Exhibit 99.1
HILAND PARTNERS, LP REPORTS 2004 PRO FORMA FOURTH QUARTER AND YEAR-END RESULTS
ENID, Okla., March 29 /PRNewswire-FirstCall/ -- Hiland Partners, LP (Nasdaq:
HLND) (the "Partnership") today reported pro forma financial results for the
three months and year ended December 31, 2004. The Partnership's reported pro
forma financial results give effect to the transfer of assets to the Partnership
in connection with its formation and the Partnership's initial public offering
as if they had occurred as of the beginning of the periods presented.
Substantially all of the assets and operations of Continental Gas, Inc. and
Hiland Partners, LLC, other than a portion of its working capital assets and the
assets related to the Bakken gathering system, were contributed to the
Partnership in connection with the initial public offering of 2,300,000 common
units representing limited partnership interests in Hiland Partners, LP that
closed on February 15, 2005. Included in the tables below are also the reported
results of Continental Gas, Inc. and Hiland Partners, LLC for the three months
and the year ended December 31, 2004.
On a pro forma basis, net income for the three months ended December 31,
2004 was $2.7 million, or $0.38 per limited partner unit, compared to a net loss
of $0.2 million, or $0.03 per limited partner unit, for the three months ended
December 31, 2003. Pro forma total segment margin for the three months ended
December 31, 2004 was $8.0 million compared to $5.4 million for the three months
ended December 31, 2003, an increase of 49%. The increase is attributable to
higher average realized natural gas sales prices and NGL sales prices. Pro forma
EBITDA for the three months ended December 31, 2004 nearly tripled to $5.7
million compared to $2.0 million for the three months ended December 31, 2003.
EBITDA is a non-GAAP financial measure that is reconciled to its most directly
comparable GAAP measure in the tables below.
"Due to our continued focus on organic growth, we are pleased to announce
improved operating results for the fourth quarter," said Randy Moeder, President
and Chief Executive Officer of Hiland Partners. "Our midstream segment directly
benefited from favorable processing margins. We intend to continue to focus
primarily on growth within our core operating areas."
On a pro forma basis, net income for the year ended December 31, 2004 was
$7.8 million, or $1.13 per limited partner unit, compared to $2.1 million, or
$0.30 per limited partner unit, for the year ended December 31, 2003. Pro forma
total segment margin for the year ended December 31, 2004 was $25.1 million
compared to $19.1 million for the year ended December 31, 2003, an increase of
31%. This increase was primarily attributable to increases in natural gas
volumes and NGL sales volumes primarily as a result of the acquisition of the
Carmen gathering system from Great Plains Pipeline Company in August 2003
combined with higher natural gas and NGL prices. Pro forma EBITDA for the year
ended December 31, 2004 increased 64% to $17.2 million compared to $10.5 million
for the year ended December 31, 2003.
Conference Call Information
The Partnership has scheduled a conference call for 10:00 am Central
Standard Time, Wednesday, March 30, 2005, to discuss the 2004 fourth quarter and
year-end results. To participate in the call, dial 1.888.396.2298 and
participant passcode 92002423, or access it live over the Internet by logging
onto the web 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 total segment
margin and EBITDA. 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 Hiland Partners, LP
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
to an oil and gas exploration and production company for use in its 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 seven natural gas gathering
systems with approximately 825 miles of gathering pipelines, four natural gas
processing plants, three natural gas treating facilities and two NGL
fractionation facilities. The Partnership's compression assets consist of two
air compression facilities and a water injection plant.
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.
The information contained in this press release is available on the
Partnership's website at http://www.hilandpartners.com . For more information,
please contact Ken Maples, Vice President and CFO, at 580.242.6040.
Selected Historical and Pro Forma Financial and Operating Data
Predecessor Hiland
Continental Hiland Partners, LP
Gas, Inc. Partners, LLC Pro Forma(A)
---------------------- --------------------- ----------------------
Three Months Ended December 31,
-------------------------------------------------------------------------------
2004 2003 2004 2003 2004 2003
-------- -------- -------- -------- -------- --------
(unaudited)
(in thousands)
Total Segment
Margin Data:
Midstream
revenues $ 28,010 $ 24,252 $ 4,431 $ 1,872 $ 30,543 $ 26,124
Midstream
purchases 22,686 21,031 2,393 722 23,531 21,753
Midstream segment
margin (B) 5,324 3,221 2,038 1,150 7,012 4,371
Compression
revenues -- -- 963 979 963 979
Total segment
margin (C) $ 5,324 $ 3,221 $ 3,001 $ 2,129 $ 7,975 $ 5,350
Summary of
Operations Data:
Midstream
revenues $ 28,010 $ 24,252 $ 4,431 $ 1,872 $ 30,543 $ 26,124
Compression
revenues -- -- 963 979 963 979
Total revenues 28,010 24,252 5,394 2,851 31,506 27,103
Operating costs
and expenses:
Midstream
purchases
(exclusive of
items shown
separately
below) 22,686 21,031 2,393 722 23,531 21,753
Operations and
maintenance
expenses 1,309 1,132 759 470 1,872 1,602
Property
impairment
expense -- 1,535 -- -- -- 1,535
Depreciation,
amortization and
accretion 1,124 1,099 681 734 2,688 2,209
Gain on asset
sales (4) (9) -- -- (4) (9)
General and
administrative
expenses 402 179 33 16 435 195
Total operating
costs and
expenses 25,517 24,967 3,866 1,942 28,522 27,285
Operating income
(loss) 2,493 (715) 1,528 909 2,984 (182)
Interest and other
financing costs,
net 203 189 374 140 315 47
Income (loss) from
continuing
operations 2,290 (904) 1,154 769 2,669 (229)
Discontinued
operations, net 1 (23) -- -- -- --
Net income (loss) $ 2,291 ($ 927) $ 1,154 $ 769 $ 2,669 ($ 229)
Pro Forma net income
(loss) per limited
partner unit (D) $ 0.38 ($ 0.03)
Other Financial and
Operating Data:
EBITDA (E) $ 3,635 $ 363(F) $ 2,209 $ 1,643 $ 5,689 $ 2,029(F)
Natural gas
sales (MMBtu/d)
(unaudited) 39,613 39,235 5,079 3,446 42,530 42,681
NGL sales (Bbls/d)
(unaudited) 1,250 948 481 281 1,487 1,229
(A) The Partnership's reported pro forma financial results give effect to
the transfer of assets to the Partnership in connection with its
formation and to the Partnership's initial public offering and use of
the offering proceeds to retire all debt as if they had occurred as of
the beginning of the periods presented. Substantially all of the assets
and operations of Continental Gas, Inc. and Hiland Partners, LLC, other
than a portion of its working capital assets and the assets related to
the Bakken gathering system, were contributed to the Partnership in
connection with the initial public offering of 2,300,000 common units
representing limited partnership interests in Hiland Partners, LP that
closed on February 15, 2005. In addition, the pro forma financial
results for the year ended December 31, 2003 give effect to the
acquisition of the Carmen gathering system, which was acquired on August
1, 2003, as if such acquisition occurred on January 1, 2003. The assets
of Continental Gas, Inc. transferred to the Partnership were recorded at
historical costs as it was considered to be a reorganization of entities
under common control. The acquisition of the assets of Hiland Partners,
LLC and the Carmen gathering system were accounted for as purchases and,
as a result, these assets were recorded at their fair value at the time
of purchase. The unaudited pro forma information is not necessarily
indicative of the results of operations that would have occurred had the
transactions been made at the beginning of the periods presented or the
future results of the combined operations.
(B) 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.
(C) We view total segment margin as an important performance measure of the
core profitability of our operations.
(D) Net income (loss) per unit is not applicable for periods prior to our
initial public offering. Pro forma net income (loss) per limited partner
unit for the three months ended December 31, 2004 and the three months
ended December 31, 2003 of $0.38 and ($0.03), respectively, are
presented pro forma for our initial public offering. Per limited partner
unit amounts give effect to our general partner's 2% interest in income
(loss).
(E) We define EBITDA as net income plus interest expense, provision for
income taxes and depreciation, amortization and accretion expense.
EBITDA is a 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 financing 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 capital structure; and (4) the viability
of acquisition 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 facilities.
(F) EBITDA has not been increased for the impact of the $1.5 million
non-cash impairment charge for the three months ended December 31, 2003.
The following table presents a reconciliation of the non-GAAP financial
measures of (1) EBITDA to the GAAP financial measure of net income and (2) total
segment margin (which consists of the sum of midstream segment margin and
compression segment margin) to operating income, in each case, on a historical
and pro forma basis for each of the periods indicated.
Predecessor Hiland
Continental Hiland Partners, LP
Gas, Inc. Partners, LLC Pro Forma
--------------------- --------------------- ---------------------
Three Months Ended December 31,
-------------------------------------------------------------------------
2004 2003 2004 2003 2004 2003
-------- -------- -------- -------- -------- --------
(unaudited)
(in thousands)
Reconciliation of EBITDA
to Net Income (Loss):
Net income
(loss) $ 2,291 ($ 927) $ 1,154 $ 769 $ 2,669 ($ 229)
Add:
Depreciation,
amortization
and
accretion 1,124 1,099 681 734 2,688 2,209
Amortization
of deferred
loan
costs 26 24 100 -- 332 49
Interest
expense 194 167 274 140 -- --
EBITDA $ 3,635 $ 363(A) $ 2,209 $ 1,643 $ 5,689 2,029(A)
Reconciliation of
Total Segment
Margin to
Operating
Income (Loss):
Operating income
(loss) $ 2,493 ($ 715) $ 1,528 $ 909 $ 2,984 ($ 182)
Add:
Operations and
maintenance
expenses 1,309 1,132 759 470 1,872 1,602
Depreciation,
amortization
and
accretion 1,124 1,099 681 734 2,688 2,209
Property
impairment
expense -- 1,535 -- -- -- 1,535
Gain on asset
sales (4) (9) -- -- (4) (9)
General and
administrative
expenses 402 179 33 16 435 195
Total segment
margin $ 5,324 $ 3,221 $ 3,001 $ 2,129 $ 7,975 $ 5,350
(A) EBITDA has not been increased for the impact of the $1.5 million
non-cash impairment charge for the three months ended December 31, 2003.
Selected Historical and Pro Forma Financial and Operating Data
Predecessor Hiland
Continental Hiland Partners, LP
Gas, Inc. Partners, LLC Pro Forma
--------------------- --------------------- ---------------------
Year Ended December 31,
-------------------------------------------------------------------------
2004 2003 2004 2003 2004 2003
-------- -------- -------- -------- -------- --------
(audited) (in thousands) (unaudited)
Total Segment
Margin Data:
Midstream
revenues $ 98,296 $ 76,018 $ 10,481 $ 7,262 $106,879 $ 97,814
Midstream
purchases 82,532 67,002 4,600 2,826 85,584 81,988
Midstream
segment
margin 15,764 9,016 5,881 4,436 21,295 15,826
Compression
revenues -- -- 3,854 3,300 3,854 3,300
Total segment
margin $ 15,764 $ 9,016 $ 9,735 $ 7,736 $ 25,149 $ 19,126
Summary of
Operations
Data:
Midstream
revenues $ 98,296 $ 76,018 $ 10,481 $ 7,262 $106,879 $ 97,814
Compression
revenues -- -- 3,854 3,300 3,854 3,300
Total
revenues 98,296 76,018 14,335 10,562 110,733 101,114
Operating costs
and expenses:
Midstream
purchases
(exclusive of
items shown
separately
below) 82,532 67,002 4,600 2,826 85,584 81,988
Operations and
maintenance
expenses 4,933 3,714 2,080 1,900 6,817 6,076
Property
impairment
expense -- 1,535 -- -- -- 1,535
Depreciation,
amortization
and
accretion 4,127 3,304 2,311 1,684 9,021 8,158
(Gain) Loss on
asset sales (19) 34 -- -- (19) 34
General and
administrative
expenses 1,082 770 97 101 1,179 999
Total
operating
costs and
expenses 92,65 576,359 9,088 6,511 102,582 98,790
Operating income
(loss) 5,641 (341) 5,247 4,051 8,151 2,324
Interest and
other financing
costs, net 764 487 766 563 345 231
Income (loss)
from continuing
operations 4,877 (828) 4,481 3,488 7,806 2,093
Discontinued
operations, net 35 246 -- -- -- --
Income (loss)
before change
in accounting
principle 4,912 (582) 4,481 3,488 7,806 2,093
Cumulative effect
of change in
accounting
principle -- 1,554 -- (73) -- --
Net income $ 4,912 $ 972 $ 4,481 $ 3,415 $ 7,806 $ 2,093
Pro Forma net
income per
limited partner
unit (A) $ 1.13 $ 0.30
Balance Sheet Data (at period end):
Property and
equipment, at
cost, net $ 37,075 $ 38,425 $ 48,295 $ 21,973 $ 68,675
Total assets 49,175 47,840 51,692 23,458 109,613
Accounts
payable-
affiliates 2,998 2,814 415 2 3,097
Long-term debt,
net of current
maturities 12,643 14,571 23,279 10,830 --
Net equity 24,510 21,739 12,563 8,307 98,898
Other Financial
and Operating
Data:
EBITDA $ 9,843 $ 4,773(B) $ 7,559 $ 5,673 $ 17,213 $ 10,503(B)
Natural gas
sales
(MMBtu/d)
(unaudited) 40,560 37,701 3,503 3,756 43,541 41,457
NGL sales
(Bbls/d)
(unaudited) 1,133 895 304 282 1,375 1,177
(A) Net income per unit is not applicable for periods prior to our initial
public offering. Pro forma net income per limited partner unit for the
year ended December 31, 2004 and the year ended December 31, 2003 of
$1.13 and $0.30, respectively, are presented pro forma for our initial
public offering.
(B) EBITDA has not been (1) increased for the impact of the $1.5 million
non-cash impairment charge for the year ended December 31, 2003 or (2)
decreased for the impact of the $1.6 million cumulative effect of
accounting change for the year ended December 31, 2003.
The following table presents a reconciliation of the non-GAAP financial
measures of (1) EBITDA to the GAAP financial measure of net income and (2) total
segment margin (which consists of the sum of midstream segment margin and
compression segment margin) to operating income, in each case, on a historical
and pro forma basis for each of the periods indicated.
Predecessor Hiland
Continental Hiland Partners, LP
Gas, Inc. Partners, LLC Pro Forma
--------------------- --------------------- ---------------------
Year Ended December 31,
-------------------------------------------------------------------------
2004 2003 2004 2003 2004 2003
-------- -------- -------- -------- -------- --------
(audited) (in thousands) (unaudited)
Reconciliation
of EBITDA to
Net Income:
Net income $ 4,912 $ 972 $ 4,481 $ 3,415 $ 7,806 $ 2,093
Add:
Depreciation,
amortization
and
accretion 4,127 3,304 2,311 1,684 9,021 8,158
Amortization
of deferred
loan costs 102 24 106 -- 386 252
Interest
expense 702 473 661 574 -- --
EBITDA $ 9,843 $ 4,773(A) $ 7,559 $ 5,673 $ 17,213 $ 10,503(A)
Reconciliation of
Total Segment
Margin to
Operating
Income (Loss):
Operating
income (loss) $ 5,641 ($ 341) $ 5,247 $ 4,051 $ 8,151 $ 2,324
Add:
Operations
and
maintenance
expenses 4,933 3,714 2,080 1,900 6,817 6,076
Depreciation,
amortization
and
accretion 4,127 3,304 2,311 1,684 9,021 8,158
Property
impairment
expense -- 1,535 -- -- -- 1,535
(Gain) loss
on asset
sales (19) 34 -- -- (19) 34
General and
administrative
expenses 1,082 770 97 101 1,179 999
Total segment
margin $ 15,764 $ 9,016 $ 9,735 $ 7,736 $ 25,149 $ 19,126
(A) EBITDA has not been (1) increased for the impact of the $1.5 million
non-cash impairment charge for the year ended December 31, 2003 or (2)
decreased for the impact of the $1.6 million cumulative effect of
accounting change for the year ended December 31, 2003.
SOURCE Hiland Partners, LP
-0- 03/29/2005
/CONTACT: Ken Maples, Vice President and CFO of Hiland Partners, LP,
+1-580-242-6040/
/Web site: http://www.hilandpartners.com /