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Regency Energy Partners Reports Second Quarter 2012 Earnings Results

These and other risks and uncertainties are discussed in more detail in filings made by the Partnership with the Securities and Exchange Commission, which are available to the public. The Partnership undertakes no obligation to update publicly or to revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Regency Energy Partners LP (NYSE: RGP) is a growth-oriented, master limited partnership engaged in the gathering and processing, contract compression, contract treating and transportation of natural gas and the transportation, fractionation and storage of natural gas liquids. Regency's general partner is owned by Energy Transfer Equity, L.P. (NYSE: ETE). For more information, please visit Regency’s website at www.regencyenergy.com.

Consolidated Balance Sheet

 
Regency Energy Partners LP
Condensed Consolidated Balance Sheets
($ in thousands)
     
 
June 30, 2012 December 31, 2011
Assets
Current assets $ 184,934 $ 187,124
 
Property, plant and equipment, net 1,992,448 1,885,528
 
Investment in unconsolidated affiliates 2,102,503 1,924,705
Long-term derivative assets 1,872 474
Other assets, net 34,770 39,353
Intangible assets, net 726,246 740,883
Goodwill   789,789   789,789
Total Assets $ 5,832,562 $ 5,567,856
 
Liabilities and Partners' Capital and Noncontrolling Interest
Current liabilities $ 202,676 $ 233,306
 
Long-term derivative liabilities 30,644 39,112
Other long-term liabilities 5,721 6,071
Long-term debt 1,780,558 1,687,147
 
Series A Preferred Units 72,370 71,144
 
Partners' capital 3,696,842 3,498,207
Noncontrolling interest   43,751   32,869
Total Partners' Capital and Noncontrolling Interest   3,740,593   3,531,076
Total Liabilities and Partners' Capital and Noncontrolling Interest $ 5,832,562 $ 5,567,856
 
 

Consolidated Statements of Operations

 
Regency Energy Partners LP
Condensed Consolidated Statements of Operations
($ in thousands)
   
Three Months Ended June 30,
2012 2011
 
REVENUES $ 311,976 $ 356,498
 
OPERATING COSTS AND EXPENSES
Cost of sales, including related party amounts 186,815 259,475
Operation and maintenance 38,992 33,996
General and administrative, including related party amounts 16,476 17,551
Loss on asset sales, net 1,548 153
Depreciation and amortization   45,132     40,503  

Total operating costs and expenses

288,963 351,678
 
OPERATING INCOME 23,013 4,820
 
Income from unconsolidated affiliates 34,185 32,167
Interest expense, net (27,934 ) (24,689 )
Loss on debt refinancing, net (7,820 ) -
Other income and deductions, net   7,921     2,641  
INCOME BEFORE INCOME TAXES 29,365 14,939
Income tax expense   38     102  
NET INCOME $ 29,327 $ 14,837
Net income attributable to noncontrolling interest   (649 )   (293 )
NET INCOME ATTRIBUTABLE TO REGENCY ENERGY PARTNERS LP $ 28,678   $ 14,544  
 
Limited partners' interest in net income $ 24,053 $ 10,999
Weighted average number of common units outstanding 170,107,060 142,937,163
Basic income per common unit $ 0.14 $ 0.08
Diluted income per common unit $ 0.10 $ 0.07
 
 

Segment Financial and Operating Data

     
Three Months Ended June 30,
2012 2011
($ in thousands)
Gathering and Processing Segment
Financial data:
Segment margin $ 79,416 $ 50,495
Adjusted segment margin 65,463 52,642
Operating data:
Throughput (MMbtu/d) 1,380,000 1,063,000
NGL gross production (Bbls/d) 37,200 28,000
 
 
Three Months Ended June 30,
2012 2011
($ in thousands)
Contract Compression Segment
Financial data:
Segment margin $ 38,015 $ 36,973
Operating data:
Revenue generating horsepower, including intercompany revenue generating horsepower 825,000 811,000
 
 
Three Months Ended June 30,
2012 2011
($ in thousands)
Contract Treating Segment
Financial data:
Segment margin $ 7,241 $ 7,701
Operating data:
Revenue generating gallons per minute 3,773 3,368
 
 
Three Months Ended June 30,
2012 2011
($ in thousands)
Corporate & Others
Financial data:
Segment margin $ 5,497 $ 4,762
 
 

The following provides key performance measures for 100% of the Haynesville Joint Venture, the MEP Joint Venture and the Lone Star Joint Venture

   
Three Months Ended June 30,
2012   2011
($ in thousands)
Haynesville Joint Venture
Financial data:
Segment margin $ 46,311 $ 48,353
Operating data:
Throughput (MMbtu/d) 903,344 1,528,333
 
 
Three Months Ended June 30,
2012 2011
($ in thousands)
MEP Joint Venture
Financial data:
Segment margin $ 61,090 $ 61,049
Operating data:
Throughput (MMbtu/d) 1,418,206 1,197,520
 
 

Three Months Ended June 30,

From May 2, 2011 (initial Acquisition date) to June 30,

2012

2011

($ in thousands)
Lone Star Joint Venture
Financial data:
Segment margin $ 72,250 $ 46,415
Operating data:
West Texas Pipeline Throughput (Bbls/d) 133,429 128,127
NGL Fractionation Throughput (Bbls/d) 20,575 14,806
 
We acquired a 30% interest in the Lone Star Joint Venture in May 2011.
 

The following provides a reconciliation of segment margin to net income for 100% of the Haynesville Joint Venture, the MEP Joint Venture and the Lone Star Joint Venture

 
Three Months Ended June 30,
2012     2011
Haynesville Joint Venture ($ in thousands)
Net income $ 26,222 $ 30,265
Add:
Operation and maintenance 5,367 4,828
General and administrative 5,156 4,345
Depreciation and amortization 9,108 8,664
Interest expense, net 460 251
Other income and deductions, net   (2 )   -  
Total Segment Margin $ 46,311   $ 48,353  
 
 
Three Months Ended June 30,
2012 2011
MEP Joint Venture ($ in thousands)
Net income $ 20,377 $ 20,276
Add:
Operation and maintenance 3,535 3,143
General and administrative 6,922 7,310
Depreciation and amortization 17,357 17,398
Interest expense, net   12,899     12,922  
Total Segment Margin $ 61,090   $ 61,049  
 
 
Three Months Ended June 30,
2012 2011
Lone Star Joint Venture ($ in thousands)
Net income $ 41,220 $ 27,958
Add:
Operation and maintenance 15,054 6,485
General and administrative 4,496 4,649
Depreciation and amortization 12,635 7,139
Tax expense 402 192
Other income and deductions, net   (1,557 )   (8 )
Total Segment Margin $ 72,250   $ 46,415  
 
We acquired a 30% interest in Lone Star Joint Venture in May 2011.
 

Reconciliation of Non-GAAP Measures to GAAP Measures

 
Three Months Ended June 30,
2012     2011
($ in thousands)
Net income $ 29,327 $ 14,837
Add (deduct):
Interest expense, net 27,934 24,689
Depreciation and amortization 45,132 40,503
Income tax expense   38     102  
EBITDA (1) $ 102,431 $ 80,131
Add (deduct):
Non-cash gain from commodity and embedded derivatives (21,862 ) (803 )
Unit-based compensation expenses 1,005 875
Loss on asset sales, net 1,548 153
Loss on debt refinancing, net 7,820 -
Income from unconsolidated affiliates (34,185 ) (32,167 )
Partnership's interest in unconsolidated affiliates' adjusted EBITDA (2)(3)(4)(5) 59,163 55,413
Other income, net   (649 )   (146 )
Adjusted EBITDA $ 115,271   $ 103,456  
 
(1) Earnings before interest, taxes, depreciation and amortization.
 
(2) 100% of Haynesville Joint Venture's Adjusted EBITDA and the Partnership's interest are calculated as follows:
Net income Haynesville Joint Venture $ 26,222 $ 30,265
Add (deduct):
Depreciation and amortization 9,108 8,664
Interest expense, net 460 251
Other expense, net   -     -  
Haynesville Joint Venture's Adjusted EBITDA $ 35,790 $ 39,180
Ownership interest   49.99 %   49.99 %
Partnership's interest in Haynesville Joint Venture's Adjusted EBITDA $ 17,891   $ 19,586  
 
(3) 100% of MEP Joint Venture's Adjusted EBITDA and the Partnership's interest are calculated as follows:
Net income MEP Joint Venture $ 20,377 $ 20,276
Add:
Depreciation and amortization 17,357 17,398
Interest expense, net   12,899     12,913  
MEP Joint Venture's Adjusted EBITDA $ 50,633 $ 50,587
Ownership interest   50 %   49.90 %
Partnership's interest in MEP Joint Venture's Adjusted EBITDA $ 25,317   $ 25,243  
 
(4) 100% of Lone Star Joint Venture's Adjusted EBITDA and the Partnership's interest are calculated as follows:
Net income Lone Star Joint Venture $ 41,220 $ 27,958
Add (deduct):
Depreciation and amortization

$

12,635 $ 7,139
Other expenses, net

$

(673 ) $ 185  
Lone Star Joint Venture's Adjusted EBITDA $ 53,182 $ 35,282
Ownership interest   30 %   30 %
Partnership's interest in Lone Star Joint Venture's Adjusted EBITDA $ 15,954   $ 10,584  
We acquired a 30% interest in the Lone Star Joint Venture in May 2011.
 
(5) 100% of Ranch Joint Venture's Adjusted EBITDA and the Partnership's interest are calculated as follows:
Net loss Ranch Star Joint Venture $ (51 ) $ -
Add (deduct):
Depreciation and amortization

$

55   $ -  
Ranch Joint Venture's Adjusted EBITDA $ 4 $ -
Ownership interest   33 %   0 %
Partnership's interest in Ranch Joint Venture's Adjusted EBITDA $ 1   $ -  
We acquired a 33.33% interest in the Ranch Joint Venture in December 2011.
 
 

Non-GAAP Adjusted Total Segment Margin to GAAP Net Income

 
Three Months Ended June 30,
2012     2011
($ in thousands)
Net income $ 29,327 $ 14,837
Add (deduct):
Operation and maintenance 38,992 33,996
General and administrative 16,476 17,551
Loss on asset sales, net 1,548 153
Depreciation and amortization 45,132 40,503
Income from unconsolidated affiliates (34,185 ) (32,167 )
Interest expense, net 27,934 24,689
Loss on debt refinancing, net 7,820 -
Other income and deductions, net (7,921 ) (2,641 )
Income tax expense   38     102  
Total Segment Margin 125,161 97,023
Non-cash (gain) loss from commodity derivatives   (13,953 )   2,147  
Adjusted Total Segment Margin $ 111,208   $ 99,170  
 
Gathering & Processing Segment Margin $ 79,416 $ 50,495
Non-cash (gain) loss from commodity derivatives   (13,953 )   2,147  
Adjusted Gathering and Processing Segment Margin 65,463 52,642
 
Contract Compression Segment Margin 38,015 36,973
 
Contract Treating Segment Margin 7,241 7,701
 
Corporate & Others Segment Margin 5,497 4,762
 
Inter-segment Eliminations (5,008 ) (2,908 )
   
Adjusted Total Segment Margin $ 111,208   $ 99,170  
 
 

Reconciliation of “cash available for distribution” to net cash flows provided by operating activities and to net income

 
Three Months Ended June 30,
2012     2011
($ in thousands)
Net cash flows provided by operating activities $ 46,129 $ 72,136
Add (deduct):
Depreciation and amortization, including debt issuance cost and bond premium amortization (44,868 ) (43,399 )
Income from unconsolidated affiliates 32,723 33,628
Derivative valuation changes 21,862 1,140
Loss on asset sales, net (1,548 ) (153 )
Unit-based compensation expenses (1,005 ) (826 )
Cash flow changes in current assets and liabilities:
Trade accounts receivables, accrued revenues, and related party receivables (13,704 ) 16,147
Other current assets (902 ) (3,060 )
Trade accounts payable, accrued cost of gas and liquids, related party payables and deferred revenues 18,357 (40,722 )
Other current liabilities 6,360 13,377
Distributions received from unconsolidated affiliates (34,084 ) (33,628 )
Other assets and liabilities   7     197  
Net Income $ 29,327   $ 14,837  
Add:
Interest expense, net 27,934 24,689
Depreciation and amortization 45,132 40,503
Income tax expense   38     102  
EBITDA $ 102,431   $ 80,131  
Add (deduct):
Non-cash gain from commodity and embedded derivatives (21,862 ) (803 )
Unit-based compensation expenses 1,005 875
Loss on asset sales, net 1,548 153
Loss on debt refinancing, net 7,820 -
Income from unconsolidated affiliates (34,185 ) (32,167 )
Partnership's interest in unconsolidated affiliates' adjusted EBITDA 59,163 55,413
Other income, net   (649 )   (146 )
Adjusted EBITDA $ 115,271   $ 103,456  
Add (deduct):
Interest expense, excluding capitalized interest (40,971 ) (30,307 )
Maintenance capital expenditures (7,274 ) (3,190 )
Proceeds from asset sales 7,352 3,978
Distributions to Series A Preferred Units (1,945 ) (1,945 )
Other adjustments   (1,522 )   (1,417 )
Cash Available For Distribution $ 70,911   $ 70,575  




Stock quotes in this article: ETE, RGP 

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