HOUSTON, TX, Nov 04, 2009 (MARKETWIRE via COMTEX) -- El Paso Pipeline Partners, L.P. (NYSE: EPB) is reporting today third
quarter 2009 financial and operational results for the partnership.
Highlights:
- Net income attributable to El Paso Pipeline Partners, L.P. (EPB) of
$46.6 million -- up from $33.2 million in the third quarter of 2008
- Earnings of $0.35 per common unit, versus $0.29 per common unit in the
third quarter of 2008
- Distributable cash flow of $53.7 million -- an increase of 57 percent
from the third quarter of 2008
- Increased quarterly cash distributions to $0.35 per common and
subordinated unit for the third quarter of 2009, an approximately 17
percent increase from the third quarter of 2008
- Placed WIC-Piceance Lateral Expansion in-service
- Completed the acquisition of additional interests in Colorado
Interstate Gas Company (CIG)
"We completed another outstanding quarter with strong increases in
cash flow and earnings," said Jim Yardley, president and chief
executive officer of El Paso Pipeline Partners. "Our growth is
supported by high quality assets with underlying expansion
opportunities and a strong sponsor whose interests are fully aligned
with unitholders. During the quarter we completed our second
acquisition from El Paso Corporation and placed the WIC Piceance
Lateral Expansion into service on schedule and on budget."
A summary of financial results for the quarter and nine months ended
September 30, 2009 and 2008 follows:
Quarters Ended Nine Months Ended
Financial Results September 30, September 30,
($ in millions, except per unit amounts) 2009 2008 2009 2008
------- ------- ------- -------
Operating revenues $ 128.8 $ 103.3 $ 386.5 $ 331.7
Operating expenses
Operation and maintenance 39.2 40.0 114.4 114.5
Depreciation and amortization 16.7 14.6 49.8 43.7
Taxes, other than income 5.9 5.4 18.0 16.1
------- ------- ------- -------
Operating income 67.0 43.3 204.3 157.4
Earnings from unconsolidated affiliates 11.9 4.8 37.0 20.0
Other income, net 0.4 3.4 4.7 6.6
------- ------- ------- -------
EBIT before adjustment for
noncontrolling interests (NCI) 79.3 51.5 246.0 184.0
Net income attributable to NCI (13.7) (10.7) (44.7) (42.5)
------- ------- ------- -------
EBIT 65.6 40.8 201.3 141.5
Interest and debt expense, net (19.4) (12.1) (53.9) (41.9)
Affiliated interest income, net 0.4 4.5 1.5 20.5
------- ------- ------- -------
Net income attributable to EPB $ 46.6 $ 33.2 $ 148.9 $ 120.1
======= ======= ======= =======
Net income attributable to EPB per
limited partner unit--Basic and Diluted
Common units $ 0.35 $ 0.29 $ 1.14 $ 0.87
Subordinated units $ 0.35 $ 0.14 $ 1.09 $ 0.73
Financial Results
In July 2009, El Paso Pipeline Partners completed its acquisition of
an additional 18 percent interest in CIG for $214.5 million in cash
and now owns a 58 percent interest in CIG. Following the acquisition
of these additional interests, CIG is now consolidated into the
partnership. Financial results for all periods presented include
retrospective adjustments to include 58 percent of CIG and to reflect
El Paso Corporation's 42 percent interest in CIG as a noncontrolling
interest.
For the quarter and nine months ended September 30, 2009, El Paso
Pipeline Partners reported net income attributable to the partnership
of $46.6 million and $148.9 million, respectively, compared with
$33.2 million and $120.1 million, respectively, for the same periods
in 2008. Earnings before interest and taxes (EBIT) for the quarter
and nine months ended September 30, 2009 was $65.6 million and $201.3
million respectively, compared with $40.8 million and $141.5 million
respectively, for the same 2008 periods. Operating income for the
quarter and nine months ended September 30, 2009, was $67.0 million
and $204.3 million, respectively compared with $43.3 million and
$157.4 million for the same 2008 periods
The improvement in net income, EBIT, and operating income for both
periods is due to the completion of several organic growth projects
including the Medicine Bow expansion, High Plains pipeline, Totem Gas
Storage facility, and the Piceance Lateral expansion. Net income and
EBIT also increased due to the acquisition of additional interests in
SNG in 2008.
Distributable cash flow for the quarter ended September 30, 2009 was
$53.7 million, up 57 percent from $34.1 million in the third quarter
2008. Distributable cash flow increased as a result of the acquisition
of additional interests in CIG and SNG , and the completion of the
organic growth projects mentioned above. Distribution coverage for the
third quarter of 2009 was 1.19 times.
Equity Investment
El Paso Pipeline Partners recognized equity in earnings of $11.2
million from its 25 percent ownership interest in SNG for the quarter
and $35.7 million for the nine months ended September 30, 2009,
compared with $4.5 million and $19.1 million, respectively, for the
same 2008 periods. The partnership's share of SNG's distributable
cash flow was $10.6 million and $34.1 million for the quarter and
nine months ended September 30, 2009, respectively, compared with
$10.2 million and $24.1 million, respectively, for the same 2008
period.
The increase in earnings and distributable cash flow from El Paso
Pipeline Partners' equity investment in SNG for the nine month ended
periods is due primarily to its higher ownership interest following
its September 2008 acquisition and increased service revenues related
to SNG's recent rate case settlement. This was partially offset by
proceeds received by SNG from the Calpine bankruptcy settlement in
2008 and lower allowance for funds used for construction (AFUDC)
equity income due to the completion of pipeline projects in 2008.
Interest and Debt Expense
For the quarter and nine months ended September 30, 2009, interest
and debt expense was $19.4 million and $53.9 million, respectively,
compared with $12.1 million and $41.9 million, respectively, for the
same 2008 periods. The increase is due to higher average debt
balances, primarily related to the financing of the acquisition of
additional interests in CIG and SNG in September 2008, and interest
expense related to the WYCO financing obligation. These additional
interest charges were substantially offset by lower interest rates on
the partnership's credit facility, under which average rates for the
quarter and nine months ended September 30, 2009, were 0.7 percent
and 0.8 percent, respectively, compared with 3.0 percent and 3.6
percent, respectively, for the same 2008 periods.
Liquidity
El Paso Pipeline Partners maintains a $750 million revolving credit
facility, which is underwritten by a diverse group of 25 financial
institutions and matures in November 2012. As of September 30, 2009,
the partnership had approximately $200 million of available capacity
on this facility. In addition to the amounts available under its
revolving credit facility, the partnership had a cash balance of
approximately $12 million and $112 million in demand notes receivable
from El Paso Corporation.
The partnership will utilize its revolving credit facility and demand
notes receivable from El Paso Corporation to fund its on-going growth
capital expenditures. The partnership has more than adequate liquidity
to execute on its backlog of committed growth projects through 2010.
Capital Projects
During the nine months ended September 30, 2009, El Paso Pipeline
Partners invested $102.4 million primarily for the Piceance Lateral,
Raton 2010, and Totem Storage expansion projects. Maintenance capital
expenditures for the same 2009 period were $16.7 million.
Increased Third Quarter Cash Distribution
On October 19, 2009, El Paso Pipeline Partners declared cash
distributions of $0.35 per limited partner unit for the third quarter
2009, which is a 6.1 percent increase from the $0.33 paid for the
second quarter 2009 and a 16.7 percent increase from the $0.30 paid
for the third quarter 2008. The cash distribution will be paid on
November 13, 2009 on all outstanding common and subordinated units to
holders of record as of the close of business on October 30, 2009.
Webcast Information
El Paso Pipeline Partners has scheduled a live webcast to review its
third quarter 2009 results on November 4, 2009, beginning at 11:30
a.m. Eastern Time, 10:30 a.m. Central Time, which may be accessed
online through El Paso Pipeline Partners' Web site at
www.eppipelinepartners.com in the Investors section. During the
webcast, management will refer to slides that will be posted on the
Web site. The slides will be available one hour before the webcast
and can be accessed in the Investors section. A limited number of
telephone lines will also be available to participants by dialing
(877) 221-1089 (conference ID # 38673418) 10 minutes prior to the
start of the webcast.
A replay of the webcast will be available online through the
partnership's Web site in the Investors section. A telephone audio
replay will be also available through November 13, 2009 by dialing
(800) 642-1687 (conference ID # 38673418). If you have any questions
regarding this procedure, please contact Margie Fox at (713)
420-2903.
The partnership's financial statements, including its September 30,
2009, Form 10-Q, will be available in the Investors section of the
partnership's Web site at www.eppipelinepartners.com. Copies of the
filed documents, including the partnership's Quarterly Reports on
Form 10-Q and its 2008 Annual Report on Form 10-K are also available,
free of charge, by calling (877) 357-2766.
El Paso Pipeline Partners, L.P. is a Delaware limited partnership
formed by El Paso Corporation to own and operate natural gas
transportation pipelines and storage assets. El Paso Corporation owns
a 65 percent limited partner interest and a 2 percent general partner
interest in the partnership. El Paso Pipeline Partners, L.P. owns
Wyoming Interstate Company, an interstate pipeline system serving the
Rocky Mountain region, a 58 percent interest in Colorado Interstate
Gas Company which operates in the Rocky Mountain region, and a 25
percent interest in Southern Natural Gas Company, which operates in
the southeastern region of the United States. For more information
about El Paso Pipeline Partners, visit www.eppipelinepartners.com.
Disclosure of Non-GAAP Financial Measures
The SEC's Regulation G applies to any public disclosure or release of
material information that includes a non-GAAP financial measure. In
the event of such a disclosure or release, Regulation G requires (i)
the presentation of the most directly comparable financial measure
calculated and presented in accordance with GAAP and (ii) a
reconciliation of the differences between the non-GAAP financial
measure presented and the most directly comparable financial measure
calculated and presented in accordance with GAAP.
We use the non-GAAP financial measure Distributable Cash Flow as it
provides important information relating our financial operating
performance to our cash distribution capability. Additionally, we use
Distributable Cash Flow in setting forward expectations and in
communications with our board of directors of our general partner. We
define Distributable Cash Flow as Adjusted EBITDA less cash interest
expense, maintenance capital expenditures, and other income and
expenses, net, which primarily includes a non-cash allowance for
equity funds used during construction and other non-cash items. We
use EBIT as a measure to assess the operating results and
effectiveness of our business, which consists of consolidated
operations as well as investments in unconsolidated affiliates. We
define the non-GAAP financial measure EBIT as net income adjusted for
interest and debt expense, net of interest income, and net income
attributable to noncontrolling interests so that investors may
evaluate our operating results without regard to our financing
methods or capital structure. We believe EBIT is useful to investors
because it provides them with one of the same metrics used by El Paso
to evaluate our performance. Adjusted EBITDA, which is also a
non-GAAP financial measure, is defined as net income plus, (i)
depreciation and amortization expense, (ii) interest and debt
expense, net of interest income, (iii) the partnership's share of
distributions declared by unconsolidated affiliates for the
applicable period, (iv) net income attributable to noncontrolling
interests, less (i) affiliated interest income, net of affiliated
interest expense, (ii) earnings from unconsolidated affiliates, and
(iii) CIG's declared distributions to El Paso Corporation.
We believe that the non-GAAP financial measures described above are
also useful to investors because these measurements are used by many
companies in the industry as a measurement of operating and financial
performance and are commonly employed by financial analysts and
others to evaluate the operating and financial performance of the
partnership and to compare the operating and financial performance of
the partnership with the performance of other publicly traded
partnerships within the industry. Distributable Cash Flow, EBIT and
Adjusted EBITDA should not be considered an alternative to net
income, earnings per unit, operating income, cash flow from operating
activities or any other measure of financial performance presented in
accordance with GAAP. These non-GAAP measures both exclude some, but
not all, items that affect net income and operating income and these
measures may vary among other companies. Therefore, Distributable
Cash Flow, EBIT and Adjusted EBITDA may not be comparable to
similarly titled measures of other companies. Furthermore, these
non-GAAP measures should not be viewed as indicative of the actual
amount of cash that we have available for distributions or that we
plan to distribute for a given period, nor do they equate to
available cash as defined in our partnership
agreement.
Non-GAAP Reconciliation Schedule Quarters Ended Nine Months Ended
September 30, September 30,
($ millions) 2009 2008 2009 2008
------- ------- ------- -------
Net income $ 60.3 $ 43.9 $ 193.6 $ 162.6
Net income attributable to NCI (13.7) (10.7) (44.7) (42.5)
------- ------- ------- -------
Net income attributable to EPB 46.6 33.2 148.9 120.1
Add: Interest and debt expense, net 19.4 12.1 53.9 41.9
Less: Affiliated interest income, net (0.4) (4.5) (1.5) (20.5)
------- ------- ------- -------
EBIT 65.6 40.8 201.3 141.5
Add: Depreciation and amortization 16.7 14.6 49.8 43.7
Distributions declared by
unconsolidated affiliates 10.9 10.2 37.2 24.1
Net income attributable to NCI 13.7 10.7 44.7 42.5
Less: Equity earnings from
unconsolidated affiliates (11.9) (4.8) (37.0) (20.0)
CIG declared distributions to El Paso* (14.9) (16.8) (49.6) (75.5)
------- ------- ------- -------
Adjusted EBITDA 80.1 54.7 246.4 156.3
Less: Cash interest expense, net (18.4) (8.2) (52.0) (21.1)
Maintenance capital expenditures (7.0) (8.3) (16.7) (19.0)
Other, net (1.0) (4.1) (6.9) (8.6)
------- ------- ------- -------
Distributable cash flow $ 53.7 $ 34.1 $ 170.8 $ 107.6
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*CIG declared distributions to El Paso include distributions of
pre-acquisition earnings at El Paso's historical ownership interest
level of $5.1 million for the quarter ended September 30, 2008, and
$7.2 million and $36.4 million for the nine months ended September
30, 2009 and 2008.
Cautionary Statement Regarding Forward-Looking Statements
This release includes forward-looking statements and projections,
made in reliance on the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. El Paso Pipeline Partners
has made every reasonable effort to ensure that the information and
assumptions on which these statements and projections are based are
current, reasonable, and complete. However, a variety of factors
could cause actual results to differ materially from the projections,
anticipated results or other expectations expressed in this release,
including, without limitation, the ability to obtain necessary
governmental approvals for proposed pipeline projects and to
successfully construct and operate such projects; operating hazards,
natural disasters, weather-related delays, casualty losses and other
matters beyond our control; the risks associated with contracting and
recontracting of transportation commitments; regulatory uncertainties
associated with pipeline rate cases; actions taken by customers,
third-party operators, processors and transporters; conditions in
geographic regions or markets served by El Paso Pipeline Partners and
its affiliates and equity investees or where its operations and
affiliates are located; the effects of existing and future laws and
governmental regulations; competitive conditions in our industry;
changes in the availability and cost of capital; and other factors
described in El Paso Pipeline Partners' (and its affiliates')
Securities and Exchange Commission filings. While these statements
and projections are made in good faith, El Paso Pipeline Partners and
its management cannot guarantee that anticipated future results will
be achieved. Reference must be made to those filings for additional
important factors that may affect actual results. El Paso Pipeline
Partners assumes no obligation to publicly update or revise any
forward-looking statements made herein or any other forward-looking
statements made, whether as a result of new information, future
events, or otherwise.
Contacts:
Investor-Media Relations
Bruce Connery
Vice President
(713) 420-5855
Media Relations
Bill Baerg
Manager
(713) 420-2906
SOURCE: El Paso Pipeline Partners
