Crosstex Energy Reports Fourth-Quarter and Full-Year 2012 Results

  Crosstex Energy Reports Fourth-Quarter and Full-Year 2012 Results

Business Wire

DALLAS -- February 28, 2013

The Crosstex Energy companies, Crosstex Energy, L.P. (NASDAQ: XTEX) (the
Partnership) and Crosstex Energy, Inc. (NASDAQ: XTXI) (the Corporation) today
reported results for the fourth-quarter and full-year 2012.

Fourth-Quarter 2012 – Crosstex Energy, L.P. Financial Results

The Partnership realized adjusted EBITDA of $51.7 million and distributable
cash flow of $26.7 million for the fourth quarter of 2012, compared with
adjusted EBITDA of $54.6 million and distributable cash flow of $31.7 million
for the fourth quarter of 2011. Adjusted EBITDA and distributable cash flow
are non-GAAP financial measures and are explained in greater detail under
“Non-GAAP Financial Information.” There is a reconciliation of these non-GAAP
measures to net loss in the tables at the end of this news release.

The Partnership posted a net loss of $24.5 million for the fourth quarter of
2012 compared with a net loss of $1.4 million for the fourth quarter of 2011.
The increase in the net loss for the fourth quarter of 2012 was primarily the
result of increased depreciation and amortization expense.

“We successfully executed our business plan in 2012. We accomplished our three
primary objectives by achieving solid financial performance, enhancing scale
and diversification with the acquisition of the Ohio River Valley assets,
beginning construction of the Cajun Sibon I project, announcing the Cajun
Sibon II project and exiting 2012 with strong year-over-year increases in our
distribution and dividend rates,” said Barry E. Davis, Crosstex President and
Chief Executive Officer. “We have evolved into an integrated midstream energy
solutions provider with $1 billion of major projects underway that will
continue to increase our fee-based business and diversify our business across
the natural gas, natural gas liquids and crude oil sectors. Looking ahead, I’m
confident we have the right platform, the right opportunities and the right
people to deliver growth and create value for our investors and customers.”

The Partnership’s fourth-quarter 2012 gross operating margin was $104.0
million, a $6.2 million increase over the fourth quarter of 2011. The
improvement was primarily due to the Partnership’s July 2012 acquisition of
assets in the Ohio River Valley, throughput on the Partnership’s Permian Basin
systems, increased natural gas liquids (NGL) fractionation and marketing
activity and growth in south Louisiana crude oil terminal activity. Gross
operating margin is a non-GAAP financial measure and is explained in greater
detail under “Non-GAAP Financial Information.” The Crosstex Energy, L.P.
Summary Financial Data table of this news release may be used to reconcile
this non-GAAP measure to operating income.

The Partnership reports results by operating segment principally based on
regions served. Reportable segments consist of the natural gas gathering,
processing and transmission operations in the Barnett Shale in north Texas and
in the Permian Basin in west Texas (NTX); the pipelines and processing plants
in Louisiana (LIG); the south Louisiana processing and NGL assets, including
NGL fractionation and marketing activities (PNGL) and rail, truck, pipeline
and barge facilities in the Ohio River Valley (ORV). Each business segment’s
contribution to the fourth-quarter 2012 gross operating margin compared with
the fourth-quarter 2011, and the factors affecting those contributions, are
described below:

  *The ORV segment contributed $13.4 million of gross operating margin during
    the fourth quarter of 2012. Gross operating margin for crude oil and
    condensate handling and brine handling and disposal were $8.7 million and
    $4.6 million, respectively.
  *The PNGL segment’s gross operating margin of $20.2 million represents a
    decline of $2.4 million that was primarily the result of a weaker
    processing environment partially offset by increased NGL marketing and
    fractionation and crude oil terminal activity.
  *The LIG segment contributed gross operating margin of $24.3 million, a
    decrease of $9.3 million. The decline was primarily the result of a weaker
    processing environment and the impact of the slurry-filled sinkhole which
    formed in August 2012 near Bayou Corne, Louisiana.
  *The NTX segment’s gross operating margin rose $3.3 million to $46.1
    million primarily due to the addition of gas processing facilities in the
    Permian Basin during the first quarter of 2012 and higher processing
    volumes in north Texas partially offset by greater losses on a certain
    long-term delivery contract.

The Partnership’s fourth-quarter 2012 operating expenses were $37.0 million,
an increase of $6.3 million, or 21 percent, over the fourth quarter of 2011.
This increase was primarily due to the addition of ORV operating costs.
General and administrative expenses rose $2.2 million, or 15 percent, versus
the fourth quarter of 2011 largely due to increased headcount and expenses
related to the ORV acquisition and evaluation expenses related to other
potential acquisitions. Depreciation and amortization expense for the fourth
quarter of 2012 rose $20.0 million, or 62 percent, compared with the fourth
quarter of 2011. The increase was primarily the result of accelerated
depreciation and amortization related to the Sabine gas processing plant,
depreciation and amortization of the ORV assets and depreciation on additions
in the Permian Basin. Interest expense rose to $22.6 million for the fourth
quarter of 2012 from $19.3 million for the fourth quarter of 2011 primarily as
a result of interest on the 7.125% senior unsecured notes due 2022 which were
issued in May 2012.

The net loss per limited partner common unit was $0.51 for the fourth quarter
of 2012 compared with a net loss of $0.12 per limited partner common unit for
the fourth quarter of 2011.

Full-Year 2012 – Crosstex Energy, L.P. Financial Results

The Partnership realized adjusted EBITDA of $214.1 million and distributable
cash flow of $112.8 million for 2012 compared with adjusted EBITDA of $214.0
million and distributable cash flow of $121.3 million for 2011. The
Partnership reported a net loss of $40.1 million for 2012, compared with a net
loss of $2.3 million for 2011. The increase in net loss was primarily the
result of increased depreciation and amortization expenses in 2012.

The Partnership’s 2012 gross operating margin increased to $393.8 million from
$375.2 million for 2011. The improvement was primarily due to the acquisition
of the ORV assets in July 2012, the contribution of the Partnership’s Permian
Basin assets that became operational during the first quarter of 2012,
increased NGL fractionation and marketing activity and growth in south
Louisiana crude oil terminal activity. Each business segment’s contribution to
the 2012 increase and the factors affecting those contributions are described
below:

  *The ORV segment contributed $25.7 million of gross operating margin during
    the second half of 2012. Crude oil and condensate and brine handling and
    disposal gross operating margins were $17.2 million and $8.5 million,
    respectively.
  *The PNGL segment contributed $74.0 million gross operating margin, a
    decline of $1.5 million, primarily due to the impact of a weaker
    processing environment partially offset by an increase in NGL marketing
    and fractionation activity.
  *The LIG segment’s gross operating margin contribution of $108.7 million
    represents a decline of $21.1 million. The decline was primarily the
    result of a weaker processing environment and the impact of the
    slurry-filled sinkhole which formed in August 2012 near Bayou Corne,
    Louisiana.
  *The NTX segment’s gross operating margin contribution was $185.4 million,
    an increase of $15.5 million. The increase was primarily due to a full
    year’s impact of the two gathering system expansion projects that were
    completed in 2011 and the addition of the gas processing facilities in the
    Permian Basin that commenced operations in 2012, partially offset by
    higher losses on a certain long-term delivery contract.

The Partnership’s operating expenses increased $19.1 million in 2012, or 17
percent, to $130.9 million primarily due to the addition of ORV operating
costs. General and administrative expenses in 2012 rose $8.5 million over 2011
largely due to higher professional fees and services costs related to the
acquisition of the ORV assets and evaluation expenses related to other
potential acquisitions. Depreciation and amortization expense increased $36.9
million in 2012 compared with 2011 primarily due to accelerated depreciation
and amortization related to the Sabine gas processing plant, depreciation and
amortization on the ORV assets and depreciation on additions in the Permian.
Interest expense increased to $86.5 million in 2012 from $79.2 million in 2011
primarily due to interest on the 7.125% senior unsecured notes due 2022 which
were issued in May 2012.

The net loss per limited partner common unit was $1.01 in 2012 compared with a
net loss of $0.38 per limited partner common unit in 2011.

Fourth-Quarter and Full-Year 2012 - Crosstex Energy, Inc. Financial Results

The Corporation reported a $5.7 million net loss for the fourth quarter of
2012 compared with a net loss of $1.8 million for the fourth quarter of 2011.
The net loss for 2012 was $12.5 million compared with a net loss of $6.0
million for 2011.

The Corporation had $2.8 million of cash on hand and no debt at the end of
2012.

Crosstex to Hold Earnings Conference Call on March 1, 2013

The Partnership and the Corporation will hold a conference call to discuss
fourth-quarter and full-year 2012 financial results on Friday, March 1, 2013
at 10:00 a.m. Central time (11:00 a.m. Eastern time). The dial-in number for
the call is 1-888-680-0893. Callers outside the United States should dial
1-617-213-4859. The passcode is 34047688 for all callers. Investors are
advised to dial in to the call at least 10 minutes prior to the call time to
register. Participants may preregister for the call at
https://www.theconferencingservice.com/prereg/key.process?key=PA739HXYG.
Preregistrants will be issued a pin number to use when dialing in to the live
call, which will provide quick access to the conference by bypassing the
operator upon connection. Interested parties also can access the live webcast
of the call on the Investors page of Crosstex’s website at
www.crosstexenergy.com.

After the conference call, a replay can be accessed until May 30, 2013, by
dialing 1-888-286-8010. International callers should dial 1-617-801-6888 for a
replay. The passcode for all callers listening to the replay is 45687967.
Interested parties also can visit the Investors page of Crosstex’s website to
listen to a replay of the call.

About the Crosstex Energy Companies

Crosstex Energy, L.P. (NASDAQ: XTEX) is an integrated midstream energy
partnership headquartered in Dallas that offers diversified, tailored customer
solutions spanning the energy value chain with services and infrastructure
that link energy production with consumption. XTEX operates approximately
3,500 miles of natural gas, natural gas liquids and oil pipelines, 10 natural
gas processing plants and four fractionators, as well as barge and rail
terminals, product storage facilities, brine water disposal wells and an
extensive truck fleet. XTEX has the right platform, the right opportunities
and the right people to pursue its growth-focused business strategy.

Crosstex Energy, Inc. (NASDAQ: XTXI) owns combined general and limited partner
interests of approximately 19 percent and the incentive distribution rights of
Crosstex Energy, L.P.

Additional information about the Crosstex companies can be found at
www.crosstexenergy.com.

Non-GAAP Financial Information

This press release contains non-generally accepted accounting principle
financial measures that the Partnership refers to as gross operating margin,
adjusted EBITDA and distributable cash flow. Gross operating margin is defined
as revenue minus the cost of purchased gas and NGL. Adjusted EBITDA is defined
as net income (loss) plus interest expense, provision for income taxes and
depreciation and amortization expense, impairments, stock-based compensation,
loss on extinguishment of debt, (gain) loss on noncash derivatives,
transaction costs associated with successful transactions, non-controlling
interest and certain severance and exit expenses, and accrued expense of a
legal judgment under appeal, less gain on sale of property and equity in the
earnings of a limited liability company. Distributable cash flow is defined as
earnings before certain noncash charges and the gain on the sale of assets
less maintenance capital expenditures. The amounts included in the calculation
of these measures are computed in accordance with generally accepted
accounting principles (GAAP) with the exception of maintenance capital
expenditures. Maintenance capital expenditures are capital expenditures made
to replace partially or fully depreciated assets in order to maintain the
existing operating capacity of the assets and to extend their useful lives.

The Partnership believes these measures are useful to investors because they
may provide users of this financial information with meaningful comparisons
between current results and prior-reported results and a meaningful measure of
the Partnership’s cash flow after it has satisfied the capital and related
requirements of its operations.

Gross operating margin, adjusted EBITDA and distributable cash flow, as
defined above, are not measures of financial performance or liquidity under
GAAP. They should not be considered in isolation or as an indicator of the
Partnership’s performance. Furthermore, they should not be seen as measures of
liquidity or a substitute for metrics prepared in accordance with GAAP. A
reconciliation of these measures to net loss is included among the following
tables.

This press release contains forward-looking statements within the meaning of
the federal securities laws. These statements are based on certain assumptions
made by the Partnership and the Corporation based upon management’s experience
and perception of historical trends, current conditions, expected future
developments and other factors the Partnership and the Corporation believe are
appropriate in the circumstances. These statements include, but are not
limited to, statements with respect to the Partnership’s and the Corporation’s
guidance and future outlook, distribution and dividend guidelines and future
estimates and results of operations. Such statements are subject to a number
of assumptions, risks and uncertainties, many of which are beyond the control
of the Partnership and the Corporation, which may cause the Partnership’s and
the Corporation’s actual results to differ materially from those implied or
expressed by the forward-looking statements. These risks include the
following: (1) the Partnership’s profitability is dependent upon prices and
market demand for natural gas, NGL, condensate and crude oil; (2) the
Partnership’s substantial indebtedness could limit its flexibility and
adversely affect its financial health; (3) the Partnership may not be able to
obtain funding, which would impair its ability to grow; (4) the Partnership
and the Corporation do not have diversified assets; (5) the Partnership may
not be successful in balancing its purchases and sales; (6) drilling levels
may decrease due to deterioration in the credit and commodity markets; (7) the
Partnership’s credit risk management efforts may fail to adequately protect
against customer nonpayment; (8) the amount of natural gas, NGL, condensate
and crude oil transported may decline as a result of reduced drilling by
producers, competition for supplies, reserve declines and reduction in demand
from key customers and markets; (9) the level of the Partnership’s processing,
fractionation, crude oil handling and brine disposal operations may decline
for similar reasons; (10) major project construction delays beyond the control
of the Partnership; (11) operational, regulatory and other asset-related
risks, including weather conditions such as hurricanes, exist because a
significant portion of the Partnership’s assets are located in southern
Louisiana; (12) the Partnership’s use of derivative financial instruments does
not eliminate its exposure to fluctuations in commodity prices and interest
rates; and (13) other factors discussed in the Partnership’s and the
Corporation’s Annual Reports on Form 10-K for the year ended December 31,
2011, the Partnership’s and the Corporation’s Annual Reports on Form 10-K for
the year ended December 31, 2012 when they are available, and other filings
with the Securities and Exchange Commission. The Partnership and the
Corporation have no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information, future
events or otherwise.



CROSSTEX ENERGY, L.P.
Summary Financial Data
(All amounts in thousands except per unit numbers)
                                                           
                     Three Months Ended          Years Ended
                     December 31,                December 31,
                     2012         2011          2012           2011
                     Unaudited
                                                                 
Midstream            $ 525,980     $ 480,939     $ 1,655,851     $ 2,013,942
revenues
Purchased gas,
NGL and crude         422,023     383,127     1,262,093     1,638,777 
oil
Gross operating        103,957       97,812        393,758         375,165
margin
                                                                 
Operating costs
and expenses:
Operating              36,954        30,695        130,882         111,778
expenses
General and            16,910        14,690        61,308          52,801
administrative
(Gain) loss on         53            (53     )     (342      )     264
sale of property
Loss on                2,983         2,256         1,006           7,776
derivatives
Depreciation and      52,120      32,084      162,226       125,284   
amortization
Total operating
costs and              109,020       79,672        355,080         297,903
expenses
                                                                 
Operating income       (5,063  )     18,140        38,678          77,262
(loss)
                                                                 
Interest
expense, net of        (22,589 )     (19,282 )     (86,521   )     (79,233   )
interest income
Equity in
earnings of
limited                1,740         -             3,250           -
liability
company
Other income          589         50          5,053         707       
Total other           (20,260 )    (19,232 )    (78,218   )    (78,526   )
expense
Loss before
non-controlling        (25,323 )     (1,092  )     (39,540   )     (1,264    )
interest and
income taxes
Income tax            782         (228    )    (725      )    (1,126    )
provision
Net loss             $ (24,541 )   $ (1,320  )   $ (40,265   )   $ (2,390    )
Less: Net income
(loss)
attributable to       -           81          (163      )    (48       )
the
non-controlling
interest
Net loss
attributable to      $ (24,541 )   $ (1,401  )   $ (40,102   )   $ (2,342    )
Crosstex Energy,
L.P.
Preferred
interest in net
income               $ 5,433      $ 4,706      $ 20,779       $ 18,088    
attributable to
Crosstex Energy,
L.P.
General partner
interest in net      $ (114    )   $ (23     )   $ (534      )   $ (732      )
loss
Limited
partners’            $ (29,860 )   $ (6,084  )   $ (60,347   )   $ (19,698   )
interest in net
loss
                                                                 
Net loss per
limited
partners' unit:
Basic and
diluted common       $ (0.51   )   $ (0.12   )   $ (1.01     )   $ (0.38     )
unit
Weighted average
limited
partners' units
outstanding:
Basic and
diluted common        65,300      50,672      58,935        50,590    
units



CROSSTEX ENERGY, L.P.
Reconciliation of Net Loss to Adjusted EBITDA and Distributable Cash Flow
(All amounts in thousands except ratios and per unit amounts)
                                                             
                         Three Months Ended          Years Ended
                         December 31,                December 31,
                         2012          2011          2012          2011
                                                     
Net loss
attributable to          $ (24,541 )   $ (1,401  )   $ (40,102 )   $ (2,342  )
Crosstex Energy,
L.P.
Depreciation and           52,120        32,084        162,226       125,284
amortization
Stock-based                1,710         1,803         9,207         7,308
compensation
Interest expense,          22,589        19,282        86,521        79,233
net
(Gain) loss on sale        53            (53     )     (342    )     264
of property
Noncash derivatives,
taxes and other (1)       (243    )    2,930       (3,421  )    4,281   
(2)
Adjusted EBITDA            51,688        54,645        214,089       214,028
                                                                   
Interest expense           (22,267 )     (19,344 )     (86,244 )     (78,156 )
Cash taxes and other       141           (510    )     (1,373  )     (1,964  )
cash expenses
Maintenance capital       (2,845  )    (3,138  )    (13,645 )    (12,597 )
expenditures
Distributable cash       $ 26,717     $ 31,653     $ 112,827    $ 121,311 
flow
Cash distribution        $ 27,805      $ 22,462      $ 102,036     $ 85,343
declared
Distribution             0.96x         1.41x         1.11x         1.42x
coverage
                                                                   
Distributions
declared per limited     $ 0.33       $ 0.32       $ 1.32       $ 1.23    
partner unit
Distributions
declared per             $ 0.33       $ 0.32       $ 1.32       $ 1.23    
preferred unit

        Includes $0.3 million and $2.8 million of transaction expenses related
        to successfully transacted acquisition projects for the three months
(1)   and year ended December 31, 2012, respectively, and $0.4 million of
        transaction expenses related to successfully transacted growth
        projects for the year ended December 31, 2011.
        Includes $2.0 million of non-cash, non-recurring expenses related to a
(2)     legal judgment under appeal for the three months and year ended
        December 31, 2011.



CROSSTEX ENERGY, L.P.
Operating Data
                                                                
                                   
                         Three Months Ended          Years Ended
                         December 31,                December 31,
                         2012         2011          2012         2011
                                                                   
Pipeline Throughput
(MMBtu/d)
LIG                      690,000       919,000       783,000       912,000
NTX - Gathering          773,000       782,000       810,000       773,000
NTX - Transmission       342,000      354,000      350,000      352,000   
Total Gathering and      1,805,000     2,055,000     1,943,000     2,037,000
Transmission Volume
                                                                   
Natural Gas
Processed (MMBtu/d)
PNGL                     659,000       811,000       738,000       829,000
LIG                      269,000       259,000       248,000       247,000
NTX                      398,000      252,000      364,000      249,000   
Total Gas Volumes        1,326,000     1,322,000     1,350,000     1,325,000
Processed
                                                                   
Crude Oil Handling       11,500        -             11,800        -
(Bbls/d) (1)
Brine Disposal           8,000         -             7,800         -
(Bbls/d)
                                                                   
NGL Fractionated         1,584,000     1,172,000     1,359,000     1,109,000
(Gal/d)
                                                                   
Realized weighted
average
Natural Gas Liquids      1.02          1.37          1.07          1.31
price ($/gallon) (2)
Actual weighted
average
Natural Gas
Liquids-to-Gas price     309       %   432       %   383       %   358       %
ratio
                                                                   
North Texas
Gathering (3)
Wells connected          17            30            118           124

(1)   Crude oil handling includes barrels handled by the ORV and PNGL
        segments during the three months and year ended December 31, 2012.
        Ethane represents 34 percent and 38 percent of NGL gallons sold at
(2)     realized prices of $0.29/gal and $0.40/gal for the three months and
        year ended December 31, 2012, respectively.
        North Texas Gathering wells connected are as of the last day of the
(3)     period and include Centralized Delivery Point connections where
        Crosstex connects multiple wells at a single meter station.



CROSSTEX ENERGY, INC.
Summary Financial Data
(All amounts in thousands except per unit numbers)
                                                           
                     Three Months Ended          Years Ended
                     December 31,                December 31,
                     2012         2011          2012           2011
                     (Unaudited)
                                                                 
Midstream            $ 525,980     $ 480,939     $ 1,655,851     $ 2,013,942
revenues
Purchased gas         422,023     383,127     1,262,093     1,638,777 
and NGL
Gross operating        103,957       97,812        393,758         375,165
margin
                                                                 
Operating costs
and expenses:
Operating              36,954        30,695        130,882         111,778
expenses
General and            18,354        15,433        65,083          55,516
administrative
(Gain) loss on         53            (53     )     (342      )     264
sale of property
Loss on                2,983         2,256         1,006           7,776
derivatives
Depreciation and      52,138      32,101      162,300       125,358   
amortization
Total operating
costs and              110,482       80,432        358,929         300,692
expenses
                                                                 
Operating income       (6,525  )     17,380        34,829          74,473
(loss)
                                                                 
Other income
(expense):
Interest
expense, net of        (22,588 )     (19,281 )     (86,515   )     (79,227   )
interest income
Equity in
earnings of
limited                1,740         -             3,250           -
liability
company
Other income          590         51          5,054         707       
Total other            (20,258 )     (19,230 )     (78,211   )     (78,520   )
income (expense)
Loss before
non-controlling        (26,783 )     (1,850  )     (43,382   )     (4,047    )
interest and
income taxes
Income tax            4,030       714         6,642         2,768     
benefit
Net loss               (22,753 )     (1,136  )     (36,740   )     (1,279    )
Less: Net income
(loss)
attributable to       (17,083 )    674         (24,259   )    4,728     
the
non-controlling
interest
Net loss
attributable to      $ (5,670  )   $ (1,810  )   $ (12,481   )   $ (6,007    )
Crosstex Energy,
Inc.
Net loss per
common share:
Basic and            $ (0.12   )   $ (0.03   )   $ (0.26     )   $ (0.12     )
diluted
Weighted average
shares
outstanding:
Basic and             47,414      47,194      47,384        47,150    
diluted



CROSSTEX ENERGY, INC.
Calculation of Cash Available for Dividends
(All amounts in thousands except per share amounts)
                                                              
                              Three Months Ended       Years Ended
                              December 31,             December 31,
                              2012         2011        2012         2011
                                                       
Distributions declared by
Crosstex Energy, L.P.
associated with:
General Partner Interest      $ 427        $ 428       $ 1,796      $ 1,641
Incentive Distribution          1,215        793         4,391        2,424
Rights
L.P. Units owned               5,417      5,253     21,668     20,190 
Total share of                $ 7,059      $ 6,474     $ 27,855     $ 24,255
distributions declared
Other non-partnership
uses:
General and                     (1,938 )     (500  )     (3,732 )     (1,937 )
administrative expenses
Cash reserved *                (512   )    (597  )    (2,412 )    (2,232 )
Cash available for            $ 4,609     $ 5,377    $ 21,711    $ 20,086 
dividends
Dividend declared per         $ 0.12      $ 0.11     $ 0.48      $ 0.40   
share

    Cash reserved represents a holdback of cash by the Corporation to cover
    tax payments, equity matching investments in the Partnership and other
*  miscellaneous cash expenditures. The amount is currently estimated at 10
    percent of the Corporation's share of Partnership distributions declared,
    net of non-partnership general and administrative expenses.

Contact:

Crosstex Energy
Jill McMillan, 214-721-9271
Director, Public & Industry Affairs
Jill.McMillan@CrosstexEnergy.com
 
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