Breitburn Energy Partners CEO Discuses Q3 2010 Results - Earnings Call Transcript

Breitburn Energy Partners LP (

BBEP

)

Q3 2010 Earnings Call

November 04, 2010 12:00 pm ET

Executives

Greg Brown - General Counsel of BreitBurn

Hal Washburn - CEO

Randy Breitenbach - President

Mark Pease - COO

Jim Jackson - CFO

Analysts

Joel Havard - Hilliard Lyons

Presentation

Operator

Compare to:
Previous Statements by BBEP
» BreitBurn Energy Partners, L.P. Q2 2010 Earnings Call Transcript
» BreitBurn Energy Partners LP Q1 2010 Earnings Call Transcript
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» BreitBurn Energy Partners L.P. Q3 2009 Earnings Conference Call

Welcome to the BreitBurn Energy Partners Investors Conference Call. The Partnership’s news release made earlier today is available from its website at www.breitburn.com. During the presentation all participants will be in a listen-only mode. Afterwards, Security Analysts and Institutional Portfolio Managers will be invited to participate in the question-and-answer session. (Operator Instructions)

As a reminder, this call is being recorded Thursday, November 04, 2010. A replay of the call will be accessible until midnight Thursday, November 18th by dialing 877-870-5176, and entering conference ID 7476456. International callers should dial 858-384-5517. An archive of this call will also be available on the BreitBurn website at www.breitburn.com.

I would now like to turn the call over to Greg Brown, Executive Vice President and General Counsel of BreitBurn. Please go ahead, sir.

Greg Brown

Presenting this morning are Hal Washburn, BreitBurn’s CEO; Randy Breitenbach, BreitBurn’s President; Mark Pease, BreitBurn’s Chief Operating Officer; and Jim Jackson, BreitBurn’s Chief Financial Officer. After their formal remarks, the call will be opened up for questions for Security Analysts and Institutional Investors.

Let me remind you that today’s conference call contains projections, guidance and other forward-looking statements within the meaning of the Federal Securities Laws. All statements other than statements of historical facts that address future activities and outcomes are forward-looking statements. These statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied in such statements. These forward-looking statements are our best estimates today, and are based upon current expectations and assumptions about future developments, many of which are beyond our control. Actual conditions and those assumptions may and probably will change from those we projected over the course of the year.

A detailed discussion of many of these uncertainties is set forth in the cautionary statement relative to forward-looking information section of today’s release and under the heading risk factors incorporated by reference from our annual report on Form 10-K for the year ended December 31, 2009, our quarterly reports on Form 10-Q, our current reports on Form 8-K and our other filings with the Securities and Exchange Commission.

Unpredictable or unknown factors not discussed in those documents also could have material adverse effects on forward-looking statements. The partnership undertakes no obligation to update publicly any forward-looking statements to reflect new information or events.

Additionally, during the course of today’s discussion, management will refer to adjusted EBITDA, which is a non-GAAP financial measure, when discussing the partnership’s financial results. Adjusted EBITDA is reconciled to its most directly comparable GAAP measure in the earnings press release made earlier this morning and posted on the Partnership’s website.

This non-GAAP financial measure should not be considered as an alternative to GAAP measures such as net income, operating income, cash flow from operating activities or any other GAAP measure of liquidity or financial performance.

Adjusted EBITDA is presented, as management believes it provides additional information relative to the performance of the Partnership’s business, such as our ability to meet our debt covenant compliance test. This non-GAAP financial measure may not be comparable to similarly titled measures of other publicly traded partnerships or limited liability companies, because all companies may not calculate adjusted EBITDA in the same manner.

With that, let me turn the call over to Hal.

Hal Washburn

Welcome everyone and thank you for joining us today to discuss our third quarter 2010 results. As we stated earlier this year, the Partnership has made return to normal operations its primary focus for 2010 and as evidenced by our solid third quarter results, we continue to deliver on our goals.

During the third quarter we produced 1.74 million barrels of oil equivalents for 18,927 barrels of oil a today, which trends above the high end of our guidance range. Lease operating expenses, excluding transportation fees and property taxes once again and in below our guidance range at $16.54 per Boe.

Capital spending increased in the third quarter to $25.6 million inline with full year 2010 capital spending guidance. Mark will elaborate in a few minutes, but our operating team has done an excellent job of efficiently executing capital program we put into place for the year.

Additionally, we continue to focus on control the operating expenses and year-to-date our financial and operating results continue to exceed guidance expectation. Although the markets have stabilized considerably since the spring of 2009, we continue to believe in importance of preserving our financial flexibility.

In October, we closed our first senior notes offering, which was very well received and over subscribed. We eventually upsized the transaction from $250 million to $305 million and priced for the coupon rate of 8.625%. The notes are due in 2020 and $290 million of the net proceeds were immediately used to reduce our borrowings on our credit facility.

Jim will go into additional details on our current liquidity position shortly, but overall we greatly reduced our reliance on short-term variable rate bank credit facility in favor of long-term fixed rate senior notes.

Last week, we announced that our Board of Directors approved an increased distribution for the third quarter. The new distribution of $0.39 per unit or $1.56 per unit on an annualized basis represents a 4% increase in distribution since we reinstated distributions for the first quarter of this year in April. It will be paid on November 12, 2010 the record holders of common units of the close of business on November 9th.

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