DALLAS, March 10 /PRNewswire-FirstCall/ -- The Crosstex Energy companies,
Crosstex Energy, L.P. (Nasdaq: XTEX) (the Partnership) and Crosstex Energy,
Inc. (Nasdaq: XTXI) (the Corporation) today reported solid growth in results
for the fourth quarter and the full year 2005. This growth allows the
companies to continue their track record of increases in both distributions
and dividends.
"We had a great fourth quarter and an outstanding year in 2005. The
quarter and the year were distinguished by continued emphasis on maximizing
profitable growth, including constructing a new pipeline in North Texas, the
significant expansion in our treating business, and the strategic acquisition
of the South Louisiana processing business," said Barry E. Davis, President
and Chief Executive Officer.
Crosstex Energy, L.P. Financial Results
The Partnership reported net income of $10.5 million, or $0.33 per limited
partner unit, in the quarter ended December 31, 2005, compared to net income
in the fourth quarter of 2004 of $6.1 million, or $0.23 per unit. Net income
in the fourth quarter of 2005 was impacted by a $2.3 million gain during the
quarter from the mark-to-market valuation of the derivative financial
instruments (puts) purchased to protect against liquid prices fluctuations in
conjunction with the South Louisiana processing business.
Full year 2005 results for the Partnership were net income of
$19.2 million, or $0.56 per unit, compared to net income of $23.7 million or
$0.98 per unit in 2004. The year's net income was reduced by the impact of
the fair value loss of $9.2 million from the puts previously described.
Neither the gains associated with the puts in the fourth quarter nor the fair
value loss for the year had any impact on distributable cash flow.
The Partnership's Distributable Cash Flow for the fourth quarter of 2005
was $22.2 million, or 3.48 times the amount required to cover its Minimum
Quarterly Distribution of $0.25 per unit, and 1.31 times the amount required
to cover its recently increased distribution of $0.51 per unit. This is an
increase of $10.3 million, or 87 percent, over Distributable Cash Flow of
$11.9 million in the 2004 fourth quarter. Fourth quarter 2005 Distributable
Cash Flow was $3.6 million in excess of the amount needed to provide 1.1 times
coverage of the fourth quarter distribution of $0.51. For the full year of
2005, Distributable Cash Flow was $64.6 million, or 2.53 times the amount
required to cover the Minimum Quarterly Distribution and 1.29 times the amount
required to cover its actual distributions of $50.1 million. Distributable
Cash Flow for 2005 increased more than 53 percent from the 2004 figure of
$42.2 million. Distributable Cash Flow is a non-GAAP financial measure and is
explained in greater detail under "Non-GAAP Financial Information." Also, in
the tables at the end of this release is a reconciliation of this measure to
net income.
The increase in Distributable Cash Flow in the fourth quarter 2005 was due
to growth in the Partnership's gross margin to $56.4 million compared to
$33.9 million in the corresponding 2004 period, an increase of 66 percent.
Gross margin from the Midstream business segment increased by $18.9 million,
or 72 percent, to $45.1 million driven in large part by South Louisiana
processing margins of $14.1 million and market volatility.
The quarter was negatively impacted by reduced throughput volumes on the
new South Louisiana processing assets as a result of damage by Hurricanes
Katrina and Rita to production and pipeline facilities owned by others in the
Gulf of Mexico. The Partnership took advantage of arbitrage opportunities
resulting from market volatility in the aftermath of the hurricanes which more
than offset the negative impact of the reduced volumes. Additionally, the
Partnership had negotiated a purchase price reduction on these assets due to
the negative impacts on volumes foreseen prior to their acquisition. Volumes
should begin to increase in these assets over the first two quarters of 2006
as natural gas producers and pipelines complete repairs to their
infrastructure and resume full production, although it may be the third
quarter before volumes are back to levels consistent with original acquisition
expectations. The excess cash flow generated in the fourth quarter of 2005
and the purchase price reduction obtained on the South Louisiana processing
assets will be considered in setting the distribution in the first quarter of
2006.
Gross margin for the quarter from the Treating segment increased by
$3.9 million, or 55 percent, to $10.8 million due to the increase in the
number of plants in service. The number of treating plants in service
increased from 74 at the end of the fourth quarter of 2004 to 112 at the end
of the fourth quarter of 2005.
For similar reasons, overall gross margin for the year increased from
$114.5 million to $162.5 million, an increase of 42 percent. Of the
$48.0 million gross margin increase for the year, $35 million was contributed
from the midstream segment. Treating margins improved
$13 million year-over-year.
These improvements were offset by increases in operating expenses of
$7.5 million and $18.4 million for the fourth quarter and full year,
respectively, primarily associated with the new assets in service. General
and administrative expenses increased by $3.3 million and $11.8 million for
the fourth quarter and full year, respectively. This increase is related to
the staffing increases from the South Louisiana processing acquisition, the
North Texas Pipeline construction activity, the growth in treating plants and
other growth.
Interest expense increased $3.4 million and $6.5 million for the fourth
quarter and full year, respectively, due to increased debt to support growth
activities. The Partnership's capital structure is still very conservative,
having recently raised $228 million of equity, representing approximately
47 percent of the purchase price of the South Louisiana processing assets.
Crosstex Energy, Inc. Financial Results
The Corporation reported net income of $45.1 million for the fourth
quarter of 2005, compared to net income of $2.4 million for the fourth quarter
of 2004. Net income for the fourth quarter included a non-cash gain on
issuance of units of the Partnership of $65.1 million related to the
Partnership's offering of 6.6 million units during the quarter. This gain was
offset by non-cash income tax expense of $27.5 million for a net non-cash
impact on fourth quarter earnings of $37.6 million. The Corporation's net
income before income taxes and interest of non-controlling partners in the net
income of the Partnership was $10.3 million in the fourth quarter of 2005 and
$6.1 million in the fourth quarter of 2004.
The Corporation's share of distributions, including distributions on its
10 million limited partner units, its two percent general partner interest and
the incentive distribution rights was $9.4 million for the fourth quarter of
2005 compared to $6.5 million in the fourth quarter of 2004, an increase of
over 44 percent. Much of the increase is the result of the increase in the
number of limited partner units receiving distributions. Such units increased
by 6.6 million to 24.8 million units due to equity issued to finance the South
Louisiana processing assets. Since the Corporation's initial public offering
in 2004, dividends have grown from $0.30 to $0.56 per share, an increase of
86 percent in seven quarters.
Earnings Call
Crosstex will hold its quarterly conference call to discuss fourth quarter
and year-end results today, Friday, March 10, at 10:00 a.m. Central Time
(11:00 a.m. Eastern Time). The dial-in number for the call is 800-322-5044,
passcode Crosstex. A live Webcast of the call can be accessed on the investor
relations page of Crosstex Energy's Web site at http://www.crosstexenergy.com.
The call will also be available for replay for 30 days by dialing
888-286-8010, passcode 84615803, or by going to the investor relations events
page of the Company's Web site.
About the Crosstex Energy Companies
Crosstex Energy, L.P., a mid-stream natural gas company headquartered in
Dallas, operates over 5,000 miles of pipeline, nine processing plants, four
fractionators, and approximately 150 natural gas amine treating plants and
22 dew point control plants. Crosstex currently provides services for over
3.0 Bcf/day of natural gas, or approximately 6.0 percent of marketed U.S.
daily production based on August 2005 Department of Energy data.
Crosstex Energy, Inc. owns the two percent general partner interest, a
38 percent limited partner interest, and the incentive distribution rights of
Crosstex Energy, L.P.
Additional information about the Crosstex companies can be found at
http://www.crosstexenergy.com .
Non-GAAP Financial Information
This press release contains non-generally accepted accounting principle
financial measures of earnings before non-cash charges and less maintenance
capital expenditures, which we refer to as Distributable Cash Flow.
Distributable Cash Flow includes earnings before non-cash charges, less
maintenance capital expenditures, plus, in 2005, proceeds from the sale of
idle equipment. The amounts included in the calculation of these measures are
computed in accordance with generally accepted accounting principles (GAAP),
with the exception of maintenance capital expenditures. Maintenance capital
expenditures are capital expenditures made to replace partially or fully
depreciated assets in order to maintain the existing operating capacity of our
assets and to extend their useful lives. We believe this measure is useful to
investors because it may provide users of this financial information with
meaningful comparisons between current results and prior reported results and
a meaningful measure of the Partnership's cash flow after it has satisfied the
capital and related requirements of its operations. Distributable Cash Flow
is not a measure of financial performance or liquidity under GAAP. It should
not be considered in isolation or as an indicator of the Partnership's
performance. Furthermore, it should not be seen as a measure of liquidity or
a substitute for metrics prepared in accordance with GAAP. Our reconciliation
of this measure to net income is included in the following tables.
This press release contains forward-looking statements identified by the
use of words such as "forecast," "anticipate," "plan" and "estimate." These
statements are based on currently available information and assumptions and
expectations that the Partnership and the Corporation believe are reasonable.
However, the assumptions and expectations are subject to a wide range of
business risks, so they can give no assurance that actual performance will
fall within the forecast ranges. Among the key risks that may bear directly
on the Partnership's and the Corporation's results of operation and financial
condition are: (1) the amount of natural gas transported in the Partnership's
gathering and transmission lines may decline as a result of competition for
supplies, reserve declines and reduction in demand from key customers and
markets; (2) the level of the Partnership's processing and treating operations
may decline for similar reasons; (3) fluctuations in natural gas and NGL
prices may occur due to weather and other natural and economic forces; (4)
there may be a failure to successfully integrate new acquisitions; (5) the
Partnership's credit risk management efforts may fail to adequately protect
against customer nonpayment; (6) natural disasters such as hurricanes may
significantly disrupt operations; and (7) the Partnership may not adequately
address construction and operating risks. The Partnership and the Corporation
have no obligation to publicly update or revise any forward-looking statement,
whether as a result of new information, future events, or otherwise.
(Tables follow)
CROSSTEX ENERGY, L.P.
Selected Financial and Operating Data
(All amounts in thousands except per unit numbers)
Three Months Ended Year Ended
December 31, December 31,
2005 2004 2005 2004
Revenues
Midstream $1,054,544 $620,840 $2,982,874 $1,948,021
Treating 14,542 8,163 48,606 30,755
Profit from Energy
Trading Activities 411 623 1,568 2,228
1,069,497 629,626 3,033,048 1,981,004
Cost of Gas
Midstream 1,009,405 594,580 2,860,823 1,861,204
Treating 3,710 1,182 9,706 5,274
1,013,115 595,762 2,870,529 1,866,478
Gross Margin 56,382 33,864 162,519 114,526
Operating Expenses 19,138 11,599 56,736 38,339
General and
Administrative 10,360 7,063 32,697 20,867
(Gain) Loss
on Derivatives (3,711) (92) 9,968 (279)
Gain on Sale of Property (341) --- (8,138) (12)
Depreciation
and Amortization 13,890 6,535 36,024 23,034
Total 39,336 25,105 127,287 81,949
Operating Income 17,046 8,759 35,232 32,577
Interest Expense (6,444) (3,006) (15,767) (9,220)
Other Income 12 544 392 798
Total Other Income (6,432) (2,462) (15,375) (8,422)
Net Income Before
Minority Interest
and Taxes 10,614 6,297 19,857 24,155
Minority Interest
in Subsidiary (110) (139) (441) (289)
Income Tax Provision (40) (46) (216) (162)
Net Income $10,464 $6,112 $19,200 $23,704
General Partner Share
of Net Income $3,435 $1,908 $8,651 $5,913
Limited Partners Share
of Net Income $7,029 $4,204 $10,549 $17,791
Net Income per
Limited Partners' Unit:
Basic $0.33 $0.23 $0.56 $0.98
Diluted $0.30 $0.22 $0.51 $0.95
Weighted Average Limited
Partners' Units
Outstanding:
Basic 21,554 18,086 19,006 18,081
Diluted 23,809 18,713 20,527 18,633
Distributions per
Limited Partner Unit $0.51 $0.45 $1.93 $1.70
CROSSTEX ENERGY, L.P.
Reconciliation of Net Income to Distributable Cash Flow
(All amounts in thousands except ratios)
Three Months Ended Year Ended
December 31, December 31,
2005 2004 2005 2004
Net Income $ 10,464 $ 6,112 $ 19,200 $ 23,704
Depreciation
and Amortization (A) 13,820 6,478 35,751 22,852
Stock-Based Compensation 1,398 235 4,057 1,001
Gain on Sale of Property (342) --- (8,138) (12)
Proceeds from Sale of Property --- --- 9,313 611
Puts Mark-to-Market (2,304) --- 9,243 ---
Deferred Tax Benefit 501 (22) 216 (190)
Cash Flow 23,537 12,803 69,642 47,966
Maintenance Capital Expenditures (1,319) (915) (5,046) (5,729)
Distributable Cash Flow $22,218 $11,888 $64,596 $42,237
Minimum Quarterly
Distribution (MQD) $6,379 $4,615 $25,515 $18,458
Distributable Cash Flow/MQD 3.48 2.58 2.53 2.29
Actual Distribution $16,913 $10,164 $50,050 $37,032
Distribution Coverage 1.31 1.17 1.29 1.14
(A) Excludes minority interest share of depreciation and amortization of
$70,000 and $272,000 for the three months and year-end
December 31, 2005, respectively, and $57,000 and $182,000 for the
three months and year-ended December 31, 2004 respectively.
CROSSTEX ENERGY, L.P.
Operating Data
Three Months Ended Year Ended
December 31, December 31,
2005 2004 2005 2004
Pipeline Throughput
(MMBtu/d)
South Texas 524,000 548,000 517,000 555,000
LIG Pipeline
& Marketing 604,000 619,000(A) 613,000 603,000(A)
Other Midstream 204,000 125,000 172,000 131,000
Total Gathering and
Transmission Volume 1,332,000 1,292,000 1,302,000 1,289,000
Natural Gas Processed
MMBtu/d 1,730,000(B) 432,000(A) 1,825,000(B) 425,000(A)
Commercial Services
Volume 168,000 212,000 181,000 210,000
Treating Plants
in Service (C) 112 74 112 74
(A) Includes LIG volumes after April 1, 2004 acquisition.
(B) Includes South Louisiana Processing volumes after November 1, 2005.
(C) Plants in service represents plants in service on the last day of
the quarter.
CROSSTEX ENERGY, INC.
Selected Financial and Operating Data
(All amounts in thousands except per unit numbers)
Three Months Ended Twelve Months Ended
December 31, December 31,
2005 2004 2005 2004
Revenues
Midstream $1,054,544 $620,840 $2,982,874 $1,948,021
Treating 14,542 8,163 48,606 30,755
Profit from Energy
Trading Activities 411 623 1,568 2,228
1,069,497 629,626 3,033,048 1,981,004
Cost of Gas
Midstream 1,009,405 594,580 2,860,823 1,861,204
Treating 3,710 1,182 9,706 5,274
1,013,115 595,762 2,870,529 1,866,478
Gross Margin 56,382 33,864 162,519 114,526
Operating Expenses 19,155 11,628 56,768 38,396
General and Administrative 10,850 7,317 34,145 22,005
(Gain) Loss on Derivatives (3,711) (92) 9,968 (279)
Gain on Sale of Property (341) --- (8,138) (12)
Impairments --- --- --- 981
Depreciation
and Amortization 13,901 6,535 36,070 23,034
Total 39,854 25,388 128,813 84,125
Operating Income 16,528 8,476 33,706 30,401
Interest Expense (6,286) (2,949) (15,332) (9,115)
Other Income 13 548 391 802
Total Other Income (6,273) (2,401) (14,941) (8,313)
Income Before Income
Taxes and Interest
of Non-controlling
Partners in the
Partnership's
Net Income 10,255 6,075 18,765 22,088
Income Tax Expense (27,519) (1,645) (30,047) (5,149)
Gain on Issuance of
Units of the
Partnership 65,070 --- 65,070 ---
Interest of
Non-controlling
Partners in the
Partnership's Net
(Income) Loss (2,743) (2,023) (4,652) (8,239)
Net Income $45,063 $2,407 $49,136 $8,700
Preferred Stock Dividends $--- $--- $--- $132
Net Income Available
to Common $45,063 $2,407 $49,136 $8,658
Net Income per Common
Share:
Basic Earnings
per Common Share $3.53 $0.20 $3.88 $0.72
Diluted Earnings
per Common Share $3.47 $0.19 $3.79 $0.67
Weighted Average Shares
Outstanding:
Basic 12,760 12,214 12,652 11,849
Diluted 12,982 12,932 12,957 12,899
Dividends per Common Share $0.56 $0.39 $1.86 $1.37
SOURCE Crosstex Energy
-0- 03/10/2006
/CONTACT: Barry E. Davis, President and Chief Executive Officer, or
William W. Davis, Executive V.P. and Chief Financial Officer, both of Crosstex
Energy, +1-214-953-9500/
/Web site: http://www.crosstexenergy.com /
(XTEX XTXI)
CO: Crosstex Energy, L.P.; Crosstex Energy, Inc.
ST: Texas
IN: OIL
SU: ERN CCA
AH-GN
-- DAF004A --
1449 03/10/2006 07:04 EST http://www.prnewswire.com
