First, let’s look at results for the second quarter. The dramatic downturn in the commodity environment has impacted our current and near term results. Adjusted EBITDA for the second quarter was $48.7 million compared with $55.4 million for the second quarter of 2011. Distributable cash flow was $23.4 million versus $32.9 million for the year-ago quarter. If commodity prices remain at current levels, we expect to end the year at the lower end of guidance. Adjusted for six months of Ohio River Valley operations or approximately $210 million to $215 million of EBITDA. The price impacts are in line with the sensitivity that we provided earlier this year, so there was really no surprise here.
In this scenario, our ability to raise distribution and dividends for the rest of the year will be challenged. Nevertheless, our annual growth rate which still represent an approximate 7% annual increase in distribution and an approximate 23% annual increase in dividends over 2011.
Looking ahead, 2013 is an important year for us when commercial operations from our growth projects such as Cajun-Sibon and Ohio River Valley will start to ramp up. We believe that after the commencement of Cajun-Sibon’s commercial operations in 2013, we could see a return to distribution growth rates of 8% to 10% and dividend growth rate of 20% to 25%. The majority of the capital for these ventures will be spent during 2012.
Our great work has prepared us to face this commodity environment. We’ve made fee-based growth a top priority, and as a result, over 80% of our gross margins in the second quarter is not commodity price related. We have a strong healthy organization with the right people in place. We have diversified our business by expanding into new liquids rich areas through our joint-venture with Apache in the Permian Basin, our equity ownership in Howard Energy Partners in the Eagle Ford and our Riverside crude oil and condensate logistics business in South Louisiana. These ventures are ramping up in their contributions and have broadened our business and expanded our capabilities, enabling us to create more value for our investors despite the current commodity price environment.Read the rest of this transcript for free on seekingalpha.com
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