Market Overview

Crestwood Announces Second Quarter 2018 Financial and Operating Results; Provides Strategic Delaware Basin and Powder River Basin Expansion Updates; Divests Non-Core West Coast NGL Assets

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Adjusted EBITDA Increased 6% Year-over-Year Driven by
Outperformance in G&P and MS&L Segments

2018E Adjusted EBITDA Guidance Range Tightened Upward to $400
Million to $420 Million Following Strong Year-to-Date 2018 Results and
Divestiture of West Coast NGL Assets

Crestwood Equity Partners LP (NYSE:CEQP) ("Crestwood") reported today
its financial and operating results for the three months ended June 30,
2018.

Second Quarter 2018 Highlights1

  • Second quarter 2018 net loss of $21.5 million, compared to net income
    of $0.3 million in second quarter 2017. Net loss for second quarter
    2018 includes a $24 million impairment related to the sale of West
    Coast NGL assets described below
  • Second quarter 2018 Adjusted EBITDA of $102.9 million, an increase of
    6%, compared to $97.3 million in the second quarter 2017
  • Second quarter 2018 distributable cash flow to common unitholders of
    $54.2 million; The second quarter 2018 coverage ratio was
    approximately 1.3x
  • Ended second quarter 2018 with approximately $1.6 billion in total
    debt and a 4.0x leverage ratio. Crestwood has substantial liquidity
    available under its $1.5 billion revolver with $385 million drawn as
    of June 30, 2018
  • Declared second quarter 2018 cash distribution of $0.60 per common
    unit, or $2.40 per common unit on an annualized basis, to be paid on
    August 14, 2018, to unitholders of record as of August 7, 2018
  • Tightened range of 2018 estimated Adjusted EBITDA guidance to $400
    million to $420 million, reflecting a $5 million increase in mid-point
    guidance, adjusted for the divestiture of the West Coast NGL assets
    which earned approximately $7 million in the last twelve months
  • Increased 2018 estimated growth capital guidance range to $300 million
    to $350 million, reflecting Crestwood's 50% interest in the recently
    approved Powder River Basin expansion projects and acquired ownership
    in EPIC NGL Pipeline's Orla-to-Benedum segment

Recent Project Announcements

  • Completed and placed in-service the 200 million cubic feet per day
    ("MMcf/d") Orla processing plant, Orla Express Pipeline and Willow
    Lake and Nautilus gathering system connections completing a fully
    integrated gathering and processing system which spans the core of the
    Delaware Basin; as the centerpiece of Crestwood's regional footprint,
    the Orla plant is strategically located near active drilling areas and
    is well-positioned to receive existing and future gas supplies from
    both the Willow Lake area in the northern Delaware and the Nautilus
    system in the southern Delaware
  • Acquired undivided joint ownership in the Orla-to-Benedum segment of
    EPIC Y-Grade Pipeline, LP's ("EPIC") 16" NGL pipeline, which was
    placed into service in June 2018; ownership interest provides
    Crestwood control of 80,000 Bbls/d of capacity out of the Delaware
    Basin to multiple connections in the Benedum, TX area with ultimate
    downstream access to favorable Gulf Coast markets
  • Concurrently entered into a long-term Y-grade sales agreement with
    Chevron Phillips Chemical Company ("Chevron Phillips"); the
    combination of the ownership of EPIC NGL capacity and the direct sale
    of NGL's to Chevron Phillips enhances Orla plant's downstream
    marketing options, provides greater flow assurance and improves
    net-backs for Orla's gathering and processing customers
  • Announced the fully approved Powder River Basin ("PRB") Jackalope
    joint venture (Crestwood 50% and Williams 50%) expansion program for
    2018 and 2019; includes expansion of Bucking Horse gas processing
    plant and gathering infrastructure to increase capacity from 120
    MMcf/d to 345 MMcf/d; Expansions driven by increased volumes from
    accelerated drilling and improved well results by Chesapeake Energy
    ("Chesapeake") and surrounding off-set operators; in a recent
    announcement, Chesapeake expects total net annual production from the
    PRB to more than double in 2019 compared to 2018

Management Commentary

"Crestwood continued to build strong momentum during the second quarter,
with better-than-consensus quarterly performance, timely completed
capital projects and contracts, newly announced growth projects and
non-core asset sales, while maintaining a strong balance sheet and
self-funding model through 2018 and 2019 based on current plans, said
Robert G. Phillips, Chairman, President and Chief Executive Officer of
Crestwood's general partner. "Solid execution of our strategic plan
continues to position Crestwood to deliver on improved 2018 guidance,
our 3-year 15% growth forecast and provides investors with increased
visibility to the backlog of new expansion opportunities which fit our
investment parameters in the Bakken, Delaware Basin and Powder River
Basin."

Mr. Phillips continued, "In the recent quarter, improved results from
our Gathering and Processing and Marketing, Supply and Logistics
segments drove Adjusted EBITDA to $103 million, up 6% from second
quarter 2017. Additionally, with a leverage ratio of 4.0x and a coverage
ratio of 1.3x, we continue to maintain balance sheet strength and
meaningful excess DCF during an active capital deployment period for the
partnership. Quarterly results were supported by strong market
fundamentals as crude oil and natural gas prices averaged approximately
$67.00 per barrel and $2.90 per Mcf, respectively, exceeding breakeven
economics in all of our active growth basins and resulting in higher
net-backs for our G&P customers. Our MS&L segment benefited from the
recent widening of the Mont Belvieu-Conway NGL basis differential, due
largely to increased NGL supplies coming to market and regional pipeline
disruptions, and increased output from our downstream refinery and
fractionation customers."

"Crestwood's long-term plan is built around our core growth positions in
the Bakken, Delaware Basin and Powder River Basin as fundamentals drive
continued producer development activity and the need for midstream
infrastructure in the areas that we operate. In the Bakken, we are
on-track to complete our Arrow system de-bottlenecking projects in 2018
and expect to experience meaningful volume growth in the fourth quarter
2018 and full-year 2019. The addition of the Bear Den Phase-2 plant in
2019 will add significantly to our integrated Bakken business model and
earnings growth. In the Delaware Basin, with our partner First Reserve,
the completion of the Orla plant and Orla Express Pipeline, connection
of our Willow Lake and Nautilus systems, acquisition of NGL capacity in
the EPIC NGL pipeline, and long-term sales agreement with Chevron
Phillips creates a similarly integrated midstream business model that
greatly enhances our ability to compete for new volumes in this active
region. In the Powder River Basin, with our partner Williams, the
Jackalope expansion is expected to maintain pace with rapidly growing
volumes from Chesapeake and third-party off-set producers. Overall,
Crestwood's visible backlog of growth projects in all three basins will
provide the partnership a multi-year path to accretive cash flow growth
that is fully financed internally through excess cash flow and our
revolving credit facility."

Second Quarter 2018 Segment Results and Outlook

Gathering and Processing segment EBITDA totaled $78.8 million in the
second quarter 2018, an increase of 16%, compared to $68.1 million in
the second quarter 2017. During the second quarter 2018, average natural
gas gathering volumes were 1,036 MMcf/d, or 12% above second quarter
2017, gas processing volumes were 283 MMcf/d, or 28% above second
quarter 2017, compression volumes were 482 MMcf/d, crude oil gathering
volumes were 76 thousand barrels per day ("MBbls/d"), and produced water
volumes were 44 MBbls/d, or 21% above second quarter 2017. Gathering and
Processing segment EBITDA increased during the quarter due to solid
year-over-year volume growth on the Bakken, Delaware Basin and Powder
River Basin systems and the expansion of services Crestwood is providing
its G&P customers.

Storage and Transportation segment EBITDA totaled $14.2 million in the
second quarter 2018, compared to $16.6 million in the second quarter
2017. Second quarter 2018 natural gas storage and transportation volumes
averaged 2.1 Bcf/d, compared to 2.3 Bcf/d in the second quarter 2017.
Stagecoach Gas Services, our 50/50 joint venture with Consolidated
Edison, saw increased relative storage injections during the period and
new gas services to area power generation facilities as that market for
natural gas grows. Effective July 1, 2018, Crestwood began receiving a
40% cash distribution from the Stagecoach joint venture. The final
distribution step-up to 50/50 will occur in July 2019. At the COLT Hub,
daily rail crude oil loading volumes increased 22% from the first
quarter 2018 driven by wider WTI/Brent spreads and favorable economics
for Bakken crude with refinery customers in the East and West Coast
markets. The COLT Hub averaged rail loading volumes of approximately 58
MBbls/d during the month of June 2018.

Marketing, Supply and Logistics segment EBITDA totaled $12.3 million in
the second quarter 2018, compared to $15.1 million in the second quarter
2017. Both periods exclude the non-cash change in fair value of
commodity inventory-related derivative contracts and the impairments on
the divestiture of the West Coast assets described below. Second quarter
2018 EBITDA reflects the divestiture of US Salt which contributed
approximately $6.7 million of segment EBITDA in the second quarter 2017.
Adjusted for the divestiture of US Salt, MS&L segment EBITDA increased
by approximately 46% from the second quarter 2017 due to an expanded US
NGL supply base and market dislocations caused by increased NGL supplies
from various high-growth regions and regional pipeline outages.

Combined O&M and G&A expenses, net of non-cash unit based compensation
in the second quarter 2018 were $45.0 million compared to $51.5 million
in the second quarter 2017. Crestwood reduced combined O&M and G&A
expenses by approximately $6.5 million, or 13%, primarily driven by
Crestwood's efforts to streamline its MS&L segment operations and to
lower insurance costs through safer operations across its entire asset
base.

Second Quarter 2018 Business Update

Bakken Update

During the second quarter 2018, the Arrow system averaged crude oil
volumes of 76.2 MBbls/d, or 7% below the second quarter 2017, while
natural gas volumes of 67.8 MMcf/d and produced water volumes of 43.6
MBbls/d, increased 37% and 21%, respectively, over the second quarter
2017. The increased gas and produced water volumes were the result of
completed debottlenecking projects enabling the system to capture
previously flared, curtailed or trucked volumes. Crestwood expects
continued acceleration in producer completions and corresponding volume
growth throughout the second half of 2018 and into 2019 as more
de-bottlenecking projects are completed.

The overall Arrow expansion plan will increase the crude gathering
capacity to 120 MBbls/d, natural gas gathering capacity to 150 MMcf/d
and produced water gathering capacity to 75 MBbls/d. In the second
quarter, Crestwood commenced construction of the Bear Den Phase-2
processing plant that will increase combined processing capacity of
Arrow gas to 150 MMcf/d. The Bear Den Phase-2 plant expansion, expected
to go in service in the third quarter of 2019, will allow Crestwood to
discontinue using third party processing and begin processing 100% of
the gas volumes on the Arrow system, significantly reducing flaring on
the Fort Berthold Indian Reservation and provide greater flow assurance
to customers.

Delaware Basin Update

During the second quarter 2018, Crestwood's Delaware Basin gathering
assets averaged natural gas volumes of 157 MMcf/d, a 184% increase over
the second quarter 2017. Gathering volumes in the Delaware Basin
increased significantly due to the in-service of the Nautilus gathering
system in June 2017 and Nautilus system volume growth in the second
quarter 2018. Currently, there are nine active rigs operating on
Crestwood's Delaware Basin gathering systems that will result in
continued volume growth through the remainder of 2018.

As previously announced, Crestwood Permian Basin Holdings LLC
("CPJV"), a 50/50 joint venture between Crestwood and First Reserve,
commissioned the Orla plant, a new 200 MMcf/d cryogenic gas processing
plant located in Reeves County, TX. Concurrently, CPJV brought into
service the Orla Express Pipeline, a 33 mile, 20" high pressure line
connecting the existing Willow Lake system with the Orla plant, and the
Nautilus-to-Orla Pipeline, a 28 mile, 20" high pressure line connecting
the Nautilus system to the Orla plant. The Orla plant and associated
infrastructure was placed into service on schedule, on budget, and
without any major recordable safety incidents. CPJV's asset footprint in
the Delaware Basin includes 255 MMcf/d of processing capacity, 650
MMcf/d of natural gas gathering capacity and 390 miles of integrated
pipelines spanning the northern & southern Delaware Basin.

Recently, CPJV entered into the following transactions to secure a
competitive NGL takeaway solution that will allow continued growth in
its now fully integrated G&P footprint:

EPIC NGL Pipeline Transaction

CPJV entered into an agreement with EPIC to acquire undivided joint
ownership in the Orla-to-Benedum segment of EPIC's 16" pipeline, which
was placed into service June 2018. The ownership interest provides CPJV
control of 80,000 Bbls/d of capacity out of the Delaware Basin to
multiple downstream connections in the Benedum, TX area with ultimate
access to Sweeny, Mont Belvieu, and Corpus Christi markets. CPJV's
80,000 Bbls/d of capacity, which is sufficient to move NGL product from
the new 200 MMcf/d Orla plant plus two additional 250 MMcf/d processing
train expansions, is being marketed on a standalone basis as a CPJV
proprietary pipeline.

Chevron Phillips Y-Grade Sales Agreement

Simultaneously, CPJV entered into a long-term purchase and sale
agreement with Chevron Phillips in which CPJV will sell, and Chevron
Phillips will purchase, Y-grade originating from CPJV's Orla plant in
Reeves County, TX. Under the agreement, Crestwood will deliver Y-grade
product via EPIC's Orla-to-Benedum segment to Chevron Phillips at the EZ
Pipeline at Benedum Station, through which the product has the ability
to reach multiple outlets to Mont Belvieu and be a key feedstock
supplier to Chevron Phillips's Sweeny Complex located along the Gulf
Coast.

Powder River Basin Update

During the second quarter 2018, the Jackalope system averaged gathering
volumes of 94 MMcf/d, an increase of 55% over the second quarter 2017.
Recent daily gathering volumes have exceeded 125 MMcf/d as Chesapeake
continues to aggressively develop the Turner formation. Currently,
Chesapeake has five rigs operating on the Jackalope system.

Recently, Williams and Crestwood announced, through the Jackalope joint
venture, a major expansion of the Jackalope gathering system and Bucking
Horse processing plant in Converse County, Wyoming. Through a series of
projects, Jackalope will increase gathering and processing capacity from
the current 120 MMcf/d to 345 MMcf/d by the end of 2019. Initially,
Jackalope will add compression to increase the capacity of the existing
Bucking Horse plant from 120 MMcf/d to 145 MMcf/d by the end of fourth
quarter 2018, and then add a second 200 MMcf/d plant on the current
Bucking Horse footprint by end of 2019. Gathering system capacity will
be added as needed to support Chesapeake's development plans.

On July 26, 2018, Chesapeake announced the pending sale of its Utica
Shale assets for approximately $2 billion and reiterated its commitment
to its Powder River Basin assets as the oil growth engine of the
company. In that release, Chesapeake further stated that its net
production from this area is expected to reach approximately 38,000
barrels of oil equivalent per day by year-end 2018 and that its net
production from the PRB will more than double in 2019 compared to 2018.

The Powder River Basin is experiencing a resurgence of producer activity
with 19 rigs currently operating in the basin targeting primarily the
Turner, Frontier, Mowry, Sussex and Niobrara formations. Based on the
increasing productivity of recently completed Turner and Niobrara wells
and the current level of rig activity within and around the joint
venture's dedicated acreage, volumes are expected to approach the full
capacity of the expanded Jackalope system by 2021.

Non-Core Asset Divestiture

On June 30, 2018, Crestwood entered into an agreement to sell 100% of
the equity interests of Crestwood West Coast LLC, to an undisclosed
buyer. The assets of Crestwood West Coast LLC include a small gas
gathering and processing system, fractionator, butamer and various rail
and truck terminal and storage facilities which served Crestwood's West
Coast NGL customers. The assets earned approximately $7 million in the
previous twelve months. Additionally, at closing, Crestwood and the
buyer will execute a railcar unloading and fractionation agreement that
will provide Crestwood with continued Y-grade marketing and
fractionation options for Bakken, Powder River Basin, and West Texas
Y-grade volumes at the West Coast facility. Crestwood intends to use the
proceeds from the divestiture to reduce borrowings under its revolving
credit facility and reinvest in its 2018 and 2019 capital program. In
connection with this transaction, Crestwood recorded a $24 million
non-cash impairment loss on its long-lived assets during the second
quarter 2018. The transaction is subject to customary closing conditions
and is expected to close during the third quarter 2018.

Capitalization and Liquidity Update

Crestwood invested approximately $47 million in consolidated growth
capital projects during the second quarter 2018 and approximately $105
million in the first half of 2018. For full-year 2018, Crestwood is
increasing its previously stated growth capital guidance of $250 million
to $300 million up to $300 million to $350 million to reflect its
interest in the recently approved Powder River Basin and Delaware Basin
expansion projects. As of June 30, 2018, Crestwood had approximately
$1.6 billion of debt outstanding, comprised of $1.2 billion of
fixed-rate senior notes and $385 million outstanding under its $1.5
billion revolving credit facility. Crestwood's leverage ratio was 4.0x
as of June 30, 2018.

Based on the current outlook for the remainder of 2018, Crestwood does
not expect any equity issuance to execute its current growth capital
plan. Crestwood will continue to utilize excess retained DCF, proceeds
from the divestiture of the West Coast NGL assets, and significant
availability under its revolving credit facility to continue
self-funding its 2018 capital needs and expects to complete the year
within its previously guided total leverage ratio range of 4.0-4.5x.
Crestwood currently has 71.3 million preferred units outstanding (par
value of $9.13 per unit) which pay a fixed-rate annual cash distribution
of 9.25%, payable quarterly.

Upcoming Conference Participation

Crestwood's management will participate in the following upcoming
investor conferences. Prior to the start of each conference, new
presentation materials may be posted to the Investors section of
Crestwood's website at www.crestwoodlp.com.

  • Goldman Sachs Power, Utilities, MLPs and Pipelines Conference on
    August 9th in New York, NY
  • Citi One-on-One MLP/Midstream Infrastructure Conference on August 15th
    – 16th in Las Vegas, NV
  • CapitalOne Permian Deep Dive Panel on September 12th in New
    York, NY

Earnings Conference Call Schedule

Management will host a conference call for investors and analysts of
Crestwood today at 9:00 a.m. Eastern Time (8:00 a.m. Central Time) which
will be broadcast live over the Internet. Investors will be able to
connect to the webcast via the "Investors" page of Crestwood's website
at www.crestwoodlp.com.
Please log in at least 10 minutes in advance to register and download
any necessary software. A replay will be available shortly after the
call for 90 days.

Non-GAAP Financial Measures

Adjusted EBITDA and distributable cash flow are non-GAAP financial
measures. The accompanying schedules of this news release provide
reconciliations of these non-GAAP financial measures to their most
directly comparable financial measures calculated and presented in
accordance with GAAP. Our non-GAAP financial measures should not be
considered as alternatives to GAAP measures such as net income or
operating income or any other GAAP measure of liquidity or financial
performance.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning
of the U.S. Private Securities Litigation Reform Act of 1995 and Section
21E of the Securities and Exchange Act of 1934. The words "expects,"
"believes," anticipates," "plans," "will," "shall," "estimates," and
similar expressions identify forward-looking statements, which are
generally not historical in nature. Forward-looking statements are
subject to risks and uncertainties and are based on the beliefs and
assumptions of management, based on information currently available to
them. Although Crestwood believes that these forward-looking statements
are based on reasonable assumptions, it can give no assurance that any
such forward-looking statements will materialize. Important factors that
could cause actual results to differ materially from those expressed in
or implied from these forward-looking statements include the risks and
uncertainties described in Crestwood's reports filed with the Securities
and Exchange Commission, including its Annual Report on Form 10-K and
its subsequent reports, which are available through the SEC's EDGAR
system at www.sec.gov
and on our website. Readers are cautioned not to place undue reliance on
forward-looking statements, which reflect management's view only as of
the date made, and Crestwood assumes no obligation to update these
forward-looking statements.

About Crestwood Equity Partners LP

Houston, Texas, based Crestwood Equity Partners LP (NYSE:CEQP) is a
master limited partnership that owns and operates midstream businesses
in multiple shale resource plays across the United States. Crestwood
Equity is engaged in the gathering, processing, treating, compression,
storage and transportation of natural gas; storage, transportation,
terminalling, and marketing of NGLs; gathering, storage, terminalling
and marketing of crude oil; and gathering and disposal of produced water.

1 Please see non-GAAP reconciliation table included at the
end of the press release.

 
CRESTWOOD EQUITY PARTNERS LP

Consolidated Statements of Operations
(in
millions, except unit and per unit data
)

(unaudited)

   

Three Months Ended
June 30,

   

Six Months Ended
June 30,

2018   2017 2018   2017
Revenues:
Gathering and processing $ 255.4 $ 404.7 $ 595.7 $ 772.8
Storage and transportation 5.1 8.5 9.3 18.5
Marketing, supply and logistics 579.7 436.7 1,349.9 886.2
Related party 0.3   0.4   0.6   0.9  
Total revenues 840.5 850.3 1,955.5 1,678.4
Cost of products/services sold 725.4 729.6 1,691.2 1,413.1
 
Expenses:
Operations and maintenance 31.9 34.2 66.4 67.9
General and administrative 23.4 22.7 47.3 49.1
Depreciation, amortization and accretion 44.5 48.7 89.6 97.1
Loss on long-lived assets, net 24.4     24.1    
124.2   105.6   227.4   214.1  
Operating income (loss) (9.1 ) 15.1 36.9 51.2
Earnings from unconsolidated affiliates, net 12.0 9.6 24.4 17.7
Interest and debt expense, net (24.3 ) (24.1 ) (48.7 ) (50.6 )
Loss on modification/extinguishment of debt (0.4 ) (37.7 )
Other income, net 0.1   0.1   0.2   0.2  
Income (loss) before income taxes (21.3 ) 0.3 12.8 (19.2 )
(Provision) benefit for income taxes (0.2 )   (0.2 ) 0.1  
Net income (loss) (21.5 ) 0.3 12.6 (19.1 )
Net income attributable to non-controlling partners 4.0   6.3   8.0   12.4  
Net income (loss) attributable to Crestwood Equity Partners LP (25.5 ) (6.0 ) 4.6 (31.5 )
Net income attributable to preferred units 15.1   13.5   30.1   31.3  
Net loss attributable to partners $ (40.6 ) $ (19.5 ) $ (25.5 ) $ (62.8 )
 
Common unitholders' interest in net loss $ (40.6 ) $ (19.5 ) $ (25.5 ) $ (62.8 )
 
Net loss per limited partner unit:
Basic $ (0.57 ) $ (0.28 ) $ (0.36 ) $ (0.90 )
Diluted $ (0.57 ) $ (0.28 ) $ (0.36 ) $ (0.90 )
 
Weighted-average limited partners' units outstanding (in thousands):
Basic 71,225 69,655 71,195 69,676
Dilutive units        
Diluted 71,225   69,655   71,195   69,676  
 
CRESTWOOD EQUITY PARTNERS LP

Selected Balance Sheet Data

(in millions)

   

June 30,
2018

   

December 31,
2017

(unaudited)
 
Cash $ 6.1 $ 1.3
 

Outstanding debt:

Crestwood Midstream Partners LP
Revolving Credit Facility $ 385.0 $ 318.2
Senior Notes 1,200.0 1,200.0
Other 1.7   2.4
Subtotal 1,586.7 1,520.6
Less: deferred financing costs, net 24.8   28.4
Total debt $ 1,561.9   $ 1,492.2
 
Total partners' capital $ 2,092.0   $ 2,180.5
 

Crestwood Equity Partners LP partners'
capital

Common units outstanding 71.7 70.7
 
CRESTWOOD EQUITY PARTNERS LP

Reconciliation of Non-GAAP Financial Measures

(in millions)

(unaudited)

   

Three Months Ended
June 30,

   

Six Months Ended
June 30,

2018   2017 2018   2017

EBITDA

Net income (loss) $ (21.5 ) $ 0.3 $ 12.6 $ (19.1 )
Interest and debt expense, net 24.3 24.1 48.7 50.6
Loss on modification/extinguishment of debt 0.4 37.7
Provision (benefit) for income taxes 0.2 0.2 (0.1 )
Depreciation, amortization and accretion 44.5   48.7   89.6   97.1  
EBITDA (a) $ 47.5 $ 73.5 $ 151.1 $ 166.2
Significant items impacting EBITDA:
Unit-based compensation charges 10.3 5.4 17.5 12.7
Loss on long-lived assets, net 24.4 24.1
Earnings from unconsolidated affiliates, net (12.0 ) (9.6 ) (24.4 ) (17.7 )
Adjusted EBITDA from unconsolidated affiliates, net 21.9 17.8 44.0 33.4
Change in fair value of commodity inventory-related derivative
contracts
10.1 3.7 (10.1 ) (14.9 )
Significant transaction and environmental related costs and other
items
0.7   6.5   2.4   8.5  
Adjusted EBITDA (a) $ 102.9 $ 97.3 $ 204.6 $ 188.2
 

Distributable Cash Flow

Adjusted EBITDA (a) $ 102.9 $ 97.3 $ 204.6 $ 188.2
Cash interest expense (b) (23.6 ) (23.0 ) (46.7 ) (48.0 )
Maintenance capital expenditures (c) (5.3 ) (9.5 ) (11.3 ) (11.8 )
Adjusted EBITDA from unconsolidated affiliates, net (21.9 ) (44.0 )
Distributable cash flow from unconsolidated affiliates 20.6 41.8
(Provision) benefit for income taxes (0.2 ) (0.2 ) 0.1
Deficiency payments   0.3     (0.2 )
Distributable cash flow attributable to CEQP 72.5 65.1 144.2 128.3
Distributions to preferred (15.0 ) (30.0 )
Distributions to Niobrara preferred (3.3 ) (3.8 ) (6.6 ) (7.6 )
Distributable cash flow attributable to CEQP common (d) $ 54.2   $ 61.3   $ 107.6   $ 120.7  
 
(a) EBITDA is defined as income before income taxes, plus debt-related
costs (interest and debt expense, net and loss on
modification/extinguishment of debt) and depreciation, amortization
and accretion expense. Adjusted EBITDA considers the adjusted
earnings impact of our unconsolidated affiliates by adjusting our
equity earnings or losses from our unconsolidated affiliates to
reflect our proportionate share (based on the distribution
percentage) of their EBITDA, excluding impairments. Adjusted EBITDA
also considers the impact of certain significant items, such as
unit-based compensation charges, gains or losses on long-lived
assets, third party costs incurred related to potential and
completed acquisitions, certain environmental remediation costs, the
change in fair value of commodity inventory-related derivative
contracts, costs associated with the realignment of our Marketing,
Supply and Logistics operations and other transactions identified in
a specific reporting period. The change in fair value of commodity
inventory-related derivative contracts is considered in determining
Adjusted EBITDA given that the timing of recognizing gains and
losses on these derivative contracts differs from the recognition of
revenue for the related underlying sale of inventory to which these
derivatives relate. Changes in the fair value of other derivative
contracts is not considered in determining Adjusted EBITDA given the
relatively short-term nature of those derivative contracts. EBITDA
and Adjusted EBITDA are not measures calculated in accordance with
generally accepted accounting principles (GAAP), as they do not
include deductions for items such as depreciation, amortization and
accretion, interest and income taxes, which are necessary to
maintain our business. EBITDA and Adjusted EBITDA should not be
considered alternatives to net income, operating cash flow or any
other measure of financial performance presented in accordance with
GAAP. EBITDA and Adjusted EBITDA calculations may vary among
entities, so our computation may not be comparable to measures used
by other companies.
(b) Cash interest expense less amortization of deferred financing costs.
(c) Maintenance capital expenditures are defined as those capital
expenditures which do not increase operating capacity or revenues
from existing levels.
(d) Beginning in 2018, distributable cash flow is defined as Adjusted
EBITDA, adjusted for cash interest expense, maintenance capital
expenditures, income taxes, and our proportionate share (based on
the distribution percentage) of our unconsolidated affiliates'
distributable cash flow. In 2017, distributable cash flow was
defined as Adjusted EBITDA, less cash interest expense, maintenance
capital expenditures, income taxes, and changes in deferred revenue
(primarily related to deficiency payments). Distributable cash flow
should not be considered an alternative to cash flows from operating
activities or any other measure of financial performance calculated
in accordance with GAAP as those items are used to measure operating
performance, liquidity, or the ability to service debt obligations.
We believe that distributable cash flow provides additional
information for evaluating our ability to declare and pay
distributions to unitholders. Distributable cash flow, as we define
it, may not be comparable to distributable cash flow or similarly
titled measures used by other companies.
 
CRESTWOOD EQUITY PARTNERS LP

Reconciliation of Non-GAAP Financial Measures

(in millions)

(unaudited)

   

Three Months Ended
June 30,

   

Six Months Ended
June 30,

2018   2017 2018   2017

EBITDA

Net cash provided by operating activities $ 11.3 $ 74.0 $ 160.0 $ 132.9
Net changes in operating assets and liabilities 48.7 (16.8 ) (12.8 ) (1.6 )
Amortization of debt-related deferred costs (1.8 ) (1.7 ) (3.6 ) (3.5 )
Interest and debt expense, net 24.3 24.1 48.7 50.6
Unit-based compensation charges (10.3 ) (5.4 ) (17.5 ) (12.7 )
Loss on long-lived assets, net (24.4 ) (24.1 )
Earnings from unconsolidated affiliates, net, adjusted for cash
distributions received
(0.4 ) (0.8 ) 0.2 (0.5 )
Deferred income taxes 0.1 0.2 0.7
Provision (benefit) for income taxes 0.2 0.2 (0.1 )
Other non-cash (income) expense (0.1 )   (0.2 ) 0.4  
EBITDA (a) $ 47.5 $ 73.5 $ 151.1 $ 166.2
Unit-based compensation charges 10.3 5.4 17.5 12.7
Loss on long-lived assets, net 24.4 24.1
Earnings from unconsolidated affiliates, net (12.0 ) (9.6 ) (24.4 ) (17.7 )
Adjusted EBITDA from unconsolidated affiliates, net 21.9 17.8 44.0 33.4
Change in fair value of commodity inventory-related derivative
contracts
10.1 3.7 (10.1 ) (14.9 )
Significant transaction and environmental related costs and other
items
0.7   6.5   2.4   8.5  
Adjusted EBITDA (a) $ 102.9   $ 97.3   $ 204.6   $ 188.2  
 
(a) EBITDA is defined as income before income taxes, plus debt-related
costs (interest and debt expense, net and loss on
modification/extinguishment of debt) and depreciation, amortization
and accretion expense. Adjusted EBITDA considers the adjusted
earnings impact of our unconsolidated affiliates by adjusting our
equity earnings or losses from our unconsolidated affiliates to
reflect our proportionate share (based on the distribution
percentage) of their EBITDA, excluding impairments. Adjusted EBITDA
also considers the impact of certain significant items, such as
unit-based compensation charges, gains or losses on long-lived
assets, third party costs incurred related to potential and
completed acquisitions, certain environmental remediation costs, the
change in fair value of commodity inventory-related derivative
contracts, costs associated with the realignment of our Marketing,
Supply and Logistics operations and other transactions identified in
a specific reporting period. The change in fair value of commodity
inventory-related derivative contracts is considered in determining
Adjusted EBITDA given that the timing of recognizing gains and
losses on these derivative contracts differs from the recognition of
revenue for the related underlying sale of inventory to which these
derivatives relate. Changes in the fair value of other derivative
contracts is not considered in determining Adjusted EBITDA given the
relatively short-term nature of those derivative contracts. EBITDA
and Adjusted EBITDA are not measures calculated in accordance with
generally accepted accounting principles (GAAP), as they do not
include deductions for items such as depreciation, amortization and
accretion, interest and income taxes, which are necessary to
maintain our business. EBITDA and Adjusted EBITDA should not be
considered alternatives to net income, operating cash flow or any
other measure of financial performance presented in accordance with
GAAP. EBITDA and Adjusted EBITDA calculations may vary among
entities, so our computation may not be comparable to measures used
by other companies.
 
CRESTWOOD EQUITY PARTNERS LP
Segment Data

(in millions)

(unaudited)

   

Three Months Ended
June 30,

   

Six Months Ended
June 30,

2018   2017 2018   2017

Gathering and Processing

Revenues $ 300.9 $ 439.2 $ 682.5 $ 838.1
Costs of product/services sold 208.8 354.7 496.5 671.3
Operations and maintenance expenses 17.8 18.2 35.5 35.6
Gain on long-lived assets 0.1
Earnings from unconsolidated affiliates, net 4.5   1.8   10.2   3.4  
EBITDA $ 78.8 $ 68.1 $ 160.8 $ 134.6
 

Storage and Transportation

Revenues $ 7.6 $ 10.2 $ 13.8 $ 22.0
Costs of product/services sold 0.1 0.1 0.2 0.1
Operations and maintenance expenses 0.8 1.3 1.6 2.4
Earnings from unconsolidated affiliates, net 7.5   7.8   14.2   14.3  
EBITDA $ 14.2 $ 16.6 $ 26.2 $ 33.8
 

Marketing, Supply and Logistics

Revenues $ 532.0 $ 400.9 $ 1,259.2 $ 818.3
Costs of product/services sold 516.5 374.8 1,194.5 741.7
Operations and maintenance expenses 13.3 14.7 29.3 29.9
Loss on long-lived assets, net (24.4 )   (24.2 )  
EBITDA $ (22.2 ) $ 11.4 $ 11.2 $ 46.7
 
Total Segment EBITDA $ 70.8 $ 96.1 $ 198.2 $ 215.1
Corporate (23.3 ) (22.6 ) (47.1 ) (48.9 )
EBITDA $ 47.5   $ 73.5   $ 151.1   $ 166.2  
 
CRESTWOOD EQUITY PARTNERS LP
Operating Statistics

(unaudited)

   

Three Months Ended
June 30,

   

Six Months Ended
June 30,

2018   2017 2018   2017

Gathering and Processing (MMcf/d)

Bakken - Arrow 67.8 49.6 65.6 49.4
Marcellus 391.2 378.2 411.6 369.1
Barnett 279.6 321.4 284.0 326.2
Permian (a) 156.7 55.2 143.1 47.1
PRB Niobrara - Jackalope Gas Gathering (a) 93.5 60.5 84.4 53.9
Other 47.3   58.3   48.3   60.2  
Total gas gathering volumes 1,036.1 923.2 1,037.0 905.9
Processing volumes 282.9 221.3 278.4 214.8
Compression volumes 482.4 470.5 475.8 468.5
Arrow Midstream
Bakken Crude Oil (MBbls/d) 76.2 81.7 78.2 75.2
Bakken Water (MBbls/d) 43.6 36.1 41.2 33.8
 

Storage and Transportation

Northeast Storage - firm contracted capacity (Bcf) (a) 33.7 34.7 32.6 35.2
% of operational capacity contracted 97 % 100 % 94 % 100 %
Firm storage services (MMcf/d) (a) 406.8 399.5 381.6 343.1
Interruptible storage services (MMcf/d) (a) 3.9 6.0 2.4 3.5
Northeast Transportation - firm contracted capacity (MMcf/d) (a) 1,571.0 1,477.2 1,531.8 1,444.8
% of operational capacity contracted 86 % 83 % 84 % 81 %
Firm services (MMcf/d) (a) 1,287.1 1,420.8 1,327.3 1,370.0
Interruptible services (MMcf/d) (a) 80.5 89.6 61.1 82.8
Gulf Coast Storage - firm contracted capacity (Bcf) (a) 27.0 26.2 27.7 28.7
% of operational capacity contracted 70 % 68 % 72 % 75 %
Firm storage services (MMcf/d) (a) 259.5 236.8 306.9 266.1
Interruptible services (MMcf/d) (a) 104.9 133.4 103.9 85.9
COLT Hub
Rail loading (MBbls/d) 43.8 44.0 39.9 50.9
Outbound pipeline (MBbls/d) (c) 13.9 19.3 13.0 14.4
 

Marketing, Supply and Logistics

NGL Operations
NGL volumes sold or processed (MBbls/d) 96.2 114.4 132.4 116.9
NGL volumes trucked (MBbls/d) 50.7 49.0 50.4 56.6
Crude Operations
Crude barrels trucked (MBbls/d) 8.2 5.1 7.9 6.1
                 
(a) Represents 50% owned joint venture, operational data reported is at
100%.
(b) Represents only throughput leaving the terminal.

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