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DCP Midstream Partners Reports Second Quarter 2012 Results

DCP Midstream Partners, LP (NYSE: DPM), or the Partnership, today reported financial results for the three and six months ended June 30, 2012. The table below reflects results for the three and six months ended June 30, 2012 and 2011 on a consolidated basis and results for the 2011 periods as originally reported.

SECOND QUARTER AND YEAR TO DATE SUMMARY RESULTS
  Three Months Ended         Six Months Ended

June 30, (2)

June 30, (2)

2012 (3)
 

2011 (3)
 

As Reported in 2011
       

2012 (3)
 

2011 (3)
 

As Reported in 2011
(Unaudited)
(Millions, except per unit amounts)
       
Net income attributable to partners $ 79.1 $ 47.7 $ 41.5 $ 102.4 $ 47.7 $ 35.6
Net income per limited partner unit - basic and diluted $ 1.33 $ 0.80 $ 0.80 $ 1.64 $ 0.56 $ 0.56
Adjusted EBITDA (1) $ 35.1 $ 55.0 $ 45.0 $ 118.6 $ 118.9 $ 97.3
Adjusted net income attributable to partners (1) $ 13.9 $ 25.6 $ 20.5 $ 61.0 $ 60.7 $ 48.5
Adjusted net income per limited partner unit (1) - basic and diluted $ 0.08 $ 0.30 $ 0.33 $ 0.81 $ 0.86 $ 0.86
Distributable cash flow (1) $ 21.9 ** $ 39.0 $ 76.9 ** $ 85.4
(1)   Denotes a financial measure not presented in accordance with U.S. generally accepted accounting principles, or GAAP. Each such non-GAAP financial measure is defined below under “Non-GAAP Financial Information”, and each is reconciled to its most directly comparable GAAP financial measures under “Reconciliation of Non-GAAP Financial Measures” below.
 
(2) In March 2012, the Partnership completed the contribution from DCP Midstream, LLC (“DCP Midstream”) of the remaining 66.7 percent interest in DCP Southeast Texas Holdings, GP, in a transaction between entities under common control. This transfer of net assets between entities under common control was accounted for as if the transaction had occurred at the beginning of the period, and prior years were retrospectively adjusted to furnish comparative information similar to the pooling method. In addition, results are presented as originally reported in 2011 for comparative purposes.
 

(3)

We recognized $14.5 million and $19.1 million in non-cash lower of cost or market adjustments during the three and six months ended June 30, 2012, respectively. We recognized $0.6 million in non-cash lower of cost or market adjustments during the six months ended June 30, 2011 and no lower of cost or market adjustments for the three months ended June 30, 2011.
 
** Distributable cash flow has not been calculated under the pooling method.
 

SECOND QUARTER HIGHLIGHTS
  • Effective July 2, 2012, we completed the previously announced $200 million drop down of two non-operated Mont Belvieu fractionators from our general partner, DCP Midstream. The completion of this transaction will provide significant fee-based margins.
  • Effective July 3, 2012, we acquired the Crossroads system from Penn Virginia Resource Partners, L.P. for $63 million. Underpinned by fee-based margins, the Crossroads system located in the southeastern portion of Harrison county in East Texas includes an 80 million cubic feet per day cryogenic processing plant and related facilities.
  • Our capital projects for the construction of our natural gas processing plant in the Eagle Ford shale and our Keathley Canyon expansion project at Discovery are progressing on plan.
  • We raised $177 million of equity through a private placement, which positions us well in terms of both liquidity and cost of capital to support our growth outlook, including co-investment opportunities with our general partner.

CEO PERSPECTIVE

“Despite weakness in NGL markets, year to date financial results and distribution growth were in line with our 2012 forecast”, said Mark Borer, president and CEO of the Partnership. “Our second quarter results reflect the normal seasonality as well as reduced volumes in our wholesale propane business due to lingering weather impacts, largely offset by our accelerating growth. We continue to execute on our multi-faceted growth strategy including attractive co-investment opportunities with our general partner. We are pleased with our ongoing capital markets access and strong capital structure.”

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