Exhibit 99.1
DCP MIDSTREAM PARTNERS REPORTS THIRD QUARTER 2006 RESULTS
DENVER, Nov. 8 /PRNewswire-FirstCall/ -- DCP Midstream Partners, LP
(NYSE: DPM) today reported results of operations for the three and nine months
ended Sept. 30, 2006. On Dec. 7, 2005, DCP Midstream Partners, LP (the
Partnership) completed its initial public offering of common units. Earnings for
periods prior to the date of the initial public offering are attributable to DCP
Midstream Partners Predecessor, which consists of subsidiaries and assets of
Duke Energy Field Services, LLC, (DEFS) the owner of the Partnership's general
partner, which were contributed to the Partnership.
For the three months ended Sept. 30, 2006, the Partnership reported net
income of $9.7 million, or $0.51 per limited partner unit, compared to $3.6
million for the same period in 2005. For the nine months ended Sept. 30, 2006,
the Partnership reported net income of $23.9 million, or $1.32 per limited
partner unit, compared to $18.4 million for the same period in 2005.
On Oct. 25, 2006, the board of directors of the Partnership's general
partner declared a $0.025 increase in the quarterly distribution to $0.405 per
limited partner unit, equating to a prospective annual distribution of $1.62 per
limited partner unit. The new distribution rate represents a 15.7 percent
increase over the minimum quarterly distribution of $0.35 per unit set forth in
the prospectus in connection with the Partnership's initial public offering in
December 2005. The Partnership's distributable cash flow for the three months
ended Sept. 30, 2006 was $12.5 million, or 1.7 times the amount required to
cover its current distribution rate to the general and limited partners. The
Partnership's distributable cash flow for the nine months ended Sept. 30, 2006
was $31.8 million, or 1.6 times the amount required to cover its current
distribution rate to the general and limited partners.
"We've had another great quarter, with strong earnings and cash flow
supported by commodity prices and continued drilling around our assets by
ConocoPhillips and others," said Jim Mogg, chairman. "The solid performance of
our business allowed us to increase our unitholder distributions by over 15
percent since our IPO last December. We recently announced the acquisition of
Gas Supply Resources, a wholesale propane logistics company, from DEFS for
approximately $77 million, as well as an additional $250 million acquisition
from DEFS planned for 2007. We're very excited about continuing to grow DCP
Midstream Partners and delivering value to our unitholders."
EBITDA for the third quarter of 2006 was $13.9 million, compared to $6.5
million in the corresponding 2005 period. The primary driver of the increase was
the gross margin impact of strong crude oil and natural gas liquids (NGL)
prices. Additional contributors were increased gathering and processing volumes,
marketing activity on our PELICO pipeline system, as well as lower operating and
maintenance expense. A portion of the volume increase is attributable to lower
volumes in the third quarter of 2005 due to hurricane Katrina.
EBITDA for the nine months ended Sept. 30, 2006 was $36.2 million, compared
to $27.2 million in the corresponding 2005 period. The primary driver of the
increase was the gross margin impact of strong crude oil and NGL prices.
Additional contributors were increased gathering and processing volumes,
marketing activity on our PELICO pipeline system, as well as lower operating and
maintenance expense, partially offset by higher general and administrative
expense. A portion of the volume increase is attributable to lower volumes in
the third quarter of 2005 due to hurricane Katrina. Operating and maintenance
expense decreased $0.6 million for the nine months ended Sept. 30, 2006 as
compared to the same period in 2005 due primarily to lower repair and
maintenance expense, compressor lease expense and asset integrity and
environmental expense, partially offset by higher direct labor and chemical
costs. We anticipate that some of the savings achieved in operating and
maintenance expense for the nine months ending Sept. 30, 2006, will reverse in
the fourth quarter of 2006. General and administrative expenses increased $3.9
million for the nine months ended Sept. 30, 2006 as compared to the same period
in 2005 due primarily to higher public company costs and employee expenses not
incurred in 2005.
As of Sept. 30, 2006, the Partnership has hedged approximately 80 percent of
its projected natural gas, NGL, and condensate commodity price exposure through
2010 and approximately 60 percent of its projected condensate commodity price
exposure in 2011. As a result, changes in commodity prices are not expected to
have a significant impact on earnings and cash flows of the Partnership.
EBITDA, gross margin, segment gross margin, and distributable cash flow are
non-GAAP financial measures and are explained in greater detail under "Non-GAAP
Financial Information" below.
OPERATING RESULTS BY BUSINESS SEGMENT
Natural Gas Services -- Gross margin increased $5.4 million to $20.7 million
for the three months ended Sept. 30, 2006, from $15.3 million in the same period
of 2005. Gross margin increased $12.1 million to $55.9 million for the nine
months ended Sept. 30, 2006 from $43.8 million in the same period in 2005. These
increases are due primarily to higher commodity prices and favorable frac
spreads in the third quarter of 2006 along with an increase in volumes
attributable to strong drilling activity around our assets and crosshaul volumes
on our PELICO system.
NGL Logistics -- Gross margin related to our Seabreeze pipeline was
$1.2 million for the three months ended Sept. 30, 2006 compared to
$0.7 million during the same period of 2005. Gross margin for the nine months
ended Sept. 30, 2006 was $3.2 million, compared to $2.7 million during the same
period in 2005. These increases are due primarily to increased volumes.
EARNINGS CALL
DCP Midstream Partners will hold its quarterly conference call to discuss
second quarter results Nov. 9, 2006 at 11 a.m. ET. The dial-in number for the
call is 866-770-7120 in the United States or 617-213-8065 outside the United
States, pass code 83686348. A live Webcast of the call can be accessed on the
investor information page of DCP Midstream Partners' Web site at
http://www.dcppartners.com. The call will be available for replay for seven days
by dialing 888-286-8010, in the United States or 617-801-6888 outside the United
States, pass code 30663914. A replay and transcript of the broadcast will also
be available on the company's Web site.
NON-GAAP FINANCIAL INFORMATION
This press release and the accompanying financial schedules include the
non-generally accepted accounting principles ("non-GAAP") financial measures of
EBITDA, gross margin, segment gross margin and distributable cash flow. The
accompanying schedules provide reconciliations of these non-GAAP financial
measures to their most directly comparable financial measures 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 an alternative to, or more meaningful than, net income, operating
income, cash flows from operating activities or any other measure of financial
performance presented in accordance with GAAP as measures of operating
performance, liquidity or ability to service debt obligations and make cash
distributions to unitholders.
We define EBITDA as net income less interest income plus interest expense
and depreciation and amortization expense. EBITDA is used as a supplemental
liquidity measure by our management and by external users of our financial
statements such as investors, commercial banks, research analysts and others, to
assess the ability of our assets to generate cash sufficient to pay interest
costs, support our indebtedness, make cash distributions to our unitholders and
general partner and finance maintenance capital expenditures. Our EBITDA may not
be comparable to a similarly titled measure of another company because other
entities may not calculate EBITDA in the same manner.
EBITDA is also used as a supplemental performance measure by our management
and by external users of our financial statements, such as investors, commercial
banks, research analysts and others, to assess:
* financial performance of our assets without regard to financing
methods, capital structure or historical cost basis;
* our operating performance and return on capital as compared to those of
other companies in the midstream energy industry, without regard to
financing methods or capital structure; and
* viability of acquisitions and capital expenditure projects and the
overall rates of return on alternative investment opportunities.
We define gross margin as total operating revenues less purchases of natural
gas and NGLs, and we define segment gross margin for each segment as total
operating revenues for that segment less purchases of natural gas and NGLs for
that segment. Our gross margin equals the sum of our segment gross margins.
Gross margin is included as a supplemental disclosure because it is a primary
performance measure used by management as it represents the results of product
sales and purchases, a key component of our operations. Our gross margin may not
be comparable to a similarly titled measure of other companies because other
entities may not calculate gross margin in the same manner.
We define distributable cash flow as EBITDA, plus interest income, less
interest expense, earnings from equity method investment, maintenance capital
expenditures, net of reimbursable projects, and adjustments for non-cash hedge
ineffectiveness. Maintenance capital expenditures are capital expenditures made
to replace partially or fully depreciated assets, to maintain the existing
operating capacity of our assets and to extend their useful lives, or other
capital expenditures that are incurred in maintaining existing system volumes
and related cash flows. Non-cash hedge ineffectiveness refers to the ineffective
portion of our cash flow hedges, which is recorded in earnings in the current
period. This amount is considered to be non-cash for the purpose of computing
distributable cash because settlement will not occur until future periods and
will be impacted by future changes in commodity prices. Distributable cash flow
is used as a supplemental liquidity measure by our management and by external
users of our financial statements, such as investors, commercial banks, research
analysts and others, to assess our ability to make cash distributions to our
unitholders and our general partner.
DCP Midstream Partners, LP (NYSE: DPM) is a midstream master limited
partnership that gathers, processes, transports and markets natural gas and
natural gas liquids and is a leading wholesale distributor of propane. DCP
Midstream Partners, LP is managed by its general partner, DCP Midstream GP, LLC,
which is wholly owned by Duke Energy Field Services, LLC, a joint venture
between Duke Energy and ConocoPhillips. For more information, visit the DCP
Midstream Partners, LP Web site at http://www.dcppartners.com.
This press release contains forward-looking statements as defined under the
federal securities laws regarding DCP Midstream Partners, LP including
projections, estimates, forecasts, plans and objectives. These statements are
based on management's current projections, estimates, forecasts, plans and
objectives and are not guarantees of future performance. In addition, these
statements are subject to certain risks, uncertainties and other assumptions
that are difficult to predict and may be beyond our control. These risks and
uncertainties include, but are not limited to, changes in laws and regulations
impacting the gathering and processing industry, the level of creditworthiness
of the Partnership's counterparties, the Partnership's ability to access the
debt and equity markets, the Partnership's use of derivative financial
instruments to hedge commodity and interest rate risks, the amount of collateral
required to be posted from time to time in the Partnership's transactions,
changes in commodity prices, interest rates, demand for the Partnership's
services, weather and other natural phenomena, industry changes including the
impact of consolidations and changes in competition, the Partnership's ability
to obtain required approvals for construction or modernization of the
Partnership's facilities and the timing of production from such facilities, and
the effect of accounting pronouncements issued periodically by accounting
standard setting boards. Therefore, actual results and outcomes may differ
materially from what is expressed in such forward-looking information.
In light of these risks, uncertainties and assumptions, the events described
in the forward-looking statements might not occur or might occur to a different
extent or at a different time than the Partnership has described. The
Partnership undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. Information contained in this press release is unaudited,
and is subject to change.
DCP MIDSTREAM PARTNERS, LP
RESULTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ---------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
($ in millions, except per unit data)
Sales of natural gas, NGLs and
condensate $ 95.0 $ 227.4 $ 296.6 $ 494.2
Transportation and processing
services 7.0 5.9 20.4 16.7
Total operating revenues 102.0 233.3 317.0 510.9
Purchases of natural gas and NGLs 80.1 217.3 257.9 464.4
Gross margin 21.9 16.0 59.1 46.5
Operating and maintenance expense 3.6 5.0 10.9 11.5
General and administrative expense 4.4 4.6 12.1 8.2
Earnings from equity method
investment -- 0.1 0.1 0.4
EBITDA 13.9 6.5 36.2 27.2
Depreciation and amortization
expense 3.0 2.9 8.9 8.8
Interest income 1.7 -- 4.7 --
Interest expense 2.9 -- 8.1 --
Net income 9.7 3.6 23.9 18.4
Less:
Net income attributable to
DCP Midstream Partners
Predecessor -- (3.6) -- (18.4)
General partner interest in
net income (0.2) -- (0.5) --
Net income allocable to limited
partners $ 9.5 $ -- $ 23.4 $ --
Net income per limited partner
unit -- basic and diluted $ 0.51 $ -- $ 1.32 $ --
Weighted average limited
partners' units outstanding
-- basic and diluted 17.5 -- 17.5 --
DCP MIDSTREAM PARTNERS, LP
SEGMENT FINANCIAL AND OPERATING DATA
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ---------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
($ in millions)
Natural Gas Services Segment:
Financial data:
Segment gross margin $ 20.7 $ 15.3 $ 55.9 $ 43.8
Operating data:
Natural gas throughput (MMcf/d) 393 367 381 339
NGL gross production (Bbls/d) 5,384 4,507 5,222 4,795
NGL Logistics Segment:
Financial data:
Segment gross margin $ 1.2 $ 0.7 $ 3.2 $ 2.7
Operating data:
Seabreeze throughput (Bbls/d) 20,272 17,046 19,667 15,334
Black Lake throughput (Bbls/d)(c) 5,410 4,708 4,858 4,972
DCP MIDSTREAM PARTNERS, LP
RECONCILIATION OF NON-GAAP MEASURES
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- ---------------------------
2006 2005 2006 2005
------------ ------------ ------------ ------------
($ in millions)
Reconciliation of segment net
income to segment gross margin:
Natural Gas Services segment:
Segment net income $ 14.9 $ 7.6 $ 37.6 $ 24.2
Add:
Depreciation and
amortization expense 2.7 2.8 8.2 8.3
Operating and maintenance
expense 3.1 4.9 10.1 11.3
Segment gross margin $ 20.7 $ 15.3 $ 55.9 $ 43.8
NGL Logistics segment:
Segment net income $ 0.4 $ 0.6 $ 1.8 $ 2.4
Add:
Depreciation and amortization
expense 0.3 0.1 0.7 0.5
Operating and maintenance
expense 0.5 0.1 0.8 0.2
Less:
Earnings from equity method
investment -- 0.1 0.1 0.4
Segment gross margin $ 1.2 $ 0.7 $ 3.2 $ 2.7
DCP MIDSTREAM PARTNERS, LP
RECONCILIATION OF NON-GAAP MEASURES - Continued
(Unaudited)
Three Months Nine Months
Ended Ended
September 30, September 30,
2006 2006
------------- -------------
($ in millions)
Reconciliation of net income
to EBITDA:
Net income $ 9.7 $ 23.9
Interest income (1.7) (4.7)
Interest expense 2.9 8.1
Depreciation and amortization expense 3.0 8.9
EBITDA $ 13.9 $ 36.2
Reconciliation of net cash provided
by operating activities to EBITDA:
Net cash provided by operating activities $ 6.0 $ 16.8
Net changes in operating assets and
liabilities 6.2 14.1
Other, net 0.5 1.8
Interest income (1.7) (4.7)
Interest expense 2.9 8.1
Earnings from equity method investment -- 0.1
EBITDA $ 13.9 $ 36.2
Reconciliation of net cash provided by operating
activities to distributable cash flow:
Net cash provided by operating activities $ 6.0 $ 16.8
Maintenance capital expenditures, net of
reimbursable projects (0.2) (2.4)
Post closing reimbursement from DEFS for
maintenance capital expenditures 0.1 1.1
Non-cash hedge ineffectiveness (0.1) 0.4
Net changes in operating assets and
liabilities 6.2 14.1
Other, net 0.5 1.8
Distributable cash flow $ 12.5 $ 31.8
Three Months Nine Months
Ended Ended
September 30, September 30,
2005 2005
------------- -------------
($ in millions)
Reconciliation of net income to EBITDA:
Net income $ 3.6 $ 18.4
Depreciation and amortization 2.9 8.8
EBITDA $ 6.5 $ 27.2
Reconciliation of net cash (used in) provided
by operating activities to EBITDA:
Net cash (used in) provided by operating
activities $ (10.2) $ 7.7
Earnings from equity method investment 0.1 0.4
Net changes in operating assets and
liabilities 16.5 19.0
Other, net 0.1 0.1
EBITDA $ 6.5 $ 27.2
SOURCE DCP Midstream Partners, LP
-0- 11/08/2006
/CONTACT: Karen Taylor of DCP Midstream Partners, LP, +1-303-633-2913, or
24-Hour, +1-303-809-9160/
/First Call Analyst: /
/FCMN Contact: kltaylor@dcppartners.com /
/Web site: http://www.dcppartners.com/