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Hi-Crush Partners LP : Hi-Crush Partners LP Reports First Quarter 2013 Results



Hi-Crush Partners LP : Hi-Crush Partners LP Reports First Quarter 2013 Results

News Release

           Hi-Crush Partners LP Reports First Quarter 2013 Results

Houston, Texas, May 14, 2013 -  Hi-Crush Partners LP (NYSE: HCLP),  "Hi-Crush" 
or the "Partnership", today reported net income of $10.8 million, or $0.40 per
limited partner unit, for the first  quarter of 2013.  Net income per  limited 
partner unit does not include $0.14  per common and subordinated unit  related 
to the $3.75  million distribution  earned under the  preferred interest  from 
Augusta.  This distribution was paid in May  2013 and will be included in  the 
Partnership's net income in second quarter 2013.

Overview of Financial Results

"We are  pleased with  our performance  in the  first quarter  of 2013,"  said 
Robert Rasmus,  Co-Chief  Executive Officer  of  Hi-Crush.  "We  continued  to 
benefit from  rising  proppant  intensity caused  by  increased  drilling  and 
completion efficiencies and an increase in  the average number of frac  stages 
per well.   These  trends,  combined  with  a  renewed  push  towards  24-hour 
operations, continue to support  strong demand for  our premium products.   We 
saw increasing demand as we moved through the first quarter and see signs  for 
continued strength in demand in the near-term."

Revenues for  the quarter  ended  March 31,  2013  totaled $19.6  million  and 
reflect an average selling price  for all tons sold  in the quarter of  $62.76 
per ton.  Hi-Crush sold 312,730 tons of frac sand for the quarter ended  March 
31, 2013.  For the quarter ended  March 31, 2013, distributable cash flow  was 
$14.5  million  and   earnings  before  interest,   taxes,  depreciation   and 
amortization ("EBITDA") was $11.4 million.

"Our customers met their contract terms in the first quarter and volumes  were 
trending up throughout the quarter.  This, combined with our sales under  spot 
arrangements, resulted in our Wyeville plant shipping a record number of  tons 
in the month of March.   The first quarter is  our second highest quarter  for 
tons delivered  and  sold  since  building the  plant,"  said  James  Whipkey, 
Co-Chief Executive Officer of Hi-Crush.

On April 17, 2013,  Hi-Crush declared its first  quarter cash distribution  of 
$0.475  per  unit  for  all  common  and  subordinated  units.   This   amount 
corresponds to the minimum quarterly cash distribution of $0.475 per unit,  or 
$1.90 on an annualized basis, and will be paid on May 15, 2013 to  unitholders 
of record on May 1, 2013.

Preferred Interest in Augusta Facility

On January  31,  2013,  Hi-Crush  entered  into  an  agreement  with  Hi-Crush 
Proppants LLC (the "Sponsor") to acquire  an interest in Hi-Crush Augusta  LLC 
("Augusta"), the  entity  that  owns  the  Sponsor's  Augusta  raw  frac  sand 
processing facility,  for $37.5  million in  cash and  3.75 million  of  newly 
issued convertible  Class B  units  in Hi-Crush.   The preferred  interest  in 
Augusta entitles the Partnership to a preferred distribution of $3.75  million 
per quarter, or  $15 million  annually.  The first  preferred distribution  of 
$3.75 million from Augusta was  paid to the Partnership  on May 10, 2013.  The 
amount is not reflected in the Partnership's net income because the investment
in Augusta is accounted  for under the cost  method.  In accordance with  that 
method,  any  distributions  earned  under  the  preferred  interest  are  not 
recognized as income until the cash is actually received by the Partnership.

Customer Contract

Hi-Crush also announced  an amendment to  a supply agreement  with one of  its 
customers.  The terms of the amendment cover the period from April 1, 2013  to 
December 31, 2013 and involve a price reduction under the supply agreement  in 
exchange for  an increase  in  contracted frac  sand  volume at  the  Wyeville 
facility for that period.  The increase will be offset by a decrease in volume
sold to the customer from the Augusta facility operated by the Sponsor.  As  a 
result of the amendment,  all volumes at the  Wyeville facility will be  fully 
contracted.  Hi-Crush  estimates  this  amendment  will  impact  the  weighted 
average price for tons sold under its long-term contracts by less than 10%  in 
2013.

Conference Call

A conference call for investors will be held on Tuesday, May 14, 2013 at  8:30 
a.m. Central Time (9:30 a.m. Eastern Time) to discuss Hi-Crush's first quarter
results and  forward outlook.   Hosting the  call will  be Robert  E.  Rasmus, 
Co-Chief Executive Officer, James M.  Whipkey, Co-Chief Executive Officer  and 
Laura C. Fulton, Chief Financial Officer.

The call can be accessed live over the telephone by dialing (877) 705-6003, or
for international callers, (201) 493-6725.  A replay will be available shortly
after the  call  and  can  be  accessed by  dialing  (877)  870-5176,  or  for 
international callers (858) 384-5517. The  passcode for the replay is  413353. 
 The replay will be available until May 28, 2013.

Interested parties may also listen to a simultaneous webcast of the conference
call by  logging onto  Hi-Crush's website  at www.hicrushpartners.com  in  the 
Investors-Event Calendar and  Presentations section. A  replay of the  webcast 
will also be available for approximately 30 days following the call.

The slide presentation to be referenced on the call will also be on Hi-Crush's
website  at  www.hicrushpartners.com  in  the  Investors-Event  Calendar   and 
Presentations section.

Non-GAAP Financial Measures

This  news  release  and  the  accompanying  schedules  include  the  non-GAAP 
financial measure of  EBITDA, Distributable  Cash Flow  and Production  Costs, 
which may be  used periodically  by management when  discussing our  financial 
results with investors and analysts.  The accompanying schedules of this  news 
release provide reconciliations of these non-GAAP financial measures to  their 
most directly  comparable  financial  measures  calculated  and  presented  in 
accordance with generally accepted accounting principles in the United  States 
of America ("GAAP").  EBITDA, Distributable Cash Flow and Production Costs are
presented as  management believes  the data  provides a  measure of  operating 
performance  that  is  unaffected  by  historical  cost  basis  and   provides 
additional  information  and  metrics  relative  to  the  performance  of  our 
business.

About Hi-Crush

Hi-Crush is a domestic producer of monocrystalline sand, a specialized mineral
that is used  as a "proppant"  (frac sand)  to enhance the  recovery rates  of 
hydrocarbons from oil and natural gas  wells. Our reserves, which are  located 
in Wyeville,  Wisconsin, consist  of "Northern  White" sand,  a resource  that 
exists predominately in Wisconsin  and limited portions  of the upper  Midwest 
region   of    the    United    States.   For    more    information,    visit 
www.hicrushpartners.com.

Forward-Looking Statements

Some of  the information  in  this news  release may  contain  forward-looking 
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E  of the Securities Exchange  Act of 1934, as  amended 
(the  "Exchange   Act").    Forward-looking  statements   give   our   current 
expectations and  may  contain projections  of  results of  operations  or  of 
financial condition,  or forecasts  of  future events.  Words such  as  "may," 
"assume," "forecast," "position,"  "predict," "strategy," "expect,"  "intend," 
"plan," "estimate,"  "anticipate,"  "could," "believe,"  "project,"  "budget," 
"potential," or  "continue,"  and similar  expressions  are used  to  identify 
forward-looking statements. They  can be  affected by assumptions  used or  by 
known or  unknown risks  or uncertainties.   Consequently, no  forward-looking 
statements  can  be  guaranteed.    When  considering  these   forward-looking 
statements, you should  keep in  mind the  risk factors  and other  cautionary 
statements in  Hi-Crush's  reports  filed with  the  Securities  and  Exchange 
Commission ("SEC"), including those described under Item 1A of Hi-Crush's Form
10-K for the fiscal  year ended December 31,  2012 and any subsequently  filed 
Form 10-Q.     Actual results may  vary materially. You  are cautioned not  to 
place undue  reliance  on any  forward-looking  statements.  You  should  also 
understand that it is not possible to predict or identify all such factors and
should not consider the risk factors in our reports filed with the SEC or  the 
following list  to  be  a  complete  statement  of  all  potential  risks  and 
uncertainties.   Factors  that  could  cause  our  actual  results  to  differ 
materially from the  results contemplated by  such forward-looking  statements 
include: the volume of frac  sand we are able to  sell; the price at which  we 
are able to sell frac sand; the outcome of any pending litigation; changes  in 
the  price  and  availability  of  natural  gas  or  electricity;  changes  in 
prevailing economic conditions;  and difficulty  collecting receivables.   All 
forward-looking statements are  expressly qualified in  their entirety by  the 
foregoing cautionary statements.  Hi-Crush's forward looking statements  speak 
only as of the date  made and Hi-Crush undertakes  no obligation to update  or 
revise its forward-looking statements, whether as a result of new information,
future events or otherwise.

Investor contact:

Investor Relations
ir@hicrushpartners.com
(713) 960-4811

Unaudited Condensed Consolidated Statement of Operations
(Amounts in thousands, except tons, units and per unit amounts)

 

                                                Three Months     Three Months
                                                   Ended            Ended
                                               March 31, 2013   March 31, 2012
                                                 Successor       Predecessor
Revenues                                     $         19,628 $         13,532
Cost of goods sold (including depreciation
and depletion)                                          5,782            4,776
       Gross profit                                    13,846            8,756
Operating costs and expenses:
       General and administrative                       2,719            1,487
       Exploration expense                                  1              199
       Accretion of asset retirement
       obligation                                          29                6
                 Income from operations                11,097            7,064
Other (income) expense:
   Other income                                             -                -
   Interest expense                                       314              928
                 Net income                  $         10,783 $          6,136
Earnings per unit:
   Common units - basic and diluted          $           0.40
   Subordinated units - basic and diluted    $           0.40
Weighted average limited partner units
outstanding:
   Common units - basic and diluted                13,644,094
   Subordinated units - basic and diluted          13,640,351

Unaudited EBITDA and Distributable Cash Flow
(Amounts in thousands)

 

                                                Three Months     Three Months
                                                   Ended            Ended
                                               March 31, 2013   March 31, 2012
                                                 Successor       Predecessor
Reconciliation of distributable cash flow to
net income:
 Net income                                  $         10,783 $          6,136
 Depreciation and depletion expense                       273              179
 Income tax expense                                         -                -
 Interest expense                                         314              928
EBITDA                                       $         11,370 $          7,243
 Less: Cash interest paid                               (255)
 Less: Maintenance and replacement capital
 expenditures, including accrual for reserve
 replacement (1)                                        (422)
 Add:  Accretion of asset retirement
 obligation                                                29
 Add:  Quarterly distribution from preferred
 interest in Augusta (2)                                3,750
Distributable cash flow                      $         14,472

 1. Maintenance and replacement  capital expenditures,  including accrual  for 
    reserve  replacement,  were  determined  based  on  an  estimated  reserve 
    replacement  cost  of  $1.35  per  ton  sold  during  the  period.    Such 
    expenditures include those  associated with the  replacement of  equipment 
    and sand  reserves, to  the  extent that  such  expenditures are  made  to 
    maintain our long-term operating capacity.  The amount presented does  not 
    represent an actual reserve account or requirement to spend the capital. 

 2. The amount pertains to the first quarter performance of Augusta, on  which 
    we are entitled to  receive a preferred distribution  of $3,750.  We  have 
    included this amount in our distributable cash flow for the first  quarter 
    of 2013 as we received  this distribution on May  10, 2013, in advance  of 
    our first quarter 2013 cash  distributions to our common and  subordinated 
    unitholders, which  will be  paid on  May  15, 2013.   The amount  is  not 
    reflected in our  GAAP net  income because  our investment  in Augusta  is 
    accounted for under the cost method.  In accordance with that method,  any 
    distributions earned under  our preferred interest  are not recognized  as 
    income until the cash is actually received by the Partnership. 

Unaudited Condensed Consolidated Cash Flow Information
(Amounts in thousands)

 

                                   Three Months     Three Months
                                      Ended            Ended
                                  March 31, 2013   March 31, 2012
                                    Successor       Predecessor
Net cash provided by (used in):
Operating activities            $          8,466 $          3,983
Investing activities                    (39,345)         (12,815)
Financing activities                      30,902            8,305

Unaudited Condensed Consolidated Balance Sheet
(Amounts in thousands)

 

                                                  March 31,   December 31,
                                                    2013          2012
                                                  Successor    Successor
Assets
Current assets:
    Cash                                        $    10,521 $       10,498
    Accounts receivable                              12,108          8,199
    Inventories                                       1,556          3,541
    Due from Sponsor                                      -          5,615
    Prepaid expenses and other current assets           327            393
        Total current assets                         24,512         28,246
Property, plant and equipment, net                   74,082         72,844
Preferred interest in Hi-Crush Augusta LLC           47,043              -
Deferred charges, net                                 1,022          1,095
        Total assets                            $   146,659 $      102,185
Liabilities and Partners' Capital
Current liabilities:
    Accounts payable                            $     1,004 $        1,977
    Accrued liabilities                               2,629          1,755
    Due to Sponsor                                      544              -
    Deferred revenue                                      -          1,715
        Total current liabilities                     4,177          5,447
    Long-term debt                                   38,250              -
    Asset retirement obligation                       1,584          1,555
        Total liabilities                            44,011          7,002
Commitments and contingencies
Partners' capital:
    Partners' Capital/Predecessor Equity            102,648         95,183
        Total partners' capital                     102,648         95,183
        Total liabilities and partners' capital $   146,659 $      102,185

Unaudited Production Cost Per Ton

 

                                     Three Months     Three Months
                                        Ended            Ended
                                    March 31, 2013   March 31, 2012
                                      Successor       Predecessor
Sand sold (tons)                           312,730          222,657
Production costs ($ in thousands) $          5,509 $          4,597
Production costs per ton          $          17.62 $          20.65

Unaudited Reconciliation of Production Costs to Cost of Goods Sold
(Amounts in thousands)

 

                                     Three Months     Three Months
                                        Ended            Ended
                                    March 31, 2013   March 31, 2012
                                      Successor       Predecessor
Cost of goods sold                $          5,782 $          4,776
Less:  Depreciation and depletion            (273)            (179)
Production costs                  $          5,509 $          4,597

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This announcement is distributed by Thomson Reuters on behalf of Thomson
Reuters clients.

The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other
applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of
the
information contained therein.

Source: Hi-Crush Partners LP via Thomson Reuters ONE
HUG#1701436
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