Exhibit 99.1
HILAND REPORTS FOURTH QUARTER RESULTS
ENID, Okla., Feb. 20 /PRNewswire-FirstCall/ -- The Hiland companies,
Hiland Partners, LP (Nasdaq: HLND) and Hiland Holdings GP, LP (Nasdaq: HPGP)
today reported results for the fourth quarter of 2006.
Hiland Partners, LP Financial Results
Hiland Partners, LP reported quarterly net income for the three months ended
December 31, 2006 of $3.6 million compared to net income of $4.1 million for the
three months ended December 31, 2005, a decrease of 14%. 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. Net income per limited partner unit-basic for the fourth quarter of
2006 was $0.30 per unit compared to net income of $0.50 per unit in the
corresponding quarter in 2005. Weighted average limited partner units
outstanding for the three months ended December 31, 2006 was 9.2 million units
compared to 7.6 million units for the three months ended December 31, 2005.
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, 2006 was $11.9 million compared to $9.6 million for
the three months ended December 31, 2005, an increase of 24%. Total segment
margin for the three months ended December 31, 2006 was $18.0 million compared
to $12.8 million for the three months ended December 31, 2005, an increase of
41%. 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.
For the year ended December 31, 2006, Hiland Partners, LP reported net
income of $14.7 million compared to net income of $10.3 million for the year
ended December 31, 2005, an increase of 42%. Net income per limited partner
unit-basic for the year ended December 31, 2006 was $1.37 per unit compared to
net income of $1.33 per unit for the year ended December 31, 2005. Weighted
average limited partner units outstanding for the year ended December 31, 2006
was 9.0 million units compared to 7.0 million units for the year ended December
31, 2005. EBITDA for the year ended December 31, 2006 was $42.8 million compared
to $23.9 million for the year ended December 31, 2005, an increase of 79%. Total
segment margin for the year ended December 31, 2006 was $63.5 million compared
to $33.5 million for the year ended December 31, 2005, an increase of 89%. The
increases are primarily attributable to the inclusion of the results of
operations from the assets acquired from Hiland Partners, LLC (the Worland
gathering system and compression assets) as part of our initial public offering
on February 15, 2005, the acquisition of Hiland Partners, LLC (the Bakken
gathering system) effective September 1, 2005 and the acquisition of the Kinta
Area gathering assets effective May 1, 2006. As a result, our results of
operations are not comparable on a period-to-period basis.
"We are pleased with our results for 2006 which resulted in record growth
for Hiland Partners," said Randy Moeder, President and Chief Executive Officer.
"We look forward to completion in 2007 of growth projects that will provide
future long-term growth for the Partnership such as completion of the new
Badlands Plant and the development of our Woodford Shale project."
On January 25, 2007, Hiland Partners, LP announced an increase in its cash
distribution for the fourth quarter of 2006. The declared quarterly
distributions on Hiland Partners, LP's common and subordinated units increased
to $0.7125 per unit (an annualized rate of $2.85 per unit) from $0.70 per unit
(an annualized rate of $2.80 per unit) for the third quarter of 2006. This
represents a 1.8% increase over the prior quarter and a 14.0% increase over the
distribution for the same quarter of the prior year. This distribution was paid
on February 14, 2007 to unitholders of record on February 5, 2007.
Hiland Holdings GP, LP Financial Results
Hiland Holdings GP, LP reported quarterly net income for the three months
ended December 31, 2006 of $1.8 million ($0.08 per limited partner unit-basic)
compared to net income of $0.3 million for the three months ended December 31,
2005 (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 $3.0 million in the fourth quarter of 2006 compared to
$4.1 million in the fourth quarter of 2005.
Hiland Holdings GP, LP, including its predecessor, Hiland Partners GP, LLC,
reported net income of $2.4 million for the year ended December 31, 2006,
compared to net income of $0.9 million for the comparable period in 2005. Net
income before minority interest was $12.5 million for the year ended December
31, 2006 compared to $10.3 million for the year ended December 31, 2005. Net
income for the period from September 25, 2006, inception of operations, to
December 31, 2006 was $2.0 million ($0.09 per limited partner unit-basic).
Hiland Holdings GP, LP's share of distributions, including distributions on
its 5,381,471 limited partner units, its two percent general partner interest,
and the incentive distributions rights, was approximately $4.7 million for the
fourth quarter of 2006. On January 25, 2007, Hiland Holdings GP, LP, announced
an increase in its cash distribution for the fourth quarter of 2006. The
declared quarterly distributions on the Partnership's units increased to $0.2075
per unit (an annualized rate of $0.83 per unit) from $0.2025 per unit (an
annualized rate of $0.81 per unit) for the third quarter of 2006. This
represents a 2.5% increase over the prior quarter and a 12.2% increase over the
expected initial quarterly cash distribution of $0.74 per unit. The distribution
was paid on February 19, 2007 to unitholders of record on February 5, 2007. The
previously announced distribution for the third quarter of 2006, prorated for
the portion of the quarter Hiland Holdings GP, LP was a public company which
equated to $0.0132 per unit, was paid on February 19, 2007 to unitholders of
record on February 5, 2007.
Conference Call Information
Hiland has scheduled a conference call for 10:00am Central Time, Wednesday,
February 21, 2007, to discuss the 2006 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 thirteen
natural gas gathering systems with approximately 1,844 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.
Hiland Holdings GP, LP owns the two percent general partner interest, a 56.9
percent limited partner interest, 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 and Continental Gas, Inc. (predecessor) for the periods indicated.
Three Months Ended
December 31,
------------------------------
2006 2005
------------- -------------
(unaudited, in thousands)
Total Segment Margin Data:
Midstream revenues $ 55,067 $ 67,090
Midstream purchases 38,228 55,541
------------- -------------
Midstream segment margin 16,839 11,549
Compression revenues [A] 1,204 1,205
------------- -------------
Total segment margin [B] $ 18,043 $ 12,754
============= =============
Summary of Operations Data:
Midstream revenues $ 55,067 $ 67,090
Compression revenues 1,204 1,205
------------- -------------
Total revenues 56,271 68,295
Midstream purchases (exclusive of items
shown separately below) 38,228 55,541
Operations and maintenance 4,931 2,276
Depreciation, amortization and accretion 6,319 4,188
General and administrative expenses 1,341 931
------------- -------------
Total operating costs and expenses 50,819 62,936
------------- -------------
Operating income 5,452 5,359
Other expense, net (1,876) (1,220)
------------- -------------
Net income 3,576 4,139
Add:
Depreciation, amortization and accretion 6,319 4,188
Amortization of deferred loan costs 88 124
Interest expense 1,889 1,176
------------- -------------
EBITDA [C] $ 11,872 $ 9,627
============= =============
Non-cash loss on derivative transactions $ 20 $ ---
Non-cash compensation expense $ 135 $ 28
Maintenance capital expenditures $ 722 $ 763
Expansion capital expenditures 13,426 6,856
------------- -------------
Total capital expenditures $ 14,148 $ 7,619
============= =============
Operating Data:
Natural gas sales (MMBTU/d) 73,329 59,122
NGL sales (Bbls/d) 3,617 3,163
Natural gas gathered (MMBtu/d) [D] 123,766 ---
Year Ended December 31,
--------------------------------------------------------------
2005
---------------------------------------------
Continental
Hiland Gas, Inc.
Partners, (Predecessor)
2006 LP [E] [F] Total [G]
------------- ------------- ------------- -------------
(unaudited)
(in thousands)
Total Segment Margin Data:
Midstream revenues $ 214,867 $ 150,571 $ 11,813 $ 162,384
Midstream purchases 156,193 123,342 9,747 133,089
------------- ------------- ------------- -------------
Midstream segment margin 58,674 27,229 2,066 29,295
Compression revenues [A] 4,819 4,217 --- 4,217
------------- ------------- ------------- -------------
Total segment margin [B] $ 63,493 $ 31,446 $ 2,066 $ 33,512
============= ============= ============= =============
Summary of Operations Data:
Midstream revenues $ 214,867 $ 150,571 $ 11,813 $ 162,384
Compression revenues 4,819 4,217 --- 4,217
------------- ------------- ------------- -------------
Total revenues 219,686 154,788 11,813 166,601
Midstream purchases (exclusive
of items shown separately below) 156,193 123,342 9,747 133,089
Operations and maintenance 16,071 6,579 780 7,359
Depreciation, amortization
and accretion 22,130 10,600 512 11,112
General and administrative
expenses 4,994 2,304 166 2,470
------------- ------------- ------------- -------------
Total operating costs
and expenses 199,388 142,825 11,205 154,030
------------- ------------- ------------- -------------
Operating income 20,298 11,963 608 12,571
Other expense, net (5,616) (2,119) (115) (2,234)
------------- ------------- ------------- -------------
Net income 14,682 9,844 493 10,337
Add:
Depreciation, amortization
and accretion 22,130 10,600 512 11,112
Amortization of deferred
loan costs 407 471 13 484
Interest expense 5,532 1,834 108 1,942
------------- ------------- ------------- -------------
EBITDA [C] $ 42,751 $ 22,749 $ 1,126 $ 23,875
============= ============= ============= =============
Non-cash gain on derivative
transactions $ (113) $ --- $ --- $ ---
Non-cash compensation expense $ 473 $ 28 $ --- $ 28
Maintenance capital
expenditures $ 3,434 1,988 237 2,225
Expansion capital
expenditures 155,103 72,723 --- 72,723
------------- ------------- ------------- -------------
Total capital expenditures $ 158,537 $ 74,711 $ 237 $ 74,948
============= ============= ============= =============
Operating Data:
Natural gas sales (MMBTU/d) 66,947 48,509 37,052 47,096
NGL sales (Bbls/d) 3,347 2,077 1,206 1,965
Natural gas gathered
(MMBtu/d) [D] 85,540 --- --- ---
December 31, December 31,
2006 2005
------------- -------------
(unaudited)
(in thousands)
Balance Sheet Data (at period end):
Property and equipment, at cost, net $ 252,801 $ 120,715
Total assets $ 343,816 $ 193,969
Long-term debt, net of current maturities $ 147,064 $ 33,784
Net equity $ 167,746 $ 138,589
[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,
-------------------------------
2006 2005
-------------- -------------
(unaudited, in thousands)
Reconciliation of Total Segment Margin to
Operating Income
Operating income $ 5,452 $ 5,359
Add:
Operations and maintenance expenses 4,931 2,276
Depreciation, amortization and accretion 6,319 4,188
General and administrative expenses 1,341 931
-------------- --------------
Total segment margin $ 18,043 $ 12,754
============== ==============
Year Ended December 31,
--------------------------------------------------------------
2005
---------------------------------------------
Continental
Hiland Gas, Inc.
Partners, (Predecessor)
2006 LP [E] [F] Total [G]
------------- ------------- ------------- -------------
(unaudited)
(in thousands)
Reconciliation of Total
Segment Margin to
Operating Income
Operating income $ 20,298 $ 11,963 $ 608 $ 12,571
Add:
Operations and
maintenance expenses 16,071 6,579 780 7,359
Depreciation, amortization
and accretion 22,130 10,600 512 11,112
General and administrative
expenses 4,994 2,304 166 2,470
------------- ------------- ------------- -------------
Total segment margin $ 63,493 $ 31,446 $ 2,066 $ 33,512
============= ============= ============= =============
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.
[E] 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.
[F] 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.
[G] Total income and expense items included in the Consolidated Statements
of Operations and our predecessor will be included in our 2006 10-K.
Hiland Holdings GP, LP - Results of Operations
Three Months Ended December 31,
-------------------------------
2005
--------------
Hiland
Partners
GP, LLC
2006 (Predecessor)
-------------- --------------
(unaudited, in thousands)
Total Segment Margin Data:
Midstream revenues $ 55,067 $ 67,090
Midstream purchases 38,228 55,541
-------------- --------------
Midstream segment margin 16,839 11,549
Compression revenues [A] 1,204 1,205
-------------- --------------
Total segment margin [B] $ 18,043 $ 12,754
============== ==============
Summary of Operations Data:
Midstream revenues $ 55,067 $ 67,090
Compression revenues 1,204 1,205
-------------- --------------
Total revenues 56,271 68,295
Midstream purchases (exclusive of items
shown separately below) 38,228 55,541
Operations and maintenance expenses 4,931 2,276
Depreciation, amortization and accretion 6,607 4,188
General and administrative 1,604 951
-------------- --------------
Total operating costs and expenses 51,370 62,956
-------------- --------------
Operating income 4,901 5,339
Other expense, net (1,902) (1,220)
-------------- --------------
Income before minority interest in
income of Hiland Partners, LP 2,999 4,119
-------------- --------------
Minority Interest in income
of Hiland Partners, LP (1,174) (3,803)
-------------- --------------
Net income $ 1,825 $ 316
============== ==============
Year Ended December 31,
----------------------------------------------------------------------------------
2006 2005
--------------------------------------- ---------------------------------------
Hiland
Hiland Partners Hiland Continental
Holdings GP, LLC Partners, Gas, Inc.
GP, LP (Predecessor) Total GP, LLC (Predecessor) Total
[C] [D] [E] [F] [G] [E]
--------- ------------- --------- --------- ------------- ---------
(unaudited)
(in thousands)
Total Segment Margin Data:
Midstream
revenues $ 65,489 $ 149,378 $ 214,867 $ 150,571 $ 11,813 $ 162,384
Midstream
purchases 45,921 110,272 156,193 123,342 9,747 133,089
--------- ------------- --------- --------- ------------- ---------
Midstream segment
margin 19,568 39,106 58,674 27,229 2,066 29,295
Compression
revenues [A] 1,440 3,379 4,819 4,217 --- 4,217
--------- ------------- --------- --------- ------------- ---------
Total segment
margin [B] $ 21,008 $ 42,485 $ 63,493 $ 31,446 $ 2,066 $ 33,512
========= ============= ========= ========= ============= =========
Summary of
Operations Data:
Midstream
revenues $ 65,489 $ 149,378 $ 214,867 $ 150,571 $ 11,813 $ 162,384
Compression
revenues 1,440 3,379 4,819 4,217 --- 4,217
--------- ------------- --------- --------- ------------- ---------
Total revenues 66,929 152,757 219,686 154,788 11,813 166,601
Midstream
purchases
(exclusive of
items shown
separately
below) 45,921 110,272 156,193 123,342 9,747 133,089
Operations and
maintenance 5,658 10,413 16,071 6,579 780 7,359
Depreciation,
amortization
and accretion 7,661 15,202 22,863 10,600 512 11,112
General and
administrative
expenses 1,857 3,442 5,299 2,376 166 2,542
--------- ------------- --------- --------- ------------- ---------
Total operating
costs and
expenses 61,097 139,329 200,426 142,897 11,205 154,102
--------- ------------- --------- --------- ------------- ---------
Operating income 5,832 13,428 19,260 11,891 608 12,499
Other expense,
net (2,149) (4,583) (6,732) (2,119) (115) (2,234)
--------- ------------- --------- --------- ------------- ---------
Income before
minority interest
in income of
Hiland
Partners, LP 3,683 8,845 12,528 9,772 493 10,265
Minority Interest
in income of
Hiland
Partners, LP (1,727) (8,438) (10,165) (9,380) --- (9,380)
--------- ------------- --------- --------- ------------- ---------
Net income $ 1,956 $ 407 $ 2,363 $ 392 $ 493 $ 885
========= ============= ========= ========= ============= =========
December 31, December 31,
2006 2005
------------- --------------
(unaudited)
(in thousands)
Balance Sheet Data (at period end):
Property and equipment, at cost, net $ 257,003 $ 120,715
Total assets $ 355,198 $ 194,085
Long-term debt, net of current maturities $ 147,318 $ 33,784
Net equity $ 41,157 $ 2,791
[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,
-------------------------------
2005
--------------
Hiland
Partners
GP, LLC
2006 (Predecessor)
-------------- --------------
(unaudited, in thousands)
Reconciliation of Total Segment Margin
to Operating Income
Operating income $ 4,901 $ 5,339
Add:
Operations and maintenance expenses 4,931 2,276
Depreciation, amortization and accretion 6,607 4,188
General and administrative expenses 1,604 951
-------------- --------------
Total segment margin $ 18,043 $ 12,754
============== ==============
Year Ended December 31,
----------------------------------------------------------------------------------
2006 2005
--------------------------------------- ---------------------------------------
Hiland
Hiland Partners Hiland Continental
Holdings GP, LLC Partners, Gas, Inc.
GP, LP (Predecessor) Total GP, LLC (Predecessor) Total
[C] [D] [E] [F] [G] [E]
--------- ------------- --------- --------- ------------- ---------
(unaudited)
(in thousands)
Reconciliation
of Total Segment
Margin to
Operating Income
Operating income $ 5,832 $ 13,428 $ 19,260 $ 11,891 $ 608 $ 12,499
Add:
Operations and
maintenance
expenses 5,658 10,413 16,071 6,579 780 7,359
Depreciation,
amortization
and accretion 7,661 15,202 22,863 10,600 512 11,112
General and
administrative
expenses 1,857 3,442 5,299 2,376 166 2,542
--------- ------------- --------- --------- ------------- ---------
Total segment
margin $ 21,008 $ 42,485 $ 63,493 $ 31,446 $ 2,066 $ 33,512
========= ============= ========= ========= ============= =========
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
January 1, 2006 to September 25, 2006.
[E] Total income and expense items included in our Consolidated Statements
of Operations and our predecessor are included in the Form 10-K for the
stated period.
[F] Amounts presented in the Hiland Partners GP, LLC 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 Hiland Partners, LP's initial public offering.
[G] Amounts presented in the Predecessor column include only the operations
of Continental Gas, Inc. for the period prior to Hiland Partners, LP's
initial public offering on February 15, 2005.
SOURCE Hiland Partners, LP; Hiland Holdings GP, LP
-0- 02/20/2007
/CONTACT: Ken Maples, Vice President and CFO of Hiland Partners, LP,
+1-580-242-6040/
/Web site: http://www.hilandpartners.com /
(HLND HPGP)