Noble Midstream Partners Reports Fourth Quarter and Full Year 2016 Results

Feb 13, 2017 at 8:00 AM EST

HOUSTON--(BUSINESS WIRE)-- Noble Midstream Partners LP (NYSE: NBLX) (“Noble Midstream” or the “Partnership”) today reported fourth quarter and full year 2016 financial and operations results.

Fourth Quarter Highlights include:

  • Net Income of $35 million, or $25 million attributable to the Partnership
  • Net Cash Provided by Operating Activities of $38 million
  • EBITDA1 of $38 million, or $27 million attributable to the Partnership, an increase over the prior year quarter of 22%, or 16%, respectively
  • Increased the Partnership’s first full quarter distribution to $0.3925 ($1.57 annualized), a 4.7% increase from the minimum quarterly distribution
  • Distributable Cash Flow (“DCF”)1 attributable to the Partnership of $25 million, resulting in DCF1 coverage of 2.0x, based on the first full quarter distribution
  • Ended the year with $57 million in cash on hand and an undrawn $350 million credit facility
  • Record oil and gas gathering volumes of 64 thousand barrels of oil equivalent per day (MBoe/d), up 5% from the prior year quarter
  • Produced water gathering and fresh water delivery volumes of 11 thousand barrels of water per day (MBw/d) and 125 MBw/d, respectively

“I’m very pleased with the continued strength of our business, leading to an increased distribution in our first full quarter since our IPO while maintaining very strong coverage,” stated Terry R. Gerhart, Chief Executive Officer of Noble Midstream.

“This distribution increase commences our 20% annual distribution per unit growth objective, significantly accelerated from the IPO expectation. Driving the increase is the continued strong performance across all segments and activity acceleration in both the Delaware and DJ Basins."

Unless otherwise noted herein, all results included in this release reflect the results of our predecessor for accounting purposes, for periods prior to the closing of our initial public offering (“IPO”) on September 20, 2016, as well as the results of our Partnership, for the period subsequent to the closing of the IPO. We refer to certain results as “attributable to the Partnership,” which excludes the non-controlling interests in the development companies (“DevCos”) retained by Noble Energy, Inc. (“Noble Energy”). We believe the results “attributable to the Partnership” provide the best representation of the ongoing operations from which our unitholders will benefit.

Fourth Quarter 2016 Results

Oil and gas gathered volume for the quarter averaged 64 MBoe/d, an increase of 5% over the prior year quarter. Produced water gathered volume for the quarter averaged 11 MBw/d, an increase of 26% over the prior year quarter. Fresh water delivered for the quarter averaged 125 MBw/d, or 262 MBw per equivalent well, two and half times the fresh water per well rate in the prior year quarter.

In the fourth quarter, 28 equivalent wells, normalized to 4,500 lateral feet, were connected to our gathering systems, and 41 equivalent wells were completed. Equivalent wells connected and completed were below our guidance range due to timing shifts in late December; however, per well results continue to exceed initial expectations.

Fourth quarter revenues were $48 million and total operating expenses were $14 million, resulting in operating income of $34 million, an increase of 23% from the prior year quarter. Fourth quarter investment income of $1.0 million represents the Partnership’s 3.33% ownership in White Cliffs Pipeline LLC, which has been reclassified from revenue to other income retrospectively. Net income for the quarter was $35 million, or $25 million attributable to the Partnership, or $0.80 per limited partner unit. Net cash provided by operating activities was $38 million in the fourth quarter.

EBITDA1 was $38 million in the fourth quarter, or $27 million attributable to the Partnership, an increase of 16% increase over the prior year quarter, driven by increased gathering and fresh water delivery volumes. Attributable to the Partnership in the fourth quarter, cash interest expense was $0.2 million and maintenance capital expenditures totaled $2 million, resulting in DCF1 of $25 million and a DCF1 coverage ratio of 2.0x.

Capital expenditures in the fourth quarter totaled $19 million, including the following:

  • $11 million in the Laramie River DevCo primarily for the crude oil transmission line expected to come online in the third quarter 2017 for the Partnership’s third party customer in the DJ Basin
  • $2 million in the Blanco River DevCo on engineering design work and long lead items for the first Central Gathering Facilities (“CGF”) in the Delaware Basin to be placed in service in late second quarter 2017, and the second is expected to be in service by the end of 2017
  • $4 million in the Colorado River DevCo primarily on well connects in East Pony and Wells Ranch

As of December 31, 2016, the Partnership had $57 million in cash on hand and an undrawn $350 million unsecured revolving credit facility.

Fourth Quarter Distribution

On January 26, 2017, the Board of Directors of Noble Midstream’s general partner, Noble Midstream GP LLC, declared a fourth quarter cash distribution of $0.4333 per unit. The distribution is comprised of $0.3925 per unit with respect to the fourth quarter 2016 and $0.0408 per unit with respect to the 10-day period following the closing of the Partnership’s IPO on September 20, 2016 through September 30, 2016. The $0.3925 per unit distribution, the Partnership’s first full quarter distribution since its IPO, represents a 4.7% increase over the Partnership’s minimum quarterly distribution of $0.375 per unit. The distribution is payable on February 14, 2017, to unitholders as of February 6, 2017.

Full Year 2016 Financial Results

For the full year 2016, the Partnership reported revenue of $161 million and operating expenses of $48 million, resulting in operating income of $113 million. Net income for the full year was $86 million, including $28 million of income taxes prior to the Partnership’s IPO. Net income attributable to the Partnership for the post IPO period was $28 million, or $0.89 per limited partner unit.

2016 capital expenditures totaled $33 million, or $25 million attributable to the Partnership.

1 EBITDA and DCF are not Generally Accepted Accounting Principles (“GAAP”) measures. Definitions and reconciliations of these non-GAAP measures to GAAP reporting measures appear in the financial tables which follow.

Conference Call and Supplemental Information

Noble Midstream will host a webcast and conference call on Tuesday, February 14, 2017, at 1:00 p.m., Central Time, to discuss fourth quarter and year end results, 2017 guidance, and the previously announced joint venture with Plains All American Pipeline, L.P. Conference call numbers for participation are 877-883-0383, or 412-902-6506 for international calls. The passcode number is 9134791. The live audio webcast and a replay will be accessible on the ‘Investors’ page of the Partnership’s website at www.nblmidstream.com. Presentation materials are available at the same location on the Partnership's website.

About Noble Midstream Partners LP

Noble Midstream is a growth-oriented Delaware master limited partnership formed by Noble Energy to own, operate, develop and acquire a wide range of domestic midstream infrastructure assets. We currently provide crude oil, natural gas, and water-related midstream services for Noble Energy in the DJ Basin in Colorado. Our areas of focus are in the DJ Basin and the Delaware Basin in Texas. For more information, please visit www.nblmidstream.com.

Forward Looking Statements

This news release contains certain “forward-looking statements” within the meaning of federal securities law. Words such as “anticipates”, “believes”, “expects”, “intends”, “will”, “should”, “may”, “estimates”, and similar expressions may be used to identify forward-looking statements. Forward-looking statements are not statements of historical fact and reflect the Partnership’s current views about future events. No assurances can be given that the forward-looking statements contained in this news release will occur as projected and actual results may differ materially from those projected. Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks and uncertainties that could cause actual results to differ materially from those projected. These risks include, without limitation, Noble Energy’s ability to meet its drilling and development plans, changes in general economic conditions, competitive conditions in the Partnership’s industry, actions taken by third-party operators, gatherers, processors and transporters, the demand for crude oil and natural gas gathering and processing services, the Partnership’s ability to successfully implement its business plan, the Partnership’s ability to complete internal growth projects on time and on budget, the price and availability of debt and equity financing, the availability and price of crude oil and natural gas to the consumer compared to the price of alternative and competing fuels, and other risks inherent in the Partnership’s business that are discussed in its most recent registration statement on Form S-1 and in other reports on file with the Securities and Exchange Commission (“SEC”). These reports are also available from the Partnership’s office or website, www.nblmidstream.com. Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. Noble Midstream does not assume any obligation to update forward-looking statements should circumstances, management’s estimates, or opinions change.

Non-GAAP Measures

This news release also contains certain non-GAAP measures of financial performance that management believes are good tools for internal use and the investment community in evaluating Noble Midstream’s overall financial performance. Please see the attached schedules for definitions and reconciliations of the non-GAAP financial measures used in this news release to the most directly comparable GAAP financial measures.

                         

Schedule 1

Noble Midstream Partners LP

Affiliate Revenue and Throughput Volume Statistics

(unaudited)

                         
       

Three Months Ended
December 31,

     

Twelve Months Ended
December 31,

        2016   2015       2016   2015
Colorado River DevCo                        
Crude Oil Gathering Volumes (Bbl/d)         45,263       47,809           45,236     33,977
Natural Gas Gathering Volumes (MMBtu/d)         145,752       102,804           132,147     86,103
Produced Water Gathering Volumes (Bbl/d)         11,022       8,746           10,592     5,198
Fresh Water Delivery Volumes (Bbl/d)         76,190       57,838           64,306     30,746

Gathering and Fresh Water Delivery Revenues -- Affiliate (in thousands)

      $ 36,504     $ 31,100         $ 132,161   $ 72,641
                         
San Juan River DevCo                        
Fresh Water Delivery Volumes (Bbl/d)         48,560       20,532           22,423     21,234

Fresh Water Delivery and Water Services Revenues -- Affiliate (in thousands)

      $ 10,471     $ 3,270         $ 17,272   $ 10,498
                         
Green River DevCo                        
Fresh Water Delivery Volumes (Bbl/d)        

-

     

-

          7,498    

-

Fresh Water Delivery and Water Services Revenues -- Affiliate (in thousands)

      $ (95 )   $

-

        $ 4,728   $

-

                         
Total Gathering Systems                        
Crude Oil Gathering Volumes (Bbl/d)         45,263       47,809           45,236     33,977
Natural Gas Gathering Volumes (MMBtu/d)         145,752       102,804           132,147     86,103
Produced Water Gathering Volumes (Bbl/d)         11,022       8,746           10,592     5,198

Gathering Revenues -- Affiliate (in thousands)

      $ 26,848     $ 21,409         $ 94,160   $ 56,042
                         
Total Fresh Water Delivery                        
Fresh Water Services Volumes (Bbl/d)         124,750       78,370           94,227     51,980

Fresh Water Delivery Revenues -- Affiliate (in thousands)

      $ 20,033     $ 12,961         $ 60,001   $ 27,097
                             

Schedule 2

Noble Midstream Partners LP

Consolidated Statements of Operations

(in thousands, except per unit amounts, unaudited)

                             
       

Three Months Ended
December 31,

     

Twelve Months Ended
December 31,

        2016     2015       2016     2015
Revenues                            

Crude Oil, Natural Gas and Produced Water Gathering -- Affiliate

      $ 26,848       $ 21,409         $ 94,160       $ 56,042  

Fresh Water Delivery -- Affiliate

        20,033         12,961           60,001         27,097  

Crude Oil Treating -- Affiliate

        1,281         1,438           5,371         4,403  

Other -- Affiliate

        303         295           1,192         295  
Total Revenues         48,465         36,103           160,724         87,837  
Costs and Expenses                            
Direct Operating         9,108         5,781           29,107         16,933  
Depreciation and Amortization         2,414         1,935           9,066         6,891  
General and Administrative         2,503         413           9,914         2,771  
Total Operating Expenses         14,025         8,129           48,087         26,595  
Operating Income (Loss)         34,440         27,974           112,637         61,242  
Other (Income) Expense                            
Interest Expense, Net of Amount Capitalized         266         1,807           3,373         4,595  
Investment Income         (1,017 )       (1,203 )         (4,526 )       (4,621 )
Total Other (Income) Expense         (751 )       604           (1,153 )       (26 )
Income (Loss) Before Income Taxes         35,191         27,370           113,790         61,268  
Income Tax Provision (Benefit)        

-

        10,509           28,288         23,226  
Net Income (Loss) and Comprehensive Income (Loss)         35,191       $ 16,861           85,502       $ 38,042  
Less: Net Income Prior to the Offering on September 20, 2016        

-

                45,990        
Net Income Subsequent to the Offering on September 20, 2016         35,191                 39,512        
Less: Net Income Attributable to Noncontrolling Interests Subsequent to the Offering on September 20, 2016         9,826                 11,054        
Net Income Attributable to Noble Midstream Partners LP Subsequent to the Offering on September 20, 2016       $ 25,365               $ 28,458        
                             

Net Income Subsequent to the Offering on September 20, 2016 Per Limited Partner Unit -- Basic and Diluted

                           
Common Units       $ 0.80               $ 0.89        
Subordinated Units       $ 0.80               $ 0.89        
                             

Average Limited Partner Units Outstanding -- Basic and Diluted

                           

Common Units -- Public

        14,375                 14,375        

Common Units -- Noble

        1,528                 1,528        

Subordinated Units -- Noble

        15,903                 15,903        
                             
EBITDA Attributable to Noble Midstream Partners LP Subsequent to the Offering on September 20, 2016 (Non-GAAP)       $ 27,370               $ 30,655        
                             
Distributable Cash Flow of Noble Midstream Partners LP Subsequent to the Offering on September 20, 2016 (Non-GAAP)       $ 25,303               $ 28,383        
                                     

Schedule 3

Noble Midstream Partners LP

Reconciliations to Distributable Cash Flow (Non-GAAP)

Non-GAAP Financial Measures

This news release, the financial tables and other supplemental information include EBITDA and Distributable Cash Flow, both of which are non-GAAP measures which may be used periodically by management when discussing our financial results with investors and analysts. The following presents a reconciliation of each of these non-GAAP financial measures to their nearest comparable GAAP measure.

We define EBITDA as net income before income taxes, net interest expense, depreciation and amortization. EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:

  • our operating performance as compared to those of other companies in the midstream energy industry, without regard to financing methods, historical cost basis or capital structure;
  • the ability of our assets to generate sufficient cash flow to make distributions to our partners;
  • 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 of various investment opportunities.

We define Distributable Cash Flow as EBITDA less estimated maintenance capital expenditures and cash interest paid. Distributable Cash Flow is used by management to evaluate our overall performance. Our partnership agreement requires us to distribute all available cash on a quarterly basis, and Distributable Cash Flow is one of the factors used by the board of directors of our general partner to help determine the amount of available cash that is available to our unitholders for a given period. We calculate our Distributable Cash Flow (DCF) coverage ratio as Distributable Cash Flow for a given quarter divided by the aggregate amount of distributions declared in respect of such quarter. The DCF coverage ratio is used by management to illustrate our ability to make our distributions each quarter.

We believe that the presentation of EBITDA and Distributable Cash Flow provide information useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to EBITDA and Distributable Cash Flow are net income and net cash provided by operating activities. EBITDA and Distributable Cash Flow should not be considered alternatives to net income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA and Distributable Cash Flow exclude some, but not all, items that affect net income or net cash, and these measures may vary from those of other companies. As a result, EBITDA and Distributable Cash Flow as presented below may not be comparable to similarly titled measures of other companies.

EBITDA and Distributable Cash Flow should not be considered as alternatives to GAAP measures, such as net income, operating income, cash flow from operating activities, or any other GAAP measure of financial performance.

         

Schedule 3 (Continued)

Noble Midstream Partners LP

Reconciliations to Distributable Cash Flow (Non-GAAP)

 

Reconciliation of Net Income (GAAP) to Distributable Cash Flow (Non-GAAP)

(in thousands, unaudited)

         
       

Three Months Ended
December 31,

        2016     2015
Reconciliation from Net Income (GAAP) to Distributable Cash Flow (Non-GAAP)              
Net Income and Comprehensive Income (GAAP)       $ 35,191     $ 16,861
Add:              
Depreciation and Amortization         2,414       1,935
Interest Expense, Net of Amount Capitalized         266       1,807
Income Tax Provision        

-

      10,509
EBITDA (Non-GAAP)         37,871     $ 31,112
Less:              
EBITDA Attributable to Noncontrolling Interests         10,501      
EBITDA Attributable to Noble Midstream Partners LP (Non-GAAP)         27,370      
Less:              
Maintenance Capital Expenditures         1,892      
Cash Interest Paid         175      
Distributable Cash Flow of Noble Midstream Partners LP (Non-GAAP)       $ 25,303      
Distributions (Declared)         12,484      
Distribution Coverage Ratio (Declared)         2.0      
               
               
        Year Ended December 31,
        2016     2015
Reconciliation from Net Income (GAAP) to Distributable Cash Flow (Non-GAAP)              
Net Income and Comprehensive Income (GAAP)       $ 85,502     $ 38,042
Add:              
Depreciation and Amortization         9,066       6,891
Interest Expense, Net of Amount Capitalized         3,373       4,595
Income Tax Provision (Benefit)         28,288       23,226
EBITDA (Non-GAAP)         126,229     $ 72,754
Less:              
EBITDA Prior to the Offering on September 20, 2016         83,780      
EBITDA Subsequent to the Offering on September 20, 2016 (Non-GAAP)         42,449      
EBITDA Attributable to Noncontrolling Interests Subsequent to the Offering on September 20, 2016         11,794      
EBITDA Attributable to Noble Midstream Partners LP Subsequent to the Offering on September 20, 2016 (Non-GAAP)         30,655      
Less:              
Maintenance Capital Expenditures         2,097      
Cash Interest Paid         175      
Distributable Cash Flow of Noble Midstream Partners LP Subsequent to the Offering on September 20, 2016 (Non-GAAP)       $ 28,383      
Distributions (Declared)         13,782      
Distribution Coverage Ratio (Declared)         2.1      
       

Reconciliation of Net Cash Provided by Operating Activities (GAAP) to Distributable Cash Flow (Non-GAAP)

(in thousands, unaudited)

       
     

Three Months Ended
December 31,

      2016   2015
Reconciliation from Net Cash Provided by Operating Activities (GAAP) to Distributable Cash Flow (Non-GAAP)          
Net Cash Provided by Operating Activities (GAAP)     $ 37,878     $ 8,390  
Add:          
Interest Expense, Net of Amount Capitalized     266     1,807  
Changes in Operating Assets and Liabilities     (137 )   20,746  
Change in Income Tax Payable    

-

    164  
Stock Based Compensation and Other     (136 )   5  
EBITDA (Non-GAAP)     37,871     $ 31,112  
Less:          
EBITDA Attributable to Noncontrolling Interests     10,501      
EBITDA Attributable to Noble Midstream Partners LP (Non-GAAP)     27,370      
Less:          
Maintenance Capital Expenditures     1,892      
Cash Interest Paid     175      
Distributable Cash Flow of Noble Midstream Partners LP (Non-GAAP)     $ 25,303      
Distributions (Declared)     12,484      
Distribution Coverage Ratio (Declared)     2.0      
       
       
      Year Ended December 31,
      2016   2015
Reconciliation from Net Cash Provided by Operating Activities (GAAP) to Distributable Cash Flow (Non-GAAP)          
Net Cash Provided by Operating Activities (GAAP)     $ 118,451     $ 69,394  
Add:          
Interest Expense, Net of Amount Capitalized     3,373     4,595  
Changes in Operating Assets and Liabilities     4,673     (1,254 )
Change in Income Tax Payable    

-

    164  
Stock Based Compensation and Other     (268 )   (145 )
EBITDA (Non-GAAP)     126,229     $ 72,754  
Less:          
EBITDA Prior to the Offering on September 20, 2016     83,780      
EBITDA Subsequent to the Offering on September 20, 2016 (Non-GAAP)     42,449      
EBITDA Attributable to Noncontrolling Interests Subsequent to the Offering on September 20, 2016     11,794      
EBITDA Attributable to Noble Midstream Partners LP Subsequent to the Offering on September 20, 2016 (Non-GAAP)     30,655      
Less:          
Maintenance Capital Expenditures     2,097      
Cash Interest Paid     175      
Distributable Cash Flow of Noble Midstream Partners LP Subsequent to the Offering on September 20, 2016 (Non-GAAP)     $ 28,383      
Distributions (Declared)     13,782      
Distribution Coverage Ratio (Declared)     2.1      
           

Schedule 4

Noble Midstream Partners LP

Consolidated Balance Sheets

(in thousands, unaudited)

           
      December 31,
2016
  December 31,
2015
ASSETS          
Current Assets          
Cash and Cash Equivalents     $ 57,421     $ 26,612  

Accounts Receivable -- Affiliate

    19,191     13,250  
Other Current Assets     380     83  
Total Current Assets     76,992     39,945  
Property, Plant and Equipment          
Total Property, Plant and Equipment, Gross     311,045     273,722  
Less: Accumulated Depreciation and Amortization     (31,642 )   (22,789 )
Total Property, Plant and Equipment, Net     279,403     250,933  
Investments     11,151     12,279  
Deferred Charges     1,813     2,161  
Total Assets     $ 369,359     $ 305,318  
LIABILITIES          
Current Liabilities          

Accounts Payable -- Affiliate

    $ 1,452     $ 4,735  

Accounts Payable -- Trade

    12,501     18,356  
Current Portion of Capital Lease     4,786    

-

 
Ad Valorem Tax     1,187     990  
Other Current Liabilities     430     164  
Total Current Liabilities     20,356     24,245  
Deferred Tax Liability    

-

    13,140  
Asset Retirement Obligations     5,415     3,612  
Other Long-Term Liabilities     683     782  
Total Liabilities     26,454     41,779  
EQUITY          
Parent Net Investment    

-

    263,539  
Partners' Equity          
Limited Partner          

Common Units -- Public (14,375 units outstanding as of December 31, 2016)

    311,872    

-

 

Common Units -- Noble (1,528 units outstanding as of December 31, 2016)

    (3,534 )  

-

 

Subordinated Units -- Noble (15,903 units outstanding as of December 31, 2016)

    (36,799 )  

-

 
Noncontrolling Interests     71,366    

-

 
Total Equity     342,905     263,539  
Total Liabilities and Equity     $ 369,359     $ 305,318  

 

Noble Midstream Partners LP
Chris Hickman
VP, Investor Relations
(281) 943-1622
chris.hickman@nblmidstream.com

 

Source: Noble Midstream Partners LP

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