Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

Form 10-Q

 

 

for the quarterly period ended June 30, 2012

 

OR

 

 

for the transition period from                to               

 

Commission file number: 000-50067

 

CROSSTEX ENERGY, L.P.

(Exact name of registrant as specified in its charter)

 

 

(214) 953-9500

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o No x

 

As of July 27, 2012, the Registrant had 61,022,866 common units outstanding.

 

 

Table of Contents

 

TABLE OF CONTENTS

 

Item		Description		Page
		PART I—FINANCIAL INFORMATION
1.		Financial Statements		3
2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations		25
3.		Quantitative and Qualitative Disclosures About Market Risk		36
4.		Controls and Procedures		39
		PART II—OTHER INFORMATION
1.		Legal Proceedings		39
1A.		Risk Factors		40
5.		Other Information		40
6.		Exhibits		42

 

Table of Contents

 

CROSSTEX ENERGY, L.P.

 

Condensed Consolidated Balance Sheets

 

		June 30,			December 31,
		2012			2011
		(Unaudited)
		(In thousands)
ASSETS
Current assets:
Cash and cash equivalents		$	4,959		$	24,143
Restricted cash (1)		245,100			—
Accounts receivable:
Trade, net of allowance for bad debt of $362 and $405, respectively		37,258			22,680
Accrued revenue and other		103,622			143,115
Fair value of derivative assets		6,680			2,867
Natural gas and natural gas liquids, prepaid expenses and other		22,860			9,951
Total current assets		420,479			202,756
Property and equipment, net of accumulated depreciation of $445,795 and $406,273, respectively		1,285,968			1,241,901
Fair value of derivative assets		1,604			—
Intangible assets, net of accumulated amortization of $224,729 and $199,248, respectively		425,981			451,462
Investment in limited liability company		87,250			35,000
Other assets, net		22,953			24,212
Total assets		$	2,244,235		$	1,955,331
LIABILITIES AND PARTNERS’ EQUITY
Current liabilities:
Accounts payable, drafts payable and other		$	27,887		$	22,550
Accrued gas purchases		76,787			106,232
Fair value of derivative liabilities		2,839			5,587
Current portion of long-term debt (1)		250,000			—
Other current liabilities		45,162			66,065
Accrued interest		27,036			24,918
Total current liabilities		429,711			225,352
Long-term debt		762,357			798,409
Other long-term liabilities		22,383			23,919
Deferred tax liability		6,941			7,192
Fair value of derivative liabilities		7			—
Commitments and contingencies		—			—
Partners’ equity		1,022,836			900,459
Total liabilities and partners’ equity		$	2,244,235		$	1,955,331

 

(1) See Footnote 2 - 2022 Notes for additional information.

 

See accompanying notes to condensed consolidated financial statements.

 

3

Table of Contents

 

CROSSTEX ENERGY, L.P.

 

Condensed Consolidated Statements of Operations

 

		Three Months Ended June 30,						Six Months Ended June 30,
		2012			2011			2012			2011
		(Unaudited)
		(In thousands, except per unit amounts)
Revenues		$	351,194		$	525,735		$	722,903		$	1,015,505
Operating costs and expenses:
Purchased gas and NGLs		260,890			429,177			532,846			829,111
Operating expenses		30,571			27,913			58,378			52,957
General and administrative		12,965			12,643			27,928			24,399
Gain on sale of property		(406		)	(60		)	(504		)	(80		)
(Gain) loss on derivatives		(4,905		)	1,536			(2,736		)	4,957
Depreciation and amortization		32,870			31,636			65,048			61,289
Total operating costs and expenses		331,985			502,845			680,960			972,633
Operating income		19,209			22,890			41,943			42,872
Other income (expense):
Interest expense, net of interest income		(21,320		)	(20,676		)	(40,703		)	(40,444		)
Other income (expenses)		11			(241		)	25			(129		)
Total other expense		(21,309		)	(20,917		)	(40,678		)	(40,573		)
Income (loss) before non-controlling interest and income taxes		(2,100		)	1,973			1,265			2,299
Income tax provision		(411		)	(358		)	(835		)	(611		)
Net income (loss)		(2,511		)	1,615			430			1,688
Less: Net loss attributable to the non-controlling interest		(71		)	(52		)	(109		)	(107		)
Net income (loss) attributable to Crosstex Energy, L.P.		$	(2,440	)	$	1,667		$	539		$	1,795
Preferred interest in net income attributable to Crosstex Energy, L.P.		$	4,853		$	4,559		$	9,706		$	8,824
General partner interest in net income (loss)		$	(40	)	$	(111	)	$	(111	)	$	(633	)
Limited partners’ interest in net loss attributable to Crosstex Energy, L.P.		$	(7,253	)	$	(2,781	)	$	(9,056	)	$	(6,396	)
Net loss attributable to Crosstex Energy, L.P. per limited partners’ unit:
Basic and diluted per common unit		$	(0.13	)	$	(0.05	)	$	(0.17	)	$	(0.12	)

 

See accompanying notes to condensed consolidated financial statements.

 

4

Table of Contents

 

CROSSTEX ENERGY, L.P.

 

Consolidated Statements of Comprehensive Income (Loss)

 

		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2012			2011			2012			2011
		(Unaudited)
		(In thousands)
Net income (loss)		$	(2,511	)	$	1,615		$	430		$	1,688
Hedging (gains) losses reclassified to earnings		71			701			425			1,089
Adjustment in fair value of derivatives		1,796			(138		)	1,757			(1,535		)
Comprehensive income (loss)		(644		)	2,178			2,612			1,242
Comprehensive loss attributable to non-controlling interest		71			52			109			107
Comprehensive income (loss) attributable to Crosstex Energy, L.P.		$	(573	)	$	2,230		$	2,721		$	1,349

 

See accompanying notes to condensed consolidated financial statements.

 

5

Table of Contents

 

CROSSTEX ENERGY, L.P.

 

Consolidated Statements of Changes in Partners’ Equity

Six Months Ended June 30, 2012

 

																	Accumulated
												General Partner					Other
		Common Units					Preferred Units					Interest					Comprehensive			Non-Controlling
		$			Units		$			Units		$			Units		Income (loss)			Interest			Total
		(Unaudited)
		(In thousands)
Balance, December 31, 2011		$	730,010		50,677		$	147,770		14,706		$	20,322		1,334		$	(503	)	$	2,860		$	900,459
Issuance of common units		158,014			10,120		—			—		3,362			207		—			—			161,376
Proceeds from exercise of unit options		203			40		—			—		—			—		—			—			203
Conversion of restricted units for common units, net of units withheld for taxes		(980		)	172		—			—		—			—		—			—			(980		)
Capital contributions		—			—		—			—		87			4		—			—			87
Stock-based compensation		2,662			—		—			—		2,331			—		—			—			4,993
Distributions		(33,694		)	—		(9,559		)	—		(2,661		)	—		—			—			(45,914		)
Net income (loss)		(9,056		)	—		9,706			—		(111		)	—		—			(109		)	430
Hedging gains or losses reclassified to earnings		—			—		—			—		—			—		425			—			425
Adjustment in fair value of derivatives		—			—		—			—		—			—		1,757			—			1,757
Balance, June 30, 2012		$	847,159		61,009		$	147,917		14,706		$	23,330		1,545		$	1,679		$	2,751		$	1,022,836

 

See accompanying notes to condensed consolidated financial statements.

 

6

Table of Contents

 

CROSSTEX ENERGY, L.P.

 

Consolidated Statements of Cash Flows

 

		Six Months Ended June 30,
		2012			2011
		(Unaudited)
		(In thousands)
Cash flows from operating activities:
Net income		$	430		$	1,688
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		65,048			61,289
Gain on sale of property		(504		)	(80		)
Deferred tax benefit		(250		)	(250		)
Non-cash stock-based compensation		4,993			3,995
Non-cash portion of derivatives (gain) loss		(5,975		)	828
Amortization of debt issue costs		1,321			4,065
Amortization of discount on notes		948			948
Equity in loss of limited liability company		—			236
Changes in assets and liabilities:
Accounts receivable, accrued revenue and other		24,906			(10,638		)
Natural gas and natural gas liquids, prepaid expenses and other		(8,971		)	(5,403		)
Accounts payable, accrued gas purchases and other accrued liabilities		(29,655		)	8,478
Net cash provided by operating activities		52,291			65,156
Cash flows from investing activities:
Additions to property and equipment		(90,046		)	(49,643		)
Proceeds from sale of property		632			107
Investment in limited liability company		(52,250		)	(35,000		)
Net cash used in investing activities		(141,664		)	(84,536		)
Cash flows from financing activities:
Proceeds from borrowings		548,500			277,250
Payments on borrowings		(335,500		)	(232,308		)
Increase in restricted cash		(245,100		)	—
Payments on capital lease obligations		(1,536		)	(1,509		)
Increase (decrease) in drafts payable		(5,985		)	3,165
Debt refinancing costs		(4,962		)	(3,792		)
Conversion of restricted units, net of units withheld for taxes		(980		)	(1,740		)
Issuance of common units		158,014			—
Distribution to partners		(45,914		)	(37,589		)
Proceeds from exercise of unit options		203			392
Contributions from general partner		3,449			145
Net cash provided by financing activities		70,189			4,014
Net decrease in cash and cash equivalents		(19,184		)	(15,366		)
Cash and cash equivalents, beginning of period		24,143			17,697
Cash and cash equivalents, end of period		$	4,959		$	2,331
Cash paid for interest		$	36,252		$	35,936
Cash paid for income taxes		$	784		$	752

 

See accompanying notes to condensed consolidated financial statements.

 

7

Table of Contents

 

CROSSTEX ENERGY, L.P.

 

Notes to Condensed Consolidated Financial Statements

 

June 30, 2012

(Unaudited)

 

(1) General

 

Unless the context requires otherwise, references to “we,” “us,” “our” or the “Partnership” mean Crosstex Energy, L.P. and its consolidated subsidiaries.

 

Crosstex Energy, L.P., a Delaware limited partnership formed on July 12, 2002, is engaged in the gathering, transmission, processing and marketing of natural gas, natural gas liquids, or NGLs, and providing terminal services for crude oil. The Partnership connects the wells of natural gas producers in the geographic areas of its gathering systems in order to gather for a fee or purchase the gas production, processes natural gas for the removal of NGLs, transports natural gas and NGLs and ultimately provides natural gas and NGLs to a variety of markets.  The Partnership operates processing plants that process gas transported to the plants by major interstate pipelines or from our own gathering systems under a variety of fee arrangements.  In addition, the Partnership purchases natural gas and NGLs from producers not connected to its gathering systems for resale and markets natural gas and NGLs on behalf of producers for a fee.  The Partnership recently added crude oil terminal facilities in south Louisiana to provide access for crude oil producers to the premium markets in this area.

 

Crosstex Energy GP, LLC is the general partner of the Partnership. Crosstex Energy GP, LLC is a direct, wholly-owned subsidiary of Crosstex Energy, Inc. (CEI).

 

(a) Basis of Presentation

 

The accompanying condensed consolidated financial statements are prepared in accordance with the instructions to Form 10-Q, are unaudited and do not include all the information and disclosures required by generally accepted accounting principles for complete financial statements. All adjustments that, in the opinion of management, are necessary for a fair presentation of the results of operations for the interim periods have been made and are of a recurring nature unless otherwise disclosed herein. The results of operations for such interim periods are not necessarily indicative of results of operations for a full year. All significant intercompany balances and transactions have been eliminated in consolidation. Certain reclassifications have been made to the consolidated financial statements for the prior year to conform to the current presentation. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Partnership’s annual report on Form 10-K for the year ended December 31, 2011.

 

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management of the Partnership to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from these estimates.

 

(b) Investment in Limited Liability Company

 

On June 22, 2011, the Partnership entered into a limited liability agreement with Howard Energy Partners (“HEP”) for an initial capital contribution of $35.0 million in exchange for an individual ownership interest in HEP. In 2012, the Partnership made an additional capital contribution of $52.3 million to HEP related to HEP’s acquisition of substantially all of Meritage Midstream Services’ natural gas gathering assets in south Texas. HEP owns midstream assets and provides midstream and construction services to Eagle Ford Shale producers.  The Partnership owns 30.6 percent of HEP and accounts for this investment under the equity method of accounting. This investment is reflected on the balance sheet as “Investment in limited liability company.”

 

(c) Potential Changes in use of Sabine Plant during 2012

 

Currently, the Partnership’s Sabine plant has a contract with a third-party to fractionate the raw-make NGLs produced by the Sabine plant.  The primary term of the contract expired on June 30, 2012 and is currently renewed on a month-to-month basis.  The Partnership will negotiate with this third-party to try to establish a long-term fractionation agreement. If this third-party ceases to fractionate the produced NGLs from the Sabine plant and the Partnership is unsuccessful in determining another alternative for our Sabine customers, the Partnership will cease operation of the Sabine plant.  Although the Partnership does not have specific plans at this time to relocate the Sabine plant if it is idled, the Partnership may utilize it elsewhere in its operations.  The net book value of the Sabine plant was $46.4 million (including $13.3 million of intangible assets attributable to customer relationships) as of June 30, 2012.  If the plant is idled on a long-term basis, an impairment may be recorded to expense the non-recoverable costs associated with the plant’s current location, which are estimated to be approximately $27.0 million based on the net book value as of June 30, 2012.

 

8

Table of Contents

 

CROSSTEX ENERGY, L.P.

 

Notes to Condensed Consolidated Financial Statements

 

(d) Clearfield Acquisition

 

On July 2, 2012, the Partnership, through a wholly-owned subsidiary, completed its previously announced acquisition of all of the issued and outstanding common stock of Clearfield Energy, Inc. and Clearfield Energy’s wholly-owned subsidiaries (collectively, “Clearfield”). Clearfield is a well-established crude oil, condensate and water services company with operations in Ohio, Kentucky and West Virginia. Clearfield’s business includes crude oil pipelines, a barge loading terminal on the Ohio River, a rail loading terminal on the Ohio Central Railroad network, a trucking fleet, and brine water disposal wells.

 

The Partnership paid approximately $210.0 million in cash for the acquisition and the purchase was funded from restricted cash that resulted from the senior notes offering in May 2012. The assets associated with this acquisition will be included in a new reporting segment that will be referred to as Ohio River Valley. Pro-forma financial statements for the Clearfield acquisition are available on our amended Current Report on Form 8-K/A filed on August 1, 2012.

 

(2) Long-Term Debt

 

As of June 30, 2012 and December 31, 2011, long-term debt consisted of the following (in thousands):

 

		June 30,			December 31,
		2012			2011
Bank credit facility (due 2016), interest based on Prime and/or LIBOR plus an applicable margin, interest rate at June 30, 2012 and December 31, 2011 was 3.33% and 2.9%, respectively		$	48,000		$	85,000
Senior unsecured notes (due 2018), net of discount of $10.6 million and $11.6 million, respectively, which bear interest at the rate of 8.875%		714,357			713,409
Senior unsecured notes (due 2022), which bear interest at the rate of 7.125%		250,000			—
		1,012,357			798,409
Less current portion		(250,000		)	—
Debt classified as long-term		$	762,357		$	798,409

 

Credit Facility.  As of June 30, 2012, there was $57.6 million in outstanding letters of credit and $48.0 million borrowed under the Partnership’s bank credit facility, leaving approximately $529.4 million available for future borrowing based on the borrowing capacity of $635.0 million.

 

In January, 2012, the Partnership amended its credit facility.  This amendment increased its borrowing capacity from $485.0 million to $635.0 million and amended certain terms under the facility to provide additional financial flexibility during the remaining four-year term of the facility.

 

In May 2012, the Partnership amended its credit facility.  The amendment to the Partnership’s credit facility, among other things, (i) increased the maximum permitted consolidated leverage ratio (as defined in the amended credit facility, being generally computed as the ratio of total funded debt to consolidated earnings before interest, taxes, depreciation, amortization and certain other non-cash charges) during the Clearfield acquisition period (as defined in the amended credit facility, being generally the four quarterly

 

9

Table of Contents

 

CROSSTEX ENERGY, L.P.

 

Notes to Condensed Consolidated Financial Statements

 

measurement periods after closing the Clearfield acquisition) from 5.0 to 1.0 to 5.5 to 1.0, and (ii) increased the maximum permitted consolidated leverage ratio during any other acquisition period (as defined in the amended credit facility, being generally the three quarterly measurement periods after closing certain material acquisitions) from 5.0 to 1.0 to 5.5 to 1.0.

 

The credit facility is guaranteed by substantially all of the Partnership’s subsidiaries and is secured by first priority liens on substantially all of the Partnership’s assets and those of the guarantors, including all material pipeline, gas gathering and processing assets, all material working capital assets and a pledge of all of the Partnership’s equity interests in substantially all of its subsidiaries and its interest in HEP. The Partnership may prepay all loans under the amended credit facility at any time without premium or penalty (other than customary LIBOR breakage costs), subject to certain notice requirements.

 

All material terms of the credit facility are described in Part II, “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations — Indebtedness” in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2011. The Partnership expects to be in compliance with all credit facility covenants for at least the next twelve months.

 

2022 Notes.  On May 24, 2012, the Partnership issued $250.0 million in aggregate principal amount of 7.125% senior unsecured notes (the “2022 Notes”) due on June 1, 2022 at an issue price of 100% of the principal amount to yield 7.125% to maturity. The interest payments are due semi-annually in arrears in June and December.  The Partnership placed into escrow the net proceeds of $245.1 million from the offering of the 2022 Notes pending completion of the Clearfield acquisition. The net proceeds are classified as restricted cash as of June 30, 2012 and the 2022 Notes are classified as current debt as of June 30, 2012. Upon closing of the Clearfield acquisition on July 2, 2012, the 2022 Notes were reclassified as long term debt and the restricted cash was used to fund the Clearfield acquisition and for general partnership purposes, including capital expenditures for the Cajun-Sibon natural gas liquids pipeline expansion.

 

The Partnership may redeem up to 35% of the 2022 Notes at any time prior to June 1, 2015 with the cash proceeds from equity offerings at a redemption price of 107.125% of the principal amount of the 2022 Notes (plus accrued and unpaid interest to the redemption date).

 

Prior to June 1, 2017, the Partnership may redeem all or a part of the 2022 Notes at the redemption price equal to the sum of the principal amount thereof, plus a make-whole premium at the redemption date, plus accrued and unpaid interest to the redemption date.

 

On or after June 1, 2017, the Partnership may redeem all or a part of the 2022 Notes at redemption prices (expressed as percentages of principal amount) equal to 103.563% for the twelve-month period beginning on June 1, 2017, 102.375% for the twelve-month period beginning on June 1, 2018, 101.188% for the twelve-month period beginning on June 1, 2019 and 100.000% for the twelve-month period beginning on June 1, 2020 and at any time thereafter, plus accrued and unpaid interest, if any, to the applicable redemption date on the 2022 Notes.

 

Under the terms of the indenture governing the 2022 Notes agreement, repurchase offer obligations would be triggered by a change of control combined with a ratings decline on the notes. All other material terms of the senior unsecured notes are described in footnote 4 to the consolidated financial statements in the Partnership’s Annual Report on Form 10-K for the year ended December 31, 2011.

 

Non-Guarantors.  All senior unsecured notes are jointly and severally guaranteed by each of the Partnership’s current material subsidiaries (the “Guarantors”), with the exception of its regulated Louisiana subsidiaries (which may only guarantee up to $500.0 million of the Partnership’s debt), CDC (the Partnership’s joint venture in Denton County, Texas which is not 100% owned by the Partnership) and Crosstex Energy Finance Corporation (a wholly owned Delaware corporation that was organized for the sole purpose of being a co-issuer of certain of the Partnership’s indebtedness, including the senior unsecured notes). Guarantors may not sell or otherwise dispose of all or substantially all of their properties or assets, or consolidate with or merge into another company if such a sale would cause a default under the terms of the senior unsecured notes. Since certain wholly owned subsidiaries do not guarantee the senior unsecured notes, the condensed consolidating financial statements of the guarantors and non-guarantors for the three and six months ended June 30, 2012 and 2011 are disclosed below in accordance with Rule 3-10 of Regulation S-X. Comprehensive income (loss) is not included in the condensed consolidating statements of operations of the guarantors and non-guarantors for the three and six months ended June 30, 2012 and 2011 as these amounts are not considered material.

 

10

Table of Contents

 

CROSSTEX ENERGY, L.P.

 

Notes to Condensed Consolidated Financial Statements

 

Condensed Consolidating Balance Sheets

June 30, 2012

 

		Guarantors			Non-Guarantors			Elimination			Consolidated
		(In thousands)
ASSETS
Total current assets		$	405,623		$	14,856		$	—		$	420,479
Property, plant and equipment, net		1,076,248			209,720			—			1,285,968
Total other assets		537,788			—			—			537,788
Total assets		$	2,019,659		$	224,576		$	—		$	2,244,235
LIABILITIES & PARTNERS’ CAPITAL
Total current liabilities		$	424,239		$	5,472		$	—		$	429,711
Long-term debt		762,357			—			—			762,357
Other long-term liabilities		29,331			—			—			29,331
Partners’ capital		803,732			219,104			—			1,022,836
Total liabilities & partners’ capital		$	2,019,659		$	224,576		$	—		$	2,244,235

 

December 31, 2011

 

		Guarantors			Non-Guarantors			Elimination			Consolidated
		(In thousands)
ASSETS
Total current assets		$	189,410		$	13,346		$	—		$	202,756
Property, plant and equipment, net		1,026,537			215,364			—			1,241,901
Total other assets		510,671			3			—			510,674
Total assets		$	1,726,618		$	228,713		$	—		$	1,955,331
LIABILITIES & PARTNERS’ CAPITAL
Total current liabilities		$	220,811		$	4,541		$	—		$	225,352
Long-term debt		798,409			—			—			798,409
Other long-term liabilities		31,111			—			—			31,111
Partners’ capital		676,287			224,172			—			900,459
Total liabilities & partners’ capital		$	1,726,618		$	228,713		$	—		$	1,955,331

 

Condensed Consolidating Statements of Operations

For the Three Months Ended June 30, 2012

 

		Guarantors			Non-Guarantors			Elimination			Consolidated
		(In thousands)
Total revenues		$	336,828		$	22,200		$	(7,834	)	$	351,194
Total operating costs and expenses		(330,072		)	(9,747		)	7,834			(331,985		)
Operating income		6,756			12,453			—			19,209
Interest expense, net		(21,320		)	—			—			(21,320		)
Other income		11			—			—			11
Income (loss) before non-controlling interest and income taxes		(14,553		)	12,453			—			(2,100		)
Income tax provision		(408		)	(3		)	—			(411		)
Net loss attributable to non-controlling interest		—			71			—			71
Net income (loss) attributable to Crosstex Energy, L.P.		$	(14,961	)	$	12,521		$	—		$	(2,440	)

 

11

Table of Contents

 

CROSSTEX ENERGY, L.P.

 

Notes to Condensed Consolidated Financial Statements

 

For the Three Months Ended June 30, 2011

 

		Guarantors			Non-Guarantors			Elimination			Consolidated
		(In thousands)
Total revenues		$	511,104		$	21,957		$	(7,326	)	$	525,735
Total operating costs and expenses		(499,421		)	(10,750		)	7,326			(502,845		)
Operating income		11,683			11,207			—			22,890
Interest expense, net		(20,676		)	—			—			(20,676		)
Other expense		(241		)	—			—			(241		)
(Loss) income before non-controlling interest and income taxes		(9,234		)	11,207			—			1,973
Income tax provision		(354		)	(4		)	—			(358		)
Net income attributable to non-controlling interest		—			52			—			52
Net (loss) income attributable to Crosstex Energy, L.P.		$	(9,588	)	$	11,255		$	—		$	1,667

 

For the Six Months Ended June 30, 2012

 

		Guarantors			Non-Guarantors			Elimination			Consolidated
		(In thousands)
Total revenues		$	693,981		$	44,477		$	(15,555	)	$	722,903
Total operating costs and expenses		(677,659		)	(18,856		)	15,555			(680,960		)
Operating income		16,322			25,621			—			41,943
Interest expense, net		(40,646		)	(57		)	—			(40,703		)
Other income		25			—			—			25
Income (loss) before non-controlling interest and income taxes		(24,299		)	25,564			—			1,265
Income tax provision		(828		)	(7		)	—			(835		)
Net loss attributable to non-controlling interest		—			109			—			109
Net income (loss) attributable to Crosstex Energy, L.P.		$	(25,127	)	$	25,666		$	—		$	539

 

For the Six Months Ended June 30, 2011

 

		Guarantors			Non-Guarantors			Elimination			Consolidated
		(in thousands)
Total revenues		$	986,044		$	43,860		$	(14,399	)	$	1,015,505
Total operating costs and expenses		(967,573		)	(19,459		)	14,399			(972,633		)
Operating income		18,471			24,401			—			42,872
Interest expense, net		(40,444		)	—			—			(40,444		)
Other expense		(129		)	—			—			(129		)
(Loss) income before non-controlling interest and income taxes		(22,102		)	24,401			—			2,299
Income tax provision		(603		)	(8		)	—			(611		)
Net loss attributable to non-controlling interest		—			107			—			107
Net (loss) income attributable to Crosstex Energy, L.P.		$	(22,705	)	$	24,500		$	—		$	1,795

 

12

Table of Contents

 

CROSSTEX ENERGY, L.P.

 

Notes to Condensed Consolidated Financial Statements

 

Condensed Consolidating Statements of Cash Flow

For the Six Months Ended June 30, 2012

 

		Guarantors			Non-Guarantors			Elimination			Consolidated
		(In thousands)
Net cash flows provided by operating activities		$	20,468		$	31,823		$	—		$	52,291
Net cash flows used in investing activities		$	(141,037	)	$	(627	)	$	—		$	(141,664	)
Net cash flows provided by (used in) financing activities		$	70,189		$	(30,626	)	$	30,626		$	70,189

 

For the Six Months Ended June 30, 2011

 

		Guarantors			Non-Guarantors			Elimination			Consolidated
		(In thousands)
Net cash flows provided by operating activities		$	33,900		$	31,256		$	—		$	65,156
Net cash flows used in investing activities		$	(82,176	)	$	(2,360	)	$	—		$	(84,536	)
Net cash flows provided by (used in) financing activities		$	4,014		$	(28,217	)	$	28,217		$	4,014

 

(3) Other Long-term Liabilities

 

Prior to January 1, 2011, the Partnership entered into 9 and 10-year capital leases for certain equipment. Assets under capital leases as of June 30, 2012 are summarized as follows (in thousands):

 

Compressor equipment		$	37,199
Less: Accumulated amortization		(12,087		)
Net assets under capital leases		$	25,112

 

The following are the minimum lease payments to be made in each of the following years indicated for the capital leases in effect as of June 30, 2012 (in thousands):

 

2012		$	2,291
2013 through 2016 ($4,582 annually)		18,328
Thereafter		12,100
Less: Interest		(5,888		)
Net minimum lease payments under capital lease		26,831
Less: Current portion of net minimum lease payments		(4,448		)
Long-term portion of net minimum lease payments		$	22,383

 

(4) Partners’ Capital

 

(a) Issuance of Common Units

 

On May 15, 2012, we issued 10,200,000 common units representing limited partner interests in the Partnership at a public offering price of $16.28 per unit for net proceeds of $158.0 million.  In addition, Crosstex Energy GP, LLC made a general partner contribution of $3.4 million in connection with the issuance to maintain its 2% general partner interest. The net proceeds from the common units offering were used for general partnership purposes.

 

13