x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Delaware
|
68-0629883
|
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
(I.R.S.
Employer
Identification
Number)
|
Large
accelerated filer ¨
|
Accelerated
filer x
|
Non-accelerated
filer ¨
|
Smaller
Reporting Company ¨
|
(Do
not check if a smaller reporting
company)
|
Page
|
||
PART I. FINANCIAL
INFORMATION
|
||
PART II. OTHER
INFORMATION
|
||
|
PART
1. FINANCIAL INFORMATION
|
Item 1.
|
Financial
Statements.
|
September
30,
2009
|
December 31,
2008
|
|||||||
ASSETS
|
||||||||
CURRENT
ASSETS:
|
||||||||
Cash
and cash equivalents
|
$
|
9,168
|
$
|
17,916
|
||||
Accounts
receivable(1)
|
73,792
|
115,932
|
||||||
Risk
management assets
|
26,017
|
76,769
|
||||||
Prepayments
and other current assets
|
2,140
|
2,607
|
||||||
Total
current assets
|
111,117
|
213,224
|
||||||
PROPERTY,
PLANT AND EQUIPMENT — Net
|
1,313,386
|
1,357,609
|
||||||
INTANGIBLE
ASSETS — Net
|
139,273
|
154,206
|
||||||
DEFERRED
TAX ASSET
|
1,663
|
—
|
||||||
RISK
MANAGEMENT ASSETS
|
5,725
|
32,451
|
||||||
OTHER
ASSETS
|
19,678
|
15,571
|
||||||
TOTAL
|
$
|
1,590,842
|
$
|
1,773,061
|
||||
LIABILITIES
AND MEMBERS’ EQUITY
|
||||||||
CURRENT
LIABILITIES:
|
||||||||
Accounts
payable
|
$
|
65,666
|
$
|
116,578
|
||||
Due
to affiliate
|
10,859
|
4,473
|
||||||
Accrued
liabilities
|
11,364
|
19,565
|
||||||
Taxes
payable
|
992
|
1,559
|
||||||
Risk
management liabilities
|
34,988
|
13,763
|
||||||
Total
current liabilities
|
123,869
|
155,938
|
||||||
LONG-TERM
DEBT
|
774,383
|
799,383
|
||||||
ASSET
RETIREMENT OBLIGATIONS
|
19,728
|
19,872
|
||||||
DEFERRED
TAX LIABILITY
|
42,051
|
42,349
|
||||||
RISK
MANAGEMENT LIABILITIES
|
31,406
|
26,182
|
||||||
OTHER
LONG TERM LIABILITIES
|
568
|
1,622
|
||||||
COMMITMENTS
AND CONTINGENCIES (Note 12)
|
||||||||
MEMBERS’
EQUITY:
|
||||||||
Common
Unitholders(2)
|
533,651
|
625,590
|
||||||
Subordinated
Unitholders(3)
|
70,360
|
105,839
|
||||||
General
Partner(4)
|
(5,174
|
)
|
(3,714
|
)
|
||||
Total
members’ equity
|
598,837
|
727,715
|
||||||
TOTAL
|
$
|
1,590,842
|
$
|
1,773,061
|
(1)
|
Net
of allowable for bad debt of $12,172 as of September 30, 2009 and $12,080
as of December 31, 2008, of which $10,699 relates to SemGroup L.P.
which filed for bankruptcy in July
2008.
|
(2)
|
54,094,219
and 53,043,767 units were issued and outstanding as of September 30, 2009
and December 31, 2008, respectively. These amounts do not include
unvested restricted common units granted under the Partnership’s long-term
incentive plan of 793,739 and 905,486 as of September 30, 2009 and
December 31, 2008, respectively.
|
(3)
|
20,691,495
units were issued and outstanding as of September 30, 2009 and
December 31, 2008.
|
(4)
|
844,551
units were issued and outstanding as of September 30, 2009 and
December 31, 2008.
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
REVENUE:
|
||||||||||||||||
Natural
gas, natural gas liquids, oil, condensate and sulfur sales
|
$
|
156,779
|
$
|
341,700
|
$
|
468,589
|
$
|
1,008,891
|
||||||||
Gathering,
compression, processing and treating services
|
11,814
|
12,513
|
35,043
|
27,741
|
||||||||||||
Minerals
and royalty income
|
4,050
|
17,393
|
10,788
|
34,606
|
||||||||||||
Commodity
risk management (losses) gains
|
(8,832
|
)
|
231,851
|
(57,137
|
)
|
(97,769
|
)
|
|||||||||
Other
revenue
|
50
|
428
|
1,770
|
610
|
||||||||||||
Total
revenue
|
163,861
|
603,885
|
459,053
|
974,079
|
||||||||||||
COSTS
AND EXPENSES:
|
||||||||||||||||
Cost
of natural gas and natural gas liquids
|
109,945
|
237,742
|
358,802
|
726,400
|
||||||||||||
Operations
and maintenance (1)
|
16,934
|
21,475
|
54,624
|
54,772
|
||||||||||||
Taxes
other than income
|
2,934
|
5,365
|
8,790
|
14,975
|
||||||||||||
General
and administrative
|
10,449
|
9,893
|
34,882
|
31,161
|
||||||||||||
Other
operating (income) expenses
|
—
|
3,920
|
(3,552
|
)
|
10,134
|
|||||||||||
Impairment
|
274
|
—
|
516
|
—
|
||||||||||||
Depreciation,
depletion, and amortization
|
28,586
|
28,597
|
86,237
|
80,799
|
||||||||||||
Total
costs and expenses
|
169,122
|
306,992
|
540,299
|
918,241
|
||||||||||||
OPERATING
(LOSS) INCOME
|
(5,261
|
)
|
296,893
|
(81,246
|
)
|
55,838
|
||||||||||
OTHER
INCOME (EXPENSE):
|
||||||||||||||||
Interest
income
|
10
|
212
|
183
|
673
|
||||||||||||
Other
income
|
725
|
434
|
1,835
|
2,867
|
||||||||||||
Interest
expense, net
|
(4,315
|
)
|
(7,498
|
)
|
(17,282
|
)
|
(23,576
|
)
|
||||||||
Interest
rate risk management losses
|
(10,348
|
)
|
(2,859
|
)
|
(3,924
|
)
|
(5,375
|
)
|
||||||||
Other
expense
|
(267
|
)
|
(205
|
)
|
(801
|
)
|
(652
|
)
|
||||||||
Total
other expense
|
(14,195
|
)
|
(9,916
|
)
|
(19,989
|
)
|
(26,063
|
)
|
||||||||
(LOSS)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX
BEFORE
INCOME TAXES
|
(19,456
|
)
|
286,977
|
(101,235
|
)
|
29,775
|
||||||||||
INCOME
TAX PROVISION (BENEFIT)
|
5,841
|
(500
|
)
|
1,634
|
(1,497
|
)
|
||||||||||
(LOSS)
INCOME FROM CONTINUING OPERATIONS
|
(25,297
|
)
|
287,477
|
(102,869
|
)
|
31,272
|
||||||||||
DISCONTINUED
OPERATIONS
|
26
|
594
|
266
|
1,451
|
||||||||||||
NET
(LOSS) INCOME
|
$
|
(25,271
|
)
|
$
|
288,071
|
$
|
(102,603
|
)
|
$
|
32,723
|
(1)
|
Includes
costs to dispose of sulfur in our Upstream segment of $0.3 million and
$1.5 million for the three and nine months ended September 30, 2009,
respectively.
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
NET
(LOSS) INCOME PER COMMON UNIT — BASIC AND DILUTED:
|
||||||||||||||||
Basic
(loss) income from continuing operations per unit:
|
||||||||||||||||
Common
units
|
$
|
(0.33
|
)
|
$
|
3.93
|
$
|
(1.35
|
)
|
$
|
0.43
|
||||||
Subordinated
units
|
$
|
(0.35
|
)
|
$
|
3.93
|
$
|
(1.43
|
)
|
$
|
0.43
|
||||||
General
partner units
|
$
|
(0.33
|
)
|
$
|
3.93
|
$
|
(1.35
|
)
|
$
|
0.43
|
||||||
Basic
discontinued operations per unit:
|
||||||||||||||||
Common
units
|
$
|
—
|
$
|
0.01
|
$
|
—
|
$
|
0.02
|
||||||||
Subordinated
units
|
$
|
—
|
$
|
0.01
|
$
|
—
|
$
|
0.02
|
||||||||
General
partner units
|
$
|
—
|
$
|
0.01
|
$
|
—
|
$
|
0.02
|
||||||||
Basic
net (loss) income per unit:
|
||||||||||||||||
Common
units
|
$
|
(0.33
|
)
|
$
|
3.94
|
$
|
(1.35
|
)
|
$
|
0.45
|
||||||
Subordinated
units
|
$
|
(0.35
|
)
|
$
|
3.94
|
$
|
(1.43
|
)
|
$
|
0.45
|
||||||
General
partner units
|
$
|
(0.33
|
)
|
$
|
3.94
|
$
|
(1.35
|
)
|
$
|
0.45
|
||||||
Basic
weighted average units outstanding:
|
||||||||||||||||
Common
units
|
53,632
|
50,824
|
53,276
|
50,762
|
||||||||||||
Subordinated
units
|
20,691
|
20,691
|
20,691
|
20,691
|
||||||||||||
General
partner units
|
845
|
845
|
845
|
845
|
||||||||||||
Diluted
(loss) income from continuing operations per unit:
|
||||||||||||||||
Common
units
|
$
|
(0.33
|
)
|
$
|
3.93
|
$
|
(1.35
|
)
|
$
|
0.43
|
||||||
Subordinated
units
|
$
|
(0.35
|
)
|
$
|
3.93
|
$
|
(1.43
|
)
|
$
|
0.43
|
||||||
General
partner units
|
$
|
(0.33
|
)
|
$
|
3.93
|
$
|
(1.35
|
)
|
$
|
0.43
|
||||||
Diluted
discontinued operations per unit:
|
||||||||||||||||
Common
units
|
$
|
—
|
$
|
0.01
|
$
|
—
|
$
|
0.02
|
||||||||
Subordinated
units
|
$
|
—
|
$
|
0.01
|
$
|
—
|
$
|
0.02
|
||||||||
General
partner units
|
$
|
—
|
$
|
0.01
|
$
|
—
|
$
|
0.02
|
||||||||
Diluted
net (loss) income per unit:
|
||||||||||||||||
Common
units
|
$
|
(0.33
|
)
|
$
|
3.94
|
$
|
(1.35
|
)
|
$
|
0.45
|
||||||
Subordinated
units
|
$
|
(0.35
|
)
|
$
|
3.94
|
$
|
(1.43
|
)
|
$
|
0.45
|
||||||
General
partner units
|
$
|
(0.33
|
)
|
$
|
3.94
|
$
|
(1.35
|
)
|
$
|
0.45
|
||||||
Diluted
weighted average units outstanding:
|
||||||||||||||||
Common
units
|
53,632
|
50,868
|
53,276
|
50,900
|
||||||||||||
Subordinated
units
|
20,691
|
20,691
|
20,691
|
20,691
|
||||||||||||
General
partner units
|
845
|
845
|
845
|
845
|
Nine
Months
Ended
September 30,
|
||||||||
2009
|
2008
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net
(loss) income
|
$
|
(102,603
|
)
|
$
|
32,723
|
|||
Adjustments
to reconcile net (loss) income to net cash provided by operating
activities:
|
||||||||
Depreciation,
depletion and amortization
|
86,237
|
80,799
|
||||||
Impairment
|
516
|
—
|
||||||
Amortization
of debt issuance costs
|
801
|
655
|
||||||
Reclassifying
financing derivative settlements
|
(8,330
|
)
|
15,462
|
|||||
Distribution
from unconsolidated affiliates – return on
investment
|
247
|
1,751
|
||||||
Equity
in earnings of unconsolidated affiliates
|
(988
|
)
|
(2,859
|
)
|
||||
Equity-based
compensation expense
|
5,024
|
4,147
|
||||||
Gain
from sales of assets
|
(476
|
)
|
—
|
|||||
Other
operating income
|
(3,552
|
)
|
—
|
|||||
Other
|
1,547
|
(1,726
|
)
|
|||||
Changes
in assets and liabilities — net of acquisitions:
|
||||||||
Accounts
receivable
|
41,365
|
634
|
||||||
Prepayments
and other current assets
|
478
|
17
|
||||||
Risk
management activities
|
103,927
|
30,592
|
||||||
Accounts
payable
|
(50,022
|
)
|
2,742
|
|||||
Due
to affiliates
|
6,386
|
(559
|
)
|
|||||
Accrued
liabilities
|
(6,164
|
)
|
(1,227
|
)
|
||||
Other
assets and liabilities
|
(1,221
|
)
|
420
|
|||||
Net
cash provided by operating activities
|
73,172
|
163,571
|
||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Acquisitions,
net of cash acquired
|
—
|
(81,289
|
)
|
|||||
Additions
to property, plant and equipment
|
(29,427
|
)
|
(45,337
|
)
|
||||
Purchase
of intangible assets
|
(1,219
|
)
|
(1,438
|
)
|
||||
Proceeds
from sale of fixed assets
|
476
|
—
|
||||||
Investment
in unconsolidated affiliates
|
(806
|
)
|
(3,416
|
)
|
||||
Net
cash used in investing activities
|
(30,976
|
)
|
(131,480
|
)
|
||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Repayment
of revolving credit facility
|
(156,000
|
)
|
(145,069
|
)
|
||||
Proceeds
from revolving credit facility
|
131,000
|
377,383
|
||||||
Proceeds
(payments) for derivative contracts
|
8,330
|
(15,462
|
)
|
|||||
Payment
of debt issuance costs
|
—
|
(789
|
)
|
|||||
Repurchase
of common units
|
(30
|
)
|
—
|
|||||
Distributions
to members and affiliates
|
(34,244
|
)
|
(87,602
|
)
|
||||
Net
cash (used in) provided by financing activities
|
(50,944
|
)
|
128,461
|
|||||
NET
CHANGE IN CASH AND CASH EQUIVALENTS
|
(8,748
|
)
|
160,552
|
|||||
CASH
AND CASH EQUIVALENTS — Beginning of period
|
17,916
|
68,552
|
||||||
CASH
AND CASH EQUIVALENTS — End of period
|
$
|
9,168
|
$
|
229,104
|
||||
SUPPLEMENTAL
CASH FLOW DATA:
|
||||||||
Interest
paid — net of amounts capitalized
|
$
|
21,755
|
$
|
26,028
|
||||
Cash
paid for taxes
|
$
|
1,377
|
$
|
705
|
||||
Investments
in property, plant and equipment not paid
|
$
|
1,720
|
$
|
5,534
|
||||
Units
issued in acquisition from escrow
|
$
|
3,000
|
$
|
—
|
General
Partner
|
Number
of
Common
Units
|
Common
Units
|
Number
of
Subordinated
Units
|
Subordinated
Units
|
Total
|
|||||||||||||||||||
BALANCE
— December 31, 2007
|
$
|
(3,155
|
)
|
50,699,647
|
$
|
617,563
|
20,691,495
|
$
|
112,360
|
$
|
726,768
|
|||||||||||||
Net
income
|
382
|
—
|
22,976
|
—
|
9,365
|
32,723
|
||||||||||||||||||
Distributions
|
(1,016
|
)
|
—
|
(61,704
|
)
|
—
|
(24,882
|
)
|
(87,602
|
)
|
||||||||||||||
Vesting
of restricted units
|
—
|
124,384
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Distributions
to affiliates
|
—
|
—
|
(857
|
)
|
—
|
—
|
(857
|
)
|
||||||||||||||||
Equity
based compensation
|
—
|
2,910
|
—
|
1,197
|
4,147
|
|||||||||||||||||||
BALANCE
— September 30, 2008
|
$
|
(3,749
|
)
|
50,824,031
|
$
|
580,888
|
20,691,495
|
$
|
98,040
|
$
|
675,179
|
General
Partner
|
Number
of
Common
Units
|
Common
Units
|
Number
of
Subordinated
Units
|
Subordinated
Units
|
Total
|
|||||||||||||||||||
BALANCE
— December 31, 2008
|
$
|
(3,714
|
)
|
53,043,767
|
$
|
625,590
|
20,691,495
|
$
|
105,839
|
$
|
727,715
|
|||||||||||||
Net
loss
|
(1,155
|
)
|
—
|
(73,137
|
)
|
—
|
(28,311
|
)
|
(102,603
|
)
|
||||||||||||||
Distributions
|
(358
|
)
|
—
|
(25,348
|
)
|
—
|
(8,538
|
)
|
(34,244
|
)
|
||||||||||||||
Vesting
of restricted units
|
—
|
217,503
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Units
returned from escrow
|
—
|
(7,065
|
)
|
(25
|
)
|
—
|
—
|
(25
|
)
|
|||||||||||||||
Units
issued from escrow
|
—
|
849,858
|
3,000
|
—
|
—
|
3,000
|
||||||||||||||||||
Repurchase
of common units
|
—
|
(9,844
|
)
|
(30
|
)
|
—
|
—
|
(30
|
)
|
|||||||||||||||
Equity
based compensation
|
53
|
—
|
3,601
|
—
|
1,370
|
5,024
|
||||||||||||||||||
BALANCE
— September 30, 2009
|
$
|
(5,174
|
)
|
54,094,219
|
$
|
533,651
|
20,691,495
|
$
|
70,360
|
$
|
598,837
|
September
30,
2009
|
December
31,
2008
|
|||||||
($
in thousands)
|
||||||||
Land
|
$
|
1,241
|
$
|
1,211
|
||||
Plant
|
245,289
|
232,219
|
||||||
Gathering
and pipeline
|
682,967
|
653,016
|
||||||
Equipment
and machinery
|
20,044
|
18,672
|
||||||
Vehicles
and transportation equipment
|
4,219
|
3,958
|
||||||
Office
equipment, furniture, and fixtures
|
1,248
|
1,023
|
||||||
Computer
equipment
|
6,445
|
4,714
|
||||||
Corporate
|
126
|
126
|
||||||
Linefill
|
4,269
|
4,269
|
||||||
Proved
properties
|
518,164
|
515,452
|
||||||
Unproved
properties
|
72,517
|
73,622
|
||||||
Construction
in progress
|
16,094
|
39,498
|
||||||
1,572,623
|
1,547,780
|
|||||||
Less:
accumulated depreciation, depletion and amortization
|
(259,237
|
)
|
(190,171
|
)
|
||||
Net
fixed assets
|
$
|
1,313,386
|
$
|
1,357,609
|
Asset
retirement obligations—December 31, 2008
|
$
|
19,872
|
||
Liabilities
settled
|
(1,058
|
)
|
||
Accretion
expense
|
914
|
|||
Asset
retirement obligations—September 30, 2009
|
$
|
19,728
|
September
30,
2009
|
December 31,
2008
|
|||||||
($
in thousands)
|
||||||||
Rights-of-way
and easements—at cost
|
$
|
86,908
|
$
|
85,537
|
||||
Less:
accumulated amortization
|
(14,104
|
)
|
(11,437
|
)
|
||||
Contracts
|
123,958
|
123,409
|
||||||
Less:
accumulated amortization
|
(57,489
|
)
|
(43,303
|
)
|
||||
Net
intangible assets
|
$
|
139,273
|
$
|
154,206
|
·
|
a
commitment by NGP to participate in a portion of, and provide support for
(“back-stop”), a rights offering and an equity
offering;
|
·
|
a
commitment by Black Stone to purchase the Partnership's Minerals
Business for $170 million;
|
·
|
an
assignment to the Partnership of all the Partnership's incentive
distribution rights and subordinated
units;
|
·
|
an
option in favor of the Partnership to acquire the Partnership’s 844,551
outstanding general partner units by acquiring all of the outstanding
equity of the general partner of our general partner and all of the
limited partner units of its general partner, in exchange for one million
newly-issued common units; and
|
·
|
the
payment by the Partnership to NGP of a transaction fee, payable at the
Partnership’s option as $29 million in cash or as some combination of
cash, common units and/or warrants.
|
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
($
in thousands)
|
||||||||||||||||
Assets:
|
||||||||||||||||
Crude
derivatives
|
$
|
—
|
$
|
23,590
|
$
|
—
|
$
|
23,590
|
||||||||
Natural
gas derivatives
|
—
|
7,348
|
—
|
7,348
|
||||||||||||
NGL
derivatives
|
—
|
—
|
610
|
610
|
||||||||||||
Interest
rate swaps
|
—
|
194
|
—
|
194
|
||||||||||||
Total
|
$
|
—
|
$
|
31,132
|
$
|
610
|
$
|
31,742
|
||||||||
Liabilities:
|
||||||||||||||||
Crude
derivatives
|
$
|
—
|
$
|
(30,435
|
)
|
$
|
—
|
$
|
(30,435
|
)
|
||||||
Natural
gas derivatives
|
—
|
(1,102
|
)
|
—
|
(1,102
|
)
|
||||||||||
NGL
derivatives
|
—
|
—
|
(4,462
|
)
|
(4,462
|
)
|
||||||||||
Interest
rate swaps
|
—
|
(30,395
|
)
|
—
|
(30,395
|
)
|
||||||||||
Total
|
$
|
—
|
$
|
(61,932
|
)
|
$
|
(4,462
|
)
|
$
|
(66,394
|
)
|
Three
Months
Ended
September 30,
|
||||||||
2009
|
2008
|
|||||||
Net
liability balances as of July
1
|
$
|
(520
|
)
|
$
|
(36,856
|
)
|
||
Settlements
|
(1,029
|
)
|
—
|
|||||
Transfers
from Level 3 to Level 2
|
—
|
4,931
|
||||||
Total
gains or losses (realized and unrealized)
|
(2,303
|
)
|
17,702
|
|||||
Net
liability balances as of September
30
|
$
|
(3,852
|
)
|
$
|
(14,223
|
)
|
Nine
Months
Ended
September 30,
|
||||||||
2009
|
2008
|
|||||||
Net
asset (liability) balances as of January
1
|
$
|
14,016
|
$
|
(36,695
|
)
|
|||
Settlements
|
(1,939
|
)
|
—
|
|||||
Transfers
from Level 3 to Level 2
|
—
|
15,661
|
||||||
Total
gains or losses (realized and unrealized)
|
(15,929
|
)
|
6,811
|
|||||
Net
liability balances as of September
30
|
$
|
(3,852
|
)
|
$
|
(14,223
|
)
|
September
30, 2009
|
Level 1
|
Level 2
|
Level 3
|
Total
Losses
|
||||||||||||||||
Impaired
proved properties
|
$
|
355
|
$
|
—
|
$
|
—
|
$
|
355
|
$
|
516
|
Roll
Forward
Effective
Date
|
Expiration
Date
|
Notional
Amount
|
Fixed
Rate (a)
|
|||||||
12/31/2008
|
12/31/2012
|
$ | 150,000,000 | 2.360% / 2.560 | % | |||||
09/30/2008
|
12/31/2012
|
150,000,000 | 4.105% / 4.295 | % | ||||||
10/03/2008
|
12/31/2012
|
300,000,000 | 3.895% / 4.095 | % |
(a)
|
|
First amount
is the rate the Partnership pays through January 9, 2011 and the second
amount is the interest rate the Partnership pays from January 10, 2011
through December 31, 2012.
|
Underlying
|
Period
|
Total
Notional
Volumes
(units)
|
Type
|
Floor
Strike
Price
($/unit)
|
Cap
Strike
Price
($/unit)
|
|||||||||
Natural
Gas:
|
||||||||||||||
IF
Waha
|
Oct-Dec
2009
|
60,000
mmbtu
|
Costless
Collar
|
7.50 | 8.90 | |||||||||
NYMEX
Henry Hub
|
Oct-Dec
2009
|
40,000
mmbtu
|
Costless
Collar
|
6.25 | 11.20 | |||||||||
NYMEX
Henry Hub
|
Oct-Dec
2009
|
170,000
mmbtu
|
Costless
Collar
|
7.85 | 9.25 | |||||||||
NYMEX
Henry Hub
|
Oct-Dec
2009
|
170,000
mmbtu
|
Swap
|
8.35 | ||||||||||
NYMEX
Henry Hub
|
Oct-Dec
2009
|
140,000
mmbtu
|
Swap
|
6.685 | ||||||||||
NYMEX
Henry Hub
|
Oct-Dec
2009
|
140,000
mmbtu
|
Swap
|
6.885 | ||||||||||
Crude
Oil:
|
||||||||||||||
NYMEX
WTI
|
Oct-Dec
2009
|
18,000
bbls
|
Costless
Collar
|
60.00 | 77.00 | |||||||||
NYMEX
WTI
|
Oct-Dec
2009
|
15,000
bbls
|
Costless
Collar
|
93.00 | 100.85 | |||||||||
NYMEX
WTI
|
Oct-Dec
2009
|
21,000
bbls
|
Put
|
90.00 | ||||||||||
NYMEX
WTI
|
Oct-Dec
2009
|
15,000
bbls
|
Put
|
100.00 | ||||||||||
NYMEX
WTI
|
Oct-Dec
2009
|
75,000
bbls
|
Swap
|
71.25 | ||||||||||
NYMEX
WTI
|
Oct-Dec
2009
|
150,000
bbls
|
Swap
|
100.00 | ||||||||||
NYMEX
WTI (1)
|
Oct-Dec
2009
|
180,000
bbls
|
Swap
|
97.00 | ||||||||||
Natural
Gas Liquids:
|
||||||||||||||
OPIS
Ethane Mt Belv non TET
|
Oct-Dec
2009
|
1,260,000 gallons
|
Costless
Collar
|
0.48 | 0.58 | |||||||||
OPIS
Ethane Mt Belv non TET
|
Oct-Dec
2009
|
1,260,000 gallons
|
Swap
|
0.53 | ||||||||||
OPIS
Ethane Mt Belv non TET
|
Oct-Dec
2009
|
3,150,000 gallons
|
Swap
|
0.6361 | ||||||||||
OPIS
IsoButane Mt Belv non TET
|
Oct-Dec
2009
|
315,000
gallons
|
Costless
Collar
|
0.935 | 1.035 | |||||||||
OPIS
IsoButane Mt Belv non TET
|
Oct-Dec
2009
|
315,000
gallons
|
Swap
|
0.985 | ||||||||||
OPIS
IsoButane Mt Belv non TET
|
Oct-Dec
2009
|
368,676
gallons
|
Swap
|
1.295 | ||||||||||
OPIS
NButane Mt Belv non TET
|
Oct-Dec
2009
|
693,000
gallons
|
Costless
Collar
|
0.935 | 1.035 | |||||||||
OPIS
NButane Mt Belv non TET
|
Oct-Dec
2009
|
693,000
gallons
|
Swap
|
0.985 | ||||||||||
OPIS
NButane Mt Belv non TET
|
Oct-Dec
2009
|
732,732
gallons
|
Swap
|
1.2775 | ||||||||||
OPIS
Propane Mt Belv non TET
|
Oct-Dec
2009
|
1,323,000 gallons
|
Costless
Collar
|
0.765 | 0.815 | |||||||||
OPIS
Propane Mt Belv non TET
|
Oct-Dec
2009
|
1,323,000 gallons
|
Swap
|
0.815 | ||||||||||
OPIS
Propane Mt Belv non TET
|
Oct-Dec
2009
|
1,890,000 gallons
|
Swap
|
1.0925 | ||||||||||
OPIS
Propane Mt Belv non TET
|
Oct-Dec
2009
|
542,556
gallons
|
Swap
|
1.0775 | ||||||||||
OPIS
Propane Mt Belv non TET
|
Oct-Dec
2009
|
481,194
gallons
|
Swap
|
1.0875 | ||||||||||
(1)
|
6,000
barrels of this “in-the-money” swap were “unwound” as part of the October
8, 2009 hedge transactions. Also as part of an October 8, 2009
hedge transaction, 114,000 barrels were reset from $97.00 to $135.00 for
the months of November and December of 2009. See
additional discussion of the October 8, 2009 transaction below.
|
Underlying
|
Period
|
Total
Notional
Volumes
(units)
|
Type
|
Floor
Strike
Price
($/unit)
|
Cap
Strike
Price
($/unit)
|
|||||||||
Natural
Gas:
|
||||||||||||||
NYMEX
Henry Hub
|
Jan-Dec
2010
|
1,320,000
mmbtu
|
Costless
Collar
|
$ | 7.70 | $ | 9.10 | |||||||
NYMEX
Henry Hub
|
Jan-Dec
2010
|
1,500,000 mmbtu
|
Swap
|
6.65 | ||||||||||
NYMEX
Henry Hub
|
Jan-Dec
2010
|
2,040,000 mmbtu
|
Swap
|
6.14 | ||||||||||
Crude
Oil:
|
||||||||||||||
NYMEX
WTI
|
Jan-Dec
2010
|
60,000
bbls
|
Costless
Collar
|
50.00 | 67.50 | |||||||||
NYMEX
WTI
|
Jan-Dec
2010
|
60,000
bbls
|
Costless
Collar
|
50.00 | 68.00 | |||||||||
NYMEX
WTI
|
Jan-Dec
2010
|
108,000
bbls
|
Costless
Collar
|
90.00 | 99.80 | |||||||||
NYMEX
WTI
|
Jan-Dec
2010
|
180,000
bbls
|
Costless
Collar
|
50.00 | 67.50 | |||||||||
NYMEX
WTI
|
Jan-Dec
2010
|
180,000
bbls
|
Costless
Collar
|
50.00 | 68.30 | |||||||||
NYMEX
WTI
|
Jan-Dec
2010
|
60,000
bbls
|
Put
|
100.00 | ||||||||||
NYMEX
WTI
|
Jan-Dec
2010
|
72,000
bbls
|
Put
|
90.00 | ||||||||||
NYMEX
WTI
|
Jan-Dec
2010
|
120,000
bbls
|
Swap
|
78.35 | ||||||||||
NYMEX
WTI
|
Jan-Dec
2010
|
300,000
bbls
|
Swap
|
70.00 | ||||||||||
NYMEX
WTI(1)
|
Jan-Dec
2010
|
540,000
bbls
|
Swap
|
53.55 | ||||||||||
NYMEX
WTI
|
Jan-Dec
2010
|
480,000
bbls
|
Swap
|
51.40 | ||||||||||
Natural
Gas Liquids:
|
||||||||||||||
OPIS
Ethane Mt Belv non TET
|
Jan-Dec
2010
|
4,536,000 gallons
|
Costless
Collar
|
0.43 | 0.53 | |||||||||
OPIS
Ethane Mt Belv non TET
|
Jan-Dec
2010
|
4,536,000 gallons
|
Swap
|
0.58 | ||||||||||
OPIS
IsoButane Mt Belv non TET
|
Jan-Dec
2010
|
2,520,000 gallons
|
Costless
Collar
|
0.82 | 1.02 | |||||||||
OPIS
IsoButane Mt Belv non TET
|
Jan-Dec
2010
|
5,544,000 gallons
|
Costless
Collar
|
0.82 | 1.02 | |||||||||
OPIS
IsoButane Mt Belv non TET
|
Jan-Dec
2010
|
5,040,000 gallons
|
Costless
Collar
|
0.705 | 0.81 | |||||||||
OPIS
IsoButane Mt Belv non TET
|
Jan-Dec
2010
|
5,040,000 gallons
|
Swap
|
0.755 |
(1)
|
On
November 2, 2009, 135,000 barrels were reset from $53.55 to $95.00 for the
months of January, February and March 2010. See
additional discussion of the November 2, 2009 transaction below.
|
Underlying
|
Period
|
Total
Notional
Volumes
(units)
|
Type
|
Floor
Strike
Price
($/unit)
|
Cap
Strike
Price
($/unit)
|
|||||||||
Natural
Gas:
|
||||||||||||||
NYMEX
Henry Hub
|
Jan-Dec
2011
|
1,200,000 mmbtu
|
Costless
Collar
|
$ | 7.50 | $ | 8.85 | |||||||
NYMEX
Henry Hub
|
Jan-Dec
2011
|
720,000
mmbtu
|
Swap
|
7.085 | ||||||||||
NYMEX
Henry Hub
|
Jan-Dec
2011
|
2,280,000
mmbtu
|
Swap
|
6.57 | ||||||||||
Crude
Oil:
|
||||||||||||||
NYMEX
WTI(1)
|
Jan-Dec
2011
|
139,152
bbls
|
Costless
Collar
|
75.00 | 85.70 | |||||||||
NYMEX
WTI(2)
|
Jan-Dec
2011
|
125,256
bbls
|
Swap
|
80.00 | ||||||||||
NYMEX
WTI
|
Jan-Dec
2011
|
360,000
bbls
|
Swap
|
65.60 | ||||||||||
NYMEX
WTI
|
Jan-Dec
2011
|
120,000
bbls
|
Swap
|
65.10 | ||||||||||
NYMEX
WTI
|
Jan-Dec
2011
|
240,000
bbls
|
Swap
|
75.00 | ||||||||||
NYMEX
WTI
|
Jan-Dec
2011
|
240,000
bbls
|
Swap
|
80.05 |
(1)
|
460,848
barrels of this costless collar were “unwound” as part of the January 8,
2009 hedge transactions.
|
(2)
|
414,744
barrels of this swap were “unwound” as part of the January 8, 2009 hedge
transactions.
|
Underlying
|
Period
|
Total
Notional
Volumes
(units)
|
Type
|
Floor
Strike
Price
($/unit)
|
Cap
Strike
Price
($/unit)
|
|||||||||
Natural
Gas:
|
||||||||||||||
NYMEX
Henry Hub
|
Jan-Dec
2012
|
1,080,000
mmbtu
|
Costless
Collar
|
$ | 7.35 | $ | 8.65 | |||||||
NYMEX
Henry Hub
|
Jan-Dec
2012
|
3,120,000 mmbtu
|
Swap
|
6.77 | ||||||||||
Crude
Oil:
|
||||||||||||||
NYMEX
WTI(1)
|
Jan-Dec
2012
|
135,576
bbls
|
Costless
Collar
|
75.30 | 86.30 | |||||||||
NYMEX
WTI(2)
|
Jan-Dec
2012
|
108,468
bbls
|
Swap
|
68.30 | ||||||||||
NYMEX
WTI
|
Jan-Dec
2012
|
240,000
bbls
|
Swap
|
80.30 | ||||||||||
NYMEX
WTI
|
Jan-Dec
2012
|
240,000
bbls
|
Swap
|
76.50 | ||||||||||
NYMEX
WTI
|
Jan-Dec
2012
|
240,000
bbls
|
Swap
|
82.02 |
(1)
|
464,424
barrels of this costless collar were “unwound” as part of the January 8,
2009 hedge transactions.
|
(2)
|
371,532
barrels of this swap were “unwound” as part of the January 8, 2009 hedge
transactions.
|
Derivative
Assets
|
Derivative
Liabilities
|
|||||||||||||||||||
September
30, 2009
|
December
31, 2008
|
September
30, 2009
|
December
31, 2008
|
|||||||||||||||||
Balance
Sheet
Location
|
Fair
Value
|
Balance
Sheet
Location
|
Fair
Value
|
Balance
Sheet
Location
|
Fair
Value
|
Balance
Sheet
Location
|
Fair
Value
|
|||||||||||||
($
in thousands)
|
||||||||||||||||||||
Interest
rate derivatives – assets
|
Long-term
assets
|
$ | 194 | $ | — | $ | — | $ | — | |||||||||||
Interest
rate derivatives – liabilities
|
— | — |
Current
liabilities
|
(16,048 | ) |
Current
liabilities
|
(13,763 | ) | ||||||||||||
Interest
rate derivatives – liabilities
|
— | — |
Long-term
liabilities
|
(14,347 | ) |
Long-term
liabilities
|
(26,182 | ) | ||||||||||||
Commodity
derivatives – assets
|
Current
assets
|
26,017 |
Current
assets
|
77,603 | — | — | ||||||||||||||
Commodity
derivatives – assets
|
Long-term
assets
|
5,531 |
Long-term
assets
|
34,088 | — | — | ||||||||||||||
Commodity
derivatives – liabilities
|
— |
Current
assets
|
(834 | ) |
Current
liabilities
|
(18,940 | ) | — | ||||||||||||
Commodity
derivatives – liabilities
|
— |
Long-term
assets
|
(1,637 | ) |
Long-term
liabilities
|
(17,059 | ) | — | ||||||||||||
Total
derivatives
|
$ | 31,742 | $ | 109,220 | $ | (66,394 | ) | $ | (39,945 | ) | ||||||||||
Location
of Gain or (Loss) Recognized in Income on
Derivatives
|
Amount
of Gain or (Loss) Recognized in Income
on
Derivatives
|
||||||||||||||||
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||||||
2009
|
2008
|
2009
|
2008
|
||||||||||||||
($
in thousands)
|
|||||||||||||||||
Interest
rate derivatives
|
Interest
rate risk management losses
|
$ | (10,348 | ) | $ | (2,859 | ) | $ | (3,924 | ) | $ | (5,375 | ) | ||||
Commodity
derivatives
|
Commodity
risk management (losses) gains
|
(8,832 | ) | 231,851 | (57,137 | ) | (97,769 | ) | |||||||||
Total
|
$ | (19,180 | ) | $ | 228,992 | $ | (61,061 | ) | $ | (103,144 | ) | ||||||
|
(i)
|
Midstream—Texas
Panhandle Segment:
|
|
(ii)
|
Midstream—South Texas
Segment:
|
|
(iii)
|
Midstream—East Texas/Louisiana
Segment:
|
|
(iv)
|
Midstream—Gulf of Mexico
Segment:
|
|
(v)
|
Upstream
Segment:
|
|
(vi)
|
Minerals
Segment:
|
|
(vii)
|
Corporate
Segment:
|
Midstream
Business
Three
Months Ended September 30, 2009
|
Texas
Panhandle
Segment
|
South
Texas
Segment
|
East Texas /
Louisiana
Segment
|
Gulf
of
Mexico
|
Total
Midstream
Business
|
|||||||||||||||
($
in thousands)
|
||||||||||||||||||||
Sales
to external customers
|
$
|
70,263
|
$
|
18,672
|
$
|
53,620
|
$
|
8,618
|
$
|
151,173
|
||||||||||
Cost
of natural gas and natural gas liquids
|
46,540
|
16,842
|
39,665
|
6,898
|
109,945
|
|||||||||||||||
Operating
costs and other expenses
|
8,206
|
896
|
4,727
|
310
|
14,139
|
|||||||||||||||
Depreciation,
depletion, amortization and impairment
|
11,602
|
1,287
|
4,458
|
1,480
|
18,827
|
|||||||||||||||
Operating
income (loss) from continuing operations
|
$
|
3,915
|
$
|
(353
|
)
|
$
|
4,770
|
$
|
(70
|
)
|
$
|
8,262
|
||||||||
Capital
Expenditures
|
$
|
1,332
|
$
|
27
|
$
|
2,094
|
$
|
165
|
$
|
3,618
|
||||||||||
Segment
Assets
|
$
|
556,963
|
$
|
66,758
|
$
|
324,893
|
$
|
86,789
|
$
|
1,035,403
|
Total
Segments
Three
Months Ended September 30, 2009
|
Total
Midstream
Business
|
Upstream
Segment
|
Minerals
Segment
|
Corporate
Segment
|
Total
Segments
|
|||||||||||||||
($
in thousands)
|
||||||||||||||||||||
Sales
to external customers
|
$
|
151,173
|
$
|
17,470
|
$
|
4,050
|
$
|
(8,832
|
)(a)
|
$
|
163,861
|
|||||||||
Cost
of natural gas and natural gas liquids
|
109,945
|
—
|
—
|
—
|
109,945
|
|||||||||||||||
Operating
costs and other expenses
|
14,139
|
5,526
|
203
|
10,449
|
30,317
|
|||||||||||||||
Depreciation,
depletion, amortization and impairment
|
18,827
|
7,768
|
1,928
|
337
|
28,860
|
|||||||||||||||
Operating
income (loss) from continuing operations operations
|
$
|
8,262
|
$
|
4,176
|
$
|
1,919
|
$
|
(19,618
|
)
|
$
|
(5,261
|
)
|
||||||||
Capital
Expenditures
|
$
|
3,618
|
$
|
2,780
|
$
|
—
|
$
|
308
|
$
|
6,706
|
||||||||||
Segment
Assets
|
$
|
1,035,403
|
$
|
373,172
|
$
|
135,844
|
$
|
46,423
|
$
|
1,590,842
|
Midstream
Business
Three
Months Ended September 30, 2008
|
Texas
Panhandle
Segment
|
South
Texas
Segment
|
East Texas /
Louisiana
Segment
|
Total
Midstream
Business
|
||||||||||||
($
in thousands)
|
||||||||||||||||
Sales
to external customers
|
$
|
182,279
|
$
|
36,187
|
$
|
80,769
|
$
|
299,235
|
||||||||
Cost
of natural gas and natural gas liquids
|
138,428
|
33,307
|
66,007
|
237,742
|
||||||||||||
Operating
costs and other expenses
|
9,190
|
635
|
4,194
|
14,019
|
||||||||||||
Depreciation,
depletion, and amortization
|
10,984
|
939
|
2,989
|
14,912
|
||||||||||||
Operating
income from continuing operations
|
$
|
23,677
|
$
|
1,306
|
$
|
7,579
|
$
|
32,562
|
||||||||
Capital
Expenditures
|
$
|
7,152
|
$
|
201
|
$
|
2,591
|
$
|
9,944
|
||||||||
Segment
Assets
|
$
|
580,553
|
$
|
89,604
|
$
|
250,910
|
$
|
921,067
|
Total
Segments
Three
Months Ended September 30, 2008
|
Total
Midstream
Business
|
Upstream
Segment
|
Minerals
Segment
|
Corporate
Segment
|
Total
Segments
|
||||||||||||
($
in thousands)
|
|||||||||||||||||
Sales
to external customers
|
$
|
299,235
|
$
|
55,406
|
$
|
17,393
|
$
|
231,851
|
(a)
|
$
|
603,885
|
||||||
Cost
of natural gas and natural gas liquids
|
237,742
|
—
|
—
|
—
|
237,742
|
||||||||||||
Operating
costs and other expenses
|
14,019
|
12,394
|
427
|
13,813
|
40,653
|
||||||||||||
Depreciation,
depletion, and amortization
|
14,912
|
11,170
|
2,321
|
194
|
28,597
|
||||||||||||
Operating
income (loss) from continuing operations operations
|
$
|
32,562
|
$
|
31,842
|
$
|
14,645
|
$
|
217,844
|
$
|
296,893
|
|||||||
Capital
Expenditures
|
$
|
9,944
|
$
|
4,532
|
$
|
—
|
$
|
—
|
$
|
14,476
|
|||||||
Segment
Assets
|
$
|
921,067
|
$
|
634,512
|
$
|
149,380
|
$
|
68,102
|
$
|
1,773,061
|
|
|
(a)
|
Represents
results of the Partnership’s derivative
activities.
|
Midstream
Business
Nine
Months Ended September 30, 2009
|
Texas
Panhandle
Segment
|
South
Texas
Segment
|
East Texas /
Louisiana
Segment
|
Gulf
of
Mexico
|
Total
Midstream
Business
|
|||||||||||||||
($
in thousands)
|
||||||||||||||||||||
Sales
to external customers
|
$
|
205,000
|
$
|
78,077
|
$
|
156,900
|
$
|
22,668
|
$
|
462,645
|
||||||||||
Cost
of natural gas and natural gas liquids
|
147,894
|
71,730
|
121,907
|
17,271
|
358,802
|
|||||||||||||||
Operating
costs and other expenses
|
24,407
|
2,946
|
13,887
|
1,386
|
42,626
|
|||||||||||||||
Depreciation,
depletion, amortization and impairment
|
33,660
|
3,995
|
13,469
|
4,445
|
55,569
|
|||||||||||||||
Operating
income (loss) from continuing operations
|
$
|
(961
|
)
|
$
|
(594
|
)
|
$
|
7,637
|
$
|
(434
|
)
|
$
|
5,648
|
|||||||
Capital
Expenditures
|
$
|
5,042
|
$
|
41
|
$
|
16,172
|
$
|
306
|
$
|
21,561
|
||||||||||
Segment
Assets
|
$
|
556,963
|
$
|
66,758
|
$
|
324,893
|
$
|
86,789
|
$
|
1,035,403
|
Total
Segments
Nine
Months Ended September 30, 2009
|
Total
Midstream
Business
|
Upstream
Segment
|
Minerals
Segment
|
Corporate
Segment
|
Total
Segments
|
|||||||||||||||
($
in thousands)
|
||||||||||||||||||||
Sales
to external customers
|
$
|
462,645
|
$
|
42,757
|
$
|
10,788
|
$
|
(57,137
|
)(a)
|
$
|
459,053
|
|||||||||
Cost
of natural gas and natural gas liquids
|
358,802
|
—
|
—
|
—
|
358,802
|
|||||||||||||||
Operating
costs and other expenses
|
42,626
|
16,264
|
972
|
34,882
|
94,744
|
|||||||||||||||
Depreciation,
depletion, amortization and impairment
|
55,569
|
25,361
|
5,055
|
768
|
86,753
|
|||||||||||||||
Operating
income (loss) from continuing operations operations
|
$
|
5,648
|
$
|
1,132
|
$
|
4,761
|
$
|
(92,787
|
)
|
$
|
(81,246
|
)
|
||||||||
Capital
Expenditures
|
$
|
21,561
|
$
|
6,360
|
$
|
—
|
$
|
1,732
|
$
|
29,653
|
||||||||||
Segment
Assets
|
$
|
1,035,403
|
$
|
373,893
|
$
|
135,844
|
$
|
46,423
|
$
|
1,590,842
|
Midstream
Business
Nine
Months Ended September 30, 2008
|
Texas
Panhandle
Segment
|
South
Texas
Segment
|
East Texas /
Louisiana
Segment
|
Total
Midstream
Business
|
||||||||||||
($
in thousands)
|
||||||||||||||||
Sales
to external customers
|
$
|
522,114
|
$
|
125,712
|
$
|
249,052
|
$
|
896,878
|
||||||||
Cost
of natural gas and natural gas liquids
|
398,828
|
117,635
|
209,937
|
726,400
|
||||||||||||
Operating
costs and other expenses
|
25,653
|
1,862
|
11,511
|
39,026
|
||||||||||||
Depreciation,
depletion, and amortization
|
32,587
|
2,812
|
8,846
|
44,245
|
||||||||||||
Operating
income from continuing operations
|
$
|
65,046
|
$
|
3,403
|
$
|
18,758
|
$
|
87,207
|
||||||||
Capital
Expenditures
|
$
|
20,607
|
$
|
780
|
$
|
8,686
|
$
|
30,073
|
||||||||
Segment
Assets
|
$
|
580,553
|
$
|
89,604
|
$
|
250,910
|
$
|
921,067
|
Total
Segments
Nine
Months Ended September 30, 2008
|
Total
Midstream
Business
|
Upstream
Segment
|
Minerals
Segment
|
Corporate
Segment
|
Total
Segments
|
||||||||||||||||
($
in thousands)
|
|||||||||||||||||||||
Sales
to external customers
|
$ | 896,878 | $ | 140,364 | $ | 34,606 | $ | (97,769 | )(a) | $ | 974,079 | ||||||||||
Cost
of natural gas and natural gas liquids
|
726,400 | — | — | — | 726,400 | ||||||||||||||||
Operating
costs and other expenses
|
39,026 | 29,369 | 1,352 | 41,295 | 111,042 | ||||||||||||||||
Depreciation,
depletion, and amortization
|
44,245 | 29,509 | 6,460 | 585 | 80,799 | ||||||||||||||||
Operating
income (loss) from continuing operations operations
|
$ | 87,207 | $ | 81,486 | $ | 26,794 | $ | (139,649 | ) | $ | 55,838 | ||||||||||
Capital
Expenditures
|
$ | 30,073 | $ | 17,716 | $ | — | $ | — | $ | 47,789 | |||||||||||
Segment
Assets
|
$ | 921,067 | $ | 634,512 | $ | 149,380 | $ | 68,102 | $ | 1,773,061 |
|
|
(a)
|
Represents
results of the Partnership’s derivative
activities.
|
Number of
Restricted
Units
|
Weighted
Average
Fair Value
|
|||||||
Nonvested
at December 31, 2008
|
905,486
|
$
|
17.00
|
|||||
Granted
|
174,400
|
$ |
4.52
|
|||||
Vested
|
(217,503
|
)
|
$ |
20.07
|
||||
Forfeitures/Cancellations
|
(68,644
|
)
|
$ |
15.18
|
||||
Nonvested
at September 30, 2009
|
793,739
|
$ |
13.58
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Basic
weighted average units outstanding:
|
||||||||||||||||
Common
units
|
53,632
|
50,824
|
53,276
|
50,762
|
||||||||||||
Subordinated
units
|
20,691
|
20,691
|
20,691
|
20,691
|
||||||||||||
General
partner units
|
845
|
845
|
845
|
845
|
||||||||||||
Diluted
weighted average units outstanding:
|
||||||||||||||||
Common
units
|
53,632
|
50,868
|
53,276
|
50,900
|
||||||||||||
Subordinated
units
|
20,691
|
20,691
|
20,691
|
20,691
|
||||||||||||
General
partner units
|
845
|
845
|
845
|
845
|
Total
|
Common
Units
|
Restricted
Common Units
|
Subordinated
Units
|
General
Partner
Units
|
||||||||||||||||
($
in thousands, except for per unit amounts)
|
||||||||||||||||||||
Loss
from continuing operations
|
$
|
(25,297
|
)
|
|||||||||||||||||
Distributions
declared
|
1,377
|
$
|
1,341
|
$
|
15
|
$
|
—
|
$
|
21
|
|||||||||||
Assumed
loss from continuing operations after distribution to be
allocated
|
(26,674
|
)
|
(19,032
|
)
|
—
|
(7,342
|
)
|
(300
|
)
|
|||||||||||
Assumed
allocation of loss from continuing operations
|
(25,297
|
)
|
(17,691
|
)
|
15
|
(7,342
|
)
|
(279
|
)
|
|||||||||||
Discontinued
operations
|
26
|
19
|
—
|
7
|
—
|
|||||||||||||||
Assumed
net loss to be allocated
|
$
|
(25,271
|
)
|
$
|
(17,672
|
)
|
$
|
15
|
$
|
(7,335
|
)
|
$
|
(279
|
)
|
||||||
Basic
and diluted loss from continuing operations per unit
|
$
|
(0.33
|
)
|
$
|
(0.35
|
)
|
$
|
(0.33
|
)
|
|||||||||||
Basic
and diluted discontinued operations per unit
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||||||||
Basic
and diluted loss per unit
|
$
|
(0.33
|
)
|
$
|
(0.35
|
)
|
$
|
(0.33
|
)
|
|||||||||||
Total
|
Common
Units
|
Restricted
Common Units
|
Subordinated
Units
|
General
Partner
Units
|
||||||||||||||||
($
in thousands, except for per unit amounts)
|
||||||||||||||||||||
Income
from continuing operations
|
$
|
287,477
|
||||||||||||||||||
Distributions
declared
|
29,949
|
$
|
20,839
|
$
|
280
|
$
|
8,484
|
$
|
346
|
|||||||||||
Assumed
income from continuing operations after distribution to be
allocated
|
257,528
|
179,005
|
2,672
|
72,876
|
2,975
|
|||||||||||||||
Assumed
allocation of income from continuing operations
|
287,477
|
199,844
|
2,952
|
81,360
|
3,321
|
|||||||||||||||
Discontinued
operations
|
594
|
413
|
6
|
168
|
7
|
|||||||||||||||
Assumed
net income to be allocated
|
$
|
288,071
|
$
|
200,257
|
$
|
2,958
|
$
|
81,528
|
$
|
3,328
|
||||||||||
Basic
and diluted income from continuing operations per unit
|
$
|
3.93
|
$
|
3.93
|
$
|
3.93
|
||||||||||||||
Basic
and diluted discontinued operations per unit
|
$
|
0.01
|
$
|
0.01
|
$
|
0.01
|
||||||||||||||
Basic
and diluted income per unit
|
$
|
3.94
|
$
|
3.94
|
$
|
3.94
|
||||||||||||||
Total
|
Common
Units
|
Restricted
Common Units
|
Subordinated
Units
|
General
Partner
Units
|
||||||||||||||||
($
in thousands, except for per unit amounts)
|
||||||||||||||||||||
Loss
from continuing operations
|
$
|
(102,869
|
)
|
|||||||||||||||||
Distributions
declared
|
4,110
|
$
|
3,996
|
$
|
51
|
$
|
—
|
$
|
63
|
|||||||||||
Assumed
loss from continuing operations after distribution to be
allocated
|
(106,979
|
)
|
(76,184
|
)
|
—
|
(29,588
|
)
|
(1,207
|
)
|
|||||||||||
Assumed
allocation of loss from continuing operations
|
(102,869
|
)
|
(72,188
|
)
|
51
|
(29,588
|
)
|
(1,144
|
)
|
|||||||||||
Discontinued
operations
|
266
|
189
|
—
|
74
|
3
|
|||||||||||||||
Assumed
net loss to be allocated
|
$
|
(102,603
|
)
|
$
|
(71,999
|
)
|
$
|
51
|
$
|
(29,514
|
)
|
$
|
(1,141
|
)
|
||||||
Basic
and diluted loss from continuing operations per unit
|
$
|
(1.35
|
)
|
$
|
(1.43
|
)
|
$
|
(1.35
|
)
|
|||||||||||
Basic
and diluted discontinued operations per unit
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||||||||||
Basic
and diluted loss per unit
|
$
|
(1.35
|
)
|
$
|
(1.43
|
)
|
$
|
(1.35
|
)
|
|||||||||||
Total
|
Common
Units
|
Restricted
Common Units
|
Subordinated
Units
|
General
Partner
Units
|
||||||||||||||||
($
in thousands, except for per unit amounts)
|
||||||||||||||||||||
Income
from continuing operations
|
$
|
31,272
|
||||||||||||||||||
Distributions
declared
|
88,899
|
$
|
61,930
|
$
|
695
|
$
|
25,244
|
$
|
1,030
|
|||||||||||
Assumed
loss from continuing operations after distribution to be
allocated
|
(57,627
|
)
|
(40,110
|
)
|
(501
|
)
|
(16,349
|
)
|
(667
|
)
|
||||||||||
Assumed
allocation of income from continuing operations
|
31,272
|
21,820
|
194
|
8,895
|
363
|
|||||||||||||||
Discontinued
operations
|
1,451
|
1,010
|
13
|
411
|
17
|
|||||||||||||||
Assumed
net income to be allocated
|
$
|
32,723
|
$
|
22,830
|
$
|
207
|
$
|
9,306
|
$
|
380
|
||||||||||
Basic
and diluted income from continuing operations per unit
|
$
|
0.43
|
$
|
0.43
|
$
|
0.43
|
||||||||||||||
Basic
and diluted discontinued operations per unit
|
$
|
0.02
|
$
|
0.02
|
$
|
0.02
|
||||||||||||||
Basic
and diluted income per unit
|
$
|
0.45
|
$
|
0.45
|
$
|
0.45
|
Unaudited
Condensed Consolidating Balance Sheet
|
||||||||||||||
September
30, 2009
|
||||||||||||||
(in
thousands)
|
Parent
Issuer
|
Subsidiary
Guarantors
|
Consolidating
Entries
|
Total
|
||||||||||
ASSETS:
|
||||||||||||||
Accounts
receivable – related parties
|
$
|
101,348
|
$
|
—
|
$
|
(101,348
|
)
|
$
|
—
|
|||||
Other
current assets
|
13,590
|
97,527
|
—
|
111,117
|
||||||||||
Total
property, plant and equipment, net
|
9
|
1,313,377
|
—
|
1,313,386
|
||||||||||
Investment
in subsidiaries
|
1,300,981
|
—
|
(1,300,981
|
)
|
—
|
|||||||||
Total
other long-term assets
|
6,887
|
159,452
|
—
|
166,339
|
||||||||||
Total
assets
|
$
|
1,422,815
|
$
|
1,570,356
|
$
|
(1,402,329
|
)
|
$
|
1,590,842
|
|||||
LIABILITIES
AND EQUITY:
|
||||||||||||||
Accounts payable – related parties
|
$
|
—
|
$
|
101,348
|
$
|
(101,348
|
)
|
$
|
—
|
|||||
Other
current liabilities
|
29,762
|
94,107
|
—
|
123,869
|
||||||||||
Other
long-term liabilities
|
19,833
|
73,920
|
—
|
93,753
|
||||||||||
Long-term
debt
|
774,383
|
—
|
—
|
774,383
|
||||||||||
Equity
|
598,837
|
1,300,981
|
(1,300,981
|
)
|
598,837
|
|||||||||
Total
liabilities and equity
|
$
|
1,422,815
|
$
|
1,570,356
|
$
|
(1,402,329
|
)
|
$
|
1,590,842
|
Unaudited
Condensed Consolidating Balance Sheet
|
||||||||||||||
December
31, 2008
|
||||||||||||||
(in
thousands)
|
Parent
Issuer
|
Subsidiary
Guarantors
|
Consolidating
Entries
|
Total
|
||||||||||
ASSETS:
|
||||||||||||||
Accounts
receivable – related parties
|
$
|
—
|
$
|
16,880
|
$
|
(16,880
|
)
|
$
|
—
|
|||||
Other
current assets
|
37,452
|
175,772
|
—
|
213,224
|
||||||||||
Total
property, plant and equipment, net
|
128
|
1,357,481
|
—
|
1,357,609
|
||||||||||
Investment
in subsidiaries
|
1,520,016
|
—
|
(1,520,016
|
)
|
—
|
|||||||||
Total
other long-term assets
|
7,506
|
194,722
|
—
|
202,228
|
||||||||||
Total
assets
|
$
|
1,565,102
|
$
|
1,744,855
|
$
|
(1,536,896
|
)
|
$
|
1,773,061
|
|||||
LIABILITIES
AND EQUITY:
|
||||||||||||||
Accounts
payable – related parties
|
$
|
16,880
|
$
|
—
|
$
|
(16,880
|
)
|
$
|
—
|
|||||
Other
current liabilities
|
10,596
|
145,342
|
—
|
155,938
|
||||||||||
Other
long-term liabilities
|
10,528
|
79,497
|
—
|
90,025
|
||||||||||
Long-term
debt
|
799,383
|
—
|
—
|
799,383
|
||||||||||
Equity
|
727,715
|
1,520,016
|
(1,520,016
|
)
|
727,715
|
|||||||||
Total
liabilities and equity
|
$
|
1,565,102
|
$
|
1,744,855
|
$
|
(1,536,896
|
)
|
$
|
1,773,061
|
Unaudited
Condensed Consolidating Statement of Operations
|
|||||||||||||||
For
the three months ended September 30, 2009
|
|||||||||||||||
(in
thousands)
|
Parent
Issuer
|
Subsidiary
Guarantors
|
Consolidating
Entries
|
Total
|
|||||||||||
Total
revenues
|
$
|
1,348
|
$
|
162,513
|
$
|
—
|
$
|
163,861
|
|||||||
Cost
of natural gas and natural gas liquids
|
—
|
109,945
|
—
|
109,945
|
|||||||||||
Operations
and maintenance
|
—
|
16,934
|
—
|
16,934
|
|||||||||||
Taxes
other than income
|
—
|
2,934
|
—
|
2,934
|
|||||||||||
General
and administrative
|
163
|
10,286
|
—
|
10,449
|
|||||||||||
Depreciation,
depletion, and impairment
|
—
|
28,860
|
—
|
28,860
|
|||||||||||
Income
from operations
|
1,185
|
(6,446
|
)
|
—
|
(5,261
|
)
|
|||||||||
Interest
expense, net
|
(4,315
|
)
|
—
|
—
|
(4,315
|
)
|
|||||||||
Other
non-operating income
|
1,728
|
1,201
|
(2,194
|
)
|
735
|
||||||||||
Other
non-operating expense
|
(4,245
|
)
|
(8,564
|
)
|
2,194
|
(10,615
|
)
|
||||||||
Income
(loss) before income taxes
|
(5,647
|
)
|
(13,809
|
)
|
—
|
(19,456
|
)
|
||||||||
Income
tax provision
|
697
|
5,144
|
—
|
5,841
|
|||||||||||
Equity
in earnings of subsidiaries
|
(18,927
|
)
|
—
|
18,927
|
—
|
||||||||||
Income
(loss) from continuing operations
|
(25,271
|
)
|
(18,953
|
)
|
18,927 |
(25,297
|
)
|
||||||||
Discontinued
operations
|
—
|
26
|
—
|
26
|
|||||||||||
Net
income (loss)
|
$
|
(25,271
|
)
|
$
|
(18,927
|
)
|
$
|
18,927
|
$
|
(25,271
|
)
|
Unaudited
Condensed Consolidating Statement of Operations
|
|||||||||||||||
For
the nine months ended September 30, 2009
|
|||||||||||||||
(in
thousands)
|
Parent
Issuer
|
Subsidiary
Guarantors
|
Consolidating
Entries
|
Total
|
|||||||||||
Total
revenues
|
$
|
(24,423
|
)
|
$
|
483,476
|
$
|
—
|
$
|
459,053
|
||||||
Cost
of natural gas and natural gas liquids
|
—
|
358,802
|
—
|
358,802
|
|||||||||||
Operations
and maintenance
|
—
|
54,624
|
—
|
54,624
|
|||||||||||
Taxes
other than income
|
—
|
8,790
|
—
|
8,790
|
|||||||||||
General
and administrative
|
559
|
34,323
|
—
|
34,882
|
|||||||||||
Other
operating income
|
—
|
(3,552
|
)
|
—
|
(3,552
|
)
|
|||||||||
Depreciation,
depletion, and impairment
|
—
|
86,753
|
—
|
86,753
|
|||||||||||
Income
from operations
|
(24,982
|
)
|
(56,264
|
)
|
—
|
(81,246
|
)
|
||||||||
Interest
expense, net
|
(17,282
|
)
|
—
|
—
|
(17,282
|
)
|
|||||||||
Other
non-operating income
|
8,230
|
10,026
|
(6,493
|
)
|
11,763
|
||||||||||
Other
non-operating expense
|
(7,024
|
)
|
(13,939
|
)
|
6,493
|
(14,470
|
)
|
||||||||
Income
(loss) before income taxes
|
(41,058
|
)
|
(60,177
|
)
|
—
|
(101,235
|
)
|
||||||||
Income
tax provision
|
716
|
918
|
—
|
1,634
|
|||||||||||
Equity
in earnings of subsidiaries
|
(60,829
|
)
|
—
|
60,829
|
—
|
||||||||||
Income
(loss) from continuing operations
|
(102,603
|
)
|
(61,095
|
)
|
60,829
|
(102,869
|
)
|
||||||||
Discontinued
operations
|
—
|
266
|
—
|
266
|
|||||||||||
Net
income (loss)
|
$
|
(102,603
|
)
|
$
|
(60,829
|
)
|
$
|
60,829
|
$
|
(102,603
|
)
|
Unaudited
Condensed Consolidating Statement of Operations
|
|||||||||||||||
For
the three months ended September 30, 2008
|
|||||||||||||||
(in
thousands)
|
Parent
Issuer
|
Subsidiary
Guarantors
|
Consolidating
Entries
|
Total
|
|||||||||||
Total
revenues
|
$
|
2,181
|
$
|
601,704
|
$
|
—
|
$
|
603,885
|
|||||||
Cost
of natural gas and natural gas liquids
|
—
|
237,742
|
—
|
237,742
|
|||||||||||
Operations
and maintenance
|
—
|
21,475
|
—
|
21,475
|
|||||||||||
Taxes
other than income
|
—
|
5,365
|
—
|
5,365
|
|||||||||||
General
and administrative
|
(24
|
)
|
9,917
|
—
|
9,893
|
||||||||||
Other
operating expense
|
—
|
3,920
|
—
|
3,920
|
|||||||||||
Depreciation,
depletion, and impairment
|
—
|
28,597
|
—
|
28,597
|
|||||||||||
Income
from operations
|
2,205
|
294,688
|
—
|
296,893
|
|||||||||||
Interest
expense, net
|
(7,498
|
)
|
—
|
—
|
(7,498
|
)
|
|||||||||
Other
non-operating income
|
785
|
456
|
(595
|
)
|
646
|
||||||||||
Other
non-operating expense
|
(219
|
)
|
(3,440
|
)
|
595
|
(3,064
|
)
|
||||||||
Income
(loss) before income taxes
|
(4,727
|
)
|
291,704
|
—
|
286,977
|
||||||||||
Income
tax provision (benefit)
|
—
|
(500
|
)
|
—
|
(500
|
)
|
|||||||||
Equity
in earnings of subsidiaries
|
292,798
|
—
|
(292,798
|
)
|
—
|
||||||||||
Income from
continuing operations
|
288,071
|
292,204
|
(292,798
|
)
|
287,477
|
||||||||||
Discontinued
operations
|
—
|
594
|
—
|
594
|
|||||||||||
Net
income (loss)
|
$
|
288,071
|
$
|
292,798
|
$
|
(292,798
|
)
|
$
|
288,071
|
Unaudited
Condensed Consolidating Statement of Operations
|
|||||||||||||||
For
the nine months ended September 30, 2008
|
|||||||||||||||
(in
thousands)
|
Parent
Issuer
|
Subsidiary
Guarantors
|
Consolidating
Entries
|
Total
|
|||||||||||
Total
revenues
|
$
|
2,181
|
$
|
971,898
|
$
|
—
|
$
|
974,079
|
|||||||
Cost
of natural gas and natural gas liquids
|
—
|
726,400
|
—
|
726,400
|
|||||||||||
Operations
and maintenance
|
—
|
54,772
|
—
|
54,772
|
|||||||||||
Taxes
other than income
|
—
|
14,975
|
—
|
14,975
|
|||||||||||
General
and administrative
|
4
|
31,157
|
—
|
31,161
|
|||||||||||
Other
operating expense
|
—
|
10,134
|
—
|
10,134
|
|||||||||||
Depreciation,
depletion, and impairment
|
—
|
80,799
|
—
|
80,799
|
|||||||||||
Income
from operations
|
2,177
|
53,661
|
—
|
55,838
|
|||||||||||
Interest
expense
|
(23,576
|
)
|
—
|
—
|
(23,576
|
)
|
|||||||||
Other
non-operating income
|
2,520
|
3,127
|
(2,107
|
)
|
3,540
|
||||||||||
Other
non-operating expense
|
(654
|
)
|
(7,480
|
)
|
2,107
|
(6,027
|
)
|
||||||||
Income
(loss) before income taxes
|
(19,533
|
)
|
49,308
|
—
|
29,775
|
||||||||||
Income
tax provision (benefit)
|
—
|
(1,497
|
)
|
—
|
(1,497
|
)
|
|||||||||
Equity
in earnings of subsidiaries
|
52,256
|
—
|
(52,256
|
)
|
—
|
||||||||||
Income from
continuing operations
|
32,723
|
50,805
|
(52,256
|
)
|
31,272
|
||||||||||
Discontinued
operations
|
—
|
1,451
|
—
|
1,451
|
|||||||||||
Net
income (loss)
|
$
|
32,723
|
$
|
52,256
|
$
|
(52,256
|
)
|
$
|
32,723
|
Unaudited
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||
For
the nine months ended September 30, 2009
|
|||||||||||||||
(in
thousands)
|
Parent
Issuer
|
Subsidiary
Guarantors
|
Consolidating
Entries
|
Total
|
|||||||||||
Net
cash flows provided by operating activities
|
$
|
40,548
|
$
|
32,624
|
$
|
—
|
$
|
73,172
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||||||||||
Additions
to property, plant and equipment
|
(9
|
)
|
(29,418
|
)
|
—
|
(29,427
|
)
|
||||||||
Purchase
of intangible assets
|
—
|
(1,219
|
)
|
—
|
(1,219
|
)
|
|||||||||
Investment
in partnerships
|
—
|
(806
|
)
|
—
|
(806
|
)
|
|||||||||
Proceeds
from sale of asset
|
—
|
476
|
—
|
476
|
|||||||||||
Net
cash flows provided by (used in) investing activities
|
(9
|
)
|
(30,967
|
)
|
—
|
(30,976
|
)
|
||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||||||||||
Proceeds
from long-term debt
|
131,000
|
—
|
—
|
131,000
|
|||||||||||
Repayment
of long-term debt
|
(156,000
|
)
|
—
|
—
|
(156,000
|
)
|
|||||||||
Proceeds
from derivative contracts
|
—
|
8,330
|
—
|
8,330
|
|||||||||||
Repurchase
of common units
|
(30
|
)
|
—
|
—
|
(30
|
)
|
|||||||||
Distributions
to members and affiliates
|
(34,244
|
)
|
—
|
—
|
(34,244
|
)
|
|||||||||
Net
cash flows provided by (used in) financing activities
|
(59,274
|
)
|
8,330
|
—
|
(50,994
|
)
|
|||||||||
Net
(decrease) increase in cash and cash equivalents
|
(18,735
|
)
|
9,987
|
—
|
(8,748
|
)
|
|||||||||
Cash
and cash equivalents at beginning of year
|
29,272
|
(11,356
|
)
|
—
|
17,916
|
||||||||||
Cash
and cash equivalents at end of year
|
$
|
10,537
|
$
|
(1,369
|
)
|
$
|
—
|
$
|
9,168
|
Unaudited
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||
For
the nine months ended September 30, 2008
|
|||||||||||||||
(in
thousands)
|
Parent
Issuer
|
Subsidiary
Guarantors
|
Consolidating
Entries
|
Total
|
|||||||||||
Net
cash flows provided by operating activities
|
$
|
108,486
|
$
|
55,085
|
$
|
—
|
$
|
163,571
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||||||||||
Additions
to property, plant and equipment
|
(696
|
)
|
(44,641
|
)
|
—
|
(45,337
|
)
|
||||||||
Purchase
of intangible assets
|
—
|
(1,438
|
)
|
—
|
(1,438
|
)
|
|||||||||
Investment
in partnerships
|
—
|
(3,416
|
)
|
—
|
(3,416
|
)
|
|||||||||
Acquisitions,
net of cash acquired
|
(857
|
)
|
(80,432
|
)
|
—
|
(81,289
|
)
|
||||||||
Contributions
to subsidiaries
|
(80,969
|
)
|
—
|
80,969
|
—
|
||||||||||
Net
cash flows provided by (used in) investing activities
|
(85,522
|
)
|
(129,927
|
)
|
80,969
|
(131,480
|
)
|
||||||||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||||||||||
Proceeds
from long-term debt
|
377,383
|
—
|
—
|
377,383
|
|||||||||||
Repayment
of long-term debt
|
(145,069
|
)
|
—
|
—
|
(145,069
|
)
|
|||||||||
Proceeds
from derivative contracts
|
—
|
(15,462
|
)
|
—
|
(15,462
|
)
|
|||||||||
Payment
of debt issuance costs
|
—
|
(789
|
)
|
—
|
(789
|
)
|
|||||||||
Contributions
to subsidiaries
|
—
|
80,969
|
(80,969
|
)
|
—
|
||||||||||
Distributions
to members and affiliates
|
(87,602
|
)
|
—
|
—
|
(87,602
|
)
|
|||||||||
Net
cash flows provided by financing activities
|
144,712
|
64,718
|
(80,969
|
)
|
128,461
|
||||||||||
Net
increase (decrease) in cash and cash equivalents
|
170,676
|
(10,124
|
)
|
—
|
160,552
|
||||||||||
Cash
and cash equivalents at beginning of year
|
72,286
|
(3,734
|
)
|
—
|
68,552
|
||||||||||
Cash
and cash equivalents at end of year
|
$
|
242,962
|
$
|
(13,858
|
)
|
$
|
—
|
$
|
229,104
|
|
•
|
Midstream
Business—gathering, compressing, treating, processing and transporting of
natural gas; fractionating and transporting of natural gas liquids
(“NGLs”); and the marketing of natural gas, condensate and
NGLs;
|
|
•
|
Upstream
Business—acquiring, developing and producing oil and natural gas property
interests; and
|
|
•
|
Minerals
Business—acquiring and managing fee minerals and royalty interests, either
through direct ownership or through investment in other
partnerships.
|
·
|
a
commitment by NGP to participate in a portion of, and provide support for
(“back-stop”), a rights offering and an equity
offering;
|
·
|
a
commitment by Black Stone to purchase our Minerals Business for $170
million;
|
·
|
an
assignment to us of all our incentive distribution rights and subordinated
units;
|
·
|
an
option in favor of us to acquire our 844,551 outstanding general partner
units by acquiring all of the outstanding equity of the general partner of
our general partner and all of the limited partner units of our general
partner, in exchange for one million newly-issued common units;
and
|
·
|
the
payment by us to NGP of a transaction fee, payable at our option as $29
million in cash or as some combination of cash, common units and/or
warrants.
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
($
in thousands)
|
||||||||||||||||
REVENUE:
|
||||||||||||||||
Natural
gas, natural gas liquids, oil, condensate and sulfur sales
|
$
|
156,779
|
$
|
341,700
|
$
|
468,589
|
$
|
1,008,891
|
||||||||
Gathering,
compression, processing and treating services
|
11,814
|
12,513
|
35,043
|
27,741
|
||||||||||||
Minerals
and royalty income
|
4,050
|
17,393
|
10,788
|
34,606
|
||||||||||||
Realized
commodity derivative gains (losses)
|
17,170
|
(24,105
|
)
|
70,431
|
(64,388
|
)
|
||||||||||
Unrealized
commodity derivative (losses) gains
|
(26,002
|
)
|
255,956
|
(127,568
|
)
|
(33,381
|
)
|
|||||||||
Other
revenue
|
50
|
428
|
1,770
|
610
|
||||||||||||
Total
revenue
|
163,861
|
603,885
|
458,053
|
974,079
|
||||||||||||
COSTS
AND EXPENSES:
|
||||||||||||||||
Cost
of natural gas and natural gas liquids
|
109,945
|
237,742
|
358,802
|
726,400
|
||||||||||||
Operations
and maintenance (b)
|
16,934
|
21,475
|
54,624
|
54,772
|
||||||||||||
Taxes
other than income
|
2,934
|
5,365
|
8,790
|
14,975
|
||||||||||||
General
and administrative
|
10,449
|
9,893
|
34,882
|
31,161
|
||||||||||||
Other
operating (income) expenses
|
—
|
3,920
|
(3,552
|
)
|
10,134
|
|||||||||||
Impairment
|
274
|
—
|
516
|
—
|
||||||||||||
Depreciation,
depletion, and amortization
|
28,586
|
28,597
|
86,237
|
80,799
|
||||||||||||
Total
costs and expenses
|
169,122
|
306,992
|
540,299
|
918,241
|
||||||||||||
OPERATING
(LOSS) GAIN
|
(5,261
|
)
|
296,893
|
(81,246
|
)
|
55,838
|
||||||||||
OTHER
INCOME (EXPENSE):
|
||||||||||||||||
Interest
income
|
10
|
212
|
183
|
673
|
||||||||||||
Other
income
|
725
|
434
|
1,835
|
2,867
|
||||||||||||
Interest
expense, net
|
(4,315
|
)
|
(7,498
|
)
|
(17,282
|
)
|
(23,576
|
)
|
||||||||
Realized
interest rate derivative losses
|
(5,040
|
)
|
(2,358
|
)
|
(13,669
|
)
|
(4,903
|
)
|
||||||||
Unrealized
interest rate derivative (losses) gains
|
(5,308
|
)
|
(501
|
)
|
9,745
|
(472
|
)
|
|||||||||
Other
expense
|
(267
|
)
|
(205
|
)
|
(801
|
)
|
(652
|
)
|
||||||||
Total
other income (expense)
|
(14,195
|
)
|
(9,916
|
)
|
(19,989
|
)
|
(26,063
|
)
|
||||||||
(LOSS)
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAX
|
(19,456
|
)
|
286,977
|
(101,235
|
)
|
29,775
|
||||||||||
INCOME
TAX PROVISION (BENEFIT)
|
5,841
|
(500
|
)
|
1,634
|
(1,497
|
)
|
||||||||||
(LOSS)
INCOME FROM CONTINUING OPERATIONS
|
(25,297
|
)
|
287,477
|
(102,869
|
)
|
31,272
|
||||||||||
DISCONTINUED
OPERATIONS
|
26
|
594
|
266
|
1,451
|
||||||||||||
NET
(LOSS) INCOME
|
$
|
(25,271
|
)
|
$
|
288,071
|
$
|
(102,603
|
)
|
$
|
32,723
|
||||||
ADJUSTED
EBITDA (a)
|
$
|
51,285
|
$
|
74,881
|
$
|
137,156
|
$
|
184,299
|
|
|
(a)
|
See
“Non-GAAP Financial Measures” and Reconciliation of ‘Adjusted EBITDA’ to
net cash flows provided by operating activities and net loss within Item
2. Management’s Discussion and Analysis of Financial Condition and Results
of Operations for a definition and reconciliation to
GAAP.
|
(b)
|
Includes
costs to dispose of sulfur in our Upstream Segment of $0.3 million and
$1.5 million for the three and nine months ended September 30,
2009.
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
($
in thousands)
|
||||||||||||||||
Revenues:
|
||||||||||||||||
Natural
gas, natural gas liquids, oil, and condensate sales
|
$
|
67,468
|
$
|
179,608
|
$
|
196,791
|
$
|
514,450
|
||||||||
Gathering
and treating services
|
2,795
|
2,671
|
8,209
|
7,664
|
||||||||||||
Total
revenues
|
70,263
|
182,279
|
205,000
|
522,114
|
||||||||||||
Cost
of natural gas and natural gas liquids
|
46,540
|
138,428
|
147,894
|
398,828
|
||||||||||||
Operating
costs and expenses:
|
||||||||||||||||
Operations
and maintenance
|
8,206
|
9,190
|
24,407
|
25,653
|
||||||||||||
Depreciation
and amortization
|
11,602
|
10,984
|
33,660
|
32,587
|
||||||||||||
Total
operating costs and expenses
|
19,808
|
20,174
|
58,067
|
58,240
|
||||||||||||
Operating
income (loss)
|
$
|
3,915
|
$
|
23,677
|
$
|
(961
|
)
|
$
|
65,046
|
|||||||
Capital
expenditures
|
$
|
1,332
|
$
|
7,152
|
$
|
5,042
|
$
|
20,607
|
||||||||
Realized
average prices:
|
||||||||||||||||
Oil
and condensate (per Bbl)
|
$
|
65.13
|
$
|
106.43
|
$
|
57.79
|
$
|
105.03
|
||||||||
Natural
gas (per Mcf)
|
$
|
2.78
|
$
|
8.81
|
$
|
2.98
|
$
|
8.85
|
||||||||
NGLs
(per Bbl)
|
$
|
33.55
|
$
|
66.36
|
$
|
29.33
|
$
|
67.62
|
||||||||
Production
volumes:
|
||||||||||||||||
Gathering
volumes (Mfc/d) (a)
|
134,690
|
159,254
|
140,725
|
154,190
|
||||||||||||
NGLs
(net equity gallons)
|
12,170,309
|
12,728,821
|
34,620,772
|
38,519,981
|
||||||||||||
Condensate
(net equity gallons)
|
9,938,819
|
10,023,469
|
25,944,824
|
25,767,353
|
||||||||||||
Natural
gas short position (MMbtu/d) (a)
|
(4,685
|
)
|
(4,150
|
)
|
(5,524
|
)
|
(5,458
|
)
|
|
|
(a)
|
Gathering volumes (Mcf/d)
and natural gas short position (MMbtu/d) are calculated by taking the
total volume and then dividing by the number of days in the respective
period.
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2009(b)
|
2008
|
2009(b)
|
2008
|
|||||||||||||
($
in thousands)
|
||||||||||||||||
Revenues:
|
||||||||||||||||
Natural
gas, natural gas liquids, oil, and condensate sales
|
$
|
46,253
|
$
|
71,861
|
$
|
134,949
|
$
|
231,996
|
||||||||
Gathering
and treating services
|
7,367
|
8,908
|
21,951
|
17,056
|
||||||||||||
Total
revenues
|
53,620
|
80,769
|
156,900
|
249,052
|
||||||||||||
Cost
of natural gas and natural gas liquids
|
39,665
|
66,007
|
121,907
|
209,937
|
||||||||||||
Operating
costs and expenses:
|
||||||||||||||||
Operations
and maintenance
|
4,727
|
4,194
|
13,887
|
11,511
|
||||||||||||
Depreciation
and amortization
|
4,458
|
2,989
|
13,469
|
8,846
|
||||||||||||
Total
operating costs and expenses
|
9,185
|
7,183
|
27,356
|
20,357
|
||||||||||||
Operating
income
|
$
|
4,770
|
$
|
7,579
|
$
|
7,637
|
$
|
18,758
|
||||||||
Capital
expenditures
|
$
|
2,094
|
$
|
2,591
|
$
|
16,172
|
$
|
8,686
|
||||||||
Realized
average prices:
|
||||||||||||||||
Oil
and condensate (per Bbl)
|
$
|
65.49
|
$
|
125.29
|
$
|
59.35
|
$
|
117.16
|
||||||||
Natural
gas (per Mcf)
|
$
|
3.42
|
$
|
9.69
|
$
|
3.74
|
$
|
10.37
|
||||||||
NGLs
(per Bbl)
|
$
|
41.37
|
$
|
57.54
|
$
|
30.63
|
$
|
56.28
|
||||||||
Production
volumes:
|
||||||||||||||||
Gathering
volumes (Mfc/d) (a)
|
236,561
|
173,728
|
257,957
|
172,434
|
||||||||||||
NGLs
(net equity gallons)
|
5,830,042
|
6,387,873
|
14,672,928
|
17,321,951
|
||||||||||||
Condensate
(net equity gallons) (c)
|
218,552
|
|
628,824
|
1,603,175
|
1,851,850
|
|||||||||||
Natural
gas long position (MMbtu/d) (a)
|
2,295
|
747
|
2,790
|
885
|
|
|
(a)
|
Gathering
volumes (Mcf/d) and natural gas long position (MMbtu/d) are calculated by
taking the total volume and then dividing by the number of days in the
respective period.
|
(b)
|
Includes
operations related to the Millennium Acquisition effective October 1,
2008.
|
(c)
|
All
prior periods have been updated to reflect the intrasystem movement of
certain condensate net equity gallons previously unreported. For the
three months ended September 30, 2009, the net equity condensate gallons
reflect the impact of a negative entry of 257,192 gallons resulting from a
correction in our estimation model for net equity condensate gallons
at the Brookeland Plant. Revenues and cost of natural gas and
natural gas liquids were not impacted by these statistical
corrections.
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2009(b)
|
2008
|
2009(b)
|
2008
|
|||||||||||||
($
in thousands)
|
||||||||||||||||
Revenues:
|
||||||||||||||||
Natural
gas, natural gas liquids, oil, and condensate sales
|
$
|
17,324
|
$
|
35,253
|
$
|
73,863
|
$
|
122,689
|
||||||||
Gathering
and treating services
|
1,348
|
934
|
4,211
|
3,021
|
||||||||||||
Other
|
—
|
—
|
3
|
2
|
||||||||||||
Total
revenues
|
18,672
|
36,187
|
78,077
|
125,712
|
||||||||||||
Cost
of natural gas and natural gas liquids
|
16,842
|
33,307
|
71,730
|
117,635
|
||||||||||||
Operating
costs and expenses:
|
||||||||||||||||
Operations
and maintenance
|
896
|
635
|
2,946
|
1,862
|
||||||||||||
Depreciation
and amortization
|
1,287
|
939
|
3,995
|
2,812
|
||||||||||||
Total
operating costs and expenses
|
2,183
|
1,574
|
6,941
|
4,674
|
||||||||||||
Operating
(loss) income from continuing operations
|
(353
|
)
|
1,306
|
(594
|
)
|
3,403
|
||||||||||
Discontinued
operations
|
26
|
601
|
266
|
1,436
|
||||||||||||
Operating
(loss) income
|
$
|
(327
|
)
|
$
|
1,907
|
$
|
(328
|
)
|
$
|
4,839
|
||||||
Capital
expenditures
|
$
|
27
|
$
|
201
|
$
|
41
|
$
|
780
|
||||||||
Realized
average prices:
|
||||||||||||||||
Oil
and condensate (per Bbl)
|
$
|
58.06
|
$
|
112.20
|
$
|
45.02
|
$
|
106.54
|
||||||||
Natural
gas (per Mcf)
|
$
|
3.06
|
$
|
9.42
|
$
|
3.66
|
$
|
9.58
|
||||||||
NGLs
(per Bbl)
|
$
|
30.71
|
$
|
83.16
|
$
|
28.74
|
$
|
77.70
|
||||||||
Production
volumes:
|
||||||||||||||||
Gathering
volumes (Mfc/d) (a)
|
66,680
|
80,097
|
85,496
|
81,228
|
||||||||||||
NGLs
(net equity gallons)
|
252,005
|
—
|
929,452
|
—
|
||||||||||||
Condensate
(net equity gallons)
|
210,984
|
571,615
|
1,167,630
|
1,399,183
|
||||||||||||
Natural
gas long position (MMbtu/d) (a)
|
1,784
|
500
|
928
|
1,500
|
|
|
(a)
|
Gathering
volumes (Mcf/d) and natural gas long position (MMbtu/d) are calculated by
taking the total volume and then dividing by the number of days in the
respective period.
|
(b)
|
Includes
operations related to the Millennium Acquisition effective October 1,
2008.
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2009(b)
|
2008
|
2009(b)
|
2008
|
|||||||||||||
($
in thousands)
|
||||||||||||||||
Revenues:
|
||||||||||||||||
Natural
gas, natural gas liquids, oil, and condensate sales
|
$
|
8,314
|
$
|
—
|
$
|
20,380
|
$
|
—
|
||||||||
Gathering
and treating services
|
304
|
—
|
672
|
—
|
||||||||||||
Other
revenue
|
—
|
—
|
1,616
|
—
|
||||||||||||
Total
revenues
|
8,618
|
—
|
22,668
|
—
|
||||||||||||
Cost
of natural gas and natural gas liquids
|
6,898
|
—
|
17,271
|
—
|
||||||||||||
Operating
costs and expenses:
|
||||||||||||||||
Operations
and maintenance
|
310
|
—
|
1,386
|
—
|
||||||||||||
Depreciation
and amortization
|
1,480
|
—
|
4,445
|
—
|
||||||||||||
Total
operating costs and expenses
|
1,790
|
—
|
5,831
|
—
|
||||||||||||
Operating
loss
|
$
|
(70
|
)
|
$
|
—
|
$
|
(434
|
)
|
$
|
—
|
||||||
Capital
expenditures
|
$
|
165
|
$
|
—
|
$
|
306
|
$
|
—
|
||||||||
Realized
average prices:
|
||||||||||||||||
Oil
and condensate (per Bbl)
|
$
|
65.67
|
$
|
—
|
$
|
54.50
|
$
|
—
|
||||||||
Natural
gas (per Mcf)
|
$
|
3.46
|
$
|
—
|
$
|
4.64
|
$
|
—
|
||||||||
NGLs
(per Bbl)
|
$
|
37.70
|
$
|
—
|
$
|
31.79
|
$
|
—
|
||||||||
Production
volumes:
|
||||||||||||||||
Gathering
volumes (Mfc/d) (a)
|
131,527
|
—
|
115,591
|
—
|
||||||||||||
NGLs
(net equity gallons)
|
1,376,512
|
—
|
4,280,670
|
—
|
(a)
|
Gathering
volumes (Mcf/d) are calculated by taking the total volume and then
dividing by the number of days in the respective
period.
|
(b)
|
This
segment was created upon closing of the Millennium Acquisition on October
1, 2008.
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2009
|
2008(a)
|
2009
|
2008(a)
|
|||||||||||||
($
in thousands)
|
||||||||||||||||
Revenues:
|
||||||||||||||||
Oil
and condensate sales (b)
|
$
|
10,817
|
$
|
22,694
|
$
|
25,373
|
$
|
62,153
|
||||||||
Natural
gas sales (c)
|
2,221
|
11,168
|
7,081
|
27,725
|
||||||||||||
Natural
gas liquids sales (d)
|
4,382
|
8,059
|
10,152
|
24,354
|
||||||||||||
Sulfur
sales
|
—
|
13,057
|
—
|
25,524
|
||||||||||||
Other
|
50
|
428
|
151
|
608
|
||||||||||||
Total
revenues
|
17,470
|
55,406
|
42,757
|
140,364
|
||||||||||||
Operating
costs and expenses:
|
||||||||||||||||
Operations
and maintenance
|
5,178
|
12,394
|
18,311
|
29,369
|
||||||||||||
Sulfur
disposal costs
|
348
|
—
|
1,505
|
—
|
||||||||||||
Impairment
|
—
|
—
|
242
|
—
|
||||||||||||
Other
operating income
|
—
|
—
|
(3,552
|
)
|
—
|
|||||||||||
Depreciation
and amortization
|
7,768
|
11,170
|
25,119
|
29,509
|
||||||||||||
Total
operating costs and expenses
|
13,294
|
23,564
|
41,625
|
58,878
|
||||||||||||
Operating
income
|
$
|
4,176
|
$
|
31,842
|
$
|
1,132
|
$
|
81,486
|
||||||||
Capital
expenditures
|
$
|
2,780
|
$
|
4,532
|
$
|
6,360
|
$
|
17,716
|
||||||||
Realized
average prices (e):
|
||||||||||||||||
Oil
and condensate (per Bbl)
|
$
|
50.78
|
$
|
98.36
|
$
|
40.79
|
$
|
100.79
|
||||||||
Natural
gas (per Mcf)
|
$
|
3.25
|
$
|
9.05
|
$
|
3.47
|
$
|
9.41
|
||||||||
NGLs
(per Bbl)
|
$
|
34.67
|
$
|
67.35
|
$
|
27.07
|
$
|
66.58
|
||||||||
Sulfur
(per Long ton)
|
$
|
—
|
$
|
505.77
|
$
|
—
|
$
|
355.63
|
||||||||
Production
volumes:
|
||||||||||||||||
Oil
and condensate (Bbl)
|
213,351
|
230,727
|
628,527
|
616,643
|
||||||||||||
Natural
gas (Mcf)
|
991,827
|
1,233,951
|
2,792,316
|
2,949,241
|
||||||||||||
NGLs
(Bbl)
|
128,379
|
119,664
|
375,215
|
365,761
|
||||||||||||
Total
(Mcfe)
|
3,042,207
|
3,336,297
|
8,814,768
|
8,843,665
|
||||||||||||
Sulfur
(Long ton)
|
27,634
|
25,816
|
96,063
|
71,772
|
|
|
(a)
|
Includes
operations from the Stanolind Acquisition effective May 1,
2008.
|
(b)
|
Revenues
include a change in the value of product imbalances of $0 and $(260) for
the three and nine months ended September 30, 2009,
respectively. No changes in the value of the product imbalances
were recognized during the three and nine months ended September 30,
2008.
|
(c)
|
Revenues
include a change in the value of product imbalances of $(780) and $(2,377)
for the three and nine months ended September 30, 2009,
respectively. No changes in the value of the product imbalances
were recognized during three and nine months ended September 30,
2008.
|
(d)
|
Revenues
include a change in the value of product imbalances of $0 and $28 for the
three and nine months ended September 30, 2009,
respectively. No changes in the value of the product imbalances
were recognized during the three and nine months ended September 30,
2008.
|
(e)
|
Calculation
does not include impact of product
imbalances.
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
($
in thousands)
|
||||||||||||||||
Revenues:
|
||||||||||||||||
Oil
and condensate sales
|
$
|
2,228
|
$
|
4,390
|
$
|
6,136
|
$
|
12,489
|
||||||||
Natural
gas sales
|
749
|
3,044
|
2,454
|
8,818
|
||||||||||||
Natural
gas liquids sales
|
169
|
413
|
367
|
1,059
|
||||||||||||
Lease
bonus, rentals and other
|
904
|
9,546
|
1,831
|
12,240
|
||||||||||||
Total
revenues
|
4,050
|
17,393
|
10,788
|
34,606
|
||||||||||||
Operating
costs and expenses:
|
||||||||||||||||
Operations
and maintenance
|
203
|
427
|
972
|
1,352
|
||||||||||||
Impairment
|
274
|
—
|
274
|
—
|
||||||||||||
Depletion
|
1,654
|
2,321
|
4,781
|
6,460
|
||||||||||||
Total
operating costs and expenses
|
2,131
|
2,748
|
6,027
|
7,812
|
||||||||||||
Operating
income
|
$
|
1,919
|
$
|
14,645
|
$
|
4,761
|
$
|
26,794
|
||||||||
Realized
average prices:
|
||||||||||||||||
Oil
and condensate (per Bbl)
|
$
|
63.96
|
$
|
104.62
|
$
|
52.87
|
$
|
103.47
|
||||||||
Natural
gas (per Mcf)
|
$
|
2.31
|
$
|
9.36
|
$
|
2.76
|
$
|
8.99
|
||||||||
NGLs
(per Bbl)
|
$
|
29.44
|
$
|
59.16
|
$
|
23.62
|
$
|
60.92
|
||||||||
Production
volumes:
|
||||||||||||||||
Oil
and condensate (Bbl)
|
34,841
|
42,004
|
117,979
|
120,744
|
||||||||||||
Natural
gas (Mcf)
|
264,082
|
336,060
|
853,571
|
991,534
|
||||||||||||
NGLs
(Bbl)
|
5,739
|
6,981
|
15,110
|
17,381
|
||||||||||||
Total
(Mcfe)
|
507,562
|
629,970
|
1,652,106
|
1,820,288
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
($
in thousands)
|
||||||||||||||||
Revenues:
|
||||||||||||||||
Unrealized
commodity derivative (losses) gains
|
$
|
(26,002
|
)
|
$
|
255,956
|
$
|
(127,568
|
)
|
$
|
(33,381
|
)
|
|||||
Realized
commodity derivative gains (losses)
|
17,170
|
(24,105
|
)
|
70,431
|
(64,388
|
)
|
||||||||||
Total
revenue
|
(8,832
|
)
|
231,851
|
(57,137
|
)
|
(97,769
|
)
|
|||||||||
Costs
and expenses:
|
||||||||||||||||
General
and administrative
|
10,449
|
9,893
|
34,882
|
31,161
|
||||||||||||
Other
operating expenses
|
—
|
3,920
|
—
|
10,134
|
||||||||||||
Depreciation,
depletion, and amortization
|
337
|
194
|
768
|
585
|
||||||||||||
Total
costs and expenses
|
10,786
|
14,007
|
35,650
|
41,880
|
||||||||||||
Segment
operating (loss) income
|
(19,618
|
)
|
217,844
|
(92,787
|
)
|
(139.649
|
)
|
|||||||||
Other
income (expense):
|
||||||||||||||||
Interest
income
|
10
|
212
|
183
|
673
|
||||||||||||
Other
income
|
725
|
434
|
1,835
|
2,867
|
||||||||||||
Interest
expense, net
|
(4,315
|
)
|
(7,498
|
)
|
(17,282
|
)
|
(23,576
|
)
|
||||||||
Realized
interest rate derivative losses
|
(5,040
|
)
|
(2,358
|
)
|
(13,669
|
)
|
(4,903
|
)
|
||||||||
Unrealized
interest rate derivative (losses) gains
|
(5,308
|
)
|
(501
|
)
|
9,745
|
(472
|
)
|
|||||||||
Other
expense
|
(267
|
)
|
(205
|
)
|
(801
|
)
|
(652
|
)
|
||||||||
Total
other income (expense)
|
(14,195
|
)
|
(9,916
|
)
|
(19,989
|
)
|
(26,063
|
)
|
||||||||
(Loss)
income from continuing operations before taxes
|
(33,813
|
)
|
207,928
|
(112,776
|
)
|
(165,712
|
)
|
|||||||||
Income
tax provision (benefit)
|
5,841
|
(494
|
)
|
1,634
|
(1,428
|
)
|
||||||||||
(Loss)
income from continuing operations
|
(39,654
|
)
|
208,422
|
(114,410
|
)
|
(164,284
|
)
|
|||||||||
Discontinued
operations
|
—
|
(7
|
)
|
—
|
15
|
|||||||||||
Net
(loss) income
|
$
|
(39,654
|
)
|
$
|
208,415
|
$
|
(114,410
|
)
|
$
|
(164,269
|
)
|
|
•
|
provide
for the proper conduct of our business, including for future capital
expenditures and credit needs;
|
|
•
|
comply
with applicable law or any partnership debt instrument or other
agreement; or
|
|
•
|
provide
funds for distributions to unitholders and the general partner in respect
of any one or more of the next four
quarters.
|
|
•
|
cash
balances and marketable securities, net of due to affiliates, decreased
overall by $15.1 million and was impacted primarily by the distributions
paid on February 15, 2009 with respect to the fourth quarter of 2008
financial results, the results of operations, timing of capital
expenditures payments, and financing activities including our debt
activities (the due to affiliate liability of $10.9 million as of
September 30, 2009 is owed to Eagle Rock Energy G&P,
LLC);
|
|
•
|
trade
accounts receivable decreased by $42.1 million primarily from the impact
of lower commodity prices on our consolidated
revenue;
|
|
•
|
risk
management net working capital balance decreased by a net $72.0 million as
a result of the changes in current portion of the mark-to-market
unrealized positions, increased other derivative costs, which includes the
unwinding of long-term positions to purchase current positions (see
Hedging Strategy), and amortization of the put premiums and other
derivative costs;
|
|
•
|
accounts
payable decreased by $50.9 million from December 31, 2008 primarily
as a result of activities and timing of payments, including capital
expenditures activities and lower commodity prices;
and
|
|
•
|
accrued
liabilities decreased by $8.2 million primarily reflecting payment of
employee benefit accruals, lower interest payments and the timing of
payment of unbilled expenditures related primarily to capital
expenditures.
|
|
•
|
growth
capital expenditures, which are made to acquire additional assets to
increase our business, to expand and upgrade existing systems and
facilities or to construct or acquire similar systems or facilities in our
Midstream Business (and our Upstream Business with respect to the Big
Escambia Plant and other Alabama plants and facilities), or grow our
production in our Upstream Business;
or
|
|
•
|
maintenance
capital expenditures, which are made to replace partially or fully
depreciated assets, to meet regulatory requirements, to maintain the
existing operating capacity of our assets and extend their useful lives,
or to connect wells to maintain existing system volumes and related cash
flows in our Midstream Business (and in our Upstream Business with respect
to the Big Escambia Plant and other Alabama plants and facilities); in our
Upstream Business, maintenance capital also includes capital which is
expended to maintain our production in the near
future.
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Net
cash flows provided by operating activities
|
$
|
40,893
|
$
|
40,927
|
$
|
73,172
|
$
|
163,571
|
||||||||
Add
(deduct):
|
||||||||||||||||
Depreciation,
depletion, amortization and impairment
|
(28,860
|
)
|
(28,597
|
)
|
(86,753
|
)
|
(80,799
|
)
|
||||||||
Amortization
of debt issuance costs
|
(267
|
)
|
(219
|
)
|
(801
|
)
|
(655
|
)
|
||||||||
Risk
management portfolio value changes
|
(31,314
|
)
|
258,716
|
(103,927
|
)
|
(30,592
|
)
|
|||||||||
Reclassifying
financing derivative settlements
|
1,556
|
(5,925
|
)
|
8,330
|
(15,462
|
)
|
||||||||||
Other
|
(5,894
|
)
|
(1,344
|
)
|
(1,802
|
)
|
(1,313
|
)
|
||||||||
Accounts
receivables and other current assets
|
(6,917
|
)
|
(49,584
|
)
|
(41,843
|
)
|
(651
|
)
|
||||||||
Accounts
payable, due to affiliates and accrued liabilities
|
5,965
|
74,741
|
49,800
|
(956
|
)
|
|||||||||||
Other
assets and liabilities
|
(433
|
)
|
(644
|
)
|
1,221
|
(420
|
)
|
|||||||||
Net
(loss) income
|
(25,271
|
)
|
288,071
|
(102,603
|
)
|
32,723
|
||||||||||
Add
(deduct):
|
||||||||||||||||
Interest
(income) expense, net
|
9,612
|
9,849
|
31,569
|
28,458
|
||||||||||||
Depreciation,
depletion, amortization and impairment
|
28,860
|
28,597
|
86,753
|
80,799
|
||||||||||||
Income
tax provision (benefit)
|
5,841
|
(500
|
)
|
1,634
|
(1,497
|
)
|
||||||||||
EBITDA
|
19,042
|
326,017
|
17,353
|
140,483
|
||||||||||||
Add
(deduct):
|
||||||||||||||||
Unrealized
risk management losses
|
31,310
|
(255,455
|
)
|
117,823
|
33,853
|
|||||||||||
Equity-based
compensation expense
|
904
|
1,427
|
5,024
|
4,147
|
||||||||||||
Non-cash
mark-to-market of Upstream imbalances
|
780
|
—
|
2,609
|
—
|
||||||||||||
Other
income
|
(725
|
)
|
(434
|
)
|
(1,835
|
)
|
(2,867
|
)
|
||||||||
Discontinued
operations
|
(26
|
)
|
(594
|
)
|
(266
|
)
|
(1,451
|
)
|
||||||||
Other
operating expenses
|
—
|
3,920
|
(3,552
|
)
|
10,134
|
|||||||||||
ADJUSTED
EBITDA
|
$
|
51,285
|
$
|
74,881
|
$
|
137,156
|
$
|
184,299
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Amortization
of commodity derivative costs
|
$
|
10,590
|
$
|
2,260
|
$
|
33,886
|
$
|
6,780
|
Item 4.
|
Controls
and Procedures.
|
Item 1.
|
Legal
Proceedings.
|
Item 2.
|
Unregistered
Sales of Equity Securities and Use of
Proceeds.
|
Defaults
Upon Senior Securities.
|
Submission
of Matters to a Vote of Security
Holders.
|
|
None.
|
Exhibits.
|
31.1
|
Certification
by Joseph A. Mills pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
31.2
|
Certification
by Jeffrey P. Wood pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
|
|
32.1
|
Certification
by Joseph A. Mills pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 and 18 U.S.C. Section 1350.
|
|
32.2
|
Certification
by Jeffrey P. Wood pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 and 18 U.S.C. Section 1350.
|
Date:
November 9, 2009
|
EAGLE
ROCK ENERGY PARTNERS, L.P.
|
|
By:
|
EAGLE
ROCK ENERGY GP, L.P., its general partner
|
|
By:
|
EAGLE
ROCK ENERGY G&P, LLC, its general partner
|
|
By:
|
/s/
Jeffrey P. Wood
|
|
Jeffrey
P. Wood
|
||
Senior
Vice President,
|
||
Chief
Financial Officer and Treasurer of Eagle Rock
|
||
Energy
G&P, LLC, General Partner of Eagle Rock
|
||
Energy
GP, L.P., General Partner of Eagle Rock
|
||
Energy
Partners, L.P.
|
||
31.1
|
Certification
by Joseph A. Mills pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
|
31.2
|
Certification
by Jeffrey P. Wood pursuant to Section 302 of the Sarbanes-Oxley Act of
2002
|
|
32.1
|
Certification
by Joseph A. Mills pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 and 18 U.S.C. Section 1350
|
|
32.2
|
Certification
by Jeffrey P. Wood pursuant to Section 906 of the Sarbanes-Oxley Act of
2002 and 18 U.S.C. Section 1350
|