Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries CorEnergy Announces Second Quarter 2023 Results By: CorEnergy Infrastructure Trust, Inc. via Business Wire August 14, 2023 at 07:30 AM EDT CorEnergy Infrastructure Trust, Inc. (NYSE: CORR, CORRPrA) ("CorEnergy" or the "Company") today announced financial results for the second quarter, ended June 30, 2023. Second Quarter 2023 and Recent Highlights Reported Total Revenue of $35.7 million for the three months ended June 30, 2023. Generated Net Loss of $3.2 million and Adjusted EBITDA (a non-GAAP financial measure) of $5.8 million. Transported an average of 156,078 barrels per day. Entered into agreement to sell MoGas and Omega Pipeline Systems for $175.0 million in cash, now anticipated to close around the end of the calendar year, pending Federal Trade Commission review and subject to customary closing conditions. Filed additional proposed cost-of-service based tariff increases as a result of volume shortfalls: In February 2023, a 36% tariff increase on Crimson's SPB system and began collection of a 10% increase in March 2023. In March 2023, a 107% increase on Crimson’s KLM system, in addition to the 10% tariff increase filed Q3 2022 that is currently being collected. In July 2023, a 10% increase on Crimson's Southern California system in addition to the 10% tariff increase filed Q3 2022 that is currently being collected. Amended the Company's credit facility to revise the covenant requirements for Q3 and Q4 2023, providing additional time to manage near-term debt maturities through the proposed sale of CorEnergy's MoGas and Omega Pipeline Systems. Updated the Company's 2023 outlook to reflect changes in volume, maintenance capital and timing of the Company's anticipated MoGas and Omega sale, expecting Adjusted EBITDA of $24.0 to $26.0 million. Management Commentary "California volumes have held below our 2023 budget expectations while maintenance capital requirements are anticipated to be higher than budgeted. In response, we continue to implement our previously announced mitigation efforts, such as cost reductions, tariff rate increases, asset sales and debt reduction plans. We believe these actions will pave the way to better operating results for the Company upon approval of our pending tariff filings," said Dave Schulte, Chairman and Chief Executive Officer. "We could also receive a volume benefit upon the recently confirmed conversion of the P66 refinery to renewable diesel early next year, but we do not yet have visibility on the potential demand by other refineries for the estimated 50,000 barrels per day currently shipped on their pipeline to the Rodeo refinery. However, capturing even a small percentage of those volumes is significant for us. For example, if we capture just 5,000 barrels per day, or just 10% of the available volumes, that represents an approximately $3.8 million increase in annual revenue and approximately $3.0 million in annual EBITDA. The proposed $175 million sale of our MoGas and Omega systems to Spire is now expected to close around the end of the calendar year in order to provide additional information requested by the Federal Trade Commission." Second Quarter Performance Summary Second quarter financial highlights are as follows: For the Three Months Ended June 30, 2023 Per Common Share Total Basic Diluted Net Loss $ (3,167,350 ) $ (0.40 ) $ (0.40 ) Net Cash Provided by Operating Activities $ 2,627,405 Adjusted Net Loss1 $ (985,747 ) Cash Available for Distribution (CAD)1 $ (7,702,815 ) Adjusted EBITDA2 $ 5,848,769 Dividends Declared to Common Stockholders $ — 1 Non-GAAP financial measure. Adjusted Net Loss excludes special items of $1.9 million and $324 thousand, which are transaction costs and restructuring costs, respectively; however, CAD has not been so adjusted. Reconciliations of Adjusted Net Loss and CAD, as presented, to Net Loss and Net Cash Used in Operating Activities are included at the end of this press release. See Note 1 below for additional information. Cash available for distribution represents cash available to common stockholders after the effect of the preferred dividend requirement. 2 Non-GAAP financial measure. Adjusted EBITDA excludes special items of $1.9 million and $324 thousand, which are transaction costs and restructuring costs, respectively. Reconciliation of Adjusted EBITDA, as presented, to Net Loss is included at the end of this press release. See Note 2 below for additional information. Crimson Rate Increases During the third quarter of 2022, Crimson filed for a tariff increase of 35% on its Southern California pipeline system and 10% on its KLM pipeline. Both of the third quarter tariff filings were protested by shippers and are proceeding through the CPUC approval process, with resolution expected in 2024. The Company commenced collecting a 10% tariff increase on both systems 30 days after the respective third quarter filings. During the first quarter of 2023, Crimson filed for a 36% rate increase on its SPB pipeline and 107% increase on its KLM pipeline, additive to the 10% increase filed in 2022, based on the regulated cost-of-service tariff structure. Both tariff filings were protested by shippers and will proceed through the CPUC approval process. The Company commenced collecting a 10% tariff increase on the SPB system in March 2023. On July 1, 2023, Crimson submitted an application to the CPUC to increase tariffs on the Southern California pipeline by 10%, resulting in a cumulative 21% tariff increase since the original tariff filing. In accordance with CPUC rules, Crimson increased tariffs by 10% on the Southern California pipeline on August 1, 2023. The Company plans to file and begin collecting an additional 10% increase on its KLM and SPB systems on the anniversary dates of their initial filings until the matters are resolved. CorEnergy believes Crimson's cost-of-service justifies all requested increases. Any tariff increase is subject to refund if the CPUC determines that it was not justified. Business Development Activities CorEnergy continues to seek emerging carbon capture and sequestration business opportunities in California that could take advantage of the critical linkages represented by its Crimson systems and rights-of-way, as well as other ways to deploy its asset base in support of California's emerging new energy economy. As part of this effort, the company has funded approximately $1 million of development cost supporting the Lone Cypress Hydrogen Project, a proposed blue hydrogen plant at CRC's Net Zero Industrial Park at Elk Hills Field in Kern County. The plant is expected to produce 60 tons per day of blue hydrogen. The project aims to be California’s first blue hydrogen facility. CorEnergy expects to create a long-term relationship with Lone Cypress and receive the right to co-invest in the project along side California Resources Carbon TerraVault JV Holdco, LLC. 2023 Outlook CorEnergy revised its outlook for 2023, now calling for: Adjusted EBITDA of $24.0 to $26.0 million, inclusive of maintenance expense of $9.0 to $10.0 million, reflecting reduced volumes and delays in tariff processes (see Note 2 for additional details); Capital expenditures in the range of $11.5 to $12.5 million, incurred at periodic times throughout the year based on project timing. An expectation that the Company’s Class B Common Stock will mandatorily convert to Common Stock at a ratio of 0.68:1, as opposed to 1:1, during Q1 2024. Dividend and Distribution Status CorEnergy's Board of Directors maintained the suspension of dividend payments on its 7.375% Series A Cumulative Redeemable Preferred Stock and the Company’s Common Stock due to lower operating outlook. The Company's Board will continue to evaluate dividends on a quarterly basis. CorEnergy’s 7.375% Series A Cumulative Redeemable Preferred Stock will accrue dividends during any period in which dividends are not paid. Any accrued Series A Cumulative Redeemable Preferred dividends must be paid prior to the Company resuming common dividend payments. Based on the suspension of dividend payments to CorEnergy’s public equity holders, the Crimson Class A-1, Class A-2, and Class A-3 Units and CorEnergy’s Class B Common Stock will not receive dividends. The Crimson Class A-1 Units will accumulate a preferred distribution based on the CorEnergy Series A Cumulative Redeemable Preferred Shares, which would be paid prior to the Company resuming common dividend payments. The unpaid and accumulated preferred dividend amounts are included in the financial statements and notes. Second Quarter Results Call CorEnergy will host a conference call on Monday, August 14, 2023 at 11:00 a.m. Central Time to discuss its financial results. The call may also include discussion of Company developments and forward-looking and other material information about business and financial matters. To join the call, dial +1-973-528-0011 and provide access code 390317 at least five minutes prior to the scheduled start time. The call will also be webcast in a listen-only format. A link to the webcast will be accessible at corenergy.reit. A replay of the call will be available until 10:00 a.m. Central Time on September 13, 2023, by dialing +1-919-882-2331. The Conference ID is 48880. A webcast replay of the conference call will also be available on the Company’s website, corenergy.reit. About CorEnergy Infrastructure Trust, Inc. CorEnergy Infrastructure Trust, Inc. (NYSE: CORR, CORRPrA) is a real estate investment trust that owns and operates or leases regulated natural gas transmission and distribution lines and crude oil gathering, storage and transmission pipelines and associated rights-of-way. For more information, please visit corenergy.reit. Forward-Looking Statements The financial results in this press release reflect preliminary, unaudited results, which are not final until the Company’s Quarterly Report on Form 10-Q is filed. With the exception of historical information, certain statements contained in this press release may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, such as those pertaining to our guidance, pursuit of growth opportunities, anticipated transportation volumes, expected rate increases, planned capital expenditures, planned dividend payment levels, planned cost reductions, potential and pending asset sales, expected ESG program updates and developments, future compliance with debt covenants. capital resources and liquidity, and our planned acts relating thereto, and results of operations and financial condition. You can identify forward-looking statements by use of words such as "will," "may," "should," "could," "believes," "expects," "anticipates," "estimates," "intends," "projects," "goals," "objectives," "targets," "predicts," "plans," "seeks," or similar expressions or other comparable terms or discussions of strategy, plans or intentions. Although CorEnergy believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including, among others, changes in economic and business conditions; a decline in oil production levels; competitive and regulatory pressures; failure to realize the anticipated benefits of requested tariff increases; risks related to the uncertainty of the projected financial information with respect to Crimson; compliance with environmental, safety and other laws; our continued ability to access debt and equity markets and comply with existing debt covenants; failure to complete pending asset sales on our expected timeline or at all; risks associated with climate change; risks associated with changes in tax laws and our ability to continue to qualify as a REIT; and other factors discussed in CorEnergy’s reports that are filed with the Securities and Exchange Commission. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required by law, CorEnergy does not assume a duty to update any forward-looking statement. In particular, any dividends paid in the future to our stockholders will depend on the actual performance of CorEnergy, its costs of leverage and other operating expenses and will be subject to the approval of CorEnergy’s Board of Directors and compliance with leverage covenants and other applicable requirements. 1 Management uses Adjusted Net Loss as a measure of profitability and CAD as a measure of long-term sustainable performance. Adjusted Net Loss and CAD are non-GAAP measures. Adjusted Net Loss represents net loss adjusted for transaction costs, restructuring costs, less gain on sale of equipment. CAD represents Adjusted Net Loss adjusted for depreciation and amortization, amortization of debt issuance costs, stock-based compensation, and deferred tax benefit less transaction costs, restructuring costs, maintenance capital expenditures, preferred dividend requirements, and mandatory debt amortization. 2 Management uses Adjusted EBITDA as a measure of operating performance. Adjusted EBITDA represents net loss adjusted for items such as transaction costs, restructuring costs, depreciation and amortization, stock-based compensation, income tax benefit, net, and interest expense less gain on the sale of equipment. Future period non-GAAP guidance includes adjustments for special items not indicative of our core operations, which may include, without limitation, items included in the additional financial information attached to this press release. Such adjustments may be affected by changes in ongoing assumptions and judgments, as well as nonrecurring, unusual or unanticipated charges, expenses or gains or other items that may not directly correlate to the underlying performance of our business operations. The exact amounts of these adjustments are not currently determinable but may be significant. It is therefore not practicable to provide the comparable GAAP measures or reconcile this future period non-GAAP guidance to the most comparable GAAP measures. Accordingly, we are not providing such comparable GAAP measures or reconciliations in reliance on the "unreasonable efforts" exception for forward-looking non-GAAP measures set forth in SEC rules because certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated without unreasonable effort and expense. CONSOLIDATED BALANCE SHEETS June 30, 2023 December 31, 2022 Assets (Unaudited) Property and equipment, net of accumulated depreciation of $30,066,195 and $52,908,191, respectively $ 339,805,290 $ 440,148,967 Leased property, net of accumulated depreciation of $0 and $299,463, respectively — 1,226,565 Financing notes and related accrued interest receivable, net of reserve of $50,000 and $600,000, respectively 710,467 858,079 Cash and cash equivalents 9,237,764 17,830,482 Accounts and other receivables 9,028,808 14,164,525 Due from affiliated companies 5,416 167,743 Deferred costs, net of accumulated amortization of $910,220 and $726,619, respectively 303,322 415,727 Inventory 3,579,851 5,950,051 Prepaid expenses and other assets 5,178,308 9,478,146 Operating right-of-use assets 6,096,799 4,722,361 Deferred tax asset, net 217,430 — Assets held for sale 108,670,305 — Total Assets $ 482,833,760 $ 494,962,646 Liabilities and Equity Secured credit facilities, net of deferred financing costs of $403,951 and $665,547, respectively $ 102,596,049 $ 100,334,453 Unsecured convertible senior notes, net of discount and debt issuance costs of $1,397,620 and $1,726,470, respectively 116,652,380 116,323,530 Accounts payable and other accrued liabilities 16,244,763 26,316,216 Income tax payable 8,529 174,849 Due to affiliated companies 156,274 209,750 Operating lease liability 6,067,985 4,696,410 Deferred tax liability, net — 1,292,300 Unearned revenue 566,154 5,948,621 Liabilities held for sale 7,234,513 — Total Liabilities $ 249,526,647 $ 255,296,129 Equity Series A Cumulative Redeemable Preferred Stock 7.375%, $134,301,935 liquidation preference at June 30, 2023 and 129,525,675 liquidation preference at December 31, 2022 ($2,500 per share, $0.001 par value); 69,367,000 authorized; 51,810 issued and outstanding at June 30, 2023 and December 31, 2022 $ 129,525,675 $ 129,525,675 Common stock, non-convertible, $0.001 par value; 15,350,883 and 15,253,958 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively (100,000,000 shares authorized) 15,351 15,254 Class B Common Stock, $0.001 par value; 683,761 shares issued and outstanding at June 30, 2023 and December 31, 2022 (11,896,100 shares authorized) 684 684 Additional paid-in capital 327,074,755 327,016,573 Retained deficit (341,821,204 ) (333,785,097 ) Total CorEnergy Equity 114,795,261 122,773,089 Non-controlling interest 118,511,852 116,893,428 Total Equity 233,307,113 239,666,517 Total Liabilities and Equity $ 482,833,760 $ 494,962,646 CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) For the Three Months Ended June 30, 2023 March 31, 2023 Revenue Transportation and distribution $ 28,540,632 $ 29,239,115 Pipeline loss allowance subsequent sales 7,009,996 — Lease and other revenue 103,352 103,057 Total Revenue 35,653,980 29,342,172 Expenses Transportation and distribution 17,787,024 17,481,063 Pipeline loss allowance subsequent sales cost of revenue 7,050,776 — General and administrative 7,447,410 6,771,582 Depreciation and amortization 3,237,526 4,031,627 Total Expenses 35,522,736 28,284,272 Operating Income $ 131,244 $ 1,057,900 Other Income (expense) Other income $ 195,678 $ (4,404,565 ) Interest expense (4,426,351 ) 141,813 Total Other Expense (4,230,673 ) (4,262,752 ) Loss before income taxes (4,099,429 ) (3,204,852 ) Taxes Current tax expense 2,625 7,076 Deferred tax benefit (934,704 ) (11,595 ) Income tax benefit, net (932,079 ) (4,519 ) Net Loss (3,167,350 ) (3,200,333 ) Less: Net income attributable to non-controlling interest 809,212 809,212 Net Loss attributable to CorEnergy Infrastructure Trust, Inc. $ (3,976,562 ) $ (4,009,545 ) Preferred dividend requirements 2,388,130 2,388,130 Net Loss attributable to Common Stockholders $ (6,364,692 ) $ (6,397,675 ) Common Stock Basic weighted average shares outstanding $ 15,350,883 15,272,267 Basic net loss per share $ (0.40 ) $ (0.40 ) Diluted weighted average shares outstanding 15,815,840 15,737,224 Diluted net loss per share $ (0.40 ) $ (0.41 ) Class B Common Stock Basic and diluted weighted average shares outstanding 683,761 683,761 Basic and diluted net loss per share $ (0.40 ) $ (0.40 ) Dividends declared per common share $ — $ — CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Months Ended June 30, 2023 June 30, 2022 Operating Activities Net income (loss) $ (6,367,683 ) $ 6,534,883 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Deferred income tax, net (946,299 ) 88,422 Depreciation and amortization 7,269,153 7,968,981 Amortization of debt issuance costs 774,047 824,120 Gain on sale of equipment (1,074 ) (22,678 ) Stock-based compensation 92,344 151,359 Changes in assets and liabilities: Accounts and other receivables 1,482,880 1,024,635 Inventory 2,224,250 (587,295 ) Prepaid expenses and other assets 4,095,376 1,785,571 Due from affiliated companies, net 108,852 140,509 Accounts payable and other accrued liabilities (6,069,668 ) 1,071,089 Income tax payable (166,320 ) 305,205 Unearned revenue 162,160 280,795 Other changes, net (30,613 ) (206,457 ) Net cash provided by operating activities $ 2,627,405 $ 19,359,139 Investing Activities Purchases of property and equipment (7,967,423 ) (4,141,485 ) Proceeds from reimbursable projects 858,134 2,103,544 Other changes, net (789,739 ) 124,701 Net cash used in investing activities $ (7,899,028 ) $ (1,913,240 ) Financing Activities Dividends paid on Series A preferred stock — (4,776,260 ) Dividends paid on Common Stock — (1,492,690 ) Reinvestment of Dividends Paid to Common Stockholders — 403,204 Distributions to non-controlling interest — (1,618,424 ) Advances on the Crimson Revolver 7,000,000 4,000,000 Payments on the Crimson Revolver (1,000,000 ) (4,000,000 ) Principal payments on the Crimson Term Loan (4,000,000 ) (4,000,000 ) Dividends paid on Vested RSUs (15,612 ) — Payments on financing arrangement (2,203,747 ) (1,170,635 ) Net cash used in financing activities $ (219,359 ) $ (12,654,805 ) Net change in Cash and Cash Equivalents (5,490,982 ) 4,791,094 Cash and Cash Equivalents at beginning of period 17,830,482 11,540,576 Cash and Cash Equivalents at end of period $ 12,339,500 $ 16,331,670 Supplemental Disclosure of Cash Flow Information Interest paid $ 9,007,546 $ 4,999,845 Income taxes paid (net of refunds) 191,000 (12,055 ) Non-Cash Investing Activities Purchases of property, plant and equipment in accounts payable and other accrued liabilities $ 1,430,552 $ 771,180 Non-Cash Financing Activities Assets acquired under financing arrangement $ — $ 1,226,402 Non-GAAP Financial Measurements (Unaudited) The following table presents a reconciliation of Net Loss, as reported in the Consolidated Statements of Operations, to Adjusted Net Loss and CAD: For the Three Months Ended June 30, 2023 March 31, 2023 Net Loss $ (3,167,350 ) $ (3,200,333 ) Add: Transaction costs 1,857,826 495,579 Restructuring costs 323,777 1,683,777 Less: Gain on the sale of equipment — 1,074 Adjusted Net Loss, excluding special items $ (985,747 ) $ (1,022,051 ) Add: Depreciation and amortization 3,237,526 4,031,627 Amortization of debt issuance costs 356,054 417,993 Stock-based compensation 102,718 (10,374 ) Deferred tax benefit (934,704 ) (11,595 ) Less: Transaction costs 1,857,826 495,579 Restructuring costs 323,777 1,683,777 Maintenance capital expenditures 2,099,717 2,222,948 Preferred dividend requirements - Series A 2,388,130 2,388,130 Preferred dividend requirements - Non-controlling interest 809,212 809,212 Mandatory debt amortization 2,000,000 2,000,000 Cash Available for Distribution (CAD) $ (7,702,815 ) $ (6,194,046 ) The following table reconciles net cash provided by (used in) operating activities, as reported in the Consolidated Statements of Cash Flows to CAD: For the Three Months Ended June 30, 2023 March 31, 2023 Net cash provided by (used in) operating activities $ 5,735,036 $ (3,107,631 ) Changes in working capital (6,140,792 ) 4,333,875 Maintenance capital expenditures (2,099,717 ) (2,222,948 ) Preferred dividend requirements (2,388,130 ) (2,388,130 ) Preferred dividend requirements - non-controlling interest (809,212 ) (809,212 ) Mandatory debt amortization included in financing activities (2,000,000 ) (2,000,000 ) Cash Available for Distribution (CAD) $ (7,702,815 ) $ (6,194,046 ) Other Special Items: Transaction costs $ 1,857,826 $ 495,579 Restructuring costs 323,777 1,683,777 Other Cash Flow Information: Net cash used in investing activities $ (4,409,007 ) $ (3,490,021 ) Net cash provided by (used in) financing activities (331,528 ) 112,169 The following table presents a reconciliation of Net Loss, as reported in the Consolidated Statements of Operations, to Adjusted EBITDA: For the Three Months Ended June 30, 2023 March 31, 2023 Net Loss $ (3,167,350 ) $ (3,200,333 ) Add: Transaction costs 1,857,826 495,579 Restructuring costs 323,777 1,683,777 Depreciation and amortization 3,237,526 4,031,627 Stock-based compensation 102,718 (10,374 ) Income tax benefit, net (932,079 ) (4,519 ) Interest expense, net 4,426,351 4,404,565 Less: Gain on the sale of equipment — 1,074 Adjusted EBITDA $ 5,848,769 $ 7,399,248 Source: CorEnergy Infrastructure Trust, Inc. View source version on businesswire.com: https://www.businesswire.com/news/home/20230814645123/en/Contacts CorEnergy Infrastructure Trust, Inc. Investor Relations Matt Kreps or Jeff Teeven 877-699-CORR (2677) info@corenergy.reit Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
CorEnergy Announces Second Quarter 2023 Results By: CorEnergy Infrastructure Trust, Inc. via Business Wire August 14, 2023 at 07:30 AM EDT CorEnergy Infrastructure Trust, Inc. (NYSE: CORR, CORRPrA) ("CorEnergy" or the "Company") today announced financial results for the second quarter, ended June 30, 2023. Second Quarter 2023 and Recent Highlights Reported Total Revenue of $35.7 million for the three months ended June 30, 2023. Generated Net Loss of $3.2 million and Adjusted EBITDA (a non-GAAP financial measure) of $5.8 million. Transported an average of 156,078 barrels per day. Entered into agreement to sell MoGas and Omega Pipeline Systems for $175.0 million in cash, now anticipated to close around the end of the calendar year, pending Federal Trade Commission review and subject to customary closing conditions. Filed additional proposed cost-of-service based tariff increases as a result of volume shortfalls: In February 2023, a 36% tariff increase on Crimson's SPB system and began collection of a 10% increase in March 2023. In March 2023, a 107% increase on Crimson’s KLM system, in addition to the 10% tariff increase filed Q3 2022 that is currently being collected. In July 2023, a 10% increase on Crimson's Southern California system in addition to the 10% tariff increase filed Q3 2022 that is currently being collected. Amended the Company's credit facility to revise the covenant requirements for Q3 and Q4 2023, providing additional time to manage near-term debt maturities through the proposed sale of CorEnergy's MoGas and Omega Pipeline Systems. Updated the Company's 2023 outlook to reflect changes in volume, maintenance capital and timing of the Company's anticipated MoGas and Omega sale, expecting Adjusted EBITDA of $24.0 to $26.0 million. Management Commentary "California volumes have held below our 2023 budget expectations while maintenance capital requirements are anticipated to be higher than budgeted. In response, we continue to implement our previously announced mitigation efforts, such as cost reductions, tariff rate increases, asset sales and debt reduction plans. We believe these actions will pave the way to better operating results for the Company upon approval of our pending tariff filings," said Dave Schulte, Chairman and Chief Executive Officer. "We could also receive a volume benefit upon the recently confirmed conversion of the P66 refinery to renewable diesel early next year, but we do not yet have visibility on the potential demand by other refineries for the estimated 50,000 barrels per day currently shipped on their pipeline to the Rodeo refinery. However, capturing even a small percentage of those volumes is significant for us. For example, if we capture just 5,000 barrels per day, or just 10% of the available volumes, that represents an approximately $3.8 million increase in annual revenue and approximately $3.0 million in annual EBITDA. The proposed $175 million sale of our MoGas and Omega systems to Spire is now expected to close around the end of the calendar year in order to provide additional information requested by the Federal Trade Commission." Second Quarter Performance Summary Second quarter financial highlights are as follows: For the Three Months Ended June 30, 2023 Per Common Share Total Basic Diluted Net Loss $ (3,167,350 ) $ (0.40 ) $ (0.40 ) Net Cash Provided by Operating Activities $ 2,627,405 Adjusted Net Loss1 $ (985,747 ) Cash Available for Distribution (CAD)1 $ (7,702,815 ) Adjusted EBITDA2 $ 5,848,769 Dividends Declared to Common Stockholders $ — 1 Non-GAAP financial measure. Adjusted Net Loss excludes special items of $1.9 million and $324 thousand, which are transaction costs and restructuring costs, respectively; however, CAD has not been so adjusted. Reconciliations of Adjusted Net Loss and CAD, as presented, to Net Loss and Net Cash Used in Operating Activities are included at the end of this press release. See Note 1 below for additional information. Cash available for distribution represents cash available to common stockholders after the effect of the preferred dividend requirement. 2 Non-GAAP financial measure. Adjusted EBITDA excludes special items of $1.9 million and $324 thousand, which are transaction costs and restructuring costs, respectively. Reconciliation of Adjusted EBITDA, as presented, to Net Loss is included at the end of this press release. See Note 2 below for additional information. Crimson Rate Increases During the third quarter of 2022, Crimson filed for a tariff increase of 35% on its Southern California pipeline system and 10% on its KLM pipeline. Both of the third quarter tariff filings were protested by shippers and are proceeding through the CPUC approval process, with resolution expected in 2024. The Company commenced collecting a 10% tariff increase on both systems 30 days after the respective third quarter filings. During the first quarter of 2023, Crimson filed for a 36% rate increase on its SPB pipeline and 107% increase on its KLM pipeline, additive to the 10% increase filed in 2022, based on the regulated cost-of-service tariff structure. Both tariff filings were protested by shippers and will proceed through the CPUC approval process. The Company commenced collecting a 10% tariff increase on the SPB system in March 2023. On July 1, 2023, Crimson submitted an application to the CPUC to increase tariffs on the Southern California pipeline by 10%, resulting in a cumulative 21% tariff increase since the original tariff filing. In accordance with CPUC rules, Crimson increased tariffs by 10% on the Southern California pipeline on August 1, 2023. The Company plans to file and begin collecting an additional 10% increase on its KLM and SPB systems on the anniversary dates of their initial filings until the matters are resolved. CorEnergy believes Crimson's cost-of-service justifies all requested increases. Any tariff increase is subject to refund if the CPUC determines that it was not justified. Business Development Activities CorEnergy continues to seek emerging carbon capture and sequestration business opportunities in California that could take advantage of the critical linkages represented by its Crimson systems and rights-of-way, as well as other ways to deploy its asset base in support of California's emerging new energy economy. As part of this effort, the company has funded approximately $1 million of development cost supporting the Lone Cypress Hydrogen Project, a proposed blue hydrogen plant at CRC's Net Zero Industrial Park at Elk Hills Field in Kern County. The plant is expected to produce 60 tons per day of blue hydrogen. The project aims to be California’s first blue hydrogen facility. CorEnergy expects to create a long-term relationship with Lone Cypress and receive the right to co-invest in the project along side California Resources Carbon TerraVault JV Holdco, LLC. 2023 Outlook CorEnergy revised its outlook for 2023, now calling for: Adjusted EBITDA of $24.0 to $26.0 million, inclusive of maintenance expense of $9.0 to $10.0 million, reflecting reduced volumes and delays in tariff processes (see Note 2 for additional details); Capital expenditures in the range of $11.5 to $12.5 million, incurred at periodic times throughout the year based on project timing. An expectation that the Company’s Class B Common Stock will mandatorily convert to Common Stock at a ratio of 0.68:1, as opposed to 1:1, during Q1 2024. Dividend and Distribution Status CorEnergy's Board of Directors maintained the suspension of dividend payments on its 7.375% Series A Cumulative Redeemable Preferred Stock and the Company’s Common Stock due to lower operating outlook. The Company's Board will continue to evaluate dividends on a quarterly basis. CorEnergy’s 7.375% Series A Cumulative Redeemable Preferred Stock will accrue dividends during any period in which dividends are not paid. Any accrued Series A Cumulative Redeemable Preferred dividends must be paid prior to the Company resuming common dividend payments. Based on the suspension of dividend payments to CorEnergy’s public equity holders, the Crimson Class A-1, Class A-2, and Class A-3 Units and CorEnergy’s Class B Common Stock will not receive dividends. The Crimson Class A-1 Units will accumulate a preferred distribution based on the CorEnergy Series A Cumulative Redeemable Preferred Shares, which would be paid prior to the Company resuming common dividend payments. The unpaid and accumulated preferred dividend amounts are included in the financial statements and notes. Second Quarter Results Call CorEnergy will host a conference call on Monday, August 14, 2023 at 11:00 a.m. Central Time to discuss its financial results. The call may also include discussion of Company developments and forward-looking and other material information about business and financial matters. To join the call, dial +1-973-528-0011 and provide access code 390317 at least five minutes prior to the scheduled start time. The call will also be webcast in a listen-only format. A link to the webcast will be accessible at corenergy.reit. A replay of the call will be available until 10:00 a.m. Central Time on September 13, 2023, by dialing +1-919-882-2331. The Conference ID is 48880. A webcast replay of the conference call will also be available on the Company’s website, corenergy.reit. About CorEnergy Infrastructure Trust, Inc. CorEnergy Infrastructure Trust, Inc. (NYSE: CORR, CORRPrA) is a real estate investment trust that owns and operates or leases regulated natural gas transmission and distribution lines and crude oil gathering, storage and transmission pipelines and associated rights-of-way. For more information, please visit corenergy.reit. Forward-Looking Statements The financial results in this press release reflect preliminary, unaudited results, which are not final until the Company’s Quarterly Report on Form 10-Q is filed. With the exception of historical information, certain statements contained in this press release may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, such as those pertaining to our guidance, pursuit of growth opportunities, anticipated transportation volumes, expected rate increases, planned capital expenditures, planned dividend payment levels, planned cost reductions, potential and pending asset sales, expected ESG program updates and developments, future compliance with debt covenants. capital resources and liquidity, and our planned acts relating thereto, and results of operations and financial condition. You can identify forward-looking statements by use of words such as "will," "may," "should," "could," "believes," "expects," "anticipates," "estimates," "intends," "projects," "goals," "objectives," "targets," "predicts," "plans," "seeks," or similar expressions or other comparable terms or discussions of strategy, plans or intentions. Although CorEnergy believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including, among others, changes in economic and business conditions; a decline in oil production levels; competitive and regulatory pressures; failure to realize the anticipated benefits of requested tariff increases; risks related to the uncertainty of the projected financial information with respect to Crimson; compliance with environmental, safety and other laws; our continued ability to access debt and equity markets and comply with existing debt covenants; failure to complete pending asset sales on our expected timeline or at all; risks associated with climate change; risks associated with changes in tax laws and our ability to continue to qualify as a REIT; and other factors discussed in CorEnergy’s reports that are filed with the Securities and Exchange Commission. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required by law, CorEnergy does not assume a duty to update any forward-looking statement. In particular, any dividends paid in the future to our stockholders will depend on the actual performance of CorEnergy, its costs of leverage and other operating expenses and will be subject to the approval of CorEnergy’s Board of Directors and compliance with leverage covenants and other applicable requirements. 1 Management uses Adjusted Net Loss as a measure of profitability and CAD as a measure of long-term sustainable performance. Adjusted Net Loss and CAD are non-GAAP measures. Adjusted Net Loss represents net loss adjusted for transaction costs, restructuring costs, less gain on sale of equipment. CAD represents Adjusted Net Loss adjusted for depreciation and amortization, amortization of debt issuance costs, stock-based compensation, and deferred tax benefit less transaction costs, restructuring costs, maintenance capital expenditures, preferred dividend requirements, and mandatory debt amortization. 2 Management uses Adjusted EBITDA as a measure of operating performance. Adjusted EBITDA represents net loss adjusted for items such as transaction costs, restructuring costs, depreciation and amortization, stock-based compensation, income tax benefit, net, and interest expense less gain on the sale of equipment. Future period non-GAAP guidance includes adjustments for special items not indicative of our core operations, which may include, without limitation, items included in the additional financial information attached to this press release. Such adjustments may be affected by changes in ongoing assumptions and judgments, as well as nonrecurring, unusual or unanticipated charges, expenses or gains or other items that may not directly correlate to the underlying performance of our business operations. The exact amounts of these adjustments are not currently determinable but may be significant. It is therefore not practicable to provide the comparable GAAP measures or reconcile this future period non-GAAP guidance to the most comparable GAAP measures. Accordingly, we are not providing such comparable GAAP measures or reconciliations in reliance on the "unreasonable efforts" exception for forward-looking non-GAAP measures set forth in SEC rules because certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated without unreasonable effort and expense. CONSOLIDATED BALANCE SHEETS June 30, 2023 December 31, 2022 Assets (Unaudited) Property and equipment, net of accumulated depreciation of $30,066,195 and $52,908,191, respectively $ 339,805,290 $ 440,148,967 Leased property, net of accumulated depreciation of $0 and $299,463, respectively — 1,226,565 Financing notes and related accrued interest receivable, net of reserve of $50,000 and $600,000, respectively 710,467 858,079 Cash and cash equivalents 9,237,764 17,830,482 Accounts and other receivables 9,028,808 14,164,525 Due from affiliated companies 5,416 167,743 Deferred costs, net of accumulated amortization of $910,220 and $726,619, respectively 303,322 415,727 Inventory 3,579,851 5,950,051 Prepaid expenses and other assets 5,178,308 9,478,146 Operating right-of-use assets 6,096,799 4,722,361 Deferred tax asset, net 217,430 — Assets held for sale 108,670,305 — Total Assets $ 482,833,760 $ 494,962,646 Liabilities and Equity Secured credit facilities, net of deferred financing costs of $403,951 and $665,547, respectively $ 102,596,049 $ 100,334,453 Unsecured convertible senior notes, net of discount and debt issuance costs of $1,397,620 and $1,726,470, respectively 116,652,380 116,323,530 Accounts payable and other accrued liabilities 16,244,763 26,316,216 Income tax payable 8,529 174,849 Due to affiliated companies 156,274 209,750 Operating lease liability 6,067,985 4,696,410 Deferred tax liability, net — 1,292,300 Unearned revenue 566,154 5,948,621 Liabilities held for sale 7,234,513 — Total Liabilities $ 249,526,647 $ 255,296,129 Equity Series A Cumulative Redeemable Preferred Stock 7.375%, $134,301,935 liquidation preference at June 30, 2023 and 129,525,675 liquidation preference at December 31, 2022 ($2,500 per share, $0.001 par value); 69,367,000 authorized; 51,810 issued and outstanding at June 30, 2023 and December 31, 2022 $ 129,525,675 $ 129,525,675 Common stock, non-convertible, $0.001 par value; 15,350,883 and 15,253,958 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively (100,000,000 shares authorized) 15,351 15,254 Class B Common Stock, $0.001 par value; 683,761 shares issued and outstanding at June 30, 2023 and December 31, 2022 (11,896,100 shares authorized) 684 684 Additional paid-in capital 327,074,755 327,016,573 Retained deficit (341,821,204 ) (333,785,097 ) Total CorEnergy Equity 114,795,261 122,773,089 Non-controlling interest 118,511,852 116,893,428 Total Equity 233,307,113 239,666,517 Total Liabilities and Equity $ 482,833,760 $ 494,962,646 CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) For the Three Months Ended June 30, 2023 March 31, 2023 Revenue Transportation and distribution $ 28,540,632 $ 29,239,115 Pipeline loss allowance subsequent sales 7,009,996 — Lease and other revenue 103,352 103,057 Total Revenue 35,653,980 29,342,172 Expenses Transportation and distribution 17,787,024 17,481,063 Pipeline loss allowance subsequent sales cost of revenue 7,050,776 — General and administrative 7,447,410 6,771,582 Depreciation and amortization 3,237,526 4,031,627 Total Expenses 35,522,736 28,284,272 Operating Income $ 131,244 $ 1,057,900 Other Income (expense) Other income $ 195,678 $ (4,404,565 ) Interest expense (4,426,351 ) 141,813 Total Other Expense (4,230,673 ) (4,262,752 ) Loss before income taxes (4,099,429 ) (3,204,852 ) Taxes Current tax expense 2,625 7,076 Deferred tax benefit (934,704 ) (11,595 ) Income tax benefit, net (932,079 ) (4,519 ) Net Loss (3,167,350 ) (3,200,333 ) Less: Net income attributable to non-controlling interest 809,212 809,212 Net Loss attributable to CorEnergy Infrastructure Trust, Inc. $ (3,976,562 ) $ (4,009,545 ) Preferred dividend requirements 2,388,130 2,388,130 Net Loss attributable to Common Stockholders $ (6,364,692 ) $ (6,397,675 ) Common Stock Basic weighted average shares outstanding $ 15,350,883 15,272,267 Basic net loss per share $ (0.40 ) $ (0.40 ) Diluted weighted average shares outstanding 15,815,840 15,737,224 Diluted net loss per share $ (0.40 ) $ (0.41 ) Class B Common Stock Basic and diluted weighted average shares outstanding 683,761 683,761 Basic and diluted net loss per share $ (0.40 ) $ (0.40 ) Dividends declared per common share $ — $ — CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Months Ended June 30, 2023 June 30, 2022 Operating Activities Net income (loss) $ (6,367,683 ) $ 6,534,883 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Deferred income tax, net (946,299 ) 88,422 Depreciation and amortization 7,269,153 7,968,981 Amortization of debt issuance costs 774,047 824,120 Gain on sale of equipment (1,074 ) (22,678 ) Stock-based compensation 92,344 151,359 Changes in assets and liabilities: Accounts and other receivables 1,482,880 1,024,635 Inventory 2,224,250 (587,295 ) Prepaid expenses and other assets 4,095,376 1,785,571 Due from affiliated companies, net 108,852 140,509 Accounts payable and other accrued liabilities (6,069,668 ) 1,071,089 Income tax payable (166,320 ) 305,205 Unearned revenue 162,160 280,795 Other changes, net (30,613 ) (206,457 ) Net cash provided by operating activities $ 2,627,405 $ 19,359,139 Investing Activities Purchases of property and equipment (7,967,423 ) (4,141,485 ) Proceeds from reimbursable projects 858,134 2,103,544 Other changes, net (789,739 ) 124,701 Net cash used in investing activities $ (7,899,028 ) $ (1,913,240 ) Financing Activities Dividends paid on Series A preferred stock — (4,776,260 ) Dividends paid on Common Stock — (1,492,690 ) Reinvestment of Dividends Paid to Common Stockholders — 403,204 Distributions to non-controlling interest — (1,618,424 ) Advances on the Crimson Revolver 7,000,000 4,000,000 Payments on the Crimson Revolver (1,000,000 ) (4,000,000 ) Principal payments on the Crimson Term Loan (4,000,000 ) (4,000,000 ) Dividends paid on Vested RSUs (15,612 ) — Payments on financing arrangement (2,203,747 ) (1,170,635 ) Net cash used in financing activities $ (219,359 ) $ (12,654,805 ) Net change in Cash and Cash Equivalents (5,490,982 ) 4,791,094 Cash and Cash Equivalents at beginning of period 17,830,482 11,540,576 Cash and Cash Equivalents at end of period $ 12,339,500 $ 16,331,670 Supplemental Disclosure of Cash Flow Information Interest paid $ 9,007,546 $ 4,999,845 Income taxes paid (net of refunds) 191,000 (12,055 ) Non-Cash Investing Activities Purchases of property, plant and equipment in accounts payable and other accrued liabilities $ 1,430,552 $ 771,180 Non-Cash Financing Activities Assets acquired under financing arrangement $ — $ 1,226,402 Non-GAAP Financial Measurements (Unaudited) The following table presents a reconciliation of Net Loss, as reported in the Consolidated Statements of Operations, to Adjusted Net Loss and CAD: For the Three Months Ended June 30, 2023 March 31, 2023 Net Loss $ (3,167,350 ) $ (3,200,333 ) Add: Transaction costs 1,857,826 495,579 Restructuring costs 323,777 1,683,777 Less: Gain on the sale of equipment — 1,074 Adjusted Net Loss, excluding special items $ (985,747 ) $ (1,022,051 ) Add: Depreciation and amortization 3,237,526 4,031,627 Amortization of debt issuance costs 356,054 417,993 Stock-based compensation 102,718 (10,374 ) Deferred tax benefit (934,704 ) (11,595 ) Less: Transaction costs 1,857,826 495,579 Restructuring costs 323,777 1,683,777 Maintenance capital expenditures 2,099,717 2,222,948 Preferred dividend requirements - Series A 2,388,130 2,388,130 Preferred dividend requirements - Non-controlling interest 809,212 809,212 Mandatory debt amortization 2,000,000 2,000,000 Cash Available for Distribution (CAD) $ (7,702,815 ) $ (6,194,046 ) The following table reconciles net cash provided by (used in) operating activities, as reported in the Consolidated Statements of Cash Flows to CAD: For the Three Months Ended June 30, 2023 March 31, 2023 Net cash provided by (used in) operating activities $ 5,735,036 $ (3,107,631 ) Changes in working capital (6,140,792 ) 4,333,875 Maintenance capital expenditures (2,099,717 ) (2,222,948 ) Preferred dividend requirements (2,388,130 ) (2,388,130 ) Preferred dividend requirements - non-controlling interest (809,212 ) (809,212 ) Mandatory debt amortization included in financing activities (2,000,000 ) (2,000,000 ) Cash Available for Distribution (CAD) $ (7,702,815 ) $ (6,194,046 ) Other Special Items: Transaction costs $ 1,857,826 $ 495,579 Restructuring costs 323,777 1,683,777 Other Cash Flow Information: Net cash used in investing activities $ (4,409,007 ) $ (3,490,021 ) Net cash provided by (used in) financing activities (331,528 ) 112,169 The following table presents a reconciliation of Net Loss, as reported in the Consolidated Statements of Operations, to Adjusted EBITDA: For the Three Months Ended June 30, 2023 March 31, 2023 Net Loss $ (3,167,350 ) $ (3,200,333 ) Add: Transaction costs 1,857,826 495,579 Restructuring costs 323,777 1,683,777 Depreciation and amortization 3,237,526 4,031,627 Stock-based compensation 102,718 (10,374 ) Income tax benefit, net (932,079 ) (4,519 ) Interest expense, net 4,426,351 4,404,565 Less: Gain on the sale of equipment — 1,074 Adjusted EBITDA $ 5,848,769 $ 7,399,248 Source: CorEnergy Infrastructure Trust, Inc. View source version on businesswire.com: https://www.businesswire.com/news/home/20230814645123/en/Contacts CorEnergy Infrastructure Trust, Inc. Investor Relations Matt Kreps or Jeff Teeven 877-699-CORR (2677) info@corenergy.reit
CorEnergy Infrastructure Trust, Inc. (NYSE: CORR, CORRPrA) ("CorEnergy" or the "Company") today announced financial results for the second quarter, ended June 30, 2023. Second Quarter 2023 and Recent Highlights Reported Total Revenue of $35.7 million for the three months ended June 30, 2023. Generated Net Loss of $3.2 million and Adjusted EBITDA (a non-GAAP financial measure) of $5.8 million. Transported an average of 156,078 barrels per day. Entered into agreement to sell MoGas and Omega Pipeline Systems for $175.0 million in cash, now anticipated to close around the end of the calendar year, pending Federal Trade Commission review and subject to customary closing conditions. Filed additional proposed cost-of-service based tariff increases as a result of volume shortfalls: In February 2023, a 36% tariff increase on Crimson's SPB system and began collection of a 10% increase in March 2023. In March 2023, a 107% increase on Crimson’s KLM system, in addition to the 10% tariff increase filed Q3 2022 that is currently being collected. In July 2023, a 10% increase on Crimson's Southern California system in addition to the 10% tariff increase filed Q3 2022 that is currently being collected. Amended the Company's credit facility to revise the covenant requirements for Q3 and Q4 2023, providing additional time to manage near-term debt maturities through the proposed sale of CorEnergy's MoGas and Omega Pipeline Systems. Updated the Company's 2023 outlook to reflect changes in volume, maintenance capital and timing of the Company's anticipated MoGas and Omega sale, expecting Adjusted EBITDA of $24.0 to $26.0 million. Management Commentary "California volumes have held below our 2023 budget expectations while maintenance capital requirements are anticipated to be higher than budgeted. In response, we continue to implement our previously announced mitigation efforts, such as cost reductions, tariff rate increases, asset sales and debt reduction plans. We believe these actions will pave the way to better operating results for the Company upon approval of our pending tariff filings," said Dave Schulte, Chairman and Chief Executive Officer. "We could also receive a volume benefit upon the recently confirmed conversion of the P66 refinery to renewable diesel early next year, but we do not yet have visibility on the potential demand by other refineries for the estimated 50,000 barrels per day currently shipped on their pipeline to the Rodeo refinery. However, capturing even a small percentage of those volumes is significant for us. For example, if we capture just 5,000 barrels per day, or just 10% of the available volumes, that represents an approximately $3.8 million increase in annual revenue and approximately $3.0 million in annual EBITDA. The proposed $175 million sale of our MoGas and Omega systems to Spire is now expected to close around the end of the calendar year in order to provide additional information requested by the Federal Trade Commission." Second Quarter Performance Summary Second quarter financial highlights are as follows: For the Three Months Ended June 30, 2023 Per Common Share Total Basic Diluted Net Loss $ (3,167,350 ) $ (0.40 ) $ (0.40 ) Net Cash Provided by Operating Activities $ 2,627,405 Adjusted Net Loss1 $ (985,747 ) Cash Available for Distribution (CAD)1 $ (7,702,815 ) Adjusted EBITDA2 $ 5,848,769 Dividends Declared to Common Stockholders $ — 1 Non-GAAP financial measure. Adjusted Net Loss excludes special items of $1.9 million and $324 thousand, which are transaction costs and restructuring costs, respectively; however, CAD has not been so adjusted. Reconciliations of Adjusted Net Loss and CAD, as presented, to Net Loss and Net Cash Used in Operating Activities are included at the end of this press release. See Note 1 below for additional information. Cash available for distribution represents cash available to common stockholders after the effect of the preferred dividend requirement. 2 Non-GAAP financial measure. Adjusted EBITDA excludes special items of $1.9 million and $324 thousand, which are transaction costs and restructuring costs, respectively. Reconciliation of Adjusted EBITDA, as presented, to Net Loss is included at the end of this press release. See Note 2 below for additional information. Crimson Rate Increases During the third quarter of 2022, Crimson filed for a tariff increase of 35% on its Southern California pipeline system and 10% on its KLM pipeline. Both of the third quarter tariff filings were protested by shippers and are proceeding through the CPUC approval process, with resolution expected in 2024. The Company commenced collecting a 10% tariff increase on both systems 30 days after the respective third quarter filings. During the first quarter of 2023, Crimson filed for a 36% rate increase on its SPB pipeline and 107% increase on its KLM pipeline, additive to the 10% increase filed in 2022, based on the regulated cost-of-service tariff structure. Both tariff filings were protested by shippers and will proceed through the CPUC approval process. The Company commenced collecting a 10% tariff increase on the SPB system in March 2023. On July 1, 2023, Crimson submitted an application to the CPUC to increase tariffs on the Southern California pipeline by 10%, resulting in a cumulative 21% tariff increase since the original tariff filing. In accordance with CPUC rules, Crimson increased tariffs by 10% on the Southern California pipeline on August 1, 2023. The Company plans to file and begin collecting an additional 10% increase on its KLM and SPB systems on the anniversary dates of their initial filings until the matters are resolved. CorEnergy believes Crimson's cost-of-service justifies all requested increases. Any tariff increase is subject to refund if the CPUC determines that it was not justified. Business Development Activities CorEnergy continues to seek emerging carbon capture and sequestration business opportunities in California that could take advantage of the critical linkages represented by its Crimson systems and rights-of-way, as well as other ways to deploy its asset base in support of California's emerging new energy economy. As part of this effort, the company has funded approximately $1 million of development cost supporting the Lone Cypress Hydrogen Project, a proposed blue hydrogen plant at CRC's Net Zero Industrial Park at Elk Hills Field in Kern County. The plant is expected to produce 60 tons per day of blue hydrogen. The project aims to be California’s first blue hydrogen facility. CorEnergy expects to create a long-term relationship with Lone Cypress and receive the right to co-invest in the project along side California Resources Carbon TerraVault JV Holdco, LLC. 2023 Outlook CorEnergy revised its outlook for 2023, now calling for: Adjusted EBITDA of $24.0 to $26.0 million, inclusive of maintenance expense of $9.0 to $10.0 million, reflecting reduced volumes and delays in tariff processes (see Note 2 for additional details); Capital expenditures in the range of $11.5 to $12.5 million, incurred at periodic times throughout the year based on project timing. An expectation that the Company’s Class B Common Stock will mandatorily convert to Common Stock at a ratio of 0.68:1, as opposed to 1:1, during Q1 2024. Dividend and Distribution Status CorEnergy's Board of Directors maintained the suspension of dividend payments on its 7.375% Series A Cumulative Redeemable Preferred Stock and the Company’s Common Stock due to lower operating outlook. The Company's Board will continue to evaluate dividends on a quarterly basis. CorEnergy’s 7.375% Series A Cumulative Redeemable Preferred Stock will accrue dividends during any period in which dividends are not paid. Any accrued Series A Cumulative Redeemable Preferred dividends must be paid prior to the Company resuming common dividend payments. Based on the suspension of dividend payments to CorEnergy’s public equity holders, the Crimson Class A-1, Class A-2, and Class A-3 Units and CorEnergy’s Class B Common Stock will not receive dividends. The Crimson Class A-1 Units will accumulate a preferred distribution based on the CorEnergy Series A Cumulative Redeemable Preferred Shares, which would be paid prior to the Company resuming common dividend payments. The unpaid and accumulated preferred dividend amounts are included in the financial statements and notes. Second Quarter Results Call CorEnergy will host a conference call on Monday, August 14, 2023 at 11:00 a.m. Central Time to discuss its financial results. The call may also include discussion of Company developments and forward-looking and other material information about business and financial matters. To join the call, dial +1-973-528-0011 and provide access code 390317 at least five minutes prior to the scheduled start time. The call will also be webcast in a listen-only format. A link to the webcast will be accessible at corenergy.reit. A replay of the call will be available until 10:00 a.m. Central Time on September 13, 2023, by dialing +1-919-882-2331. The Conference ID is 48880. A webcast replay of the conference call will also be available on the Company’s website, corenergy.reit. About CorEnergy Infrastructure Trust, Inc. CorEnergy Infrastructure Trust, Inc. (NYSE: CORR, CORRPrA) is a real estate investment trust that owns and operates or leases regulated natural gas transmission and distribution lines and crude oil gathering, storage and transmission pipelines and associated rights-of-way. For more information, please visit corenergy.reit. Forward-Looking Statements The financial results in this press release reflect preliminary, unaudited results, which are not final until the Company’s Quarterly Report on Form 10-Q is filed. With the exception of historical information, certain statements contained in this press release may include "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, such as those pertaining to our guidance, pursuit of growth opportunities, anticipated transportation volumes, expected rate increases, planned capital expenditures, planned dividend payment levels, planned cost reductions, potential and pending asset sales, expected ESG program updates and developments, future compliance with debt covenants. capital resources and liquidity, and our planned acts relating thereto, and results of operations and financial condition. You can identify forward-looking statements by use of words such as "will," "may," "should," "could," "believes," "expects," "anticipates," "estimates," "intends," "projects," "goals," "objectives," "targets," "predicts," "plans," "seeks," or similar expressions or other comparable terms or discussions of strategy, plans or intentions. Although CorEnergy believes that the expectations reflected in these forward-looking statements are reasonable, they do involve assumptions, risks and uncertainties, and these expectations may prove to be incorrect. Actual results could differ materially from those anticipated in these forward-looking statements as a result of a variety of factors, including, among others, changes in economic and business conditions; a decline in oil production levels; competitive and regulatory pressures; failure to realize the anticipated benefits of requested tariff increases; risks related to the uncertainty of the projected financial information with respect to Crimson; compliance with environmental, safety and other laws; our continued ability to access debt and equity markets and comply with existing debt covenants; failure to complete pending asset sales on our expected timeline or at all; risks associated with climate change; risks associated with changes in tax laws and our ability to continue to qualify as a REIT; and other factors discussed in CorEnergy’s reports that are filed with the Securities and Exchange Commission. You should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Other than as required by law, CorEnergy does not assume a duty to update any forward-looking statement. In particular, any dividends paid in the future to our stockholders will depend on the actual performance of CorEnergy, its costs of leverage and other operating expenses and will be subject to the approval of CorEnergy’s Board of Directors and compliance with leverage covenants and other applicable requirements. 1 Management uses Adjusted Net Loss as a measure of profitability and CAD as a measure of long-term sustainable performance. Adjusted Net Loss and CAD are non-GAAP measures. Adjusted Net Loss represents net loss adjusted for transaction costs, restructuring costs, less gain on sale of equipment. CAD represents Adjusted Net Loss adjusted for depreciation and amortization, amortization of debt issuance costs, stock-based compensation, and deferred tax benefit less transaction costs, restructuring costs, maintenance capital expenditures, preferred dividend requirements, and mandatory debt amortization. 2 Management uses Adjusted EBITDA as a measure of operating performance. Adjusted EBITDA represents net loss adjusted for items such as transaction costs, restructuring costs, depreciation and amortization, stock-based compensation, income tax benefit, net, and interest expense less gain on the sale of equipment. Future period non-GAAP guidance includes adjustments for special items not indicative of our core operations, which may include, without limitation, items included in the additional financial information attached to this press release. Such adjustments may be affected by changes in ongoing assumptions and judgments, as well as nonrecurring, unusual or unanticipated charges, expenses or gains or other items that may not directly correlate to the underlying performance of our business operations. The exact amounts of these adjustments are not currently determinable but may be significant. It is therefore not practicable to provide the comparable GAAP measures or reconcile this future period non-GAAP guidance to the most comparable GAAP measures. Accordingly, we are not providing such comparable GAAP measures or reconciliations in reliance on the "unreasonable efforts" exception for forward-looking non-GAAP measures set forth in SEC rules because certain financial information, the probable significance of which cannot be determined, is not available and cannot be reasonably estimated without unreasonable effort and expense. CONSOLIDATED BALANCE SHEETS June 30, 2023 December 31, 2022 Assets (Unaudited) Property and equipment, net of accumulated depreciation of $30,066,195 and $52,908,191, respectively $ 339,805,290 $ 440,148,967 Leased property, net of accumulated depreciation of $0 and $299,463, respectively — 1,226,565 Financing notes and related accrued interest receivable, net of reserve of $50,000 and $600,000, respectively 710,467 858,079 Cash and cash equivalents 9,237,764 17,830,482 Accounts and other receivables 9,028,808 14,164,525 Due from affiliated companies 5,416 167,743 Deferred costs, net of accumulated amortization of $910,220 and $726,619, respectively 303,322 415,727 Inventory 3,579,851 5,950,051 Prepaid expenses and other assets 5,178,308 9,478,146 Operating right-of-use assets 6,096,799 4,722,361 Deferred tax asset, net 217,430 — Assets held for sale 108,670,305 — Total Assets $ 482,833,760 $ 494,962,646 Liabilities and Equity Secured credit facilities, net of deferred financing costs of $403,951 and $665,547, respectively $ 102,596,049 $ 100,334,453 Unsecured convertible senior notes, net of discount and debt issuance costs of $1,397,620 and $1,726,470, respectively 116,652,380 116,323,530 Accounts payable and other accrued liabilities 16,244,763 26,316,216 Income tax payable 8,529 174,849 Due to affiliated companies 156,274 209,750 Operating lease liability 6,067,985 4,696,410 Deferred tax liability, net — 1,292,300 Unearned revenue 566,154 5,948,621 Liabilities held for sale 7,234,513 — Total Liabilities $ 249,526,647 $ 255,296,129 Equity Series A Cumulative Redeemable Preferred Stock 7.375%, $134,301,935 liquidation preference at June 30, 2023 and 129,525,675 liquidation preference at December 31, 2022 ($2,500 per share, $0.001 par value); 69,367,000 authorized; 51,810 issued and outstanding at June 30, 2023 and December 31, 2022 $ 129,525,675 $ 129,525,675 Common stock, non-convertible, $0.001 par value; 15,350,883 and 15,253,958 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively (100,000,000 shares authorized) 15,351 15,254 Class B Common Stock, $0.001 par value; 683,761 shares issued and outstanding at June 30, 2023 and December 31, 2022 (11,896,100 shares authorized) 684 684 Additional paid-in capital 327,074,755 327,016,573 Retained deficit (341,821,204 ) (333,785,097 ) Total CorEnergy Equity 114,795,261 122,773,089 Non-controlling interest 118,511,852 116,893,428 Total Equity 233,307,113 239,666,517 Total Liabilities and Equity $ 482,833,760 $ 494,962,646 CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) For the Three Months Ended June 30, 2023 March 31, 2023 Revenue Transportation and distribution $ 28,540,632 $ 29,239,115 Pipeline loss allowance subsequent sales 7,009,996 — Lease and other revenue 103,352 103,057 Total Revenue 35,653,980 29,342,172 Expenses Transportation and distribution 17,787,024 17,481,063 Pipeline loss allowance subsequent sales cost of revenue 7,050,776 — General and administrative 7,447,410 6,771,582 Depreciation and amortization 3,237,526 4,031,627 Total Expenses 35,522,736 28,284,272 Operating Income $ 131,244 $ 1,057,900 Other Income (expense) Other income $ 195,678 $ (4,404,565 ) Interest expense (4,426,351 ) 141,813 Total Other Expense (4,230,673 ) (4,262,752 ) Loss before income taxes (4,099,429 ) (3,204,852 ) Taxes Current tax expense 2,625 7,076 Deferred tax benefit (934,704 ) (11,595 ) Income tax benefit, net (932,079 ) (4,519 ) Net Loss (3,167,350 ) (3,200,333 ) Less: Net income attributable to non-controlling interest 809,212 809,212 Net Loss attributable to CorEnergy Infrastructure Trust, Inc. $ (3,976,562 ) $ (4,009,545 ) Preferred dividend requirements 2,388,130 2,388,130 Net Loss attributable to Common Stockholders $ (6,364,692 ) $ (6,397,675 ) Common Stock Basic weighted average shares outstanding $ 15,350,883 15,272,267 Basic net loss per share $ (0.40 ) $ (0.40 ) Diluted weighted average shares outstanding 15,815,840 15,737,224 Diluted net loss per share $ (0.40 ) $ (0.41 ) Class B Common Stock Basic and diluted weighted average shares outstanding 683,761 683,761 Basic and diluted net loss per share $ (0.40 ) $ (0.40 ) Dividends declared per common share $ — $ — CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) For the Six Months Ended June 30, 2023 June 30, 2022 Operating Activities Net income (loss) $ (6,367,683 ) $ 6,534,883 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Deferred income tax, net (946,299 ) 88,422 Depreciation and amortization 7,269,153 7,968,981 Amortization of debt issuance costs 774,047 824,120 Gain on sale of equipment (1,074 ) (22,678 ) Stock-based compensation 92,344 151,359 Changes in assets and liabilities: Accounts and other receivables 1,482,880 1,024,635 Inventory 2,224,250 (587,295 ) Prepaid expenses and other assets 4,095,376 1,785,571 Due from affiliated companies, net 108,852 140,509 Accounts payable and other accrued liabilities (6,069,668 ) 1,071,089 Income tax payable (166,320 ) 305,205 Unearned revenue 162,160 280,795 Other changes, net (30,613 ) (206,457 ) Net cash provided by operating activities $ 2,627,405 $ 19,359,139 Investing Activities Purchases of property and equipment (7,967,423 ) (4,141,485 ) Proceeds from reimbursable projects 858,134 2,103,544 Other changes, net (789,739 ) 124,701 Net cash used in investing activities $ (7,899,028 ) $ (1,913,240 ) Financing Activities Dividends paid on Series A preferred stock — (4,776,260 ) Dividends paid on Common Stock — (1,492,690 ) Reinvestment of Dividends Paid to Common Stockholders — 403,204 Distributions to non-controlling interest — (1,618,424 ) Advances on the Crimson Revolver 7,000,000 4,000,000 Payments on the Crimson Revolver (1,000,000 ) (4,000,000 ) Principal payments on the Crimson Term Loan (4,000,000 ) (4,000,000 ) Dividends paid on Vested RSUs (15,612 ) — Payments on financing arrangement (2,203,747 ) (1,170,635 ) Net cash used in financing activities $ (219,359 ) $ (12,654,805 ) Net change in Cash and Cash Equivalents (5,490,982 ) 4,791,094 Cash and Cash Equivalents at beginning of period 17,830,482 11,540,576 Cash and Cash Equivalents at end of period $ 12,339,500 $ 16,331,670 Supplemental Disclosure of Cash Flow Information Interest paid $ 9,007,546 $ 4,999,845 Income taxes paid (net of refunds) 191,000 (12,055 ) Non-Cash Investing Activities Purchases of property, plant and equipment in accounts payable and other accrued liabilities $ 1,430,552 $ 771,180 Non-Cash Financing Activities Assets acquired under financing arrangement $ — $ 1,226,402 Non-GAAP Financial Measurements (Unaudited) The following table presents a reconciliation of Net Loss, as reported in the Consolidated Statements of Operations, to Adjusted Net Loss and CAD: For the Three Months Ended June 30, 2023 March 31, 2023 Net Loss $ (3,167,350 ) $ (3,200,333 ) Add: Transaction costs 1,857,826 495,579 Restructuring costs 323,777 1,683,777 Less: Gain on the sale of equipment — 1,074 Adjusted Net Loss, excluding special items $ (985,747 ) $ (1,022,051 ) Add: Depreciation and amortization 3,237,526 4,031,627 Amortization of debt issuance costs 356,054 417,993 Stock-based compensation 102,718 (10,374 ) Deferred tax benefit (934,704 ) (11,595 ) Less: Transaction costs 1,857,826 495,579 Restructuring costs 323,777 1,683,777 Maintenance capital expenditures 2,099,717 2,222,948 Preferred dividend requirements - Series A 2,388,130 2,388,130 Preferred dividend requirements - Non-controlling interest 809,212 809,212 Mandatory debt amortization 2,000,000 2,000,000 Cash Available for Distribution (CAD) $ (7,702,815 ) $ (6,194,046 ) The following table reconciles net cash provided by (used in) operating activities, as reported in the Consolidated Statements of Cash Flows to CAD: For the Three Months Ended June 30, 2023 March 31, 2023 Net cash provided by (used in) operating activities $ 5,735,036 $ (3,107,631 ) Changes in working capital (6,140,792 ) 4,333,875 Maintenance capital expenditures (2,099,717 ) (2,222,948 ) Preferred dividend requirements (2,388,130 ) (2,388,130 ) Preferred dividend requirements - non-controlling interest (809,212 ) (809,212 ) Mandatory debt amortization included in financing activities (2,000,000 ) (2,000,000 ) Cash Available for Distribution (CAD) $ (7,702,815 ) $ (6,194,046 ) Other Special Items: Transaction costs $ 1,857,826 $ 495,579 Restructuring costs 323,777 1,683,777 Other Cash Flow Information: Net cash used in investing activities $ (4,409,007 ) $ (3,490,021 ) Net cash provided by (used in) financing activities (331,528 ) 112,169 The following table presents a reconciliation of Net Loss, as reported in the Consolidated Statements of Operations, to Adjusted EBITDA: For the Three Months Ended June 30, 2023 March 31, 2023 Net Loss $ (3,167,350 ) $ (3,200,333 ) Add: Transaction costs 1,857,826 495,579 Restructuring costs 323,777 1,683,777 Depreciation and amortization 3,237,526 4,031,627 Stock-based compensation 102,718 (10,374 ) Income tax benefit, net (932,079 ) (4,519 ) Interest expense, net 4,426,351 4,404,565 Less: Gain on the sale of equipment — 1,074 Adjusted EBITDA $ 5,848,769 $ 7,399,248 Source: CorEnergy Infrastructure Trust, Inc. 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CorEnergy Infrastructure Trust, Inc. Investor Relations Matt Kreps or Jeff Teeven 877-699-CORR (2677) info@corenergy.reit