Breitburn Energy Partners LP (NASDAQ:BBEP) today announced financial and operating results for the fourth quarter and full year 2014.
Key Highlights
- Closed on the acquisitions of QR Energy and strategic bolt-on acreage in the Permian Basin for approximately $2.7 billion, including debt assumed.
- Increased fourth quarter 2014 production to 4.2 million Boe, a 35% increase from fourth quarter 2013, and increased full year production to 14.1 million Boe, a 29% increase from 2013. Excluding production from QR Energy assets, Breitburn's production increased 6% in the fourth quarter 2014 compared to fourth quarter 2013 and 20% for 2014 compared to 2013. Annual production was in line with the forecast in Breitburn’s third quarter Form 10Q.
- Increased Adjusted EBITDA, a non-GAAP financial measure, to $127.4 million (including acquisition and integration costs of $11.7 million), a 7% increase from third quarter 2014. Increased full year Adjusted EBITDA to $473.8 million (including acquisition and integration costs of $14.5 million), a 28% increase from 2013.
- Total estimated proved reserves as of December 31, 2014, were 315.3 million Boe compared to 214.3 million Boe as of December 31, 2013, a 47% increase.
- Total oil and gas capital expenditures for 2014 were $389 million, a 32% increase from 2013. Excluding capital spending of $25 million attributable to QR Energy assets, 2014 capital spending was within the range that was forecast in Breitburn’s third quarter Form 10Q.
Management Commentary
Halbert S. Washburn, Breitburn’s Chief Executive Officer, said: “Our recent acquisitions changed the nature of our portfolio, solidifying and expanding our presence in the Permian, the Mid-Continent and Ark-La-Tex, some of the most prolific oil and gas regions of the country. We announced a substantially reduced capital program of $200 million for 2015, and we remain focused on operating within our cash flow this year. With more than half of our production coming from the Permian, the Mid-Continent and Ark-La-Tex, we plan to allocate a large portion of our capital this year to these areas. Based on our operating results so far this year, we feel comfortable with our 2015 guidance issued on January 2nd. At the midpoint of that guidance, we expect to generate approximately $80 million of excess cash after distributions and capital spending and have a DCF coverage ratio of approximately 1.35x. We are focused on reducing all costs wherever we can, and we will continue to look for every opportunity to maximize operational and financial flexibility.”
Fourth Quarter 2014 Operating and Financial Results Compared to Third Quarter 2014
-
Total production was 4,170 MBoe in the fourth quarter of 2014 compared
to 3,353 MBoe in the third quarter of 2014. Average daily production
was 49.7 MBoe/day in the fourth quarter of 2014 compared to 36.5
MBoe/day in the third quarter of 2014.
- Oil production increased to 2,327 MBbl compared to 1,904 MBbl in the third quarter of 2014
- NGL production increased to 368 MBbl compared to 253 MBbl in the third quarter of 2014
- Natural gas production increased to 8,847 MMcf compared to 7,178 MMcf in the third quarter of 2014
- Adjusted EBITDA was $127.4 million in the fourth quarter of 2014 (including acquisition and integration costs of $11.7 million) compared to $118.7 million in the third quarter of 2014, a 7% increase. The increase was primarily due to the mid-quarter closing of the QR Energy transaction and higher commodity derivative instrument settlements, partially offset by lower sales revenue driven by lower crude oil prices and the acquisition and integration costs.
- Net income attributable to common unitholders was $401.0 million, or $2.27 per diluted common unit, in the fourth quarter of 2014, which includes non-cash impairment charges of approximately $119.6 million, or $0.68 per unit as compared to net income of $126.5 million, or $1.03 per diluted common unit, in the third quarter of 2014, which includes non-cash impairment charges of approximately $29.4 million, or $0.24 per unit. The increase in non-cash impairment charges was due to the effect of decreased commodity prices on some of our higher cost oil properties.
- Oil, NGL and natural gas sales revenues were $197.1 million in the fourth quarter of 2014 compared to $216.1 million in the third quarter of 2014, primarily due to lower realized oil, natural gas and NGL prices due to the decrease in commodity prices.
- Lease operating expenses, which include district expenses, processing fees, disposal costs, and transportation costs but exclude taxes, were $92.9 million in the fourth quarter of 2014 compared to $62.7 million in the third quarter of 2014. The increase was primarily due to the closing of the QR Energy transaction in the fourth quarter, disposal costs related to the East Texas Salt Water Disposal System, and expenses incurred in upgrading pumping equipment in the Permian Basin to reduce future well failure rates.
- General and administrative expenses, excluding non-cash unit-based compensation costs and including QR Energy general and administrative expenses and $11.7 million in related acquisition and integration costs, were $28.1 million in the fourth quarter of 2014 compared to $12.9 million in the third quarter of 2014.
- Gains on commodity derivative instruments were $587.6 million in the fourth quarter of 2014 compared to gains of $146.2 million in the third quarter of 2014, primarily due to decreases in oil and natural gas futures prices during the fourth quarter of 2014. Derivative instrument settlement receipts were $62.1 million in the fourth quarter of 2014 compared to payments of $3.7 million in the third quarter of 2014, primarily due to lower oil prices.
- NYMEX WTI oil spot prices averaged $73.21 per Bbl and Brent oil spot prices averaged $76.43 per Bbl in the fourth quarter of 2014 compared to $97.87 per Bbl and $101.90 per Bbl, respectively, in the third quarter of 2014. Henry Hub natural gas spot prices averaged $3.78 per Mcf in the fourth quarter of 2014 compared to $3.96 per Mcf in the third quarter of 2014.
- Average realized crude oil, NGL, and natural gas prices, excluding the effects of commodity derivative settlements, averaged $69.36 per Bbl, $26.38 per Bbl and $4.07 per Mcf, respectively, in the fourth quarter of 2014 compared to $90.12 per Bbl, $37.87 per Bbl and $4.12 per Mcf, respectively, in the third quarter of 2014.
- Oil, NGL and natural gas capital expenditures were $113 million (or $88 million after excluding capital spending of $25 million attributable to QR Energy assets) in the fourth quarter of 2014 compared to $108 million in the third quarter of 2014.
- Distributable cash flow, a non-GAAP financial measure, was $43.9 million in the fourth quarter of 2014 compared to $53.3 million in the third quarter of 2014.
Full Year 2014 Results
- Total oil, NGLs and natural gas sales were $855.8 million in 2014, an increase of 30% from 2013.
- Full year lease operating expenses, which include district expenses, processing fees, and transportation costs but exclude taxes, were $293.6 million compared to $216.3 million in 2013.
- Full year general and administrative expenses, excluding unit-based compensation related costs and including $14.5 million in acquisition and integration costs, were $63.6 million compared to $38.8 million in 2013.
- Average realized oil and NGL prices, excluding the effect of commodity derivative instruments, for 2014, were $86.08 per Bbl and $35.46 per Bbl, respectively, compared to NYMEX WTI oil prices of $93.21 per barrel. Average realized natural gas prices, excluding the effect of commodity derivative instruments, were $4.82 per Mcf compared to Henry Hub prices of $4.37 per Mcf.
- Net income attributable to common unitholders was $411.3 million, or $3.02 per diluted common unit, in 2014, which includes non-cash impairment charges of approximately $149.0 million, or $1.11 per unit, compared to a net loss of $43.7 million, or $0.43 per diluted common unit, in 2013, which includes non-cash impairment charges of approximately $54.4 million, or $0.54 per unit.
- Gains on commodity derivative instruments were $566.5 million in 2014 compared to losses of $29.2 million in 2013, primarily due to decreases in oil and natural gas futures prices in 2014. Derivative instrument settlement receipts were $27.8 million in 2014 compared to receipts of $8.1 million in 2013, primarily due to lower oil prices.
- Distributable cash flow, a non-GAAP financial measure, was $210.2 million in 2014 compared to $200.3 million in 2013.
2014 Estimated Proved Reserves
Total estimated proved reserves as of December 31, 2014, were 315.3 MMBoe compared to total estimated proved reserves of 214.3 MMBoe as of December 31, 2013. The standardized measure of discounted future net cash flows related to our estimated proved reserves was approximately $4.5 billion as of December 31, 2014, compared to approximately $3.2 billion as of December 31, 2013. Of the total estimated proved reserves, 55% were oil, 8% were NGLs and 37% were natural gas, and 77% were classified as proved developed. Set forth below is a breakdown of Breitburn’s total estimated proved reserves among its seven operating areas:
Operating Area | % Estimated Proved Reserves | ||||
Ark-La-Tex | 21 | % | |||
MI/IN/KY | 20 | % | |||
Permian Basin | 18 | % | |||
Mid-Continent | 13 | % | |||
Rockies | 11 | % | |||
Florida | 10 | % | |||
California | 7 | % |
The unweighted average first-day-of-the-month oil and natural gas prices used to determine our total estimated proved reserves as of December 31, 2014, were $94.99 per Bbl of oil for WTI NYMEX, $101.30 per Bbl of oil for ICE Brent and $4.35 per MMBtu of natural gas for Henry Hub.
Impact of Derivative Instruments
Breitburn uses commodity derivative instruments to mitigate risks associated with commodity price volatility and to help maintain cash flows for operating activities, acquisitions, capital expenditures and distributions. Breitburn does not enter into derivative instruments for speculative trading purposes. Since Breitburn does not use hedge accounting to account for its derivative instruments, changes in the fair value of derivative instruments are recorded in Breitburn’s earnings during each reporting period. These non-cash changes in the fair value of derivatives do not affect Adjusted EBITDA, cash flow from operations, distributable cash flow or Breitburn’s ability to pay cash distributions for the reporting periods presented.
Production, Statement of Operations, and Realized Price Information
The following table presents production, selected income statement and realized price information for the three months ended December 31, 2014 and 2013, the three months ended September 30, 2014, and the full year results for 2014 and 2013:
Three Months Ended | Year Ended December 31, | ||||||||||||||||||||||
December 31, | September 30, | December 31, | |||||||||||||||||||||
Thousands of dollars, except as indicated | 2014 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||||
Oil sales | $ | 151,335 | $ | 176,986 | $ | 158,456 | $ | 669,355 | $ | 530,625 | |||||||||||||
NGL sales | 9,709 | 9,582 | 8,644 | 41,031 | 22,558 | ||||||||||||||||||
Natural gas sales | 36,023 | 29,578 | 26,504 | 145,434 | 107,482 | ||||||||||||||||||
Gain (loss) on commodity derivative instruments | 587,590 | 146,171 | (17,234 | ) | 566,533 | (29,182 | ) | ||||||||||||||||
Other revenues, net | 3,376 | 1,585 | 978 | 7,616 | 3,175 | ||||||||||||||||||
Total revenues | $ | 788,033 | $ | 363,902 | $ | 177,348 | $ | 1,429,969 | $ | 634,658 | |||||||||||||
Lease operating expenses (a) | $ | 92,936 | $ | 62,714 | $ | 63,439 | $ | 293,563 | $ | 216,275 | |||||||||||||
Production and property taxes (b) | 14,084 | 16,327 | 11,295 | 62,071 | 46,220 | ||||||||||||||||||
Total lease operating expenses | 107,020 | 79,041 | 74,734 | 355,634 | 262,495 | ||||||||||||||||||
Purchases and other operating costs | 299 | 102 | 440 | 725 | 1,322 | ||||||||||||||||||
Change in inventory | 201 | 3,761 | 5,758 | (678 | ) | (995 | ) | ||||||||||||||||
Total operating costs | $ | 107,520 | $ | 82,904 | $ | 80,932 | $ | 355,681 | $ | 262,822 | |||||||||||||
Lease operating expenses, pre taxes, per Boe (a) | $ | 22.29 | $ | 18.70 | $ | 20.56 | $ | 20.80 | $ | 19.69 | |||||||||||||
Production and property taxes per Boe (b) | 3.38 | 4.87 | 3.66 | 4.40 | 4.21 | ||||||||||||||||||
Total lease operating expenses per Boe | $ | 25.67 | $ | 23.57 | $ | 24.22 | $ | 25.20 | $ | 23.90 | |||||||||||||
General and administrative expenses (excluding non-cash unit-based compensation) | $ | 28,116 | $ | 12,908 | $ | 8,742 | $ | 63,562 | $ | 38,752 | |||||||||||||
Net income (loss) attributable to the partnership | $ | 405,173 | $ | 130,643 | $ | (58,792 | ) | $ | 421,333 | $ | (43,671 | ) | |||||||||||
Less: distributions to preferred unitholders | 4,125 | 4,125 | — | 10,083 | — | ||||||||||||||||||
Net income (loss) attributable to common unitholders | $ | 401,048 | $ | 126,518 | $ | (58,792 | ) | $ | 411,250 | $ | (43,671 | ) | |||||||||||
Total production (MBoe) (c) | 4,170 | 3,353 | 3,086 | 14,114 | 10,983 | ||||||||||||||||||
Oil (MBbl) | 2,327 | 1,904 | 1,704 | 7,931 | 5,651 | ||||||||||||||||||
NGLs (MBbl) | 368 | 253 | 205 | 1,157 | 640 | ||||||||||||||||||
Natural gas (MMcf) | 8,847 | 7,178 | 7,060 | 30,159 | 28,156 | ||||||||||||||||||
Average daily production (Boe/d) | 49,665 | 36,450 | 33,542 | 38,670 | 30,091 | ||||||||||||||||||
Sales volumes (MBoe) (d) | 4,022 | 3,412 | 3,163 | 13,956 | 10,988 | ||||||||||||||||||
Average realized sales price (per Boe) (e) (f) | $ | 48.96 | $ | 63.33 | $ | 61.10 | $ | 61.30 | $ | 60.05 | |||||||||||||
Oil (per Bbl) (e) (f) | 69.36 | 90.12 | 88.77 | 86.08 | 93.67 | ||||||||||||||||||
NGLs (per Bbl) (e) | 26.38 | 37.87 | 42.17 | 35.46 | 35.25 | ||||||||||||||||||
Natural gas (per Mcf) (e) | $ | 4.07 | $ | 4.12 | $ | 3.75 | $ | 4.82 | $ | 3.82 |
(a) | Includes district expenses, processing fees, disposal costs, and transportation costs. |
(b) | Includes ad valorem and severance taxes. |
(c) | Natural gas is converted on the basis of six Mcf of gas per one Bbl of oil equivalent. This ratio reflects an energy content equivalency and not a price or revenue equivalency. Given commodity price disparities, the price for a Bbl of oil equivalent for natural gas is significantly less than the price for a Bbl of oil. |
(d) | Oil sales were 2,180 MBbl, 1,964 MBbl and 1,782 MBbl for the three months ended December 31, 2014, September 30, 2014 and December 31, 2013, respectively, and 7,773 MBbl and 5,655 MBbl for the twelve months ended December 31, 2014 and 2013, respectively. |
(e) | Excludes the effect of commodity derivative settlements. |
(f) | Includes oil purchases. |
Non-GAAP Financial Measures
This press release, including the financial tables and other supplemental information, including the reconciliations of certain non-generally accepted accounting principles (“non-GAAP”) measures to their nearest comparable generally accepted accounting principles (“GAAP”) measures, may be used periodically by management when discussing Breitburn’s financial results with investors and analysts, and they are also available at www.breitburn.com.
“Adjusted EBITDA” and “distributable cash flow” are among the non-GAAP financial measures used in this press release. These non-GAAP financial measures 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 liquidity or financial performance. Management believes that these non-GAAP financial measures enhance comparability to prior periods.
Adjusted EBITDA is presented because management believes it provides additional information relative to the performance of Breitburn’s assets, without regard to financing methods or capital structure. Distributable cash flow is used by management as a tool to measure the cash distributions we could pay to our unitholders. This financial measure indicates to investors whether or not we are generating cash flow at a level that can support our distribution rate to our unitholders. These non-GAAP financial measures may not be comparable to similarly titled measures of other publicly traded partnerships or limited liability companies because all companies may not calculate Adjusted EBITDA or distributable cash flow in the same manner.
Adjusted EBITDA
The following table presents a reconciliation of net income (loss) and net cash flows from operating activities, our most directly comparable GAAP financial performance and liquidity measures, to Adjusted EBITDA for each of the periods indicated.
Three Months Ended | Year Ended December 31, | ||||||||||||||||||||
December 31, | September 30, | December 31, | |||||||||||||||||||
Thousands of dollars, except as indicated | 2014 | 2014 | 2013 | 2014 | 2013 | ||||||||||||||||
Reconciliation of net income (loss) to Adjusted EBITDA: | |||||||||||||||||||||
Net income (loss) attributable to the partnership | $ | 405,173 | $ | 130,643 | $ | (58,792 | ) | $ | 421,333 | $ | (43,671 | ) | |||||||||
Loss (gain) on commodity derivative instruments | (587,590 | ) | (146,171 | ) | 17,234 | (566,533 | ) | 29,182 | |||||||||||||
Commodity derivative instrument settlements (a) (b) | 62,053 | (3,704 | ) | 4,450 | 27,825 | 8,083 | |||||||||||||||
Depletion, depreciation and amortization expense | 87,292 | 72,671 | 62,400 | 291,709 | 216,495 | ||||||||||||||||
Impairment | 119,566 | 29,434 | 54,012 | 149,000 | 54,373 | ||||||||||||||||
Interest expense and other financing costs | 36,110 | 29,494 | 26,680 | 126,470 | 87,067 | ||||||||||||||||
Loss (gain) on sale of assets | 306 | (63 | ) | (2,154 | ) | 663 | (2,015 | ) | |||||||||||||
Income tax expense (benefit) | (457 | ) | 532 | 277 | (73 | ) | 905 | ||||||||||||||
Unit-based compensation expense (c) | 4,947 | 5,829 | 5,270 | 23,387 | 19,955 | ||||||||||||||||
Adjusted EBITDA | $ | 127,400 | $ | 118,665 | $ | 109,377 | $ | 473,781 | $ | 370,374 | |||||||||||
Less: | |||||||||||||||||||||
Maintenance capital (d) | $ | 43,714 | $ | 33,434 | $ | 29,217 | $ | 133,079 | $ | 89,267 | |||||||||||
Cash interest expense | 35,651 | 27,849 | 24,741 | 120,470 | 80,767 | ||||||||||||||||
Distributions to preferred unitholders | 4,125 | 4,125 | — | 10,083 | — | ||||||||||||||||
Distributable cash flow available to common unitholders | $ | 43,910 | $ | 53,257 | $ | 55,419 | $ | 210,149 | $ | 200,340 | |||||||||||
Distributable cash flow available per common unit (e) (f) | 0.207 | 0.390 | 0.458 | 1.431 | 1.884 | ||||||||||||||||
Common unit distribution coverage (f) | 0.83x | 0.78x | 0.93x | 0.81x | 0.97x | ||||||||||||||||
Reconciliation of net cash flows from operating activities to Adjusted EBITDA: | |||||||||||||||||||||
Net cash provided by operating activities | $ | 62,839 | $ | 103,807 | $ | 90,224 | $ | 357,755 | $ | 257,166 | |||||||||||
Increase (decrease) in assets net of liabilities relating to operating activities | 29,199 | (13,160 | ) | (5,680 | ) | (4,057 | ) | 32,105 | |||||||||||||
Interest expense (g) | 35,563 | 27,729 | 24,654 | 120,143 | 80,617 | ||||||||||||||||
Income from equity affiliates, net | (88 | ) | 191 | (67 | ) | (178 | ) | (55 | ) | ||||||||||||
Incentive compensation expense (h) | — | — | (21 | ) | — | (21 | ) | ||||||||||||||
Non controlling interest | 17 | — | — | 17 | — | ||||||||||||||||
Income taxes | (130 | ) | 98 | 267 | 101 | 562 | |||||||||||||||
Adjusted EBITDA | $ | 127,400 | $ | 118,665 | $ | 109,377 | $ | 473,781 | $ | 370,374 | |||||||||||
(a) | Excludes premiums paid at contract inception related to those derivative contracts that settled during the applicable periods of: | 2,141 | 2,141 | 1,233 | 8,494 | 4,893 | |||||||||||||||
(b) | Includes net cash settlements on derivative instruments for: | ||||||||||||||||||||
- Oil settlements (paid) received: | 55,975 | (7,940 | ) | (7,378 | ) | 18,230 | (36,183 | ) | |||||||||||||
- Natural gas settlements received: | 6,078 | 4,236 | 11,828 | 9,595 | 44,266 | ||||||||||||||||
(c) | Represents non-cash long-term unit-based incentive compensation expense. | ||||||||||||||||||||
(d) | Maintenance capital is management's estimate of the investment in capital projects and obligatory spending on existing facilities and operations needed to hold production approximately flat over a multi-year period. | ||||||||||||||||||||
(e) | Based on common units outstanding (including outstanding LTIP grants) at each distribution record date within the periods. | ||||||||||||||||||||
(f) | Third quarter 2014 includes the effect of the offering of 14 million common units in October 2014. Fourth quarter 2014 includes only 41 days of QR Energy operating results, $11.7 million of acquisition and integration costs, and the effect of 71.5 million common units issued in connection with the QR Energy merger in November 2014. | ||||||||||||||||||||
(g) | Excludes amortization of debt issuance costs and amortization of senior note discount/premium. | ||||||||||||||||||||
(h) | Represents cash-based incentive compensation plan expense. | ||||||||||||||||||||
Summary of Commodity Derivative Instruments
The table below summarizes Breitburn’s commodity derivative hedge portfolio as of March 2, 2015. Please refer to the Commodity Price Protection Portfolio at www.breitburn.com for additional information related to our hedge portfolio.
Year | |||||||||||||||
2015 | 2016 | 2017 | 2018 | ||||||||||||
Oil Positions: | |||||||||||||||
Fixed Price Swaps - NYMEX WTI | |||||||||||||||
Volume (Bbl/d) | 20,415 | 15,504 | 13,519 | 493 | |||||||||||
Average Price ($/Bbl) | $ | 93.30 | $ | 88.07 | $ | 85.05 | $ | 82.20 | |||||||
Fixed Price Swaps - ICE Brent | |||||||||||||||
Volume (Bbl/d) | 3,374 | 4,300 | 298 | — | |||||||||||
Average Price ($/Bbl) | $ | 97.89 | $ | 95.17 | $ | 97.50 | $ | — | |||||||
Collars - NYMEX WTI | |||||||||||||||
Volume (Bbl/d) | 2,025 | 1,500 | — | — | |||||||||||
Average Floor Price ($/Bbl) | $ | 90.00 | $ | 80.00 | $ | — | $ | — | |||||||
Average Ceiling Price ($/Bbl) | $ | 111.73 | $ | 102.00 | $ | — | $ | — | |||||||
Collars - ICE Brent | |||||||||||||||
Volume (Bbl/d) | 500 | 500 | — | — | |||||||||||
Average Floor Price ($/Bbl) | $ | 90.00 | $ | 90.00 | $ | — | $ | — | |||||||
Average Ceiling Price ($/Bbl) | $ | 109.50 | $ | 101.25 | $ | — | $ | — | |||||||
Puts - NYMEX WTI | |||||||||||||||
Volume (Bbl/d) | 500 | 1,000 | — | — | |||||||||||
Average Price ($/Bbl) | $ | 90.00 | $ | 90.00 | $ | — | $ | — | |||||||
Total: | |||||||||||||||
Volume (Bbl/d) | 26,814 | 22,804 | 13,816 | 493 | |||||||||||
Average Price ($/Bbl) | $ | 93.51 | $ | 89.01 | $ | 85.32 | $ | 82.20 | |||||||
Gas Positions: | |||||||||||||||
Fixed Price Swaps - MichCon City-Gate | |||||||||||||||
Volume (MMBtu/d) | 7,500 | 17,000 | 10,000 | — | |||||||||||
Average Price ($/MMBtu) | $ | 6.00 | $ | 4.46 | $ | 4.48 | $ | — | |||||||
Fixed Price Swaps - Henry Hub | |||||||||||||||
Volume (MMBtu/d) | 54,891 | 36,050 | 19,016 | 1,870 | |||||||||||
Average Price ($/MMBtu) | $ | 4.84 | $ | 4.24 | $ | 4.43 | $ | 4.15 | |||||||
Collars - Henry Hub | |||||||||||||||
Volume (MMBtu/d) | 18,000 | 630 | 595 | — | |||||||||||
Average Floor Price ($/MMBtu) | $ | 5.00 | $ | 4.00 | $ | 4.00 | $ | — | |||||||
Average Ceiling Price ($/MMBtu) | $ | 7.48 | $ | 5.55 | $ | 6.15 | $ | — | |||||||
Puts - Henry Hub | |||||||||||||||
Volume (MMBtu/d) | 1,920 | 11,350 | 10,445 | — | |||||||||||
Average Price ($/MMBtu) | $ | 4.78 | $ | 4.00 | $ | 4.00 | $ | — | |||||||
Deferred Premium ($/MMBtu) | $ | 0.64 | (a) | $ | 0.66 | $ | 0.69 | $ | — | ||||||
Total: | |||||||||||||||
Volume (MMBtu/d) | 82,311 | 65,030 | 40,056 | 1,870 | |||||||||||
Average Price ($/MMBtu) | $ | 4.98 | $ | 4.25 | $ | 4.33 | $ | 4.15 | |||||||
Basis Swaps- Henry Hub | |||||||||||||||
Volume (MMBtu/d) | 14,400 | — | — | — | |||||||||||
Average Price ($/MMBtu) | $ | (0.19 | ) | $ | — | $ | — | $ | — | ||||||
(a) Deferred premiums of $0.64 apply to 420 MMBtu/d. | |||||||||||||||
Premiums paid in 2012 related to oil and natural gas derivatives to be settled in the fourth quarter of 2014 and beyond are as follows:
Year | ||||||||||||||
Thousands of dollars | 2015 | 2016 | 2017 | 2018 | ||||||||||
Oil | $ | 4,683 | $ | 7,438 | $ | 734 | $ | — | ||||||
Natural gas | $ | 1,989 | $ | 952 | $ | — | $ | — |
2014 Form 10-K and Tax Reporting Package for Unitholders
Breitburn’s 2014 Form 10-K, which was filed yesterday, is available through the Investor Relations/SEC Filings section of our website at www.breitburn.com.
Also available for download on our website beginning on March 16, 2015 will be the 2014 tax reporting package, including Schedule K-1. Breitburn expects to finish mailing the tax packages to its unitholders within a week of the packages being available online. To request electronic (paperless) delivery of your 2014 Individual Tax Reporting Package, please visit www.taxpackagesupport.com/breitburn and register to opt in for the applicable units you held during 2014. Electronic delivery is available for: Breitburn Energy Partners LP Common Units, QR Energy, LP Common Units, and Breitburn Energy Partners LP Series A Cumulative Redeemable Perpetual Preferred Units (NASDAQ: BBEPP). For additional information, unitholders may call the K-1 Tax Package Support Line toll free at 800-559-4966.
Other Information
Breitburn will host a conference call Tuesday, March 3, 2015, at 1:00 pm (EDT) to discuss Breitburn’s fourth quarter and full year 2014 results. The conference call may be accessed by calling 888-539-3612 (international callers dial 719-325-2244) or via webcast at http://ir.breitburn.com/. An archived edition of the conference call will also be available through March 10th by calling 877-870-5176 (international callers dial 858-384-5517) and entering replay PIN 8598867 or by visiting http://ir.breitburn.com/. Breitburn will take questions from securities analysts and institutional portfolio managers; the call is open to all other interested parties on a listen-only basis.
About Breitburn Energy Partners LP
Breitburn Energy Partners LP is a publicly traded independent oil and gas master limited partnership focused on the acquisition, development, and production of oil and gas properties throughout the United States. Breitburn’s producing and non-producing crude oil and natural gas reserves are located in Ark-La-Tex; Michigan, Indiana, Kentucky; the Permian Basin; the Mid-Continent; the Rockies; Florida; and California. See www.breitburn.com for more information.
Cautionary Statement Regarding Forward-Looking Information
This press release contains forward-looking statements relating to Breitburn's operations that are based on management’s current expectations, estimates and projections about its operations. Words and phrases such as “believes,” “expect,” “future,” “impact,” “guidance,” “will be,” “future” and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. These include risks relating to Breitburn's financial performance and results, availability of sufficient cash flow and other sources of liquidity to execute our business plan, prices and demand for natural gas and oil, increases in operating costs, uncertainties inherent in estimating our reserves and production, our ability to replace reserves and efficiently develop our current reserves, political and regulatory developments relating to taxes, derivatives and our oil and gas operations, risks relating to our acquisitions and the factors set forth under the heading “Risk Factors” incorporated by reference from our Annual Report on Form 10-K filed with the Securities and Exchange Commission, and if applicable, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, Breitburn undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Unpredictable or unknown factors not discussed herein also could have material adverse effects on forward-looking statements.
BBEP-IR
Breitburn Energy Partners LP and Subsidiaries | ||||||||||
Consolidated Balance Sheets | ||||||||||
December 31, | December 31, | |||||||||
Thousands of dollars | 2014 | 2013 | ||||||||
ASSETS | ||||||||||
Current assets | ||||||||||
Cash | $ | 12,628 | $ | 2,458 | ||||||
Accounts and other receivables, net | 166,436 | 96,862 | ||||||||
Derivative instruments | 408,151 | 7,914 | ||||||||
Related party receivables | 2,462 | 2,604 | ||||||||
Inventory | 3,727 | 3,890 | ||||||||
Prepaid expenses | 7,304 | 3,334 | ||||||||
Total current assets | 600,708 | 117,062 | ||||||||
Equity investments | 6,463 | 6,641 | ||||||||
Property, plant and equipment | ||||||||||
Oil and gas properties | 7,736,409 | 4,818,639 | ||||||||
Other assets | 60,533 | 21,338 | ||||||||
7,796,942 | 4,839,977 | |||||||||
Accumulated depletion and depreciation | (1,342,741 | ) | (924,601 | ) | ||||||
Net property, plant and equipment | 6,454,201 | 3,915,376 | ||||||||
Other long-term assets | ||||||||||
Intangibles, net | 8,336 | 11,679 | ||||||||
Goodwill | 92,024 | — | ||||||||
Derivative instruments | 319,560 | 71,319 | ||||||||
Other long-term assets | 157,042 | 74,205 | ||||||||
Total assets | $ | 7,638,334 | $ | 4,196,282 | ||||||
LIABILITIES AND EQUITY | ||||||||||
Current liabilities | ||||||||||
Accounts payable | $ | 129,270 | $ | 69,809 | ||||||
Current portion of long-term debt | 105,000 | — | ||||||||
Derivative instruments | 5,457 | 24,876 | ||||||||
Distributions payable | 733 | — | ||||||||
Current asset retirement obligation | 4,948 | — | ||||||||
Revenue and royalties payable | 40,452 | 26,233 | ||||||||
Wages and salaries payable | 22,322 | 15,359 | ||||||||
Accrued interest payable | 20,672 | 19,690 | ||||||||
Production and property taxes payable | 25,207 | 20,558 | ||||||||
Other current liabilities | 7,495 | 6,364 | ||||||||
Total current liabilities | 361,556 | 182,889 | ||||||||
Credit facility | 2,089,500 | 733,000 | ||||||||
Senior notes, net | 1,156,560 | 1,156,675 | ||||||||
Other long-term debt | 1,100 | — | ||||||||
Total long-term debt | 3,247,160 | 1,889,675 | ||||||||
Deferred income taxes | 2,575 | 2,749 | ||||||||
Asset retirement obligation | 233,463 | 123,769 | ||||||||
Derivative instruments | 2,269 | 2,560 | ||||||||
Other long-term liabilities | 25,135 | 4,820 | ||||||||
Total liabilities | 3,872,158 | 2,206,462 | ||||||||
Equity | ||||||||||
Series A preferred units, 8.0 million units issued and outstanding at December 31, 2014 and 0 at December 31, 2013 | 193,215 | — | ||||||||
Common units, 210.9 million units issued and outstanding at December 31, 2014 and 119.2 million at December 31, 2013 | 3,566,468 | 1,989,820 | ||||||||
Accumulated other comprehensive loss | (392 | ) | — | |||||||
Total partners' equity | 3,759,291 | 1,989,820 | ||||||||
Noncontrolling interest | 6,885 | — | ||||||||
Total equity | 3,766,176 | 1,989,820 | ||||||||
Total liabilities and equity | $ | 7,638,334 | $ | 4,196,282 |
Breitburn Energy Partners LP and Subsidiaries | ||||||||||||||||||
Consolidated Statements of Operations | ||||||||||||||||||
Three Months Ended | Twelve Months Ended | |||||||||||||||||
December 31, | December 31, | |||||||||||||||||
Thousands of dollars, except per unit amounts | 2014 | 2013 | 2014 | 2013 | ||||||||||||||
Revenues and other income items | ||||||||||||||||||
Oil, natural gas and natural gas liquid sales | $ | 197,067 | $ | 193,604 | $ | 855,820 | $ | 660,665 | ||||||||||
Gain (loss) on commodity derivative instruments, net | 587,590 | (17,234 | ) | 566,533 | (29,182 | ) | ||||||||||||
Other revenue, net | 3,376 | 978 | 7,616 | 3,175 | ||||||||||||||
Total revenues and other income items | 788,033 | 177,348 | 1,429,969 | 634,658 | ||||||||||||||
Operating costs and expenses | ||||||||||||||||||
Operating costs | 107,520 | 80,933 | 355,681 | 262,822 | ||||||||||||||
Depletion, depreciation and amortization | 87,292 | 62,400 | 291,709 | 216,495 | ||||||||||||||
Impairments | 119,566 | 54,012 | 149,000 | 54,373 | ||||||||||||||
General and administrative expenses | 33,063 | 14,012 | 86,949 | 58,707 | ||||||||||||||
Loss (gain) on sale of assets | 306 | (2,154 | ) | 663 | (2,015 | ) | ||||||||||||
Total operating costs and expenses | 347,747 | 209,203 | 884,002 | 590,382 | ||||||||||||||
Operating income (loss) | 440,286 | (31,855 | ) | 545,967 | 44,276 | |||||||||||||
Interest expense, net of capitalized interest | 36,600 | 26,680 | 126,960 | 87,067 | ||||||||||||||
Gain on interest rate swaps | (490 | ) | – | (490 | ) | — | ||||||||||||
Other income, net | (523 | ) | (20 | ) | (1,746 | ) | (25 | ) | ||||||||||
Total other expense | 35,587 | 26,660 | 124,724 | 87,042 | ||||||||||||||
Income (loss) before taxes | 404,699 | (58,515 | ) | 421,243 | (42,766 | ) | ||||||||||||
Income tax expense (benefit) | (457 | ) | 277 | (73 | ) | 905 | ||||||||||||
Net income (loss) | 405,156 | (58,792 | ) | 421,316 | (43,671 | ) | ||||||||||||
Less: Net loss attributable to noncontrolling interest | (17 | ) | – | (17 | ) | — | ||||||||||||
Net income (loss) attributable to the partnership | 405,173 | (58,792 | ) | 421,333 | (43,671 | ) | ||||||||||||
Less: distributions to preferred unitholders | 4,125 | – | 10,083 | — | ||||||||||||||
Net income (loss) attributable to common unitholders | $ | 401,048 | $ | (58,792 | ) | $ | 411,250 | $ | (43,671 | ) | ||||||||
Basic net income (loss) per common unit | $ | 2.28 | $ | (0.52 | ) | $ | 3.04 | $ | (0.43 | ) | ||||||||
Diluted net income (loss) per common unit | $ | 2.27 | $ | (0.52 | ) | $ | 3.02 | $ | (0.43 | ) | ||||||||
Breitburn Energy Partners LP and Subsidiaries | ||||||||||
Consolidated Statements of Comprehensive Income | ||||||||||
Year Ended December 31, | ||||||||||
Thousands of dollars, except per unit amounts | 2014 | 2013 | ||||||||
Net income (loss) | $ | 421,316 | $ | (43,671 | ) | |||||
Other comprehensive income, net of tax: | ||||||||||
Change in fair value of available-for-sale securities | (189 | ) | — | |||||||
Pension and post-retirement benefits actuarial loss | (473 | ) | — | |||||||
Total other comprehensive loss | (662 | ) | — | |||||||
Total comprehensive income (loss) | 420,654 | (43,671 | ) | |||||||
Less: Comprehensive loss attributable to noncontrolling interest | (287 | ) | — | |||||||
Comprehensive income (loss) attributable to the partnership | $ | 420,941 | $ | (43,671 | ) | |||||
Breitburn Energy Partners LP and Subsidiaries | ||||||||||
Consolidated Statements of Cash Flows | ||||||||||
Year Ended December 31, | ||||||||||
Thousands of dollars | 2014 | 2013 | ||||||||
Cash flows from operating activities | ||||||||||
Net income (loss) | $ | 421,316 | $ | (43,671 | ) | |||||
Adjustments to reconcile to cash flow from operating activities: | ||||||||||
Depletion, depreciation and amortization | 291,709 | 216,495 | ||||||||
Impairment of oil and natural gas properties | 149,000 | 54,373 | ||||||||
Unit-based compensation expense | 23,387 | 19,955 | ||||||||
(Gain) loss on derivative instruments | (567,024 | ) | 29,182 | |||||||
Derivative instrument settlement receipts | 26,806 | 8,083 | ||||||||
Income from equity affiliates, net | 178 | (55 | ) | |||||||
Deferred income taxes | (174 | ) | 262 | |||||||
Loss (gain) on sale of assets | 663 | (2,015 | ) | |||||||
Other | 6,204 | 5,163 | ||||||||
Changes in net assets and liabilities | ||||||||||
Accounts receivable and other assets | 41,754 | (29,322 | ) | |||||||
Inventory | 163 | (804 | ) | |||||||
Net change in related party receivables and payables | 142 | (1,191 | ) | |||||||
Accounts payable and other liabilities | (36,369 | ) | 711 | |||||||
Net cash provided by operating activities | 357,755 | 257,166 | ||||||||
Cash flows from investing activities | ||||||||||
Property acquisitions, net of cash acquired | (401,465 | ) | (1,175,817 | ) | ||||||
Capital expenditures | (417,755 | ) | (266,308 | ) | ||||||
Other | (18,283 | ) | (26,661 | ) | ||||||
Proceeds from sale of assets | 499 | 2,981 | ||||||||
Net cash used in investing activities | (837,004 | ) | (1,465,805 | ) | ||||||
Cash flows from financing activities | ||||||||||
Proceeds from issuance of preferred units, net | 193,215 | — | ||||||||
Proceeds from issuance of common units, net | 277,613 | 618,013 | ||||||||
Distributions to preferred unitholders | (9,350 | ) | — | |||||||
Distributions to common unitholders | (264,585 | ) | (186,868 | ) | ||||||
Proceeds from issuance of long-term debt, net | 2,457,600 | 2,276,000 | ||||||||
Repayments of long-term debt | (1,785,000 | ) | (1,487,000 | ) | ||||||
Senior note redemption | (352,531 | ) | — | |||||||
Change in bank overdraft | (2,434 | ) | 2,013 | |||||||
Debt issuance costs | (25,109 | ) | (15,568 | ) | ||||||
Net cash provided by financing activities | 489,419 | 1,206,590 | ||||||||
Increase (decrease) in cash | 10,170 | (2,049 | ) | |||||||
Cash beginning of period | 2,458 | 4,507 | ||||||||
Cash end of period | $ | 12,628 | $ | 2,458 |
Contacts:
Antonio D'Amico
Vice President,
Investor Relations & Government Affairs
or
Jessica Tang
Investor
Relations Manager
213-225-0390