Exhibit 99.1
HILAND PARTNERS, LP REPORTS FIRST QUARTER RESULTS
ENID, Okla., May 11 /PRNewswire-FirstCall/ -- Hiland Partners, LP (Nasdaq:
HLND) (the "Partnership") today reported quarterly net income for the three
months ended March 31, 2006 of $3.6 million compared to net income of $1.6
million for the three months ended March 31, 2005, an increase of 117%. Net
income per limited partner unit for the first quarter of 2006 increased to $0.37
per unit from income of $0.16 per unit in the corresponding quarter in 2005, an
increase of 131%. Adjusted EBITDA (adjusted EBITDA is defined as net income plus
interest expense, provisions for income taxes and depreciation, amortization and
accretion expense, as adjusted for non-cash realized (gain) loss on derivative
transactions and non-cash unit based compensation expense) for the three months
ended March 31, 2006 was $8.4 million compared to $3.7 million for the three
months ended March 31, 2005, an increase of 129%. Total segment margin for the
three months ended March 31, 2006 was $11.9 million compared to $5.6 million for
the three months ended March 31, 2005, an increase of 113%. The increases are
primarily attributable to higher average realized natural gas and NGL sales
prices and the inclusion of the results of operations from the assets
contributed to us by Hiland Partners, LLC (the Worland gathering system and
compression assets) as part of our initial public offering on February 15, 2005
and the acquisition of Hiland Partners, LLC (the Bakken gathering system)
effective September 1, 2005.
Our financial results for the quarter ended March 31, 2006 include the
acquisition of the membership interests of Hiland Partners, LLC (the Bakken
gathering system) effective on September 1, 2005. The results of operations for
the quarter ended March 31, 2005 include the financial results of Continental
Gas, Inc. (our predecessor) through February 14, 2005 and the results of
operations of Hiland Partners, LP for the period from February 15, 2005, the
date Hiland Partners, LP commenced operations. As a result, our results of
operations are not comparable on a period-to-period basis.
"We are pleased with our first quarter results and the continued growth of
the Bakken gathering asset that allows us to continue our distribution growth,"
said Randy Moeder, President and Chief Executive Officer of Hiland Partners, LP.
"As we look forward this year, we expect to see that growth continues with the
acquisition of the Kinta area gathering assets from Enogex and with the
implementation of the other organic growth projects previously announced for
2006."
On April 26, 2006, the Partnership announced an increase in its cash
distribution for the first quarter of 2006. The declared quarterly distributions
on the Partnership's common and subordinated units increased from $0.625 per
unit (an annualized rate of $2.50 per unit) for the fourth quarter of 2005, to
$0.65 per unit (an annualized rate of $2.60 per unit) for the first quarter of
2006. This distribution will be payable on May 15, 2006 to unitholders of record
on May 5, 2006.
Conference Call Information
The Partnership has scheduled a conference call for 10:00am Central Time,
Friday, May 12, 2006, to discuss the 2006 first 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,
adjusted 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 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
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 thirteen
natural gas gathering systems with approximately 1,700 miles of gathering
pipelines, five natural gas processing plants, three natural gas treating
facilities and three 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.
- tables to follow -
Other Financial and Operating Data
Results of Operations
Set forth in the table below is financial and operating data for
Continental Gas, Inc. (predecessor) and Hiland Partners, LP for the periods
indicated.
Three Months Ended March 31,
-----------------------------------------------------------------
2005
-------------------------------------------------
Hiland Continental
Partners, Gas, Inc.
2006 LP (A) (Predecessor) (B) Total (C)
------------ ------------ ----------------- ------------
(Unaudited, in thousands)
Total Segment Margin Data:
Midstream revenues $ 52,204 $ 13,362 $ 11,813 $ 25,175
Midstream purchases 41,535 10,456 9,747 20,203
------------ ------------ ----------------- ------------
Midstream segment margin 10,669 2,906 2,066 4,972
Compression revenues (D) 1,205 603 --- 603
------------ ------------ ----------------- ------------
Total segment margin (E) $ 11,874 $ 3,509 $ 2,066 $ 5,575
============ ============ ================= ============
Summary of Operations Data:
Midstream revenues $ 52,204 $ 13,362 $ 11,813 $ 25,175
Compression revenues 1,205 603 --- 603
------------ ------------ ----------------- ------------
Total revenues 53,409 13,965 11,813 25,778
Midstream purchases
(exclusive of items shown
separately below) 41,535 10,456 9,747 20,203
Operations and maintenance 2,574 797 780 1,577
Depreciation, amortization
and accretion 4,137 1,165 512 1,677
General and administrative 1,030 187 166 353
------------ ------------ ----------------- ------------
Total operating costs
and expenses 49,276 12,605 11,205 23,810
------------ ------------ ----------------- ------------
Operating income 4,133 1,360 608 1,968
Other income (expense) (583) (217) (115) (332)
------------ ------------ ----------------- ------------
Net income 3,550 1,143 493 1,636
Add:
Depreciation, amortization
and accretion 4,137 1,165 512 1,677
Amortization of deferred
loan costs 123 192 13 205
Interest expense 535 26 108 134
------------ ------------ ----------------- ------------
EBITDA (F) 8,345 2,526 1,126 3,652
Add:
Non-cash realized gain on
derivative transactions (82) --- --- ---
Non-cash unit based
compensation expense 107 --- --- ---
------------ ------------ ----------------- ------------
Adjusted EBITDA (F) $ 8,370 $ 2,526 $ 1,126 $ 3,652
============ ============ ================= ============
Maintenance capital
expenditures $ 692 $ 44 $ 237 $ 281
Expansion capital
expenditures 10,486 --- --- ---
------------ ------------ ----------------- ------------
Total capital expenditures $ 11,178 $ 44 $ 237 $ 281
============ ============ ================= ============
Operating Data:
Natural gas sales
(MMBTU/d) 59,627 41,794 37,052 39,423
NGL sales (Bbls/d) 3,245 1,428 1,206 1,317
March 31, December 31,
2006 2005
------------ ------------
Balance Sheet Data (at period end):
Property and equipment, at cost, net $ 128,868 $ 120,715
Total assets $ 197,893 $ 193,969
Long-term debt, net of current maturities $ 41,784 $ 33,784
Net equity $ 137,705 $ 138,589
(A) Amounts presented in the Hiland Partners, LP column include only the
activity for the period beginning on February 15, 2005. These amounts include
the operations of the Worland gathering system and compression assets acquired
from Hiland Partners, LLC at the completion of our initial public offering.
(B) Amounts presented in the Predecessor column include only the activity
of Continental Gas, Inc. for the period prior to the formation of Hiland
Partners, LP on February 15, 2005.
(C) Total income and expense items included in the Consolidated Statements
of Operations and our predecessor will be included in our first quarter 2006
10-Q.
(D) Compression revenues and compression segment margin are the same. There
are no compression purchases associated with the compression segment.
(E) Reconciliation of total segment margin to operating income:
Three Months Ended March 31,
-----------------------------------------------------------------
2005
-------------------------------------------------
Hiland Continental
Partners, Gas, Inc.
2006 LP (E) (Predecessor) (A) Total (F)
------------ ------------ ----------------- ------------
(in thousands)
Reconciliation of
Total Segment Margin to
Operating Income (Loss)
Operating income $ 4,133 $ 1,360 $ 608 $ 1,968
Add:
Operations and maintenance
expenses 2,574 797 780 1,577
Depreciation, amortization
and accretion 4,137 1,165 512 1,677
General and administrative
expenses 1,030 187 166 353
------------ ------------ ----------------- ------------
Total segment margin $ 11,874 $ 3,509 $ 2,066 $ 5,575
============ ============ ================= ============
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.
(F) We define EBITDA, a non-GAAP financial measure, as net income plus
interest expense, provisions for income taxes and depreciation, amortization and
accretion expense. We define adjusted EBITDA, a non-GAAP financial measure, as
net income plus interest expense, provisions for income taxes and depreciation,
amortization and accretion expense, as adjusted for non-cash realized (gain)
loss on derivative transactions and non-cash unit based compensation expense.
EBITDA and adjusted EBITDA are used as supplemental financial measures 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 and adjusted EBITDA should not be considered as
alternatives to net income, operating income, cash flows from operating
activities or any other measures of financial performance presented in
accordance with GAAP. Our EBITDA and adjusted EBITDA may not be comparable to
EBITDA and adjusted EBITDA of similarly titled measures of other entities, as
other entities may not calculate EBITDA and adjusted EBITDA in the same manner
as we do.
SOURCE Hiland Partners, LP
-0- 05/11/2006
/CONTACT: Ken Maples, Vice President and CFO of Hiland Partners, LP,
+1-580-242-6040/
/Web site: http://www.hilandpartners.com /