DALLAS--(BUSINESS WIRE)--Nov. 7, 2008--The Crosstex Energy
companies, Crosstex Energy, L.P. (NASDAQ: XTEX) (the Partnership) and
Crosstex Energy, Inc. (NASDAQ: XTXI) (the Corporation) today reported
earnings for the third quarter of 2008.
Third-Quarter 2008 -- Crosstex Energy, L.P. Financial Results
The Partnership reported a net loss of $5.2 million in the third
quarter of 2008, compared with net income of $2.1 million in the third
quarter of 2007. The Partnership's distributable cash flow in the
third quarter of 2008 was $30.3 million, 1.02 times the amount
required to cover its quarterly distribution of $0.50 per unit.
Distributable cash flow in the third quarter of 2007 was $31.9
million. Distributable cash flow is a non-GAAP financial measure and
is explained in greater detail under "Non-GAAP Financial Information"
below. There is a reconciliation of this non-GAAP measure to net
income in the tables at the end of this news release.
"Our third quarter results were negatively impacted by the effects
of Hurricanes Gustav and Ike and continued volume delays in North
Texas, our key growth area," said Barry E. Davis, Crosstex Chairman,
President and Chief Executive Officer. "However, we still have strong
underlying long-term business fundamentals, great assets and excellent
customer relationships across all our assets."
Third-quarter 2008 gross margin was $110.2 million, compared to
$97.2 million in the corresponding 2007 period, a 13 percent increase.
Gross margin from the Midstream segment rose 14 percent to $97.3
million in the third quarter of 2008 versus gross margin of $85.7
million in the third quarter last year. The improvement is due to
higher system throughput from continued expansion of gathering and
transportation systems in the Barnett Shale in North Texas and system
expansion projects on the Crosstex LIG system in Louisiana. The
Midstream increase was offset by the negative impact of Hurricanes
Gustav and Ike and decreases in the processing business due to a less
favorable natural gas liquids market.
Third-quarter 2008 gross margin from the Treating segment
increased 12 percent to $12.9 million, compared with gross margin of
$11.5 million in the third quarter of 2007. Although the Partnership
had 195 treating and dew point control plants in service at the end of
both quarters, Treating gross margin increased due to increased fees
per plant due to larger plants in service and throughput on its
volume-based plants for the quarter.
Operating expenses were $47.0 million in the third quarter of
2008, compared with $31.7 million in the third quarter of 2007. The
increase was related to expansion of gathering assets primarily in
North Texas, East Texas and Louisiana and maintenance and repairs
associated with the recent hurricanes. In the third quarter of 2008,
general and administrative expenses rose to $16.9 million from $16.1
million in the third quarter of 2007 primarily due to an increase in
bad debt expense of $1.6 million associated with SemGroup, L.P., which
was partially offset by a decrease in stock-based compensation.
Interest expense was $17.1 million in the third quarter of 2008 versus
$20.7 million in the third quarter of 2007 due to lower interest rates
between the periods.
Income from discontinued operations was $1.3 million in the third
quarter of 2008, compared with $1.6 million in the third quarter of
2007. As part of its strategy to increase liquidity, the Partnership
began marketing a nonstrategic asset for sale in September 2008 and
the income generated by this asset is reflected in income from
discontinued operations.
The net loss per limited partner unit in the third quarter of 2008
was $0.25 per unit versus a net loss of $0.10 per unit in the
corresponding quarter of 2007. The loss per limited partner unit was
impacted by the $5.8 million preferential allocation of net income to
the general partner in the third quarter of 2008, which represented
the general partner's incentive distribution rights less certain
stock-based compensation costs. This allocation further increased the
limited partners' net loss to $11.1 million in the third quarter of
2008.
Third Quarter 2008 -- Crosstex Energy, Inc. Financial Results
The Corporation reported net income of $0.5 million for the third
quarter of 2008, compared with net income of $2.2 million in the
comparable 2007 period. The Corporation's net loss from continuing
operations before income taxes, gain on issuance of units of the
Partnership and interest of noncontrolling partners in the net income
of the Partnership was $5.5 million in the third quarter of 2008,
compared with net income of $0.2 million in the third quarter of 2007.
The Corporation's share of Partnership distributions, including
distributions on its approximately 16.4 million participating limited
partner units, its two percent general partner interest and the
incentive distribution rights, was $15.5 million in the third quarter
of 2008. Its share of Partnership distributions in the third quarter
of 2007 was $12.6 million.
Crosstex to Hold Conference Call Today
The Partnership and the Corporation will hold their quarterly
conference call to discuss third quarter 2008 financial results today,
November 7, at 10:00 a.m. Central Time (11:00 a.m. Eastern Time). The
dial-in number for the call is 1-888-713-4211, and the passcode is
82267047. Callers outside the United States should dial
1-617-213-4864, and the passcode is 82267047. Investors are advised to
dial in to the call at least 10 minutes prior to the call time to
register. Participants may preregister for the call at
https://www.theconferencingservice.com/prereg/key.process?key=
PTUAMRWFE. (Due to its length, this URL may need to be copied/pasted
into your Internet browser's address field. Remove the extra space if
one exists.)
Preregistrants will be issued a pin number to use when dialing in
to the live call, which will provide quick access to the conference by
bypassing the operator upon connection. Interested parties also can
access a live Web cast of the call on the Investors page of Crosstex's
Web site at www.crosstexenergy.com.
After the conference call, a replay can be accessed until December
7, 2008, by dialing 1-888-286-8010. International callers should dial
1-617-801-6888 for a replay. The passcode for all callers listening to
the replay is 40501936. Interested parties also can visit the
Investors page of Crosstex's Web site to listen to a replay of the
call.
About the Crosstex Energy Companies
Crosstex Energy, L.P., a midstream natural gas company
headquartered in Dallas, operates approximately 5,700 miles of
pipeline, 12 processing plants, four fractionators, and approximately
195 natural gas amine-treating plants and dew point control plants.
The Partnership currently provides services for over 4.0 Bcf/day of
natural gas, or approximately eight percent of marketed U.S. daily
production.
Crosstex Energy, Inc. owns the two percent general partner
interest, a 34 percent limited partner interest, and the incentive
distribution rights of Crosstex Energy, L.P.
Additional information about the Partnership and the Corporation
can be found at www.crosstexenergy.com.
Non-GAAP Financial Information
This press release contains a non-generally accepted accounting
principle financial measure that we refer to as Distributable Cash
Flow. Distributable cash flow includes earnings before noncash
charges, less maintenance capital expenditures and amortization of
costs of certain derivatives (puts). 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 and the amortization of put premiums.
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. The puts were acquired to hedge the future price of certain
natural gas liquids. The net cost of the puts is being amortized
against Distributable Cash Flow over their life.
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 among the following tables.
This press release contains forward-looking statements within the
meaning of the federal securities laws. These statements are based on
certain assumptions made by the Partnership and the Corporation based
upon management's experience and perception of historical trends,
current conditions, expected future developments and other factors the
Partnership and the Corporation believe are appropriate in the
circumstances. These statements include, but are not limited to,
statements with respect to the Partnership's and the Corporation's
future financial condition, liquidity and results of operations. Such
statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond the control of the Partnership
and the Corporation, which may cause the Partnership's and the
Corporation's actual results to differ materially from those implied
or expressed by the forward-looking statements. These risks include
the following: (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) the Partnership may not
adequately address construction and operating risks; and (7) other
factors discussed in the Partnership's and the Corporation's Annual
Reports on Form 10-K for the year ended December 31, 2007, and other
filings with the Securities and Exchange Commission. 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 & Operating Data
(All amounts in thousands except per unit numbers)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- -----------------------
2008 2007 2008 2007
----------- --------- ----------- -----------
(Unaudited) (Unaudited)
Revenues
Midstream $1,310,226 $926,726 $4,087,683 $2,721,193
Treating 19,036 13,080 48,106 40,160
Profit from Energy
Trading Activities 648 587 2,332 2,180
----------- --------- ----------- -----------
1,329,910 940,393 4,138,121 2,763,533
Cost of Gas
Midstream 1,213,547 841,580 3,796,074 2,503,523
Treating 6,164 1,617 11,618 6,208
----------- --------- ----------- -----------
1,219,711 843,197 3,807,692 2,509,731
Gross Margin 110,199 97,196 330,429 253,802
Operating Expenses 46,997 31,690 127,408 87,645
General and
Administrative 16,897 16,127 49,695 43,010
(Gain) Loss on Sale of
Property 68 2 (1,591) (1,819)
(Gain) Loss on
Derivatives 1,295 526 (7,193) (3,969)
Depreciation and
Amortization 32,828 27,465 96,927 76,845
----------- --------- ----------- -----------
Total 98,085 75,810 265,246 201,712
Operating Income 12,114 21,386 65,183 52,090
Interest Expense and
Other (16,964) (20,481) (46,703) (56,159)
----------- --------- ----------- -----------
Income (Loss) from
continuing operations
before Minority Interest
and Taxes (4,850) 905 18,480 (4,069)
Minority Interest in
Subsidiary (44) (136) (238) (186)
Income Tax Provision (1,683) (236) (2,352) (655)
----------- --------- ----------- -----------
Income (Loss) from
Continuing Operations (6,577) 533 15,890 (4,910)
Income from Discontinued
Operations 1,334 1,597 4,320 4,652
----------- --------- ----------- -----------
Net Income (Loss) $ (5,243) $ 2,130 $ 20,210 $ (258)
=========== ========= =========== ===========
General Partner Share of
Net Income (Loss) $ 5,810 $ 4,737 $ 27,861 $ 13,444
=========== ========= =========== ===========
Limited Partners' Share
of Net Income (Loss) $ (11,053) $ (2,607) $ (7,651) $ (13,702)
=========== ========= =========== ===========
Net Income (Loss) per
Limited Partners' Unit
Basic and Diluted
Common Unit $ (0.25) $ (0.10) $ (3.11) $ (0.51)
=========== ========= =========== ===========
Basic and Diluted Sr.
Sub Series C Unit $ - $ - $ 9.44 $ -
=========== ========= =========== ===========
Weighted Average Limited
Partners' Units
Outstanding:
Basic and Diluted 44,869 26,718 41,466 26,682
=========== ========= =========== ===========
CROSSTEX ENERGY, L.P.
Reconciliation of Net Income to Distributable Cash Flow
(All amounts in thousands except ratios and distributions per unit)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2008 2007 2008 2007
----------- -------- ----------- --------
(Unaudited) (Unaudited)
Net Income (Loss) $(5,243) $ 2,130 $ 20,210 $ (258)
Depreciation and
Amortization (1) 33,322 27,999 98,434 78,351
Stock-based Compensation 1,885 3,549 8,251 8,635
Financial Derivatives Mark-
to-Market 5,134 2,460 (1,980) 439
Other (2) 425 44 (654) 133
----------- -------- ----------- --------
Cash Flow 35,523 36,182 124,261 87,300
Amortization of Put Premiums - (2,708) - (6,176)
Maintenance Capital
Expenditures (5,249) (1,609) (12,816) (6,165)
----------- -------- ----------- --------
Distributable Cash Flow $30,274 $31,865 $111,444 $74,959
=========== ======== =========== ========
Actual Distribution $29,708 $22,796 $111,389 $65,318
Distribution Coverage 1.02 1.40 1.00 1.15
Distributions per Limited
Partner Unit $ 0.50 $ 0.59 $ 1.75 $ 1.72
=========== ======== =========== ========
(1) Excludes minority interest share of depreciation and amortization
of $76,000 and $206,000 for the three and nine months ended
September 30, 2008, respectively, and $31,000 and $174,000 for the
three months and nine months ended September 30, 2007, respectively.
Includes discontinued operation depreciation and amortization of
$571,000 and $1,713,000 for the three and nine months ended
September 30, 2008, respectively and $565,000 and $1,680,000 for the
three and nine months ended September 30, 2007 respectively.
(2) Includes taxes and gain from the disposition of assets.
CROSSTEX ENERGY, L.P.
Operating Data
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- ---------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Pipeline Throughput
(MMBtu/d)
South Texas (1) 423,000 429,000 423,000 396,000
LIG Pipeline and
Marketing (1) 895,000 1,023,000 973,000 921,000
North Texas - Gathering 762,000 393,000 653,000 312,000
North Texas -
Transmission 342,000 296,000 337,000 225,000
Other Midstream 221,000 202,000 208,000 186,000
---------- ---------- ---------- ----------
Total Gathering and
Transmission Volume 2,643,000 2,343,000 2,594,000 2,040,000
Natural Gas Processed
(MMBtu/d)
South Louisiana (1) 1,037,000 1,473,000 1,289,000 1,439,000
LIG System (1) 262,000 314,000 325,000 317,000
South Texas 184,000 219,000 200,000 221,000
North Texas 200,000 150,000 191,000 102,000
---------- ---------- ---------- ----------
Total Gas Volumes
Processed 1,683,000 2,156,000 2,005,000 2,079,000
Weighted Average Natural
Gas Liquids Price
($/gallon) 1.36 1.18 1.43 1.07
Weighted Average Natural
Gas Liquids to Gas
Ratio 210% 222% 193% 180%
Commercial Services Volume
(MMBtu/d) 74,000 92,000 81,000 95,000
North Texas Gathering (2)
Wells Connected 46 57 135 157
Treating Plants in Service
and GPM
Treating and DPC plants
in service (3) 195 195 195 195
Total GPM of treating
plants in service (4) 10,718 9,863 10,718 9,863
(1) Volumes in this period were significantly negatively impacted by
Hurricane Gustav, Hurricane Ike and Tropical Storm Edouard on these
systems.
(2) North Texas Gathering wells connected are as of the last day of
the period and include Centralized Delivery Point ("CDP")
connections where Crosstex connects multiple wells at a single
meter station.
(3) Treating plants and Dew Point Control ("DPC") plants in Service
represents plants in service as of the last day of the period.
(4) The numbers represent the total Gallons per Minute ("GPM")
capacity of all the Amine Treating plants in service as of the last
day of the period.
CROSSTEX ENERGY, INC.
Selected Financial & Operating Data
(All amounts in thousands except per share numbers)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- -----------------------
2008 2007 2008 2007
----------- --------- ----------- -----------
(Unaudited) (Unaudited)
Revenues
Midstream $1,310,226 $926,726 $4,087,683 $2,721,193
Treating 19,036 13,080 48,106 40,160
Profit from Energy
Trading Activities 648 587 2,332 2,180
----------- --------- ----------- -----------
1,329,910 940,393 4,138,121 2,763,533
Cost of Gas
Midstream 1,213,547 841,580 3,796,074 2,503,523
Treating 6,164 1,617 11,618 6,208
----------- --------- ----------- -----------
1,219,711 843,197 3,807,692 2,509,731
Gross Margin 110,199 97,196 330,429 253,802
Operating Expenses 46,998 31,706 127,415 87,678
General and
Administrative 17,613 16,886 51,767 45,074
(Gain) Loss on
Derivatives 1,295 526 (7,193) (3,969)
(Gain) Loss on Sale of
Property 68 2 (1,591) (1,819)
Depreciation and
Amortization 32,848 27,477 97,039 76,880
----------- --------- ----------- -----------
Total 98,822 76,597 267,437 203,844
Operating Income 11,377 20,599 62,992 49,958
Interest Expense and
Other (16,903) (20,390) (46,542) (55,826)
----------- --------- ----------- -----------
Income (Loss) from
Continuing Operations
before Income Taxes,
Gain on Issuance of
Units of the
Partnership and
Interest of
Noncontrolling
Partners in the
Partnership's Net
Income (Loss) (5,526) 209 16,450 (5,868)
Gain on Issuance of
Units of the
Partnership - - 14,748 -
Income Tax Provision (2,061) (914) (10,731) (2,111)
Interest of
Noncontrolling Partners
in the Partnership's
Net Income (Loss) 7,833 2,533 7,280 11,402
---------------------------------------------
Income from Continuing
Operations 246 1,828 27,747 3,423
Income from Discontinued
Operations, net of
Taxes and Minority
Interest 294 352 951 1,024
----------- --------- ----------- -----------
Net Income $ 540 $ 2,180 $ 28,698 $ 4,447
=========== ========= =========== ===========
Net Income per Common
Share
Basic Earnings per
Common Share $ 0.01 $ 0.05 $ 0.62 $ 0.10
=========== ========= =========== ===========
Diluted Earnings per
Common Share $ 0.01 $ 0.05 $ 0.62 $ 0.10
=========== ========= =========== ===========
Weighted Average Shares
Outstanding:
Basic 46,299 45,996 46,285 45,978
=========== ========= =========== ===========
Diluted 46,649 46,655 46,626 46,591
=========== ========= =========== ===========
Dividends per Common
Share $ 0.32 $ 0.24 $ 1.06 $ 0.69
=========== ========= =========== ===========
CONTACT: Crosstex Energy
Investor Contact:
Crystal C. Bell, 214-721-9407
Investor Relations Specialist
or
Media Contact:
Jill McMillan, 214-721-9271
Manager of Public & Industry Affairs
SOURCE: Crosstex Energy
