Inergy Midstream Reports Second Quarter Results

  Inergy Midstream Reports Second Quarter Results

            Management to Host Conference Call Today at 10 a.m. CT

Business Wire

KANSAS CITY, Mo. -- May 7, 2013

Inergy Midstream, L.P. (NYSE:NRGM) (“Inergy Midstream”) today reported results
of operations for the quarter ended March 31, 2013, the second quarter of
fiscal 2013.

Inergy Midstream reported Adjusted EBITDA of $42.6 million for the quarter
ended March 31, 2013, an increase of $12.6 million, or 42%, from $30.0 million
for the quarter ended March 31, 2012. Net income was $3.2 million for the
quarter ended March 31, 2013, and $16.4 million in the same quarter of last
year.

Distributable cash flow was $32.7 million for the quarter ended March 31,
2013, compared to $26.4 million in the same quarter of last year, an increase
of $6.3 million, or approximately 24%.

Inergy Midstream reported Adjusted EBITDA of $75.6 million for the six months
ended March 31, 2013, an increase of $15.1 million, or 25%, from $60.5 million
for the six months ended March 31, 2012. Net income was $9.7 million for the
six months ended March 31, 2013, and $34.0 million in the same period of last
year.

Distributable cash flow was $62.2 million for the six months ended March 31,
2013, compared to $52.3 million in the same period of last year, an increase
of $9.9 million, or approximately 19%.

“We are pleased to report solid quarterly results that exhibit material growth
from one year ago and that are in line with our expectations,” said John
Sherman, President and CEO of Inergy Midstream. “We continue to see stable
fundamentals and performance in our natural gas storage and transportation
business. The recently acquired crude oil logistics business is performing
ahead of plan and is expected to create additional growth opportunities.”

Recent Events

As previously announced, the Board of Directors of Inergy Midstream’s general
partner declared a cash distribution of $0.395 per limited partner unit ($1.58
annually) for the quarter ended March 31, 2013. The distribution will be paid
on May 15, 2013.

Also as previously announced, Crestwood Midstream Partners LP (NYSE: CMLP)
(“Crestwood”) and Crestwood Holdings LLC and Inergy, L.P. (NYSE:NRGY)
(“Inergy”) and Inergy Midstream, L.P. announced the signing of definitive
agreements to create a fully integrated midstream partnership with a total
enterprise value of approximately $7 billion. For a complete description of
these agreements, see the 8-K filed on May 6, 2013.

Quarterly Results

In the quarter ended March 31, 2013, revenues increased to $63.8 million
compared to $46.9 million during the same quarter in the prior year.

In the quarter ended March 31, 2013, service/product-related costs increased
to $12.8 million compared to $11.0 million during the same quarter in the
prior year.

In the quarter ended March 31, 2013, operating and administrative expenses
were $13.3 million compared to $6.8 million in the same period of fiscal 2012.

Year-To-Date Results

In the six months ended March 31, 2013, revenues increased to $114.2 million
compared to $93.7 million during the same period in the prior year.

In the six months ended March 31, 2013, service/product-related costs
increased to $23.7 million compared to $22.1 million during the same period in
the prior year.

In the six months ended March 31, 2013, operating and administrative expenses
were $25.0 million compared to $12.9 million in the same period of fiscal
2012.

Inergy Midstream, L.P. and Inergy, L.P. will conduct a live conference call
and internet webcast today, May 7, 2013, to discuss results of operations for
the quarter ended March 31, 2013, and their business outlook. The call will
begin at 10:00 a.m. Central Time. The call-in number for the earnings call is
1-877-405-3427, and the conference name is Inergy. The live internet webcast
and the replay can be accessed on Inergy’s website, www.inergylp.com. A
digital recording of the call will be available for one week following the
call by dialing 1-855-859-2056 and entering the pass code 57678868.

About Inergy Midstream, L.P.

Inergy Midstream, L.P., headquartered in Kansas City, Missouri, is a publicly
traded master limited partnership engaged in the development and operation of
natural gas, NGL and crude oil storage, transportation, and logistics
businesses in the Northeast region of the United States and in North Dakota.

About Inergy, L.P.

Inergy, L.P., headquartered in Kansas City, Missouri, is a publicly traded
master limited partnership. Inergy's operations include a natural gas storage
business in Texas and an NGL supply logistics, transportation, and marketing
business that serves customers in the United States and Canada. Through its
general partner interest and majority equity ownership interest in Inergy
Midstream, L.P., Inergy is also engaged in the development and operation of
natural gas, NGL and crude oil storage, transportation, and logistics
businesses in the Northeast region of the United States and in North Dakota.

Corporate news, unit prices, and additional information about Inergy
Midstream, including reports from the United States Securities and Exchange
Commission, are available on the company’s website, www.inergylp.com. For more
information, contact Vince Grisell in Inergy Midstream’s Investor Relations
Department at 816-842-8181 or via e-mail at
investorrelations@inergyservices.com.

We define EBITDA as income before income taxes plus net interest expense and
depreciation and amortization expense. We define Adjusted EBITDA as EBITDA
excluding the gain or loss on the disposal of assets, long-term incentive and
equity compensation expense, reimbursement of certain costs by Inergy, L.P. in
accordance with the Omnibus Agreement, and transaction costs. Transaction
costs are third-party professional fees and other costs that are incurred in
conjunction with closing a transaction.

Adjusted EBITDA is a non-GAAP supplemental financial measure that management
and external users of our financial statements, such as industry analysts,
investors, lenders, and rating agencies, may use to assess:

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

EBITDA and Adjusted EBITDA should not be considered an alternative to net
income, income before income taxes, cash flows from operating activities, or
any other measure of financial performance calculated in accordance with GAAP,
as those items are used to measure operating performance, liquidity, and our
ability to service debt obligations. We believe that EBITDA provides
additional information for evaluating our ability to make distributions to our
common unitholders and is presented solely as a supplemental measure. We
believe that Adjusted EBITDA provides additional information for evaluating
our financial performance without regard to our financing methods, capital
structure, and historical cost basis. One should not consider Adjusted EBITDA
in isolation or as a substitute for analysis of our results as reported under
GAAP. EBITDA and Adjusted EBITDA, as we define them, may not be comparable to
EBITDA and Adjusted EBITDA or similarly titled measures used by other
corporations or partnerships in our industry, thereby diminishing such
measures’ utility.

Additional Information and Where to Find It

This press release contains information about the proposed merger involving
Crestwood and NRGM. In connection with the proposed merger, NRGM will file
with the SEC a registration statement on Form S-4 that will include a proxy
statement/prospectus for the unitholders of Crestwood. Crestwood will mail the
final proxy statement/prospectus to its unitholders. INVESTORS AND UNITHOLDERS
ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS
FILED OR TO BE FILED WITH THE SEC CAREFULLY WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT CRESTWOOD, NRGM, THE PROPOSED
MERGER AND RELATED MATTERS. Investors and unitholders will be able to obtain
free copies of the proxy statement/prospectus and other documents filed with
the SEC by NRGM and Crestwood through the website maintained by the SEC at
www.sec.gov. In addition, investors and unitholders will be able to obtain
free copies of documents filed by Crestwood with the SEC from Crestwood’s
website, www.crestwoodlp.com, under the heading “SEC Filings” in the “Investor
Relations” tab and free copies of documents filed by NRGM with the SEC from
NRGM’s website, www.inergylp.com, under the heading “SEC Filings” in the
Inergy Midstream, L.P. “Investor Relations” tab.

Participants in the Solicitation

Crestwood, NRGM, NRGY and their respective general partner’s directors and
executive officers may be deemed to be participants in the solicitation of
proxies from the unitholders of Crestwood in respect of the proposed merger
transaction. Information regarding the persons who may, under the rules of the
SEC, be deemed participants in the solicitation of the unitholders of
Crestwood in connection with the proposed transaction, including a description
of their direct or indirect interests, by security holdings or otherwise, will
be set forth in the proxy statement/prospectus when it is filed with the SEC.
Information regarding Crestwood’s directors and executive officers is
contained in Crestwood’s Annual Report on Form 10-K for the year ended
December 31, 2012, which is filed with the SEC. Information regarding NRGM’s
directors and executive officers is contained in NRGM’s Annual Report on Form
10-K for the year ended September 30, 2012, which is filed with the SEC.
Information regarding NRGY’s directors and executive officers is contained in
NRGY’s Annual Report on Form 10-K for the year ended September 30, 2012, which
is filed with the SEC. Free copies of these documents may be obtained from the
sources described above.

Forward Looking Statements

The statements in this document regarding future events, occurrences,
circumstances, activities, performance, outcomes and results are
forward-looking statements. Although these statements reflect the current
views, assumptions and expectations of NRGM’s and Crestwood’s management, the
matters addressed herein are subject to numerous risks and uncertainties which
could cause actual activities, performance, outcomes and results to differ
materially from those indicated. Such forward-looking statements include, but
are not limited to, statements about the future financial and operating
results, objectives, expectations and intentions and other statements that are
not historical facts. Factors that could result in such differences or
otherwise materially affect NRGM’s or Crestwood’s financial condition, results
of operations and cash flows include, without limitation, failure to satisfy
closing conditions with respect to the merger; the risks that the NRGM and
Crestwood businesses will not be integrated successfully or may take longer
than anticipated; the possibility that expected synergies will not be
realized, or will not be realized within the expected timeframe; fluctuations
in oil, natural gas and NGL prices; the extent and success of drilling
efforts, as well as the extent and quality of natural gas volumes produced
within proximity of our assets; failure or delays by our customers in
achieving expected production in their natural gas projects; competitive
conditions in our industry and their impact on our ability to connect natural
gas supplies to our gathering and processing assets or systems; actions or
inactions taken or non-performance by third parties, including suppliers,
contractors, operators, processors, transporters and customers; our ability to
consummate acquisitions, successfully integrate the acquired businesses,
realize any cost savings and other synergies from any acquisition; changes in
the availability and cost of capital; operating hazards, natural disasters,
weather-related delays, casualty losses and other matters beyond our control;
timely receipt of necessary government approvals and permits, our ability to
control the costs of construction, including costs of materials, labor and
right-of-way and other factors that may impact our ability to complete
projects within budget and on schedule; the effects of existing and future
laws and governmental regulations, including environmental and climate change
requirements; the effects of existing and future litigation; and risks related
to our substantial indebtedness, as well as other factors disclosed in NRGM’s
and Crestwood’s filings with the U.S. Securities and Exchange Commission. You
should read NRGM’s and Crestwood’s filings with the U.S. Securities and
Exchange Commission, including their Annual Reports on Form 10-K for the years
ended September 30, 2012 and December 31,2012, respectively, and their most
recent Quarterly Reports and Current Reports for a more extensive list of
factors that could affect results. Neither NRGM nor Crestwood assumes any
obligation to update these forward-looking statements.

Inergy Midstream, L.P. (Formerly Inergy Midstream LLC)
Consolidated Statements of Operations
For the Three Months and Six Months Ended March 31, 2013 and 2012
(in millions, except unit and per unit data)
                                                    
                             Three Months Ended        Six Months Ended

                             March 31,                 March 31,
                             (Unaudited)
                              2013     2012^(a)     2013     2012^(a) 
                                                                  
Revenue:
Firm storage                 $ 20.3     $ 20.2         $ 40.5     $ 41.1
Transportation                 15.7       7.6            23.9       14.1
Hub services                   2.3        2.4            5.5        6.7
Related party firm storage     3.3        3.3            6.7        5.3
Salt                           11.3       13.4           23.9       26.5
Crude                         10.9      -            13.7      -        
                                                                  
                               63.8       46.9           114.2      93.7
Costs and expenses:
Storage related                2.8        1.6            5.0        3.5
Transportation related         1.1        1.4            2.1        3.1
Salt related                   7.3        8.0            14.7       15.5
Crude related                  1.6        -              1.9        -
Operating and                  13.3       6.8            25.0       12.9
administrative
Depreciation and               25.9       12.7           41.1       24.7
amortization
Loss on disposal of assets    -         -            0.6       -        
                                                                  
                              52.0      30.5         90.4      59.7     
                                                                  
Operating income               11.8       16.4           23.8       34.0
Interest expense, net         8.6       -            14.1      -        
                                                                  
Net income                   $ 3.2      $ 16.4        $ 9.7      $ 34.0     
                                                                  
Less: net income prior to
initial public offering of     -          -              -          12.9
Inergy Midstream, L.P.
Less: net income earned by
US Salt, LLC prior to         -         3.0          -         6.2      
acquisition
                                                                  
Net income available to      $ 3.2      $ 13.4        $ 9.7      $ 14.9     
partners
                                                                  
Partners’ interest
information:
Non-managing general
partner interest in net      $ 2.2      $ -           $ 3.9      $ -        
income
                                                                  
Total limited partners’      $ 1.0      $ 13.4        $ 5.8      $ 14.9     
interest in net income
                                                                  
                                                                  
Net income per limited
partner unit:
Basic                        $ 0.01     $ 0.18        $ 0.07     $ 0.20     
                                                                  
Diluted                      $ 0.01     $ 0.18        $ 0.07     $ 0.20     
                                                                  
                                                                  
Weighted-average limited
partner units outstanding
(in thousands):
Basic                         85,887    74,337       81,932    74,334   
                                                                  
Diluted                       85,887    74,337       81,932    74,334   


                           Three Months Ended       Six Months Ended
                            March 31,                 March 31,
                             2013    2012^(a)     2013     2012^(a) 
                            (Unaudited)               (Unaudited)
Supplemental Information:                                      
                                                                  
Cash and cash equivalents                             $ 0.3       $ -
                                                                  
Outstanding debt:
Credit facility ^(b)                                  $ 211.9     $ 97.0
Senior unsecured notes                                 500.0     -        
^(c)
Total debt                                            $ 711.9    $ 97.0     
                                                                  
Total partner’s capital                               $ 731.4    $ 651.9    
                                                                  
EBITDA:
Net income                  $ 3.2      $ 16.4         $ 9.7       $ 34.0
Depreciation and              25.9       12.7           41.1        24.7
amortization
Interest expense, net        8.6     -            14.1      -        
EBITDA ^(d)                 $ 37.7     $ 29.1         $ 64.9      $ 58.7
Long-term incentive and
equity compensation           3.4        0.9            6.0         1.8
expense
Loss on disposal of           -          -              0.6         -
assets
Reimbursement of certain
costs by Inergy, L.P.         1.2        -              1.2         -
^(e)
Transaction costs            0.3      -            2.9       -        
Adjusted EBITDA ^(d)        $ 42.6    $ 30.0        $ 75.6     $ 60.5     
                                                                  
Distributable cash flow:
Adjusted EBITDA             $ 42.6     $ 30.0         $ 75.6      $ 60.5
Cash interest expense         (8.0 )     -              (10.9 )     -
^(f)
Maintenance capital           (1.9 )     -              (2.5  )     (0.4     )
expenditures ^(g)
Less: Pre-acquisition
distributable cash flow      -        (3.6     )    -         (7.8     )
of US Salt, LLC ^(h)
Distributable cash flow     $ 32.7    $ 26.4        $ 62.2     $ 52.3     
^(i)
                                                                  
EBITDA:
Net cash provided by        $ 38.0     $ 36.3         $ 60.2      $ 68.2
operating activities
Net changes in working        (4.9 )     (6.0     )     0.4         (7.4     )
capital balances
Amortization of deferred      (0.6 )     (0.3     )     (3.2  )     (0.3     )
financing costs
Interest expense, net         8.6        -              14.1        -
Long-term incentive and
equity compensation           (3.4 )     (0.9     )     (6.0  )     (1.8     )
expense
Loss on disposal of          -        -            (0.6  )    -        
assets
EBITDA                      $ 37.7    $ 29.1        $ 64.9     $ 58.7     
Long-term incentive and
equity compensation           3.4       0.9            6.0         1.8
expense
Loss on disposal of           -          -              0.6         -
assets
Reimbursement of certain      1.2                       1.2         -
costs by Inergy, L.P.
Transaction costs            0.3      -            2.9       -        
Adjusted EBITDA             $ 42.6    $ 30.0        $ 75.6     $ 60.5     

(a) On May 14, 2012, Inergy Midstream acquired 100% of the membership
interests in US Salt from Inergy (“US Salt Acquisition”). The US Salt
Acquisition is reflected in Inergy Midstream’s consolidated financial
statements based on the historical values, and periods prior to the
acquisition have been retrospectively adjusted to include the historical
balances of US Salt. This accounting treatment is similar to the pooling of
interests and is required as the transaction is amongst entities under common
control.

(b) On December 21, 2011, Inergy Midstream entered into a new $500 million
revolving credit facility (“Credit Facility”) with a December 2016 maturity
date. The Credit Facility is available to fund acquisitions, working capital,
and internal growth projects and for general partnership purposes. On April
16, 2012, Inergy Midstream exercised a portion of its accordion feature under
the Credit Facility and increased the loan commitments thereunder by $100
million. The aggregate amount of revolving loan commitments under the Credit
Facility now equals $600 million.

(c) On December 7, 2012, the Company and NRGM Finance Corp. (“Finance Corp.”
and together with Inergy Midstream, the “Issuers”) issued and sold $500
million in a private offering in aggregate principal amount of their 6.0%
Senior Notes due 2020 pursuant to a purchase agreement dated November 29,
2012. The Issuers issued the notes pursuant to an Indenture dated December 7,
2012, among the Issuers, the subsidiary guarantors, and U.S. Bank National
Association as Trustee. The Company filed a copy of the Indenture as Exhibit
4.1 to the Current Report on Form 8-K filed by Inergy Midstream on December
13, 2012.

(d) EBITDA is defined as income (loss) before income taxes plus net interest
expense and depreciation and amortization expense. As indicated in the table,
Adjusted EBITDA represents EBITDA excluding the gain or loss on the disposal
of assets, long-term incentive and equity compensation expenses, reimbursement
of certain costs by Inergy, L.P., and transaction costs. Inergy, L.P. is
required to reimburse Inergy Midstream, L.P. for certain costs under the terms
of the Omnibus Agreement entered into on December 21, 2011 in conjunction with
the initial public offering of Inergy Midstream, L.P. Transaction costs are
third-party professional fees and other costs that are incurred in conjunction
with closing a transaction. EBITDA and Adjusted EBITDA should not be
considered an alternative to net income, income before income taxes, cash
flows from operating activities, or any other measure of financial performance
calculated in accordance with generally accepted accounting principles as
those items are used to measure operating performance, liquidity, and our
ability to service debt obligations. We believe that EBITDA provides
additional information for evaluating our ability to make distributions to our
common unitholders and is presented solely as a supplemental measure. We
believe that Adjusted EBITDA provides additional information for evaluating
our financial performance without regard to our financing methods, capital
structure, and historical cost basis. EBITDA and Adjusted EBITDA, as we define
them, may not be comparable to EBITDA and Adjusted EBITDA or similarly titled
measures used by other corporations or partnerships.

(e) Inergy, L.P. is required to reimburse Inergy Midstream, L.P. for certain
costs under the terms of the Omnibus Agreement entered into on December 21,
2011 in conjunction with the initial public offering of Inergy Midstream, L.P.

(f) Cash interest expense is book interest expense less amortization of
deferred financing costs.

(g) Maintenance capital expenditures are defined as those capital expenditures
which do not increase operating capacity or revenues from existing levels.

(h) The amount represents US Salt’s distributable cash flow prior to the
acquisition of US Salt by Inergy Midstream from Inergy on May 14, 2012, which
has been retrospectively included in the historic results of operations of
Inergy Midstream as discussed above.

(i) Distributable cash flow is defined as Adjusted EBITDA, less cash interest
expense, maintenance capital expenditures, and income taxes. Distributable
cash flow should not be considered an alternative to cash flows from operating
activities or any other measure of financial performance calculated in
accordance with generally accepted accounting principles as those items are
used to measure operating performance, liquidity, or the ability to service
debt obligations. We believe that distributable cash flow provides additional
information for evaluating our ability to declare and pay distributions to
unitholders. Distributable cash flow, as we define it, may not be comparable
to distributable cash flow or similarly titled measures used by other
corporations and partnerships.

Contact:

Inergy Midstream, L.P.
Vince Grisell, 816-842-8181
investorrelations@inergyservices.com
 
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