TULSA, Okla.--(BUSINESS WIRE)--Cypress Energy Partners, L.P. (NYSE: CELP) announced today that the board of directors of its general partner declared a cash distribution for the first quarter of 2017. The cash distribution is $0.21 per limited partner unit. The distribution will be payable on May 15, 2017 to all unitholders of record on May 8, 2017.
As previously outlined in our press release on March 15th, our Board believes it is prudent and responsible to make the difficult decision to reduce our quarterly distribution by approximately 48% for the first time since our initial public offering in January of 2014. If this distribution level is maintained throughout 2017 it will provide approximately $9.3 million of internally generated capital on an annualized basis, compared to the previous distribution level of $0.406413 per quarter ($1.63 annualized), This additional capital will provide the Company with increased liquidity and reduced leverage, that will enable the Company to invest in selected growth projects, and will strengthen the Company’s balance sheet. We believe this previously announced action has provided a sound catalyst to reduce our previously elevated cost of capital by de-levering the Company and increasing the distribution coverage for our unitholders. This action will also enable the Company to better pursue acquisition opportunities especially when a seller is interested in a tax efficient transaction involving our common units.
Our sponsor, Cypress Energy Holdings, LLC (“CEH”), and its affiliates are aligned with our common unitholders, with an approximate 65% ownership interest in CELP. As a result of this alignment, CEH has again supported the unitholders with temporary relief of the administrative fee paid to CEH pursuant to the Omnibus Agreement, which would have charged $1.0 million to CELP this first quarter which is customarily seasonally weak compared to the rest of the year.
This press release includes “forward-looking statements.” All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those expressed or implied in such statements and are subject to a number of risks and uncertainties. While CELP believes its expectations as reflected in the forward-looking statements are reasonable, CELP can give no assurance that such expectations will prove to be correct. The forward-looking statements involve risks and uncertainties that affect operations, financial performance, and other factors as discussed in filings with the Securities and Exchange Commission. Other factors that could impact any forward-looking statements are those risks described in CELP’s Annual Report filed on Form 10-K and other public filings. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading “Risk Factors.” CELP undertakes no obligation to publicly update or revise any forward-looking statements except as required by law.
About Cypress Energy Partners, L.P.
Cypress Energy Partners, L.P. is a growth-oriented master limited partnership that provides midstream services including pipeline inspection, integrity and hydrostatic testing services to energy, E&P, public utility companies and midstream companies and their vendors throughout the U.S. and Canada. Cypress also provides saltwater disposal and other water and environmental services to U.S. energy E&P companies and their vendors in North Dakota in the Williston Basin, and West Texas in the Permian Basin. In all three of these business segments, Cypress works closely with its customers to help them comply with increasingly complex and strict environmental and safety rules and regulations and reduce their operating costs. Cypress is headquartered in Tulsa, Oklahoma.
This release is a qualified notice under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat 100% of Cypress Energy Partners L.P.’s distributions to foreign investors as being attributable to income that is effectively connected with a United States trade or business. Therefore, distributions to foreign investors are subject to federal income tax withholding at the highest applicable effective tax rate.