Breitburn's CEO Discusses Q1 2012 Results - Earnings Call Transcript

Breitburn Energy Partners L.P. (BBEP)

Q1 2012 Results Earnings Call

May 07, 2012 1:00 PM ET

Executives

Greg Brown – Executive Vice President and General Counsel

Hal Washburn – Chief Executive Officer

Randy Breitenbach – President

Mark Pease – Chief Operating Officer

Jim Jackson – Chief Financial Officer

Analysts

John Ragozzino – RBC Capital Markets

Bernie Colson – Global Hunter

Ethan Bellamy – Baird

Kevin Smith – Raymond James

Michael Blum – Wells Fargo

Presentation

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the BreitBurn Energy Partners Inventor Conference Call. The Partnership’s new 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, securities analysts and institutional portfolio managers will be invited to participate in a question-and-answer session. (Operator instructions)

As a reminder, this call is being recorded, Monday, May 7, 2012. A replay of the call will be accessible until midnight, Monday, May 21st by dialing 877-870-5176 and entering the conference ID 7248609. International callers should dial 858-384-5517, an achieve of this call will also be available on the BreitBurn website at www.breitburn.com.

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

Greg Brown

Thanks, Operator, and good morning, everyone. 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 open for questions from securities analysts and institutional investors.

Let me remind you that today’s conference call contains projects, guidance and other forward-looking statements within the meaning of the Federal Securities law. All statements, other than statements of historical fact, 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 our current expectations and assumptions about future developments, many of which are beyond our control. Actual conditions, 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 are 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 currently on file for the year ended December 31, 2011 and our quarterly reports on From-Q, our current reports on Form 8-K and our other filings with the Securities and Exchange Commission.

Except where legally required, the Partnership undertakes no obligation to update publically 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 alternate to GAAP measures such as net income, operating income or cash flow from operating activities or any other GAAP measure of liquidity or financial performance.

Adjusted EBITDA is presented because management believes it provides additional information relative to the performance of the Partnership’s business. This non-GAAP financial measure may not be comparable to similarly titled measures of other publically traded partnership’s, limited liability companies because all companies may not calculate adjusted EBITDA in the same manner.

Now, with that, let me turn the cal over to Hal.

Hal Washburn

Thank you, Greg. Welcome, everyone and thank you for joining us today to discuss our first quarter of 2012. We completed this quarter with consistent operating and financial performance, and we are also very pleased to announce an excellent bolt-on acquisition in the Big Horn Basin, Wyoming, and an increase in our 2012 capital program based on the success of our recent drilling projects in California.

Let me start by discussing a few key quarterly highlights. During the first quarter, we produced 1.987 million Boe of oil and natural gas were 21,800 Boe per day. Our oil and NGL production was 859,000 barrels and our natural gas production was 6.8 Bcf.

Net production on an annualized basis is trending with our guidance range despite seasonal weather related restrictions on our production. Our operations team effectively and efficiently carried out our capital and operating plans during the quarter.

For the first quarter 2012, including realized gains of commodity derivative instruments, oil and NGL sales revenues were approximately $70 million and natural gas sales were approximately $42 million for a total of $112 million.

This is slightly lower than the fourth quarter of 2011, due primarily to the delay of Florida crude oil shipment from late March to the 1st week of April, and lower natural gas sales revenues during the quarter.

As you may recall, unlike most of our properties, crude oil sales from our Florida fields are made in periodic large barge shipments. Although, this shipment included approximately 420,000 net barrels of crude oil that was produced in the first quarter. The sale actually occurred in Partnership’s second quarter. Accordingly the Partnership’s second quarter adjusted EBITDA will include this Florida sale.

EBITDA was $61.4 million for the first quarter down from $64.4 million in the fourth quarter of 2011. We estimate that had the delayed Florida sale occurred in the first quarter would have contributed approximately $5 million of additional EBITDA. In the first quarter our lease operating expenses on annualized basis of $38.1 million were within our guidance range.

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