Exhibit 99.1

 

 

FOR IMMEDIATE RELEASE

AUGUST 4, 2011

 

Contact:

Jill McMillan, Director, Public & Industry Affairs

 

Phone: (214) 721-9271

 

Jill.McMillan@CrosstexEnergy.com

 

CROSSTEX ENERGY REPORTS SECOND-QUARTER 2011 RESULTS

 

DALLAS, August 4, 2011 — The Crosstex Energy companies, Crosstex Energy, L.P. (NASDAQ:XTEX) (the Partnership) and Crosstex Energy, Inc. (NASDAQ:XTXI) (the Corporation), are reporting earnings for the second-quarter 2011.

 

Second-Quarter 2011 — Crosstex Energy, L.P. Financial Results

 

The Partnership realized adjusted EBITDA of $55.4 million and distributable cash flow of $32.9 million for the second quarter of 2011, compared with adjusted EBITDA of $45.2 million and distributable cash flow of $22.8 million for the second quarter of 2010. Adjusted EBITDA and distributable cash flow are non-GAAP financial measures and are explained in greater detail under “Non-GAAP Financial Information.” There is a reconciliation of these non-GAAP measures to net income (loss) in the tables at the end of this news release.

 

The Partnership reported net income of $1.7 million for the second quarter of 2011 versus a net loss of $2.5 million for the second quarter of 2010.

 

“Our strong second-quarter results reflect the performance and growth of our assets,” said Barry E. Davis, Crosstex President and Chief Executive Officer. “We recently completed several strategic transactions that broaden Crosstex’s reach beyond our existing core areas to increase our scale and diversification, creating additional value for our stakeholders. We are well positioned and well capitalized which we believe will enable us to continue to successfully execute our growth strategy.”

 

The Partnership’s second-quarter 2011 gross operating margin of $96.6 million rose $12.6 million above gross operating margin for the second quarter of 2010. The increase was due to a favorable processing environment, higher natural gas liquids (NGL) fractionated volumes during the quarter and higher gathering and transmission volumes. Gross operating margin is a non-GAAP financial measure and is explained in greater detail under “Non-GAAP Financial Information.” There is a reconciliation of this non-GAAP measure to operating income in the tables at the end of this news release.

 

-more-

 



 

The Partnership reports results by operating segment principally based on regions served. Reportable segments consist of the natural gas gathering, processing and transmission operations in north Texas (NTX); the pipelines and processing plants in Louisiana (LIG); and the south Louisiana processing and NGL assets, including NGL fractionation and marketing activities (PNGL). Each business segment’s contribution to the second-quarter 2011 gross operating margin change versus the second-quarter 2010, and the factors affecting those contributions, are described below:

 

·                  The LIG segment’s gross operating margin increased $1.9 million, primarily the result of the continued strength of the processing environment.

·                  The PNGL segment’s gross operating margin rose $6.8 million, primarily due to the favorable processing environment, increased NGL fractionation and marketing volumes, and Blue Water processing plant inlet volumes.

·                  The NTX segment’s gross operating margin improved $3.9 million. The positive impact of increased gathering and transmission volumes, higher processed volumes and the favorable processing environment was partially offset by increased losses on a certain delivery contract for the second quarter of 2011.

 

The Partnership’s second-quarter 2011 operating expenses of $27.9 million increased $2.5 million, or 10 percent, from the second quarter of 2010.  The increase was primarily the result of higher labor and benefit expenses and normal repair and maintenance cost fluctuations. General and administrative expenses increased $0.9 million, or eight percent, versus the second quarter of 2010 largely due to higher labor and benefit expenses and professional fees and services costs which were partially offset by lower stock-based compensation expense. Depreciation and amortization expense for the second quarter of 2011 rose $4.8 million, or 18 percent, compared with the second quarter of 2010 primarily due to increased amortization of intangibles. Interest expense rose to $20.7 million for the second quarter of 2011 from $20.0 million for the second quarter of 2010 primarily due to the write-off of debt issue costs associated with the amendment of the bank credit facility in May 2011.

 

The net loss per limited partner common unit for the second quarter of 2011 was $0.05 compared with a net loss of $0.08 per common unit for the second quarter of 2010.

 

Second-Quarter 2011 — Crosstex Energy, Inc. Financial Results

 

The Corporation reported a net loss of $1.1 million for the second quarter of 2011 compared with a net loss of $2.2 million for the second quarter of 2010.

 

On a stand-alone basis, the Corporation had cash on hand of approximately $4.7 million and no debt as of the end of the second quarter of 2011.

 

Crosstex Provides Growth Projects Update

 

A slide presentation providing additional information about the Partnership’s recently announced growth projects is posted on the company’s website. The slides can be found on both the home page and the investor page of the website located at www.crosstexenergy.com.

 

2



 

Crosstex to Hold Earnings Conference Call August 5, 2011

 

The Partnership and the Corporation will hold their quarterly conference call to discuss second-quarter 2011 results on August 5 at 10:00 a.m. Central time (11:00 a.m. Eastern time). The dial-in number for the call is 1-888-679-8033. Callers outside the United States should dial 1-617-213-4846. The passcode is 88691992 for all callers. 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=PKUVNGH47.  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 the live webcast of the call on the Investors page of Crosstex’s website at www.crosstexenergy.com.

 

After the conference call, a replay can be accessed until November 4, 2011, 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 70975077.  Interested parties also can visit the Investors page of Crosstex’s website 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 3,300 miles of pipeline, nine processing plants and three fractionators. The Partnership currently provides services for 3.2 billion cubic feet of natural gas per day, or approximately six percent of marketed U.S. daily production.

 

Crosstex Energy, Inc. owns the two percent general partner interest, a 25 percent limited partner interest and the incentive distribution rights of Crosstex Energy, L.P.

 

Additional information about the Crosstex companies can be found at www.crosstexenergy.com.

 

Non-GAAP Financial Information

 

This press release contains non-generally accepted accounting principle financial measures that the Partnership refers to as gross operating margin, adjusted EBITDA and distributable cash flow. Gross operating margin is defined as revenue minus the cost of purchased gas and NGLs. Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation and amortization, impairments, loss on extinguishment of debt, stock-based compensation, noncash derivative items, (gain) loss on the sale of assets and other miscellaneous noncash items. Distributable cash flow is defined as earnings before certain noncash charges and the gain on the sale of assets less maintenance capital expenditures. 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 the assets and to extend their useful lives.

 

The Partnership believes these measures are useful to investors because they 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.

 

3



 

Gross operating margin, adjusted EBITDA and distributable cash flow, as defined above, are not measures of financial performance or liquidity under GAAP. They should not be considered in isolation or as an indicator of the Partnership’s performance. Furthermore, they should not be seen as measures of liquidity or a substitute for metrics prepared in accordance with GAAP. A reconciliation of these measures to net income (loss) 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 guidance and future outlook, distribution and dividend guidelines, future estimates and results of operations and the impact of changes in prices and ratios on the Partnership’s gross operating margin. 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 Partnership’s profitability is dependent upon prices and market demand for natural gas and NGLs; (2) the Partnership’s substantial indebtedness could limit its flexibility and adversely affect its financial health; (3) the Partnership may not be able to obtain funding which would impair its ability to grow; (4) the Partnership and the Corporation do not have diversified assets; (5) drilling levels may decrease due to deterioration in the credit and commodity markets; (6) the Partnership’s credit risk management efforts may fail to adequately protect against customer nonpayment; (7) the Partnership’s use of derivative financial instruments does not eliminate its exposure to fluctuations in commodity prices and interest rates; (8) the Partnership may not be successful in balancing its purchases and sales; (9) the amount of natural gas transported in the Partnership’s gathering and transmission lines may decline as a result of reduced drilling by producers, competition for supplies, reserve declines and reduction in demand from key customers and markets; (10) the level of the Partnership’s processing operations may decline for similar reasons; (11) operational, regulatory and other asset-related risks, including weather conditions such as hurricanes, exist because a significant portion of the Partnership’s assets are located in southern Louisiana; and (12) other factors discussed in the Partnership’s and the Corporation’s Annual Reports on Form 10-K for the year ended December 31, 2010, 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)

 

4



 

CROSSTEX ENERGY, L.P.

Selected Financial Data

(All amounts in thousands except per unit amounts)

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Midstream revenues

 

$

496,147

 

$

442,048

 

$

946,462

 

$

910,706

 

Purchased gas and NGLs

 

399,589

 

358,038

 

760,068

 

745,501

 

 

 

 

 

 

 

 

 

 

 

Gross operating margin

 

96,558

 

84,010

 

186,394

 

165,205

 

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

Operating expenses

 

27,913

 

25,424

 

52,957

 

51,889

 

General and administrative

 

12,643

 

11,704

 

24,399

 

24,393

 

(Gain) loss on sale of property

 

(60

)

564

 

(80

)

(13,779

)

Loss on derivatives

 

1,536

 

1,594

 

4,957

 

5,290

 

Impairments

 

 

313

 

 

1,311

 

Depreciation and amortization

 

31,636

 

26,820

 

61,289

 

53,912

 

Total operating costs and expenses

 

73,668

 

66,419

 

143,522

 

123,016

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

22,890

 

17,591

 

42,872

 

42,189

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net of interest income

 

(20,676

)

(19,998

)

(40,444

)

(46,853

)

Loss on extinguishment of debt

 

 

 

 

(14,713

)

Other income (expense)

 

(241

)

23

 

(129

)

205

 

Total other income (expense)

 

(20,917

)

(19,975

)

(40,573

)

(61,361

)

Income (loss) before non-controlling interest and income taxes

 

1,973

 

(2,384

)

2,299

 

(19,172

)

Income tax provision

 

(358

)

(74

)

(611

)

(649

)

Net income (loss)

 

1,615

 

(2,458

)

1,688

 

(19,821

)

Less: Net income (loss) attributable to the non-controlling interest

 

(52

)

10

 

(107

)

(25

)

Net income (loss) attributable to Crosstex Energy, L.P.

 

$

1,667

 

$

(2,468

)

$

1,795

 

$

(19,796

)

Preferred interest in net income (loss) attributable to Crosstex Energy, L.P.

 

$

4,559

 

$

3,125

 

$

8,824

 

$

6,250

 

Beneficial conversion feature attributable to preferred units

 

$

 

$

 

$

 

$

22,279

 

General partner interest in net income (loss)

 

$

(111

)

$

(1,279

)

$

(633

)

$

(2,775

)

Limited partners’ interest in net income (loss) attributable to Crosstex Energy, L.P

 

$

(2,781

)

$

(4,314

)

$

(6,396

)

$

(45,550

)

Net income (loss) attributable to Crosstex Energy, L.P.

 

 

 

 

 

 

 

 

 

Basic and diluted common unit

 

$

(0.05

)

$

(0.08

)

(0.12

)

(0.89

)

Weighted average limited partners’ units outstanding:

 

 

 

 

 

 

 

 

 

Basic and diluted common units

 

50,563

 

49,781

 

50,518

 

49,734

 

Series A convertible preferred units outstanding

 

14,706

 

14,706

 

14,706

 

14,706

 

 

5



 

CROSSTEX ENERGY, L.P.

Reconciliation of Net Income (Loss) to Adjusted EBITDA and Distributable Cash Flow

(All amounts in thousands except ratios and per unit amounts)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

(Unaudited)

 

(Unaudited)

 

Net income (loss) attributable to Crosstex Energy, L.P.

 

$

1,667

 

$

(2,468

)

$

1,795

 

$

(19,796

)

Depreciation, amortization and impairments

 

31,636

 

27,133

 

61,289

 

55,223

 

Stock-based compensation

 

1,805

 

2,714

 

3,995

 

5,245

 

Interest expense, net

 

20,676

 

19,998

 

40,444

 

46,853

 

Loss on extinguishment of debt

 

 

 

 

14,713

 

(Gain) loss on sale of property

 

(60

)

564

 

(80

)

(13,779

)

Noncash derivatives, taxes and other

 

(291

)

(2,778

)

1,569

 

486

 

Adjusted EBITDA

 

55,433

 

45,163

 

109,012

 

88,945

 

 

 

 

 

 

 

 

 

 

 

Interest expense (1)

 

(19,474

)

(19,998

)

(39,242

)

(43,203

)

Cash taxes and other cash expenses (2)

 

(259

)

(199

)

(724

)

(899

)

Maintenance capital expenditures

 

(2,770

)

(2,149

)

(5,196

)

(4,321

)

Distributable cash flow

 

$

32,930

 

$

22,817

 

$

63,850

 

$

40,522

 

Actual distribution (common and preferred)

 

$

21,576

 

$

 

$

41,279

 

$

 

Distribution coverage

 

1.53

 

n/a

 

1.55

 

n/a

 

 

 

 

 

 

 

 

 

 

 

Distributions declared per limited partner unit

 

$

0.31

 

$

 

$

0.60

 

$

 

Distributions declared per preferred unit

 

$

0.31

 

$

0.2125

 

$

0.60

 

$

0.4250

 

 


(1)          Excludes $678 thousand of debt issuance cost amortization and $894 thousand of senior secured note make-whole and call premium paid-in-kind interest resulting from repayment of such notes from the proceeds of the preferred unit sale and an asset sale for the six months ended June 30, 2010.

 

(2)          Excludes $318 thousand of startup expenses related to successfully transacted growth projects for the three months and six months ended June 30, 2011, respectively.

 

6



 

CROSSTEX ENERGY, L.P.

Operating Data

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

Pipeline Throughput (MMBtu/d)

 

 

 

 

 

 

 

 

 

LIG

 

923,000

 

887,000

 

931,000

 

901,000

 

NTX - Gathering

 

826,000

 

731,000

 

764,000

 

738,000

 

NTX - Transmission

 

358,000

 

344,000

 

355,000

 

340,000

 

Total Gathering and Transmission Volume

 

2,107,000

 

1,962,000

 

2,050,000

 

1,979,000

 

 

 

 

 

 

 

 

 

 

 

Natural Gas Processed (MMBtu/d)

 

 

 

 

 

 

 

 

 

PNGL

 

881,000

 

854,000

 

901,000

 

891,000

 

LIG

 

236,000

 

286,000

 

247,000

 

285,000

 

NTX

 

269,000

 

207,000

 

243,000

 

203,000

 

Total Gas Volumes Processed

 

1,386,000

 

1,347,000

 

1,391,000

 

1,379,000

 

 

 

 

 

 

 

 

 

 

 

Commercial Services Volume (MMBtu/d)

 

165,000

 

49,000

 

193,000

 

50,000

 

 

 

 

 

 

 

 

 

 

 

NGLs Fractionated (Gal/d)

 

1,145,000

 

896,000

 

1,139,000

 

917,000

 

 

 

 

 

 

 

 

 

 

 

Realized weighted average Natural Gas Liquids price ($/gallon)

 

1.24

 

0.98

 

1.21

 

1.03

 

Actual weighted average Natural Gas Liquids-to-Gas price ratio

 

325

%

261

%

332

%

247

%

 

 

 

 

 

 

 

 

 

 

North Texas Gathering (1)

 

 

 

 

 

 

 

 

 

Wells connected

 

43

 

21

 

72

 

58

 

 


(1)          North Texas Gathering wells connected are as of the last day of the period and include Centralized Delivery Point (“CDP”) connections where the Partnership connects multiple wells at a single meter station.

 

7



 

CROSSTEX ENERGY, INC.

Selected Financial Data

(All amounts in thousands except per share amounts)

 

 

 

Three Months Ended

 

Six Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2011

 

2010

 

2011

 

2010

 

 

 

(Unaudited)

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Midstream revenues

 

$

496,147

 

$

442,048

 

$

946,462

 

$

910,706

 

Purchased gas and NGLs

 

399,589

 

358,038

 

760,068

 

745,501

 

 

 

 

 

 

 

 

 

 

 

Gross operating margin

 

96,558

 

84,010

 

186,394

 

165,205

 

 

 

 

 

 

 

 

 

 

 

Operating costs and expenses:

 

 

 

 

 

 

 

 

 

Operating expenses

 

27,913

 

25,424

 

52,957

 

51,889

 

General and administrative

 

13,272

 

12,455

 

25,754

 

25,936

 

(Gain) loss on sale of property

 

(60

)

564

 

(80

)

(13,779

)

Loss on derivatives

 

1,536

 

1,594

 

4,957

 

5,290

 

Impairments

 

 

313

 

 

1,311

 

Depreciation and amortization

 

31,654

 

26,840

 

61,326

 

53,950

 

Total operating costs and expenses

 

74,315

 

67,190

 

144,914

 

124,597

 

 

 

 

 

 

 

 

 

 

 

Operating income

 

22,243

 

16,820

 

41,480

 

40,608

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net of interest income

 

(20,674

)

(19,995

)

(40,440

)

(46,850

)

Loss on extinguishment of debt

 

 

 

 

(14,713

)

Other income (expense)

 

(242

)

23

 

(130

)

205

 

Total other income (expense)

 

(20,916

)

(19,972

)

(40,570

)

(61,358

)

Income (loss) before non-controlling interest and income taxes

 

1,327

 

(3,152

)

910

 

(20,750

)

Income tax benefit

 

248

 

1,204

 

898

 

3,789

 

Net income (loss)

 

1,575

 

(1,948

)

1,808

 

(16,961

)

Less: Net income (loss) attributable to the non-controlling Interest

 

2,648

 

233

 

4,417

 

(9,378

)

Net loss attributable to Crosstex Energy, Inc.

 

$

(1,073

)

$

(2,181

)

$

(2,609

)

$

(7,583

)

Net loss per common share:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.02

)

$

(0.05

)

$

(0.05

)

$

(0.16

)

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

Basic and diluted

 

47,140

 

46,598

 

47,108

 

46,571

 

Dividends declared per common share

 

$

0.10

 

$

 

$

0.19

 

$

 

 

8