Hiland Reports Third Quarter Results
Enid, Oklahoma - November 7, 2007 - The Hiland companies, Hiland Partners, LP
(NASDAQ: HLND) and Hiland Holdings GP, LP (NASDAQ: HPGP) today reported results
for the third quarter of 2007.
Hiland Partners, LP Financial Results
Hiland Partners, LP reported quarterly net income for the three months ended
September 30, 2007 of $3.3 million compared to net income of $3.7 million for
the three months ended September 30, 2006. This decrease is primarily due to
additional depreciation expense and interest expense incurred as a result of our
organic growth projects, offset by increased sales volume from our Bakken, Eagle
Chief and Woodford Shale gathering systems. Net income per limited partner
unit-basic for the third quarter of 2007 was $0.22 per unit compared to $0.33
per unit in the corresponding quarter in 2006. Weighted average limited partner
units-basic outstanding was 9.3 million units for the three months ended
September 30, 2007 compared to 9.2 million units for the three months ended
September 30, 2006. EBITDA (EBITDA is defined as net income plus interest
expense, provisions for income taxes and depreciation, amortization and
accretion expense) for the three months ended September 30, 2007 was $14.1
million compared to $11.8 million for the three months ended September 30, 2006,
an increase of 19.5%. Total segment margin for the three months ended September
30, 2007 was $21.8 million compared to $17.7 million for the three months ended
September 30, 2006, an increase of 23.7%. The increases in EBITDA and total
segment margin are primarily attributable to increased activity from our Bakken,
Eagle Chief and Woodford Shale gathering systems.
For the nine-month period ended September 30, 2007, Hiland Partners, LP reported
net income of $7.9 million compared to net income of $11.1 million for the nine
months ended September 30, 2006. This decrease is primarily due to additional
depreciation expense and interest expense incurred as a result of the
acquisition of the Kinta Area gathering assets effective May 1, 2006 and
interest expense related to borrowings for our organic growth projects, offset
by increased sales volume from our Bakken, Eagle Chief and Woodford Shale
gathering systems. Net income per limited partner unit-basic for the nine months
ended September 30, 2007 decreased to $0.53 per unit from $1.07 per unit in the
corresponding period in 2006. Weighted average limited partner units-basic
outstanding for the nine months ended September 30, 2007 was 9.3 million units
compared to 8.9 million units for the nine months ended September 30, 2006.
EBITDA for the nine months ended September 30, 2007 was $37.1 million compared
to $30.9 million for the nine months ended September 30, 2006, an increase of
20.1%. Total segment margin for the nine months ended September 30, 2007 was
$58.0 million compared to $45.5 million for the nine months ended September 30,
2006, an increase of 27.6%. The increases in EBITDA and total segment margin are
primarily attributable to the inclusion of the results of operations from the
acquisition of the Kinta Area gathering assets effective May 1, 2006 and
increased activity from our Bakken, Eagle Chief and Woodford Shale gathering
systems.
"The third quarter saw improved gas processing margins, the completion of our
new Badlands facility in North Dakota, completion of our Bakken frac train in
Montana and continued development of our Woodford Shale gathering system in
Oklahoma," said Joe Griffin, Chief Executive Officer and President. "We expect
these organic projects to deliver significant growth to the Partnership in
future periods."
On October 25, 2007, Hiland Partners, LP announced an increase in its cash
distribution for the third quarter of 2007. The declared quarterly distributions
on Hiland Partners, LP's common and subordinated units were increased to $0.7550
per unit (an annualized rate of $3.02 per unit) from $0.7325 per unit (an
annualized rate of $2.93 per unit) for the second quarter of 2007. This
distribution will be paid on November 14, 2007 to unitholders of record on
November 6, 2007.
Hiland Holdings GP, LP Financial Results
Hiland Holdings GP, LP reported quarterly net income for the three months ended
September 30, 2007 of $1.7 million ($0.08 per limited partner unit-basic). The
net loss for the three months ended September 30, 2006, which includes its
predecessor, Hiland Partners GP, LLC, was insignificant. Hiland Holdings GP, LP
commenced operations September 25, 2006 upon successful completion of its
initial public offering and the concurrent contribution of certain interests
from its predecessor entity and its contributing parties. Net income before
minority interest was $2.6 million in the third quarter of 2007 compared to $2.7
million in the third quarter of 2006. This decrease is primarily due to
additional depreciation expense and interest expense incurred as a result of our
organic growth projects, offset by increased sales volume from our Bakken, Eagle
Chief and Woodford Shale gathering systems.
Hiland Holdings GP, LP's share of distributions from Hiland Partners, LP,
including distributions on its 5,381,471 limited partner units, its two percent
general partner interest, and the incentive distributions rights, will be
approximately $5.4 million for the third quarter of 2007. On October 25, 2007,
Hiland Holdings GP, LP, announced an increase in its cash distribution for the
third quarter of 2007. The declared quarterly distributions on the Partnership's
units were increased to $0.23 per unit (an annualized rate of $0.92 per unit)
from $0.22 per unit (an annualized rate of $0.88 per unit) for the second
quarter of 2007. The distribution will be paid on November 19, 2007 to
unitholders of record on November 6, 2007.
Hiland Holdings GP, LP's share of distributions from Hiland Partners, LP,
including distributions on its 5,381,471 limited partner units, its two percent
general partner interest, and the incentive distributions rights, will be
approximately $5.4 million for the third quarter of 2007. On October 25, 2007,
Hiland Holdings GP, LP, announced an increase in its cash distribution for the
third quarter of 2007. The declared quarterly distributions on the Partnership's
units were increased to $0.23 per unit (an annualized rate of $0.92 per unit)
from $0.22 per unit (an annualized rate of $0.88 per unit). The distribution
will be paid on November 19, 2007 to unitholders of record on November 6, 2007.
Conference Call Information
Hiland has scheduled a conference call for 10:00am Central Time, Thursday,
November 8, 2007, to discuss the 2007 third quarter results. To participate in
the call, dial 1.888.396.2298 and participant passcode 92002423, or access it
live over the Internet at www.hilandpartners.com, on the "investor relations"
section of the Partnership's website.
Use of Non-GAAP Financial Measures
This press release and the accompanying schedules include the non-generally
accepted accounting principles ("non-GAAP") financial measures of EBITDA and
total segment margin. The accompanying schedules provide reconciliations of
these non-GAAP financial measures to their most directly comparable financial
measure calculated and presented in accordance with accounting principles
generally accepted in the United States of America ("GAAP"). Our non-GAAP
financial measures should not be considered as alternatives to GAAP measures
such as net income, operating income or any other GAAP measure of liquidity or
financial performance.
About the Hiland Companies
Hiland Partners, LP is a publicly traded midstream energy partnership engaged in
gathering, compressing, dehydrating, treating, processing and marketing natural
gas, and fractionating, or separating, natural gas liquids, or NGLs. The
Partnership also provides air compression and water injection services for use
in oil and gas secondary recovery operations. The Partnership's operations are
primarily located in the Mid-Continent and Rocky Mountain regions of the United
States. Hiland Partners, LP's midstream assets consist of 13 natural gas
gathering systems with approximately 1,934 miles of gathering pipelines, five
natural gas processing plants, seven natural gas treating facilities and four
NGL fractionation facilities. The Partnership's compression assets consist of
two air compression facilities and a water injection plant.
Hiland Holdings GP, LP owns the two percent general partner interest, 1,301,471
common units and 4,080,000 subordinated units in Hiland Partners, LP, and the
incentive distribution rights of Hiland Partners, LP.
This press release may include certain statements concerning expectations for
the future that are forward-looking statements. Such forward-looking statements
are subject to a variety of known and unknown risks, uncertainties, and other
factors that are difficult to predict and many of which are beyond management's
control. An extensive list of factors that can affect future results are
discussed in the Partnership's Annual Report on Form 10-K and other documents
filed from time to time with the Securities and Exchange Commission. The
Partnership undertakes no obligation to update or revise any forward-looking
statements to reflect new information or events.
Contacts: Ken Maples, Vice President and CFO
Hiland Partners, LP
(580) 242-6040
- -- tables to follow --
Other Financial and Operating Data
Hiland Partners, LP - Results of Operations
Set forth in t7he table below is financial and operating data for Hiland
Partners, LP.
Hiland Partners, LP - Results of Operations
Set forth in the table below is financial and operating data for Hiland
Partners, LP.
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2007 2006 2007 2006
--------- --------- --------- ---------
(unaudited, in thousands)
Total Segment Margin Data:
Midstream revenues $ 66,431 $ 56,062 $ 191,691 $ 159,800
Midstream purchases 45,789 39,609 137,320 117,965
--------- --------- --------- ---------
Midstream segment margin 20,642 16,453 54,371 41,835
Compression revenues (A) 1,205 1,205 3,615 3,615
--------- --------- --------- ---------
Total segment margin (B) $ 21,847 $ 17,658 $ 57,986 $ 45,450
========= ========= ========= =========
Summary of Operations Data:
Midstream revenues $ 66,431 $ 56,062 $ 191,691 $ 159,800
Compression revenues 1,205 1,205 3,615 3,615
--------- --------- --------- ---------
Total revenues 67,636 57,267 195,306 163,415
Midstream purchases (exclusive of items
shown separately below) 45,789 39,609 137,320 117,965
Operations and maintenance 6,157 4,569 16,108 11,140
Depreciation, amortization and accretion 7,583 6,175 21,362 15,811
General and administrative 1,715 1,375 5,108 3,653
--------- --------- --------- ---------
Total operating costs and expenses 61,244 51,728 179,898 148,569
--------- --------- --------- ---------
Operating income 6,392 5,539 15,408 14,846
Other income (expense) (3,138) (1,801) (7,495) (3,740)
--------- --------- --------- ---------
Net income 3,254 3,738 7,913 11,106
Add:
Depreciation, amortization and accretion 7,583 6,175 21,362 15,811
Amortization of deferred loan costs 114 86 290 319
Interest expense 3,126 1,783 7,519 3,643
--------- --------- --------- ---------
EBITDA (C) $ 14,077 $ 11,782 $ 37,084 $ 30,879
========= ========= ========= =========
Non cash realized (gain)
loss on derivatives $ (339) $ 31 $ (510) $ (133)
Non cash unit based
compensation expense $ 244 $ 120 $ 589 $ 338
Maintenance capital
expenditures $ 973 $ 997 $ 2,509 $ 2,712
Expansion capital
expenditures 29,051 13,333 70,809 141,677
--------- --------- --------- ---------
Total capital
expenditures $ 30,024 $ 14,330 $ 73,318 $ 144,389
========= ========= ========= =========
Operating Data:
Inlet natural gas (MCF/d) 219,544 203,721 210,878 143,112
Natural gas sales (MMBTU/d) 84,281 69,563 78,998 64,796
NGL sales (Bbls/d) 4,721 3,239 4,340 3,256
Natural gas gathered (MMBtu/d) (D) 124,121 129,168 124,486 72,657
September 30, December 31,
2007 2006
-------- --------
(in thousands)
(unaudited)
Balance sheet Data (at end of period):
Property and equipment, at cost, net $309,228 $252,801
Total assets $392,889 $343,816
Long-term debt, net of current maturities $206,253 $147,064
Net equity $150,684 $167,746
(A) Compression revenues and compression segment margin are the
same. There are no compression purchases associated with the
compression segment.
(B) Reconciliation of total segment margin to operating income:
Three Months Ended Nine Months Ended
September 30, September 30,
----------------- -----------------
2007 2006 2007 2006
------- ------- ------- -------
(unaudited, in thousands)
Reconciliation of Total Segment Margin to
Operating Income
Operating income $ 6,392 $ 5,539 $15,408 $14,846
Add:
Operations and maintenance expenses 6,157 4,569 16,108 11,140
Depreciation, amortization and accretion 7,583 6,175 21,362 15,811
General and administrative expenses 1,715 1,375 5,108 3,653
------- ------- ------- -------
Total segment margin $21,847 $17,658 $57,986 $45,450
======= ======= ======= =======
We view total segment margin, a non-GAAP financial measure, as an
important performance measure of the core profitability of our
operations. We review total segment margin monthly for consistency
and trend analysis. We define midstream segment margin as midstream
revenue less midstream purchases. Midstream purchases include the
following costs and expenses: cost of natural gas and NGLs purchased
by us from third parties, cost of natural gas and NGLs purchased by
us from affiliates, and cost of crude oil purchased by us from third
parties. We define compression segment margin as the revenue derived
from our compression segment.
(C) We define EBITDA, a non-GAAP financial measure, as net income
plus interest expense, provisions for income taxes and depreciation,
amortization and accretion expense. EBITDA is used as a supplemental
financial measure by our management and by external users of our
financial statements such as investors, commercial banks, research
analysts and others to assess: (1) the financial performance of our
assets without regard to financial methods, capital structure or
historical cost basis; (2) the ability of our assets to generate
cash sufficient to pay interest costs and support our indebtedness;
(3) our operating performance and return on capital as compared to
those of other companies in the midstream energy sector, without
regard to financing or structure; and (4) the viability of
acquisitions and capital expenditure projects and the overall rates
of return on alternative investment opportunities. EBITDA is also a
financial measurement that, with certain negotiated adjustments, is
reported to our banks and is used as a gauge for compliance with our
financial covenants under our credit facility. EBITDA should not be
considered as an alternative to net income, operating income, cash
flows from operating activities or any other measures of financial
performance presented in accordance with GAAP. Our EBITDA may not be
comparable to EBITDA of similarly titled measures of other entities,
as other entities may not calculate EBITDA in the same manner as we
do.
(D) Natural gas gathered for fee (MMBtu/d) represents natural gas
volumes gathered associated with the Kinta Area gas gathering assets
we acquired on May 1, 2006 in which we do not take title to the gas.
Hiland Holdings GP, LP - Results of Operations
Set forth in the table below is financial and operating data for Hiland
Holdings GP, LP
Hiland
Hiland Hiland Partners
Holdings Holdings GP, LLC
GP, LP GP, LP (C) (Predecessor)(D) Total (E)
--------- --------- --------- ---------
unaudited, in thousands)
Three Months Ended
September 30,
----------------------------------------------------
2007 2006
--------- ---------------------------------------
Total Segment Margin Data:
Midstream revenues $ 66,431 $ 3,656 $ 52,406 $ 56,062
Midstream purchases 45,789 2,583 37,026 39,609
--------- --------- --------- ---------
Midstream segment margin 20,642 1,073 15,380 16,453
Compression revenues (A) 1,205 79 1,126 1,205
--------- --------- --------- ---------
Total segment margin (B) $ 21,847 $ 1,152 $ 16,506 $ 17,658
========= ========= ========= =========
Summary of Operations Data:
Midstream revenues $ 66,431 $ 3,656 $ 52,406 $ 56,062
Compression revenues 1,205 79 1,126 1,205
--------- --------- --------- ---------
Total revenues 67,636 3,735 53,532 57,267
Operating costs and expenses
Midstream purchases (exclusive of
items shown separately below) 45,789 2,583 37,026 39,609
Operations and maintenance 6,157 298 4,271 4,569
Depreciation, amortization and accretion 7,870 427 6,035 6,462
General and administrative 2,054 105 1,292 1,397
--------- --------- --------- ---------
Total operating costs and expenses 61,870 3,413 48,624 52,037
--------- --------- --------- ---------
Operating income 5,766 322 4,908 5,230
Other income (expense) (3,164) (119) (2,370) (2,489)
--------- --------- --------- ---------
Income before minority interest in income of
Hiland Partners 2,602 203 2,538 2,741
Minority interest in income of Hiland Partners (867) (72) (2,693) (2,765)
--------- --------- --------- ---------
Net income (loss) 1,735 131 (155) (24)
Less income (loss) attributable to predecessor -- -- -- (155)
--------- --------- --------- ---------
Limited partners' interest in net income $ 1,735 $ 131 $ (155) $ 131
========= ========= ========= =========
Nine Months Ended
September 30,
----------------------------------------------------
2007 2006
--------- ---------------------------------------
(unaudited, in thousands)
Total Segment Margin Data:
Midstream revenues $ 191,691 $ 10,422 $ 149,378 $ 159,800
Midstream purchases 137,320 7,693 110,272 117,965
--------- --------- --------- ---------
Midstream segment margin 54,371 2,729 39,106 41,835
Compression revenues (A) 3,615 236 3,379 3,615
--------- --------- --------- ---------
Total segment margin (B) $ 57,986 $ 2,965 $ 42,485 $ 45,450
========= ========= ========= =========
Summary of Operations Data:
Midstream revenues $ 191,691 $ 10,422 $ 149,378 $ 159,800
Compression revenues 3,615 236 3,379 3,615
--------- --------- --------- ---------
Total revenues 195,306 10,658 152,757 163,415
Operating costs and expenses
Midstream purchases (exclusive of
items shown separately below) 137,320 7,693 110,272 117,965
Operations and maintenance 16,108 727 10,413 11,140
Depreciation, amortization and accretion 22,222 1,054 15,202 16,256
General and administrative 6,383 253 3,442 3,695
--------- --------- --------- ---------
Total operating costs and expenses 182,033 9,727 139,329 149,056
--------- --------- --------- ---------
Operating income 13,273 931 13,428 14,359
Other income (expense) (7,570) (247) (4,583) (4,830)
--------- --------- --------- ---------
Income before minority interest in income of
Hiland Partners 5,703 684 8,845 9,529
Minority interest in income of Hiland Partners (2,080) (553) (8,438) (8,991)
--------- --------- --------- ---------
Net income 3,623 131 407 538
Less income attributable to predecessor -- -- -- 407
--------- --------- --------- ---------
Limited partners' interest in net income $ 3,623 $ 131 $ 407 $ 131
========= ========= ========= =========
September 30, December 31,
2007 2006
-------- --------
(in thousands)
(unaudited)
Balance sheet Data (at end of period):
Property and equipment, at cost, net $313,093 $257,003
Total assets $403,031 $355,198
Long-term debt, net of current maturities $206,608 $147,318
Minority interests $131,036 $137,302
Net equity $ 29,346 $ 41,157
(A) Compression revenues and compression segment margin are the same.
There are no compression purchases associated with the compression
segment.
(B) Reconciliation of total segment margin to operating income:
Hiland
Hiland Hiland Partners
Holdings Holdings GP, LLC
GP, LP GP, LP (Predecessor) Total
------- ------- ------- -------
(unaudited, in thousands)
Three Months Ended
September 30,
-------------------------------------
2007 2006
------- ---------------------------
Reconciliation of Total Segment Margin to
Operating Income
Operating income 5,766 322 4,908 5,230
Add:
Operations and maintenance expenses 6,157 298 4,271 4,569
Depreciation, amortization and accretion 7,870 427 6,035 6,462
General and administrative expenses 2,054 105 1,292 1,397
------- ------- ------- -------
Total segment margin $21,847 $ 1,152 $16,506 $17,658
======= ======= ======= =======
Nine Months Ended
September 30,
-------------------------------------
2007 2006
------- ---------------------------
Reconciliation of Total Segment Margin to
Operating Income
Operating income 13,273 931 13,428 14,359
Add:
Operations and maintenance expenses 16,108 727 10,413 11,140
Depreciation, amortization and accretion 22,222 1,054 15,202 16,256
General and administrative expenses 6,383 253 3,442 3,695
------- ------- ------- -------
Total segment margin $57,986 $ 2,965 $42,485 $45,450
======= ======= ======= =======
We view total segment margin, a non-GAAP financial measure, as an important
performance measure of the core profitability of our operations. We review total
segment margin monthly for consistency and trend analysis. We define midstream
segment margin as midstream revenue less midstream purchases. Midstream
purchases include the following costs and expenses: cost of natural gas and NGLs
purchased by us from third parties, cost of natural gas and NGLs purchased by us
from affiliates, and cost of crude oil purchased by us from third parties. We
define compression segment margin as the revenue derived from our compression
segment.
(C) Amounts presented in the Hiland Holdings GP, LP column include only the
consolidated operations beginning on September 25, 2006. These amounts include
the contribution of assets and member interest from Hiland Partners GP, LLC at
the completion of our initial public offering.
(D) Amounts presented in the Hiland Partners GP, LLC Predecessor columns include
only the consolidated operations for the period beginning February 15, 2005 to
September 25, 2006.
(E) Total income and expense items included in our Consolidated Statement of
Operations and our predecessor are included in this Form 10-Q for the stated
period.
http://schemas.microsoft.com/office/word/2003/wordml013f
SOURCE Hiland Partners, LP; Hiland Holdings GP, LP
-0- 11/07/2007
/CONTACT: Ken Maples, Vice President and CFO of Hiland Partners, LP,
+1-580-242-6040/