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BreitBurn Energy Partners L.P. Reports First Quarter Results



  BreitBurn Energy Partners L.P. Reports First Quarter Results

Business Wire

LOS ANGELES -- May 03, 2013

BreitBurn Energy Partners L.P. (the “Partnership”) (NASDAQ:BBEP) today
announced financial and operating results for its first quarter of 2013.

Selected Results for the Quarter Included the Following:

  * Increased total net production to a quarterly record high of 2.35 MMBoe,
    which represented an 18% increase from the first quarter of 2012.
  * Increased net liquids production to a quarterly record high of 1.21 MMBoe,
    or 51% of total net production, which represented a 40% increase from the
    first quarter of 2012.
  * Increased Adjusted EBITDA, a non-GAAP financial measure, to $64.1 million,
    which represented a 4% increase from the first quarter of 2012.
  * Drilled the first 16 wells, completed 10 workovers, and spudded 22
    additional wells of the Partnership’s projected 135 well drilling program
    for 2013.
  * Declared cash distribution for the first quarter of 2013 of $0.475 per
    unit, or $1.90 per unit on an annualized basis on April 28, 2013, which
    represented a 4% increase from the first quarter of 2012.
  * Reduced borrowings to approximately $100 million under the Partnership’s
    credit facility, which has total lender commitments of $900 million under
    its borrowing base and the ability to increase commitments to $1 billion
    with lender approval.

Management Commentary

Hal Washburn, CEO, said: “The Partnership is off to what we believe is a good
start and a productive year. Our 2013 drilling program has already delivered
better than expected results and we are on track with our $261 million capital
program and delivery of our full year production guidance of between 9.5
million and 10.1 million Boe. We had five rigs running during the first
quarter and expect to have as many as 11 rigs running later in the year. Our
development program is focused on our high margin oil opportunities in both
our legacy and newly acquired assets. We expect liquids production to increase
by over 40% from the fourth quarter of 2012 to the fourth quarter of 2013 and
exit the year with liquids comprising approximately 55% of total production.
We continue to actively monitor the acquisition market and our balance sheet
should allow us to move quickly on the right opportunity.”

Mark Pease, President and COO, said: “The first quarter was very active from
an operational standpoint and set the foundation for increased activity later
this year. We spent approximately $45 million in total capital and as planned,
we expect to increase drilling activity significantly through mid-year. We
expect to exit 2013 with about the same activity level as the first quarter,
so the majority of our capital spending will occur in the second and third
quarters. Over 95% of our 2013 capital spending will be on our high-margin oil
projects, including those in Texas and California where we have been
experiencing good drilling results.”

First Quarter 2013 Operating and Financial Results Compared to Fourth Quarter
2012

  * Total production increased to a record quarterly high of 2,346 MBoe in the
    first quarter of 2013 from 2,212 MBoe in the fourth quarter of 2012.
    Average daily production was 26,070 Boe/day in the first quarter of 2013
    compared to 24,044 Boe/day in the fourth quarter of 2012.

       * Oil and NGL production was 1,206 MBoe compared to 1,005 MBoe.
       * Natural gas production was 6,844 MMcf compared to 7,243 MMcf.

  * Adjusted EBITDA, a non-GAAP financial measure, was $64.1 million in the
    first quarter of 2013 compared to $78.0 million in the fourth quarter of
    2012. The decrease was primarily due to lower realized gains on commodity
    derivatives for both crude oil and natural gas, weaker oil differentials
    in Wyoming and Texas, weaker natural gas differentials in Michigan, as
    well as weaker natural gas liquids market prices.
  * Pre-tax lease operating expenses, which include district expenses,
    processing fees and transportation costs, were $19.42 per Boe in the first
    quarter of 2013 as compared to $18.88 per Boe in the fourth quarter of
    2012.
  * General and administrative expenses, excluding non-cash unit-based
    compensation, were $4.29 per Boe in the first quarter of 2013 as compared
    to $4.44 per Boe in the fourth quarter of 2012.
  * Oil and natural gas sales revenues were $120.4 million for the first
    quarter of 2013, up from $113.2 million in the fourth quarter of 2012,
    primarily reflecting higher crude oil prices.
  * Realized gains on commodity derivative instruments were $5.2 million in
    the first quarter of 2013 compared to $22.5 million in the fourth quarter
    of 2012.
  * NYMEX WTI crude oil spot prices averaged $94.33 per barrel and Brent crude
    oil spot prices averaged $112.44 per barrel in the first quarter of 2013
    compared to $88.01 per barrel and $110.15 per barrel, respectively, in the
    fourth quarter of 2012. Henry Hub natural gas spot prices averaged $3.49
    per Mcf in the first quarter of 2013 compared to $3.40 per Mcf in the
    fourth quarter of 2012.
  * Realized crude oil and NGL prices averaged $78.12 per Boe and realized
    natural gas prices averaged $5.43 per Mcf in the first quarter of 2013,
    compared to $91.38 per Boe and $6.14 per Mcf, respectively, in the fourth
    quarter of 2012.
  * Net loss attributable to the Partnership, including the effect of
    unrealized losses on commodity derivative instruments, was $36.3 million,
    or $0.38 per diluted common unit, in the first quarter of 2013 compared to
    a net loss of $10.3 million, or $0.13 per diluted common unit, in the
    fourth quarter of 2012.
  * Oil and gas capital expenditures totaled $45 million in the first quarter
    of 2013 compared to $60 million in the fourth quarter of 2012.

Impact of Derivative Instruments

The Partnership uses commodity derivative instruments to mitigate the risks
associated with commodity price volatility and to help maintain cash flows for
operating activities, acquisitions, capital expenditures, and distributions.
The Partnership does not enter into derivative instruments for speculative
trading purposes. Non-cash gains or losses do not affect Adjusted EBITDA, cash
flow from operations or the Partnership’s ability to pay cash distributions.

Realized gains from commodity derivative instruments were $5.2 million for the
quarter ended March 31, 2013. Non-cash unrealized losses from commodity
derivative instruments were $29.3 million for the quarter ended March 31,
2013.

Production, Statement of Operations, and Realized Price Information

The following table presents production, selected income statement and
realized price information for the three months ended March 31, 2013 and 2012,
and the three months ended December 31, 2012:

                                  Three Months Ended
Thousands of dollars, except      March 31,       December 31,     March 31,
as indicated                      2013            2012             2012
Oil, natural gas and NGLs         $ 120,362       $  113,179       $ 94,007
sales(a)
Realized gain on commodity          5,158            22,455          17,591
derivative instruments
Unrealized loss on commodity        (29,334 )        (18,740 )       (53,596 )
derivative instruments
Other revenues, net                 758              700             1,145    
Total revenues                    $ 96,944        $  117,594       $ 59,147   
Lease operating expenses and      $ 45,561        $  41,769        $ 38,073
processing fees
Production and property taxes       9,383            10,962          7,573    
Total lease operating             $ 54,944        $  52,731        $ 45,646   
expenses
Purchases and other operating       318              267             370
costs
Change in inventory                 (3,109  )        578             (2,755  )
Total operating costs             $ 52,153        $  53,576        $ 43,261   
Lease operating expenses pre      $ 19.42         $  18.88         $ 19.16
taxes per Boe(b)
Production and property taxes       4.00             4.96            3.81
per Boe
Total lease operating               23.42            23.84           22.97    
expenses per Boe
General and administrative
expenses (excluding               $ 10,055        $  9,815         $ 8,083    
unit-based compensation)
Net income loss attributable      $ (36,300 )     $  (10,334 )     $ (49,970 )
to the partnership
Net income loss per diluted       $ (0.38   )     $  (0.13   )     $ (0.76   )
limited partner unit
                                                                    
Total production (MBoe)             2,346            2,212           1,987
Oil and NGLs (MBoe)                 1,206            1,005           859
Natural gas (MMcf)                  6,844            7,243           6,769
Average daily production            26,070           24,044          21,835   
(Boe/d)
Sales volumes (MBoe)                2,270            2,203           1,899    
Average realized sales price      $ 55.23         $  61.49         $ 58.66
(per Boe)(c)(d)
Oil and NGLs (per Boe)(c)(d)        78.12            91.38           90.36
Natural gas (per Mcf)(c)            5.43             6.14            6.18     

(a)   NGLs account for less than 5% of total production.
(b)   Includes lease operating expenses, district expenses, transportation
      expenses and processing fees.
(c)   Includes realized gain on commodity derivative instruments.
(d)   Includes crude oil purchases.
       

Non-GAAP Financial Measures

This press release, the financial tables and other supplemental information,
including the reconciliations of certain non-generally accepted accounting
principles (“non-GAAP”) measures to their nearest comparable generally
accepted accounting principles (“GAAP”) measures, may be used periodically by
management when discussing the Partnership's financial results with investors
and analysts, and they are also available on the Partnership's website under
the Investor Relations tab.

Among the non-GAAP financial measures used is “Adjusted EBITDA.” This non-GAAP
financial measure should not be considered as an alternative to GAAP measures,
such as net income, operating income, cash flow from operating activities or
any other GAAP measure of liquidity or financial performance. Management
believes that these non-GAAP financial measures enhance comparability to prior
periods.

Adjusted EBITDA is presented as management believes it provides additional
information relative to the performance of the Partnership's business, such as
our ability to meet our debt covenant compliance tests. This non-GAAP
financial measure may not be comparable to similarly titled measures of other
publicly traded partnerships or limited liability companies because all
companies may not calculate Adjusted EBITDA in the same manner.

Adjusted EBITDA

The following table presents a reconciliation of net loss and net cash flows
from operating activities, our most directly comparable GAAP financial
performance and liquidity measures, to Adjusted EBITDA for each of the periods
indicated.

                                  Three Months Ended
                                  March 31,       December 31,     March 31,
Thousands of dollars              2013            2012             2012
Reconciliation of net loss to
Adjusted EBITDA:
                                                                    
Net loss attributable to the      $ (36,300 )     $  (10,334 )     $ (49,970 )
Partnership
                                                                    
Unrealized loss on commodity        29,334           18,740          53,596
derivative instruments
Depletion, depreciation and         47,790           40,497          38,281
amortization expense
Interest expense and other          18,419           21,171          14,458
financing costs(a)
Unrealized gain on interest         -                (3,021  )       (164    )
rate derivatives
(Gain) loss on sale of assets       (9      )        264             125
Income tax expense (benefit)        30               285             (559    )
Unit-based compensation             4,808            5,329           5,591
expense(b)
Net operating cash flow from
acquisitions, effective date        -                5,092           -        
through closing date
Adjusted EBITDA                   $ 64,072        $  78,023        $ 61,358   
                                                                    
                                                                    
                                  Three Months Ended
                                  March 31,       December 31,     March 31,
Thousands of dollars              2013            2012             2012
Reconciliation of net cash
flows from operating
activities to Adjusted
EBITDA:
                                                                    
Net cash provided by              $ 58,852        $  25,506        $ 71,299
operating activities
                                                                    
Increase (decrease) in assets
net of liabilities relating         (12,140 )        27,655          (23,168 )
to operating activities
Interest expense(a)(c)              17,180           19,885          13,206
Income from equity                  129              (131    )       (154    )
affiliates, net
Incentive compensation              -                (82     )       -
expense(d)
Income taxes                        51               98              220
Non-controlling interest            -                -               (45     )
Net operating cash flow from
acquisitions, effective date        -                5,092           -        
through closing date
Adjusted EBITDA                   $ 64,072        $  78,023        $ 61,358   
                                                                    

(a)   Includes realized loss on interest rate derivatives.
(b)   Represents non-cash long-term unit-based incentive compensation expense.
(c)   Excludes amortization of debt issuance costs and amortization of senior
      note discount/premium.
(d)   Represents cash-based incentive compensation plan expense.
       

Hedge Portfolio Summary

The table below summarizes the Partnership’s commodity derivative hedge
portfolio as of May 3, 2013. Please refer to the updated Commodity Price
Protection Portfolio via our website for additional details related to our
hedge portfolio.

                 Year
                 2013           2014           2015           2016           2017
Oil
Positions:
Fixed
Price
Swaps -
NYMEX WTI
Hedged
Volume             5,270          4,814          5,189          2,611          1,472
(Bbls/d)
Average
Price            $ 91.45        $ 93.07        $ 94.67        $ 89.60        $ 86.32
($/Bbl)
Fixed
Price
Swaps -
ICE Brent
Hedged
Volume             4,200          4,800          3,300          4,300          298
(Bbls/d)
Average
Price            $ 97.57        $ 98.88        $ 97.73        $ 95.17        $ 97.50
($/Bbl)
Collars -
NYMEX WTI
Hedged
Volume             500            1,000          1,000          -              -
(Bbls/d)
Average
Floor            $ 77.00        $ 90.00        $ 90.00        $ -            $ -
Price
($/Bbl)
Average
Ceiling          $ 103.10       $ 112.00       $ 113.50       $ -            $ -
Price
($/Bbl)
Collars -
ICE Brent
Hedged
Volume             -              -              500            500            -
(Bbls/d)
Average
Floor            $ -            $ -            $ 90.00        $ 90.00        $ -
Price
($/Bbl)
Average
Ceiling          $ -            $ -            $ 109.50       $ 101.25       $ -
Price
($/Bbl)
Puts -
NYMEX WTI
Hedged
Volume             1,000          500            500            1,000          -
(Bbls/d)
Average
Price            $ 90.00        $ 90.00        $ 90.00        $ 90.00        $ -
($/Bbl)
Total:
Hedged
Volume             10,970         11,114         10,489         8,411          1,770
(Bbls/d)
Average
Price            $ 93.00        $ 95.17        $ 94.74        $ 92.52        $ 88.20
($/Bbl)
                                                                                
Gas
Positions:
Fixed
Price
Swaps -
MichCon
City-Gate
Hedged
Volume             37,000         7,500          7,500          7,000          -
(MMBtu/d)
Average
Price            $ 6.50         $ 6.00         $ 6.00         $ 4.51         $ -
($/MMBtu)
Fixed
Price
Swaps -
Henry Hub
Hedged
Volume             24,445         38,600         43,200         20,700         5,571
(MMBtu/d)
Average
Price            $ 4.71         $ 4.80         $ 4.83         $ 4.24         $ 4.51
($/MMBtu)
Puts -
Henry Hub
Hedged
Volume             -              6,000          6,694          -              -
(MMBtu/d)
Average
Price            $ -            $ 5.00         $ 1.12         $ -            $ -
($/MMBtu)
Total:
Hedged
Volume             61,445         52,100         52,200         27,700         5,571
(MMBtu/d)
Average
Price            $ 5.79         $ 4.99         $ 5.00         $ 4.31         $ 4.51
($/MMBtu)
                                                                                
Calls -
Henry Hub
Hedged
Volume             30,000         15,000         -              -              -
(MMBtu/d)
Average
Price            $ 8.00         $ 9.00         $ -            $ -            $ -
($/MMBtu)
Deferred
Premium          $ 0.08         $ 0.12         $ -            $ -            $ -
($/MMBtu)
                                                                                

Other Information

The Partnership will host an investor conference call to discuss its results
today at 9:00 a.m. (Pacific Time). Investors may access the conference call
over the Internet via the Investor Relations tab of the Partnership's website
(www.breitburn.com), or via telephone by dialing 888-438-5519 (international
callers dial +1-719-457-2083) a few minutes prior to register. Those listening
via the Internet should go to the site 15 minutes early to register, download
and install any necessary audio software. In addition, a replay of the call
will be available through May 17, 2013 by dialing 877-870-5176 (international
callers dial +1-858-384-5517) and entering replay PIN 5531578, or by going to
the Investor Relations tab of the Partnership's website (www.breitburn.com).
The Partnership will take live questions from securities analysts and
institutional portfolio managers; the complete call is open to all other
interested parties on a listen-only basis.

About BreitBurn Energy Partners L.P.

BreitBurn Energy Partners L.P. is a publicly traded independent oil and gas
master limited partnership focused on the acquisition, exploitation,
development and production of oil and gas properties. The Partnership’s
producing and non-producing crude oil and natural gas reserves are located in
Michigan, Wyoming, California, Texas, Florida, Indiana and Kentucky. See
www.BreitBurn.com for more information.

Cautionary Statement Regarding Forward-Looking Information

This press release contains forward-looking statements relating to the
Partnership’s operations that are based on management's current expectations,
estimates and projections about its operations. Words and phrases such as
“believes,” “expect,” “future,” “impact,” “guidance,” “forecast,” “will be”
and variations of such words and similar expressions are intended to identify
such forward-looking statements. These statements are not guarantees of future
performance and are subject to certain risks, uncertainties and other factors,
some of which are beyond our control and are difficult to predict. These
include risks relating to the Partnership’s financial performance and results,
availability of sufficient cash flow and other sources of liquidity to execute
our business plan, prices and demand for natural gas and oil, increases in
operating costs, uncertainties inherent in estimating our reserves and
production, our ability to replace reserves and efficiently develop our
current reserves, political and regulatory developments relating to taxes,
derivatives and our oil and gas operations, risks relating to our
acquisitions, and the factors set forth under the heading “Risk Factors”
incorporated by reference from our Annual Report on Form 10-K filed with the
Securities and Exchange Commission, and if applicable, our Quarterly Reports
on Form 10-Q and our Current Reports on Form 8-K. Therefore, actual outcomes
and results may differ materially from what is expressed or forecasted in such
forward-looking statements. The reader should not place undue reliance on
these forward-looking statements, which speak only as of the date of this
press release. Unless legally required, the Partnership undertakes no
obligation to update publicly any forward-looking statements, whether as a
result of new information, future events or otherwise. Unpredictable or
unknown factors not discussed herein also could have material adverse effects
on forward-looking statements.

BBEP-IR

BreitBurn Energy Partners L.P. and Subsidiaries
Unaudited Consolidated Balance Sheets
 
                                           March 31,             December 31,
Thousands                                  2013                  2012
ASSETS
Current assets
Cash                                       $ 7,610               $ 4,507
Accounts and other receivables, net          58,473                67,862
Derivative instruments                       17,844                34,018
Related party receivables                    1,147                 1,413
Inventory                                    7,465                 3,086
Prepaid expenses                             1,576                 2,779      
Total current assets                         94,115                113,665
Equity investments                           7,133                 7,004
Property, plant and equipment
Oil and gas properties                       3,411,617             3,363,946
Other assets                                 15,325                14,367     
                                             3,426,942             3,378,313
Accumulated depletion and depreciation       (712,545  )           (666,420  )
Net property, plant and equipment            2,714,397             2,711,893
Other long-term assets
Derivative instruments                       48,144                55,210
Other long-term assets                       25,630                27,722
                                                                  
Total assets                               $ 2,889,419           $ 2,915,494  
LIABILITIES AND EQUITY
Current liabilities
Accounts payable                           $ 42,159              $ 42,497
Derivative instruments                       11,691                5,625
Revenue and royalties payable                21,038                22,262
Wages and salaries payable                   5,282                 10,857
Accrued interest payable                     28,344                13,002
Accrued liabilities                          27,060                20,997     
Total current liabilities                    135,574               115,240
                                                                  
Credit facility                              85,000                345,000
Senior notes, net                            755,697               755,696
Deferred income taxes                        2,466                 2,487
Asset retirement obligation                  99,792                98,480
Derivative instruments                       4,421                 4,393
Other long-term liabilities                  4,576                 4,662      
Total liabilities                            1,087,526             1,325,958
Equity
Partners' equity                             1,801,893             1,589,536  
Total equity                                 1,801,893             1,589,536
                                                                  
Total liabilities and equity               $ 2,889,419           $ 2,915,494  
                                                                  
Common units outstanding                     99,680                84,668
                                                                              
                                                                              

BreitBurn Energy Partners L.P. and Subsidiaries
Unaudited Consolidated Statements of Operations
 
                                               Three Months Ended
                                               March 31,
Thousands of dollars, except per unit          2013                2012
amounts
                                                                    
Revenues and other income items
Oil, natural gas and natural gas liquid        $ 120,362           $ 94,007
sales
Loss on commodity derivative instruments,        (24,176 )           (36,005 )
net
Other revenue, net                               758                 1,145    
Total revenues and other income items            96,944              59,147
Operating costs and expenses
Operating costs                                  52,153              43,261
Depletion, depreciation and amortization         47,790              38,281
General and administrative expenses              14,863              13,674
(Gain) loss on sale of assets                    (9      )           125      
                                                                    
Operating loss                                   (17,853 )           (36,194 )
                                                                    
Interest expense, net of capitalized             18,419              13,800
interest
Loss on interest rate swaps                      -                   494
Other income, net                                (2      )           (4      )
Total other expense                              18,417              14,290   
                                                                    
Loss before taxes                                (36,270 )           (50,484 )
                                                                    
Income tax expense (benefit)                     30                  (559    )
                                                                    
Net loss                                         (36,300 )           (49,925 )
                                                                    
Less: Net income attributable to                 -                   (45     )
noncontrolling interest
Net loss attributable to the partnership         (36,300 )           (49,970 )
                                                                    
Basic net loss per unit                        $ (0.38   )         $ (0.76   )
Diluted net loss per unit                      $ (0.38   )         $ (0.76   )
                                                                              
                                                                              

BreitBurn Energy Partners L.P. and Subsidiaries
Unaudited Consolidated Statements of Cash Flows
                                            
                                             Year Ended
                                             March 31,
Thousands of dollars                         2013                 2012
                                                                   
Cash flows from operating activities
Net loss                                     $ (36,300  )         $ (49,925  )
Adjustments to reconcile net loss to
cash flow from operating activities:
Depletion, depreciation and amortization       47,790               38,281
Unit-based compensation expense                4,808                5,591
Unrealized loss on derivative                  29,334               53,432
instruments
Income from equity affiliates, net             (129     )           154
Deferred income taxes                          (21      )           (779     )
(Gain) loss on sale of assets                  (9       )           125
Other                                          905                  809
Changes in assets and liabilities:
Accounts receivable and other assets           11,455               30,670
Inventory                                      (4,379   )           (4,505   )
Net change in related party receivables        266                  2,085
and payables
Accounts payable and other liabilities         5,132                (4,639   )
Net cash provided by operating                 58,852               71,299    
activities
Cash flows from investing activities
Capital expenditures                           (38,143  )           (14,054  )
Proceeds from sale of assets                   9                    507
Property acquisitions                          (2,503   )           -         
Net cash used in investing activities          (40,637  )           (13,547  )
Cash flows from financing activities
Issuance of common units                       285,152              166,155
Distributions                                  (40,602  )           (28,130  )
Proceeds from issuance of long-term            72,000               310,885
debt, net
Repayments of long-term debt                   (332,000 )           (498,000 )
Change in book overdraft                       338                  (2,097   )
Long-term debt issuance costs                  -                    (5,513   )
Net cash used in financing activities          (15,112  )           (56,700  )
Increase in cash                               3,103                1,052
Cash beginning of period                       4,507                5,328     
Cash end of period                           $ 7,610              $ 6,380     

Contact:

BreitBurn Energy Partners L.P.
Investor Relations Contacts:
James G. Jackson
Executive Vice President and Chief Financial Officer
213-225-5900 x273
or
Jessica Tang
Investor Relations
213-225-5900 x210
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