29,812 Other current liabilities 202 (6,404) Net cash provided by 148,825 151,232 operating activities Cash Flows From Investing Activities: Additions to property, plant and equipment (322,251) (218,929) Additions to intangible assets (10,389) (20,698) Acquisitions - (16,084) Investments in unconsolidated affiliates (72,313) (121,967) Distributions from unconsolidated affiliates 4,443 3,848 Escrow cash - 8 Proceeds from sale of assets 24,124 260 Other, net 2,492 (2,752) Net cash used in investing (373,894) (376,314) activities Cash Flows From Financing Activities: Proceeds from long-term debt 530,375 825,000 Repayment of long-term debt (523,000) (422,665) Retirement of unsecured debt - (14,572) Deferred financing costs (3,540) (15,783) Distributions to unitholders (171,586) (153,062) Proceeds from public offering of common units, net of underwriting discounts and commissions 405,355 - Equity offering costs (15,910) (5) Proceeds from option exercises 1,331 3,201 Net cash provided by 223,025 222,114 financing activities Net decrease in cash and cash equivalents (2,044) (2,968) Cash and cash equivalents, beginning of year 56,962 59,930 Cash and cash equivalents, end of year $ 54,918 $ 56,962 COPANO ENERGY, L.L.C. AND SUBSIDIARIES UNAUDITED CONSOLIDATED BALANCE SHEETS December31, 2012 2011 (In thousands, except unit information) ASSETS Current assets: Cash and cash equivalents $ 54,918 $ 56,962 Accounts receivable, net 126,909 119,193 Risk management assets 16,183 4,322 Prepayments and other current assets 5,555 5,114 Total current assets 203,565 185,591 Property, plant and equipment, net 1,372,509 1,103,699 Intangible assets, net 162,071 192,425 Investments in unconsolidated affiliates 431,447 544,687 Escrow cash 1,848 1,848 Risk management assets 1,881 6,452 Other assets, net 26,843 29,895 Total assets $ 2,200,164 $ 2,064,597 LIABILITIES AND MEMBERS' CAPITAL Current liabilities: Accounts payable $ 162,147 $ 155,921 Accrued capital expenditures 11,306 7,033 Accrued interest 11,089 8,686 Accrued tax liability 1,551 1,182 Risk management liabilities - 3,565 Other current liabilities 20,034 15,007 Total current liabilities 206,127 191,394 Long term debt (includes $3,124 and $0 bond premium as of December 31, 2012 and 2011, respectively) 1,001,649 994,525 Deferred tax liability 2,494 2,199 Risk management and other noncurrent 9,618 4,581 liabilities Commitments and contingencies Members' capital: SeriesA convertible preferred units, no par value, 12,897,029 units and 11,684,074units issued and outstanding as of December 285,168 285,168 31, 2012 and 2011, respectively Common units, no par value, 78,966,408 units and 66,341,458 units issued and outstanding as of December 31, 2012 and 1,555,468 1,164,853 2011, respectively Paid in capital 72,916 62,277 Accumulated deficit (935,482) (624,121) Accumulated other comprehensive income (loss) 2,206 (16,279) 980,276 871,898 Total liabilities and members' capital $ 2,200,164 $ 2,064,597 COPANO ENERGY, L.L.C. AND SUBSIDIARIES UNAUDITED RESULTS OF OPERATIONS ^ ThreeMonthsEnded YearEnded December31, December31, 2012 2011 2012 2011 ($ in thousands) Total segment gross $ 74,336 $ 62,091 $ 287,106 $ 252,575 margin^(1) Operations and maintenance 21,772 18,373 77,943 65,326 expenses ^ Depreciation and 19,695 18,013 77,104 69,156 amortization^ Impairment ^ 742 3,409 29,486 8,409 General and administrative 11,709 14,150 50,648 48,680 expenses^ Taxes other than income^ 1,933 1,101 7,392 5,130 Equity in loss (earnings) from unconsolidated 47,355 (13,257) 137,088 145,324 affiliates^(2)(3) Gain on sale of operating (225) - (9,941) - assets ^ Operating (loss) (28,645) 20,302 (82,614) (89,450) income^(2)(3) Loss on refinancing of - - - (18,233) unsecured debt ^ Interest and other financing (12,425) (12,708) (54,678) (47,127) costs, net^ Provision for income taxes^ (272) (341) (1,678) (1,502) Net (loss) income^ (41,342) 7,253 (138,970) (156,312) Preferred unit distributions (9,366) (8,486) (36,117) (32,721) ^ Net loss to common units ^ $ (50,709) $ (1,233) $ (175,087) $ (189,033) Total segment gross margin: ^ Texas ^ $ 54,646 $ 48,752 $ 204,324 $ 184,437 Oklahoma ^ 21,150 25,457 88,468 $ 105,080 Rocky Mountains^(4) (237) 396 932 $ 2,641 Segment gross margin ^ 75,559 74,605 293,724 292,158 Corporate and other^(5) (1,223) (12,514) (6,618) $ (39,583) Total segment gross $ 74,336 $ 62,091 $ 287,106 $ 252,575 margin^(1) Segment gross margin per unit: ^ Texas: ^ Service throughput $ 0.73 $ 0.65 $ 0.62 $ 0.70 ($/MMBtu) ^ Oklahoma: ^ Service throughput $ 0.76 $ 0.90 $ 0.77 $ 1.00 ($/MMBtu) ^ Volumes: ^ Texas: ^(6) Service throughput 814,684 818,343 895,212 726,944 (MMBtu/d)^(7)(8) Pipeline throughput 518,355 517,439 552,078 456,686 (MMBtu/d) ^ Plant inlet volumes 755,395 718,696 811,813 639,194 (MMBtu/d)^(8) NGLs produced 56,434 33,770 48,802 28,736 (Bbls/d)^(8) Oklahoma:^(9) Service throughput 303,645 307,346 315,029 287,408 (MMBtu/d)^(7)(8) Plant inlet volumes 162,057 159,344 158,754 155,675 (MMBtu/d)^(8) NGLs produced (Bbls/d) ^ 16,390 17,471 16,644 17,498 Capital Expenditures: ^ Maintenance capital $ 2,869 $ 2,379 $ 10,853 $ 13,490 expenditures^ Expansion capital 88,693 56,227 348,487 259,803 expenditures^ Total capital $ 91,562 $ 58,606 $ 359,340 $ 273,293 expenditures^ Operations and maintenance expenses: ^ Texas^ $ 13,911 $ 11,284 $ 47,352 $ 38,099 Oklahoma ^ 7,742 7,039 30,334 26,982 Rocky Mountains^ 119 50 257 245 Total operations and $ 21,772 $ 18,373 $ 77,943 $ 65,326 maintenance expenses ^ Total segment gross margin is a non-GAAP financial measure. Please read (1) Unaudited Non-GAAP Financial Measures" for a reconciliation of total segment gross margin to its most directly comparable GAAP measure of operating income. During the three months ended March31, 2012 and December31, 2012, Copano (2) recorded a $120million and $66.3million non-cash impairment charge, respectively, relating to its investments in Bighorn and Fort Union. (3) The following table summarizes the results and volumes associated with Copano's unconsolidated affiliates ($ in thousands): Three Months Ended December31, 2012 2011 Volume Equity Volume Equity (Earnings)/Loss (Earnings)/Loss Eagle Ford $ (13,837) $ (9,240) Gathering Pipeline (MMBtu/d) 406,425 145,551 throughput NGLs (Bbls/d) 17,450 6,735 produced^(a) Liberty Pipeline (Bbls/d) 27,558 131 4,946 211 Group Webb Duval^(b) (MMBtu/d) 48,437 15 61,411 (111) Southern Dome (411) (393) Plant inlet (MMBtu/d) 12,095 10,287 NGLs produced (Bbls/d) 417 358 Bighorn and Fort (MMBtu/d) 675,662 61,186 630,843 (3,710) Union^(c) Year Ended December31, 2012 2011 Volume Equity Volume Equity (Earnings)/Loss (Earnings)/Loss Eagle Ford $ (34,919) $ (11,218) Gathering Pipeline (MMBtu/d) 296,965 46,456 throughput^(d) NGLs produced (Bbls/d) 12,528 1,698 Liberty Pipeline (Bbls/d) 22,029 442 1,876 270 Group^(e) Webb Duval^(b) (MMBtu/d) 56,732 (240) 51,907 146 Southern Dome (1,104) (2,415) Plant inlet (MMBtu/d) 9,961 11,292 NGLs produced (Bbls/d) 351 403 Bighorn and Fort (MMBtu/d) 726,026 172,926 604,261 158,592 Union^(c) (a) Net of NGLs produced at Copano's Houston Central complex. (b) Net of intercompany volumes. Changes in pipeline throughput at Fort Union did not have a material (c) impact on gross margin because Fort Union received payments for additional volumes under long-term contractual commitments in each of the periods indicated. For year ended December 31, 2011, the volume has been recast from 110,827 (d) MMBtu/d, as previously stated, to show daily flow averaged over the 365 days instead of the 153 days of physical flow. For the year ended December 31, 2011, the volume has been recast from (e) 4,597 Bbls/d, as previously stated, to show daily flow averaged over the 365 days instead of the 149 days of physical flow. Rocky Mountains segment gross margin includes results from producer services, including volumes purchased for resale, volumes gathered under (4) firm capacity gathering agreements with Fort Union, volumes transported using Copano's firm capacity agreements with Wyoming Interstate Gas Company and compressor rental services provided to Bighorn. (5) Corporate and other includes results attributable to Copano's commodity risk management activities. Plant inlet volumes and NGLs produced represent total volumes processed (6) and produced by the Texas segment at all plants, including plants owned by the Texas segment and plants owned by third parties. "Service throughput" means the volume of natural gas delivered to (7) Copano's 100%-owned processing plants by third-party pipelines plus Copano's "pipeline throughput," which is the volume of natural gas transported or gathered through Copano's pipelines. Volumes for the three months and year ended December31, 2011 have been (8) recast from the following results to reflect daily flow averaged over the 92 and 365 day periods instead of the actual days of physical flow. Three Months Ended Year Ended December31, 2011 December31, 2011 Texas Service throughput (MMBtu/d) 844,469 795,497 Plant inlet volumes (MMBtu/d) 803,282 758,588 NGLs produced (Bbls/d) 33,951 29,147 Oklahoma Service throughput (MMBtu/d) N/A 291,532 Plant inlet volumes (MMBtu/d) N/A 160,406 Plant inlet volumes and NGLs produced represent total volumes processed (9) and produced by the Oklahoma segment at all plants, including plants owned by the Oklahoma segment and plants owned by third parties. COPANO ENERGY, L.L.C. AND SUBSIDIARIES UNAUDITED NON-GAAP FINANCIAL MEASURES Three MonthsEnded Three Months December31, Ended YearEnded December31, September30, 2012 2011 2012 2012 2011 (In thousands) Reconciliation of total segment gross margin to operating (loss) income: ^ Operating (loss) $ (28,645) $ 20,302 $ 43,185 $ (82,614) $ (89,450) income Operations and Add: maintenance 21,772 18,373 19,242 77,943 65,326 expenses Depreciation and 19,695 18,013 19,259 77,104 69,156 amortization ^ Impairment ^ 742 3,409 - 29,486 8,409 General and administrative 11,709 14,150 13,697 50,648 48,680 expenses Taxes other 1,933 1,101 1,983 7,392 5,130 than income Equity in loss (earnings) from 47,355 (13,257) (12,558) 137,088 145,324 unconsolidated affiliates Gain on sale of operating (225) - (9,716) (9,941) - assets ^ Total segment gross $ 74,336 $ 62,091 $ 75,092 $ 287,106 $ 252,575 margin^ Reconciliation of EBITDA, adjusted EBITDA and total distributable cash ^ flow to net (loss) income: ^ Net (loss) income^ $ (41,342) $ 7,253 $ 28,925 $ (138,970) $ (156,312) Depreciation Add: and 19,695 18,013 19,259 77,104 69,156 amortization Interest and other 12,441 12,737 13,797 55,264 47,187 financing costs Provision for 272 341 474 1,678 1,502 income taxes EBITDA (8,934) 38,344 62,455 (4,924) (38,467) Amortization Add: of commodity 5,755 7,448 5,924 21,757 29,517 derivative options^ Distributions from 12,967 15,142 11,994 47,475 35,471 unconsolidated affiliates^ Loss on refinancing of - - - - 18,233 unsecured debt ^ Equity-based 2,999 4,081 3,223 10,574 13,265 compensation Equity in loss (earnings) from 47,355 (13,257) (12,558) 137,088 145,324 unconsolidated affiliates Unrealized loss (gain) from commodity 1,485 2,145 2,583 (333) (550) risk management activities ^ Impairment ^ 742 3,409 - 29,486 8,409 Other non-cash operating (1,433) 390 (591) 1,461 118 items ^ Adjusted EBITDA^ 60,936 57,702 73,030 242,584 211,320 Cash interest Less: and other (11,652) (12,772) (13,745) (54,178) (46,395) financing costs Provision for income taxes (217) (278) (419) (1,383) (1,207) and other ^ Maintenance capital (2,869) (2,379) (1,743) (10,853) (13,490) expenditures Total distributable $ 46,198 $ 42,273 $ 57,123 $ 176,170 $ 150,228 cash flow ^(1) Actual quarterly $ 46,108 $ 42,064 distribution Total distributable 100% 101% cash flow coverage __________ ^ (1) Prior to any retained cash reserves established by Copano's Board of Directors. SOURCE Copano Energy, L.L.C. Website: http://www.copano.com
Copano Energy Reports Fourth Quarter and Full Year 2012 Results - Updates 2013 Guidance
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