TO BUSINESS AND ENERGY EDITORS:
Hiland Reports Fourth-Quarter and Full-Year 2007 Results
ENID, Okla., Feb. 21 /PRNewswire-FirstCall/ -- The Hiland companies,
Hiland Partners, LP (Nasdaq: HLND) and Hiland Holdings GP, LP (Nasdaq: HPGP)
today reported results for the fourth-quarter and full-year 2007.
Hiland Partners, LP Financial Results
Hiland Partners, LP reported quarterly net income for the three months ended
December 31, 2007 of $2.9 million compared to net income of $3.6 million for the
three months ended December 31, 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 primarily from our
Bakken, Badlands and Woodford Shale gathering systems. Net income per limited
partner unit-basic for the fourth quarter of 2007 was $0.14 per unit compared to
$0.30 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
December 31, 2007 compared to 9.2 million units for the three months ended
December 31, 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 December 31, 2007 was $15.3
million compared to $11.9 million for the three months ended December 31, 2006,
an increase of 29.0%. Total segment margin for the three months ended December
31, 2007 was $24.8 million compared to $18.0 million for the three months ended
December 31, 2006, an increase of 37.7%. The increases in EBITDA and total
segment margin are primarily attributable to increased activity from our Bakken,
Badlands and Woodford Shale gathering systems.
For the year ended December 31, 2007, Hiland Partners, LP reported net
income of $10.8 million compared to net income of $14.7 million for the year
ended December 31, 2006. This decrease is primarily due to additional
depreciation expense and interest expense incurred as a result of our organic
growth projects and as a result of the acquisition of the Kinta Area gathering
assets effective May 1, 2006, offset by increased sales volume primarily from
our Bakken, Eagle Chief and Woodford Shale gathering systems. Net income per
limited partner unit-basic for the year ended December 31, 2007 decreased to
$0.67 per unit from $1.37 per unit in 2006. Weighted average limited partner
units-basic outstanding for the year ended December 31, 2007 was 9.3 million
units compared to 9.0 million units for the year ended December 31, 2006. EBITDA
for the year ended December 31, 2007 was $52.4 million compared to $42.8 million
for the year ended December 31, 2006, an increase of 22.6%. Total segment margin
for the year ended December 31, 2007 was $82.8 million compared to $63.5 million
for the year ended December 31, 2006, an increase of 30.5%. The increases in
EBITDA and total segment margin are primarily attributable to the full year
inclusion of the results of operations from the acquisition of the Kinta Area
gathering assets effective May 1, 2006 and increased activity primarily from our
Bakken, Eagle Chief and Woodford Shale gathering systems.
"We are pleased with our performance during 2007 which resulted in record
growth in EBITDA, revenues and system throughput volumes for Hiland," said
Joseph L. Griffin, President and Chief Executive Officer. "The Badlands gas
treating and gathering expansion and the Woodford Shale gathering system, both
of which were placed into service in 2007, along with current outlook for
drilling activity and commodity prices should allow the Partnership significant
opportunities for growth in 2008 and beyond. On February 5th, we took the
Badlands plant out of service when it was discovered that a primary piece of
equipment had failed. Work has been conducted around the clock to make the
necessary warranty repairs and we anticipate start up at the beginning of March.
I am pleased to announce that we recently entered into new agreements with
Continental Resources, Inc. and Encore Operating, L.P. to provide gathering and
treating services to additional fields being developed in the Badlands area. We
will spend approximately $3 million to construct 19 miles of pipe and install
related compression and expect to have these projects on line during the second
and third quarters of this year, respectively."
On January 25, 2008, Hiland Partners, LP announced an increase in its cash
distribution for the fourth quarter of 2007. The declared quarterly
distributions on Hiland Partners, LP's common and subordinated units increased
to $0.795 per unit (an annualized rate of $3.18 per unit) from $0.7550 per unit
(an annualized rate of $3.02 per unit) for the third quarter of 2007. This
represents a 5.3% increase over the prior quarter and an 11.6% increase over the
distribution for the same quarter of the prior year. This distribution was paid
on February 14, 2008 to unitholders of record on February 4, 2008.
Hiland Holdings GP, LP Financial Results
Hiland Holdings GP, LP reported quarterly net income for the three months
ended December 31, 2007 of $1.5 million ($0.07 per limited partner unit-basic)
compared to net income of $1.8 million for the three months ended December 31,
2006. Net income before minority interest was $2.1 million in the fourth quarter
of 2007 compared to $3.0 million in the fourth quarter of 2006. These decreases
are primarily due to additional depreciation expense and interest expense
incurred as a result of our organic growth projects, offset by increased sales
volume primarily from our Bakken, Badlands and Woodford Shale gathering systems.
Hiland Holdings GP, LP reported net income of $5.2 million for the year
ended December 31, 2007 ($0.24 per limited partner unit-basic) compared to net
income of $2.4 million for the comparable period in 2006, which includes its
predecessor, Hiland Partners GP, LLC. 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 $7.8 million for the year ended December 31, 2007 compared to $12.5
million for the year ended December 31, 2006. The decrease in net income before
minority interest is primarily due to additional depreciation expense and
interest expense incurred as a result of our organic growth projects and as a
result of the acquisition of the Kinta Area gathering assets effective May 1,
2006, partially offset by increased sales volume primarily 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, was
approximately $6.0 million for the fourth quarter of 2007. On January 25, 2008,
Hiland Holdings GP, LP, announced an increase in its cash distribution for the
fourth quarter of 2007. The declared quarterly distributions on the
Partnership's units were increased to $0.255 per unit (an annualized rate of
$1.02 per unit) from $0.23 per unit (an annualized rate of $0.92 per unit) for
the third quarter of 2007. This represents a 10.9% increase over the prior
quarter and a 22.9% increase over the distribution for the same quarter of the
prior year. The distribution was paid on February 19, 2008 to unitholders of
record on February 4, 2008.
Conference Call Information
Hiland has scheduled a conference call for 10:00am Central Time, Friday,
February 22, 2008, to discuss the 2007 fourth quarter results. To participate in
the call, dial 1.888.396.2298 and participant passcode 92002423, or access it
live over the Internet at http://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 2,024 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.
- tables to follow -
Other Financial and Operating Data
Hiland Partners, LP - Results of Operations
Set forth in the table below is financial and operating data for Hiland
Partners, LP.
Three Months Ended Year Ended
December 31, December 31,
---------------------- ----------------------
2007 2006 2007 2006
--------- --------- --------- ---------
(in thousands)
(unaudited) (unaudited)
Total Segment Margin Data:
Midstream revenues $ 81,533 $ 55,067 $ 273,224 $ 214,867
Midstream purchases 57,892 38,228 195,212 156,193
--------- --------- --------- ---------
Midstream segment margin 23,641 16,839 78,012 58,674
Compression revenues (A) 1,204 1,204 4,819 4,819
--------- --------- --------- ---------
Total segment margin (B) $ 24,845 18,043 $ 82,831 63,493
========= ========= ========= =========
Summary of Operations
Data:
Midstream revenues 81,533 55,067 273,224 214,867
Compression revenues 1,204 1,204 4,819 4,819
--------- --------- --------- ---------
Total revenues 82,737 56,271 278,043 219,686
Midstream purchases
(exclusive of items
shown separately below) 57,892 38,228 195,212 156,193
Operations and maintenance 7,171 4,931 23,279 16,071
Depreciation, amortization
and accretion 8,493 6,319 29,855 22,130
General and administrative 2,479 1,341 7,587 4,994
--------- --------- --------- ---------
Total operating costs and
expenses 76,035 50,819 255,933 199,388
--------- --------- --------- ---------
Operating income 6,702 5,452 22,110 20,298
Other income (expense) (3,831) (1,876) (11,326) (5,616)
--------- --------- --------- ---------
Net income 2,871 3,576 10,784 14,682
Add:
Depreciation, amortization
and accretion 8,493 6,319 29,855 22,130
Amortization of deferred
loan costs 120 88 410 407
Interest expense 3,827 1,889 11,346 5,532
--------- --------- --------- ---------
EBITDA (C) $ 15,311 $ 11,872 $ 52,395 $ 42,751
========= ========= ========= =========
Non cash realized (gain)
loss on derivatives $ 137 $ 20 ($ 373) ($ 113)
Non cash unit based
compensation expense $ 361 $ 135 $ 950 $ 473
Maintenance capital
expenditures $ 914 $ 722 $ 3,423 $ 3,434
Expansion capital
expenditures 16,721 13,426 87,530 155,103
--------- --------- --------- ---------
Total capital expenditures $ 17,635 $ 14,148 $ 90,953 $ 158,537
========= ========= ========= =========
Operating Data:
Inlet natural gas (MCF/d) 229,608 200,415 215,551 157,556
Natural gas sales
(MMBTU/d) 85,872 73,329 80,731 66,947
NGL sales (Bbls/d) 5,754 3,617 4,696 3,347
Natural gas gathered
(MMBtu/d) (D) 118,625 123,766 123,008 85,540
December 31,
-------------------
2007 2006
--------- ---------
(in thousands)
Balance sheet Data (at end of period): (unaudited)
Property and equipment, at cost, net $319,320 $252,801
Total assets $410,473 $343,816
Long-term debt, net of current maturities $226,104 $147,064
Net equity $139,167 $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 Year Ended
December 31, December 31,
------------------ ------------------
2007 2006 2007 2006
------- ------- ------- -------
(in thousands)
(unaudited) (unaudited)
Reconciliation of Total
Segment Margin to
Operating Income
Operating income $ 6,702 $ 5,452 $22,110 $20,298
Add:
Operations and
maintenance expenses 7,171 4,931 23,279 16,071
Depreciation,
amortization and
accretion 8,493 6,319 29,855 22,130
General and administrative
expenses 2,479 1,341 7,587 4,994
------- ------- ------- -------
Total segment margin (B) $24,845 $18,043 $82,831 $63,493
======= ======= ======= =======
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
Three Months Ended
December 31,
------------------------
2007 2006
-------- --------
(unaudited, in thousands)
Total Segment Margin Data:
Midstream revenues $ 81,533 $ 55,067
Midstream purchases 57,892 38,228
-------- --------
Midstream segment margin 23,641 16,839
Compression revenues (A) 1,204 1,204
-------- --------
Total segment margin (B) $ 24,845 $ 18,043
======== ========
Summary of Operations Data:
Midstream revenues $ 81,533 55,067
Compression revenues 1,204 1,204
-------- --------
Total revenues 82,737 56,271
Operating costs and expenses
Midstream purchases
(exclusive of
items shown separately below) 57,892 38,228
Operations and maintenance 7,171 4,931
Depreciation, amortization
and accretion 8,780 6,607
General and administrative 2,938 1,604
-------- --------
Total operating costs
and expenses 76,781 51,370
-------- --------
Operating income 5,956 4,901
Other income (expense) (3,855) (1,902)
-------- --------
Income before minority interest
in income of HLND 2,101 2,999
Minority interest in income
of HLND (558) (1,174)
-------- --------
Net income $ 1,543 $ 1,825
======== ========
Hiland
Hiland Hiland Partners
Holdings Holdings GP, LLC (D)
GP, LP GP, LP (C) (Predecessor) Total (E)
--------- --------- --------- ---------
Year Ended December 31,
------------------------------------------------
2007 2006
--------- -----------------------------------
(in thousands)
(unaudited)
Total Segment
Margin
Data:
Midstream revenues $ 273,224 $ 65,489 $ 149,378 $ 214,867
Midstream purchases 195,212 45,921 110,272 156,193
--------- --------- --------- ---------
Midstream segment
margin 78,012 19,568 39,106 58,674
Compression
revenues (A) 4,819 1,440 3,379 4,819
--------- --------- --------- ---------
Total segment
margin (B) $ 82,831 $ 21,008 $ 42,485 $ 63,493
========= ========= ========= =========
Summary of Operations
Data:
Midstream revenues $ 273,224 $ 65,489 $ 149,378 $ 214,867
Compression revenues 4,819 1,440 3,379 4,819
--------- --------- --------- ---------
Total revenues 278,043 66,929 152,757 219,686
Operating costs and
expenses
Midstream purchases
(exclusive of items
shown separately
below) 195,212 45,921 110,272 156,193
Operations and
maintenance 23,279 5,658 10,413 16,071
Depreciation,
amortization
and accretion 31,002 7,661 15,202 22,863
General and
administrative 9,321 1,857 3,442 5,299
--------- --------- --------- ---------
Total
operating
costs and
expenses 258,814 61,097 139,329 200,426
--------- --------- --------- ---------
Operating
income 19,229 5,832 13,428 19,260
Other income
(expense) (11,425) (2,150) (4,583) (6,733)
--------- --------- --------- ---------
Income before
minority interest
in income of HLND 7,804 3,682 8,845 12,527
Minority interest in
income of HLND (2,638) (1,726) (8,438) (10,164)
--------- --------- --------- ---------
Net income 5,166 1,956 407 2,363
Less income
attributable to
predecessor -- -- -- 407
--------- --------- --------- ---------
Limited partners'
interest in net
income $ 5,166 $ 1,956 $ 407 $ 1,956
========= ========= ========= =========
December 31,
2007 2006
-------- --------
(in thousands)
(unaudited)
Balance Sheet data (at period end)
Property and equipment, at cost, net $323,073 $257,003
Total assets $420,286 $355,198
Long-term debt, net of current
maturities $226,459 $147,318
Minority interests $126,409 $137,302
Net equity $ 22,135 $ 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:
Three Months Ended
December 31,
----------------------
2007 2006
------- -------
Reconciliation of Total Segment (unaudited, in thousands)
Margin to Operating Income
Operating income $ 5,956 $ 4,901
Add:
Operations and maintenance expenses 7,171 4,931
Depreciation, amortization and
accretion 8,780 6,607
General and administrative
expenses 2,938 1,604
------- -------
Total segment margin (B) $24,845 $18,043
======= =======
Hiland
Hiland Hiland Partners
Holdings Holdings GP, LLC (D)
GP, LP GP, LP (C) (Predecessor) Total (E)
------- ------- ------- -------
Year Ended December 31,
-------------------------------------------
2007 2006
------- -------------------------------
(in thousands)
(unaudited)
Reconciliation of
Total Segment
Margin to
Operating Income
Operating income $19,229 $ 5,832 $13,428 $19,260
Add:
Operations and
maintenance expenses 23,279 5,658 10,413 16,071
Depreciation,
amortization and
accretion 31,002 7,661 15,202 22,863
General and
administrative
expenses 9,321 1,857 3,442 5,299
------- ------- ------- -------
Total segment margin $82,831 $21,008 $42,485 $63,493
======= ======= ======= =======
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-K for the
stated period.
SOURCE Hiland Partners, LP; Hiland Holdings GP, LP
-0- 02/21/2008
/CONTACT: Ken Maples, Vice President and CFO of Hiland Partners, LP,
+1-580-242-6040/
/First Call Analyst: /
/FCMN Contact: /
/Web site: http://www.hilandpartners.com /
(HLND HPGP)
CO: Hiland Partners, LP; Hiland Holdings GP, LP
ST: Oklahoma
IN: OIL
SU: ERN CCA