QEP Midstream Partners Reports Estimated Fourth Quarter 2013 Financial And Operating Results

  QEP Midstream Partners Reports Estimated Fourth Quarter 2013 Financial And
                              Operating Results

PR Newswire

DENVER, Feb. 25, 2014

DENVER, Feb. 25, 2014 /PRNewswire/ -- QEP Midstream Partners, LP (NYSE: QEPM)
("QEPM" or the "Partnership") today reported estimated financial and operating
results for the fourth quarter and for the period following the closing of the
initial public offering ("IPO") on August14, 2013, through December31, 2013
(the "Post-IPO Period"). The Partnership reported fourth quarter 2013 net
income of $12.6 million, or $0.23 per limited partner unit (on a diluted
basis), fourth quarter 2013 Adjusted EBITDA (a non-GAAP measure) of $20.2
million, and fourth quarter 2013 distributable cash flow ("DCF", a non-GAAP
measure) of $17.1 million, which represents 120% coverage of the fourth
quarter distribution. The Partnership reported Post-IPO Period net income of
$19.1 million, or $0.35 per limited partner unit (on a diluted basis) and
Adjusted EBITDA (a non-GAAP measure) of $30.7 million.

(Logo: http://photos.prnewswire.com/prnh/20130904/LA74347LOGO)

The Partnership paid a quarterly distribution of $0.26 per unit for the fourth
quarter on February 14, 2014, to unitholders of record at the close of
business on February 4, 2014. The distribution represents an increase of $0.01
per common unit, or 4%, over the third quarter 2013 distribution (pro rata).

Please see the definitions of non-GAAP measures and the reconciliation to the
most comparable measures calculated in accordance with GAAP in the "Non-GAAP
Financial Measures" section of this press release.

Post-IPO Period Highlights

  oCompleted the IPO on August14, 2013
  oGenerated $30.7 million of Adjusted EBITDA and $26.7 million of
    distributable cash flow
  oAnnounced a fourth quarter cash distribution of $0.26 per unit
  oEstablished strong balance sheet and liquidity to support future growth

"The strong financial and operating results in the fourth quarter are a
continuation of the consistent and profitable growth that these assets and our
operating teams have been delivering for years," commented Chuck Stanley,
President, Chairman and Chief Executive Officer. "The Partnership delivered
strong financial results in the quarter and we are excited about opportunities
for future growth. Our quarterly distribution of $0.26 per unit marks a four
percent increase from our minimum quarterly distribution. Our guidance for
2014 implies continued growth in our business and distributable cash flow and
we expect that our strong financial position will enable continued growth in
the years to come," concluded Stanley.

Operating Results

Results of operations during the fourth quarter 2013 were largely in line with
company expectations. Compared to the results for the fourth quarter 2012 for
the Partnership's Predecessor (see discussion below regarding Predecessor
Financial Information), gathering and transportation revenue and gathering
expense decreased.This is due to the lack of comparability of the results of
the Predecessor, which include results for assets that were not assigned to
the Partnership but were, instead, retained by the Predecessor.

Compared to the fourth quarter 2012, on a pro forma basis, gathering and
transportation revenue increased by approximately $0.2 million, primarily
driven by an increase in gathering revenue due to an increase in volumes on
the Green River Gathering System. Gathering expense increased $0.9 million
from the fourth quarter 2012 as a result of increased labor and benefits costs
associated with the contributed properties.

Balance Sheet

As of December31, 2013, the Partnership had $19.0 million of cash and cash
equivalents and its $500.0 million revolving credit facility was undrawn.

Capital Expenditures

Capital expenditures totaled $20.0 million for the Partnership during the
Post-IPO Period, which includes expansion capital of $6.9 million and
maintenance capital of $13.1 million. Maintenance capital expenditures of
$13.1 million include $9.6 million related to a condensate pipeline repair and
replacement project that was completed in the fourth quarter 2013. The
Partnership was reimbursed by QEP Resources, Inc. for these costs pursuant to
an indemnification provision in the Omnibus Agreement executed in connection
with the closing of the IPO. The remaining maintenance capital expenditures of
$3.5 million related to compressor overhauls and line looping projects
intended to improve efficiency and increase flexibility on the Vermillion and
Green River gathering systems. Expansion capital expenditures of $6.9 million
related primarily to a compressor replacement project on the Vermillion
Gathering System.

2014 Guidance

For 2014 the Partnership's forecasts distributable cash flow in a range of $65
million to $70 million, Adjusted EBITDA of $78 million to $83 million, capital
expenditures of $18 million to $20 million, including approximately $8 million
of expansion capital expenditures related to expansion of the Vermillion
Gathering System.

Predecessor Financial Information

Certain information in this release includes periods prior to the completion
of the IPO and prior to the effective dates of certain agreements between the
Partnership and QEPR. Consequently, the financial statements contained in
this release include periods that pertain to QEP Midstream Partners, LP
Predecessor, the Partnership's predecessor for accounting purposes (the
Predecessor). Because the results of the Predecessor include results for both
the properties conveyed to the Partnership in connection with the IPO and
properties retained by the Predecessor, the Partnership does not consider the
results of the Predecessor to be indicative of the Partnership's future
results. The Partnership has included in this release Supplemental Pro Forma
Disclosures, which provide historical financial data limited to only the
properties conveyed to the Partnership in connection with the IPO.

Estimates of key financial and operating data follow.

Fourth Quarter 2013 Results Conference Call

QEPM's management will discuss fourth quarter 2013 results in a conference
call on Wednesday, February 26, 2014, beginning at 11:00 a.m. EST. The
conference call can be accessed at www.qepm.com. You may also participate in
the conference call by dialing (877) 407-4019 domestically or (201) 689-8337
internationally. Attendees should log in to the webcast or dial in
approximately 15 minutes prior to the call's start time. A replay of the
conference call will be available on the website and a telephone audio replay
will be available from February 26, 2014 to March 26, 2014, by calling (877)
660-6853 domestically or (201) 612-7415 internationally and then entering
conference ID # 13574900.

About QEP Midstream Partners, LP

QEP Midstream Partners, LP is a master limited partnership formed by QEP
Resources, Inc. (NYSE: QEP) to own, operate, acquire and develop midstream
assets. The Partnership provides midstream gathering services to QEP and
third-party companies in the Green River, Uinta and Williston basins.

Forward-Looking Statements

Disclosures in this press release contain certain forward-looking statements
within the meaning of the federal securities laws. Statements that do not
relate strictly to historical or current facts are forward-looking. These
statements contain words such as "possible," "if," "will" and "expect" and
involve risks and uncertainties including, among others, that our business
plans may change as circumstances warrant. Such forward-looking statements
include statements regarding: future growth; financial position; pro forma
disclosures; financial data for the Predecessor; reimbursement of expenses
related to condensate pipeline repair and replacement; ability of compressor
overhaul and line looping projects to improve efficiency and increase
flexibility of QEPM's gathering systems; and forecasted distributable cash
flow, Adjusted EBITDA, capital expenditures and cash interest expense for the
twelve months ending December 31, 2014. Factors that could cause QEPM's
actual results to differ materially from the results contemplated by such
forward-looking statements include: changes in general economic conditions;
competitive conditions in QEPM's industry; actions taken by third-party
operators, processors and transporters; changes in the demand for oil and
natural gas storage and transportation services; QEPM's ability to
successfully implement its business plan; QEPM's ability to complete internal
growth projects on time and on budget; the price and availability of debt and
equity financing; operating risks and hazards incidental to transporting,
storing and processing oil and natural gas, as applicable; natural disasters,
weather-related delays and casualty losses; the outcome of litigation; changes
in interest rates; and other factors discussed in the "Risk Factors" section
of QEPM's Prospectus, dated August 8, 2013, filed with the Securities and
Exchange Commission on August9, 2013. Investors should not place undue
reliance on forward-looking statements as a prediction of actual results. QEPM
undertakes no obligation to update or revise such forward-looking statements
to reflect events or circumstances that occur, or of which QEPM becomes aware,
after the date hereof.

Contact

Investors:
Greg Bensen
Director, Investor Relations
303-405-6665

Media:
Brent Rockwood
Director, Communications
303-672-6999



QEP MIDSTREAM PARTNERS, LP
CONSOLIDATED STATEMENTS OF INCOME
                                           Year Ended
                                           December31, 2013
                                           Period
                                           From       Period From
                   Three      Three
                   Months     Months       August     January 1,   Year Ended
                                           14,
                   Ended      Ended                   2013,        December
                                           2013,      through      31,
                   December   December     through
                   31,        31,                     August 13,   2012
                                           December
                   2013       2012         31,        2013

                                           2013
                   Successor  Predecessor  Successor  Predecessor  Predecessor
                   (in millions, except per unit information)
Revenues
Gathering and      $   29.9   $   37.9     $   46.1   $   92.9     $   151.3
transportation
Condensate sales   1.8        1.9          2.0        7.4          10.9
Total revenues     31.7       39.8         48.1       100.3        162.2
Operating
expenses
Gathering          6.7        8.3          9.8        19.7         29.9
General and        4.0        4.4          5.5        13.6         17.0
administrative
Taxes other than   0.5        0.7          0.8        1.3          3.1
income taxes
Depreciation and   7.6        10.0         11.7       25.0         39.8
amortization
Total operating    18.8       23.4         27.8       59.6         89.8
expenses
Net loss from      —          —            —          (0.5)        —
property sales
Operating income   12.9       16.4         20.3       40.2         72.4
Other income       —          0.1          —          —            0.1
Income from
unconsolidated     1.2        1.7          1.2        3.8          7.2
affiliates
Interest expense   (0.6)      (3.3)        (0.9)      (2.6)        (8.7)
Net income         13.5       14.9         20.6       41.4         71.0
Net income
attributable to    (0.9)      (1.0)        (1.5)      (2.5)        (3.7)
noncontrolling
interest
Net income
attributable to    $   12.6   $   13.9     $   19.1   $   38.9     $   67.3
QEP Midstream or
Predecessor
Net income
attributable to
QEP Midstream per
limited partner
unit (basic and
diluted):
Common units       $   0.23                $   0.35
Subordinated       $   0.23                $   0.35
units
Weighted-average
limited partner
units outstanding
(basic and
diluted):
Common units       26.7                    26.7
Subordinated       26.7                    26.7
units



QEP MIDSTREAM PARTNERS, LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    Period From    Period From

                                    August 14,     January 1,     Year Ended

                                    2013, through  2013, through  December 31,

                                    December 31,   August 13,     2012

                                    2013           2013
                                    Successor      Predecessor    Predecessor
                                    (in millions)
OPERATING ACTIVITIES
Net income                          $   20.6       $   41.4       $  71.0
Adjustments to reconcile net
income to net cash provided by
operating activities:
Depreciation and amortization       11.7           25.0           39.8
Unit-based compensation expense     0.5            —              —
Income from unconsolidated          (1.2)          (3.8)          (7.2)
affiliates
Distributions from unconsolidated   1.3            4.9            7.8
affiliates
Amortization of debt issuance       0.2            —              —
costs
Net loss from asset sales           —              0.5            —
Changes in operating assets and     (1.5)          22.9           (4.4)
liabilities
Net cash provided by operating      $   31.6       $   90.9       $  107.0
activities
INVESTING ACTIVITIES
Property, plant and equipment       $   (14.2)     $   (9.1)      $  (43.7)
Proceeds from sale of assets        0.5            0.6            0.3
Other                               —              —              —
Net cash used in investing          $   (13.7)     $   (8.5)      $  (43.4)
activities
FINANCING ACTIVITIES
Repayments of long-term debt (to    $   (95.5)     $   (66.4)     $  (43.6)
related party)
Long-term debt issuance costs       (3.2)          —              —
Net proceeds from initial public    449.6          —              —
offering
Proceeds from initial public        (351.1)        —              —
offering distributed to parent
Contributions from (distributions   9.6            (12.2)         (14.5)
to) parent, net
Distribution to unitholders         (7.1)          —              —
Distribution to noncontrolling      (2.3)          (4.1)          (6.6)
interest
Net cash provided by (used in)      $   —          $   (82.7)     $  (64.7)
financing activities
Change in cash and cash             $   17.9       $   (0.3)      $  (1.1)
equivalents
Beginning cash and cash             1.1            1.4            2.5
equivalents
Ending cash and cash equivalents    $   19.0       $   1.1        $  1.4
Supplemental Disclosures:
Non-cash investing activities
Change in capital expenditure       $   5.8        $   (1.6)      $  (1.3)
accrual balance



Supplemental Pro Forma Disclosures

Certain information contained in this release relates to periods that ended
prior to the completion of the IPO and prior to the effective dates of certain
agreements between the Partnership and QEP Resources, Inc. Consequently, the
historical financial results include combined results for both the properties
conveyed to the Partnership in connection with the IPO and properties retained
by the Predecessor. The following information is for informational purposes
only and was derived from the Predecessor financial information by removing
the results of the assets retained by the Predecessor (consisting of the Uinta
Basin Gathering System and general support equipment). QEPM believes that
historical data limited to only the properties conveyed to the Partnership in
connection with the IPO is relevant and meaningful, enhances the discussion of
periods presented and is useful to the reader to better understand trends in
QEPM's operations. The following information is for informational purposes
only and was derived from the Predecessor financial information by removing
the results of the assets retained by the Predecessor (consisting of the Uinta
Basin Gathering System and general support equipment). Management does not
believe that the financial data is necessarily indicative of the financial
data reported by the Partnership for periods subsequent to the IPO, future
results of QEPM, or other transactions that resulted in the capitalization and
start-up of the QEPM.



QEP Midstream Partners, LP
Pro Forma Financial Data
                 Three Months Ended December 31  Year Ended December  Change
                                                 31,
                 2013        2012      2013 vs.  2013       2012      2013 vs.
                                       2012                           2012
                (in millions, except operating, per unit amounts and
                percentages)
Revenues
Gathering and    $   29.9    $  29.7   $  0.2    $  119.0   $ 119.0   $ —
transportation
Condensate       1.8         1.7       0.1       7.6        8.5       (0.9)
sales
Total revenues   $   31.7    $  31.4   $  0.3    $  126.6   $ 127.5   $ (0.9)
Operating
expenses
Gathering        $   6.7     $  5.8    $  0.9    $  24.0    $ 21.1    $ 2.9
expenses
Operating
Statistics
Natural gas
throughput in
millions of
MMBtu
Gathering and    74.3        74.7      (0.4)     300.2      309.2     (9.0)
transportation
Equity interest  6.4         8.1       (1.7)     19.5       25.7      (6.2)
^(1)
Total natural    80.7        82.8      (2.1)     319.7      334.9     (15.2)
gas throughput
Throughput
attributable to  (2.8)       (2.0)     (0.8)     (10.3)     (12.1)    1.8
noncontrolling
interests ^(2)
Total
throughput
attributable to  77.9        80.8      (2.9)     309.4      322.8     (13.4)
QEP Midstream
or Predecessor
Crude oil and
condensate
gathering
system           1,073.0     1,166.4   (93.4)    4,986.3    5,297.4   (311.1)
throughput
volumes (in
MBbls)
Water gathering
volumes (in      1,227.0     1,069.9   157.1     4,215.6    3,998.4   217.2
MBbls)
Condensate
sales volumes    21.2        21.2      —         92.2       98.8      (6.6)
(in MBbls)
Price
Average gas
gathering and    $   0.34    $  0.33   $  0.01   $  0.33    $ 0.32    $ 0.01
transportation
fee (per MMBtu)
Average oil and
condensate       2.47        2.37      0.10      2.49       2.31      0.18
gathering fee
(per barrel)
Average water
gathering fee    1.85        1.86      (0.01)    1.83       1.84      (0.01)
(per barrel)
Average
condensate sale  85.25       84.53     0.72      78.30      86.43     (8.13)
price (per
barrel)

(1) Includes QEPM's 50% share of gross volumes from Three Rivers Gathering,
    L.L.C.
(2) Includes the 22% noncontrolling interest in Rendezvous Gas Services,
    L.L.C.



Non-GAAP Financial Measures

This press release and the accompanying tables include financial measures in
accordance with U.S. generally accepted accounting principles ("GAAP"), as
well as non-GAAP financial measures, including Adjusted EBITDA and
distributable cash flow. Management believes that the presentation of
Adjusted EBITDA and distributable cash flow provides information useful to
investors in assessing QEPM's financial condition and results of operations.
Management defines Adjusted EBITDA as net income attributable to the
Partnership or Predecessor before depreciation and amortization, interest and
other income, interest expense, gains and losses from asset sales and deferred
revenue associated with minimum volume commitment payments. We define
distributable cash flow as Adjusted EBITDA less net cash interest paid,
maintenance capital expenditures (net of reimbursements) and cash adjustments
related to equity method investments and non-controlling interests, and other
non-cash expenses. Distributable cash flow does not reflect changes in
working capital balances.

The GAAP measures most directly comparable to Adjusted EBITDA and
distributable cash flow are net income and cash flow from operating activities
attributable to the Partnership or Predecessor. The tables below include
reconciliations of these non-GAAP financial measures to the nearest GAAP
financial measures.



                                           Year Ended
                                           December31, 2013
                                           Period
                                           From       Period From
                   Three      Three
                   Months     Months       August     January 1,   Year Ended
                                           14,
                   Ended      Ended                   2013,        December
                                           2013,      through      31,
                   December   December     through
                   31,        31,                     August 13,   2012
                                           December
                   2013      2012         31,        2013

                                           2013
                   Successor  Predecessor  Successor  Predecessor  Predecessor
                   (in millions)
Reconciliation of Net Income Attributable to QEP Midstream or Predecessor to
Adjusted EBITDA and Distributable Cash Flows
Net income
attributable to    $   12.6   $   13.9     $   19.1   $   38.9     $   67.3
QEP Midstream or
Predecessor
Interest expense,
net of other       0.6        3.2          0.9        2.6          8.6
income
Depreciation and   7.6        10.0         11.7       25.0         39.8
amortization
Noncontrolling
interest share of  (0.6)      (0.6)        (1.0)      (1.6)        (2.7)
depreciation and
amortization^(1)
Net loss from      —          —            —          0.5          —
asset sales
Adjusted EBITDA    $   20.2   $   26.5     $   30.7   $   65.4     $   113.0
Cash interest      (0.5)                   (0.7)
paid
Maintenance
capital            (8.8)                   (13.1)
expenditures
Reimbursements
for maintenance    6.6                     9.6
capital
expenditures
Cash adjustments
for
non-controlling    (0.6)                   —
interest and
equity method
investments
Non-cash
long-term          0.2                     0.2
compensation
expense
Distributable      $   17.1                $   26.7
Cash Flow



                       Year Ended
                       December31, 2013
                       Period From   Period From

                       August 14,    January 1,     Year Ended    Year Ended

                       2013,         2013, through  December 31,  December 31,
                       through
                                     August 13,     2012          2011
                       December 31,
                                     2013
                       2013
                       Successor     Predecessor    Predecessor   Predecessor
                       (in millions)
Reconciliation of Net Cash Flows Provided by Operating
Activities to Adjusted EBITDA and Distributable Cash Flow
Net cash provided by   $   31.6      $   90.9       $   107.0     $   97.5
operating activities
Noncontrolling
interest share of      (1.0)         (1.6)          (2.7)         (2.7)
depreciation and
amortization^(1)
Income from
unconsolidated
affiliates, net of     (0.1)         (1.1)          (0.6)         (3.3)
distributions from
unconsolidated
affiliates
Net income
attributable to        (1.5)         (2.5)          (3.7)         (3.2)
noncontrolling
interest
Interest expense       0.9           2.6            8.6           12.7
Working capital        1.5           (22.9)         4.4           7.6
changes
Amortization of
deferred financing     (0.2)         —              —             —
charges
Unit-based             (0.5)         —              —             —
compensation expense
Adjusted EBITDA        $   30.7      $   65.4       $   113.0     $   108.6
Cash interest paid     (0.7)
Maintenance capital    (13.1)
expenditures
Reimbursements for
maintenance capital    9.6
expenditures
Non-cash long-term     0.2
compensation expense
Distributable Cash     $   26.7
Flow

(1) Represents the noncontrolling interest's 22% share of depreciation and
    amortization attributable to Rendezvous Gas Services, L.L.C.





SOURCE QEP Midstream Partners, LP

Website: http://www.qepm.com
 
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