Crestwood Announces Third Quarter 2016 Financial And Operating Results; On-Track To Achieve 2016 Guidance; Delaware Basin Expansion Projects Underway

Crestwood Equity Partners LP (NYSE:CEQP) ("Crestwood") reported today its financial and operating results for the three months ended September 30, 2016.

Third Quarter 2016 Highlights 1
  • Third quarter 2016 net income of $3.0 million, compared to a net loss of $623.4 million in the third quarter 2015 2
  • Third quarter 2016 Adjusted EBITDA of $103.5 million, compared to $133.5 million in the third quarter 2015
  • Third quarter 2016 distributable cash flow of $74.7 million, compared to $91.6 million in the third quarter 2015, providing a third quarter 2016 coverage ratio of approximately 1.8x, or 1.5x including the impact of preferred units
  • Declared third quarter 2016 cash distribution of $0.60 per common unit, or $2.40 per common unit on an annualized basis, to be paid on November 14, 2016 to unitholders of record as of November 7, 2016
  • On-track to achieve 2016 Adjusted EBITDA guidance range of $435 million to $465 million

Recent Announcements
  • Signed 20-year natural gas gathering and compression agreement with SWEPI LP ("SWEPI or Shell"), a subsidiary of Royal Dutch Shell plc, to construct, own and operate the Nautilus System in Loving and Ward counties, Texas in the Delaware Permian Basin; Targeted in-service date on or before July 1, 2017
  • Extended exclusivity and reimbursement agreement, through December 31, 2016, with an anchor shipper to develop the previously announced 3-product gathering system (the RIGS System) in Reeves County, Texas in the Delaware Permian Basin; Crestwood anticipates formal project approvals and execution of definitive agreements in the first half of 2017
  • Formed Delaware Basin joint venture with First Reserve to own and finance the Nautilus System and pursue additional infrastructure opportunities in the region; each party initially committing $250 million to the joint venture
  • Entered into a binding letter of intent with Chesapeake Energy Corporation ("Chesapeake") to restructure and expand the dedication of the Powder River Basin (PRB) gathering and processing agreement to a 20-year, fixed-fee contract with minimum annual revenue guarantees over the next five to seven years; new contract improves producer economics to incentivize near term ramp-up in drilling activity; Chesapeake characterizes PRB acreage as "emerging oil growth giant" at recent investor day and stated plans to add 1-2 rigs in 2017

Management Commentary

"During the third quarter, Crestwood generated strong Adjusted EBITDA and distributable cash flow, resulting in a coverage ratio of 1.8x and a leverage ratio of 4.0x, and further demonstrating our commitment to optimization of our assets and continued financial discipline," stated Robert G. Phillips, Chairman, President and Chief Executive Officer of Crestwood's general partner. "Additionally, our Delaware Permian growth strategy is beginning to pay off as our Willow Lake facilities had a record quarter in the northern Delaware, we announced another high quality gathering and compression project with Shell affiliate SWEPI and we extended our exclusivity and reimbursement agreement with the anchor party to our proposed RIGS gathering system adjacent to the SWEPI system. These projects are examples of accretive greenfield opportunities within our portfolio that will generate quality long-term cash flow growth. Importantly, finalizing the Delaware joint venture with First Reserve, our general partner, solidifies our ability to flexibly finance these projects and maintain our strong balance sheet."

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