Noble Midstream Partners Reports Third Quarter 2019 Results

HOUSTON--()--Noble Midstream Partners LP (NYSE: NBLX) (Noble Midstream or the Partnership) today reported third quarter 2019 financial and operational results. The Partnership’s consolidated results include noncontrolling interests which represent equity ownership interests that are not attributable to the Partnership; however, certain results are shown as “attributable to the Partnership,” which exclude the aforementioned noncontrolling interests. Noble Midstream believes the results “attributable to the Partnership” provide the best representation of the ongoing operations from which the Partnership’s unitholders will benefit.

Third Quarter Highlights Include:

  • Net Income was $66 million ($41 million to the Partnership) and Adjusted EBITDA¹ came in at $94 million, a 35% and 31% increase over the third quarter of 2018, driven by record gathering and produced water volumes of 319 MBoe/d and 180 MBw/d, respectively. Adjusted EBITDA attributable to the Partnership was $60 million. Distributable cash flow (DCF)¹ increased sequentially to $50 million, above the top end of the guidance range.
  • A 15% reduction in per well connection capital drove quarterly organic capital below the low end of guidance. FY19 organic capital expenditure has been reduced by 25% versus original guidance.
  • Declared a 20% annual increase in distribution per unit to $0.6716, with DCF of $50 million and a Distribution Coverage Ratio¹ of 1.6x.
  • Entered into a strategic relationship in August with Saddlehorn Pipeline, through Black Diamond Gathering, including an option for up to 20% ownership, and expanded the Black Diamond Gathering oil gathering dedication by 85,000 acres, or 54%.
  • EPIC Y-Grade interim crude service started up on time in 3Q19 with permanent crude service on schedule for 1Q20 startup.

Our high-quality assets in the DJ and Delaware Basins and operational execution drove the outperformance in our year-to-date and third quarter results through continued focus on efficiencies and accomplishing higher throughput volumes with less capital. The outlook for our business remains strong and increasingly resilient, as we add high-quality cash flows from new services and customers. Consistent customer activity in our gathering business, along with the team’s work to deliver strong execution and drive enhanced capital efficiency during 2019, provides a solid foundation as we enter a transformational year in 2020 when major project capital rolls off and the inflection in cash flow begins,” stated Brent Smolik, Chief Executive Officer of Noble Midstream.

1 Adjusted EBITDA, DCF and Distribution Coverage Ratio are not Generally Accepted Accounting Principles (GAAP) measures. Definitions and reconciliations of these non-GAAP measures to their most directly comparable GAAP reporting measures appear in Schedule 4 of the financial tables which follow.

Strong Volume Performance Versus Guidance

In the gathering business, oil and gas throughput came in above the high end of guidance while produced water gathering volumes came in at the midpoint of third quarter guidance. Record gross oil and gas gathering and sales volumes were up 8% sequentially to 319 MBoe/d while produced water gathering throughput was up 10%. Gathering throughput growth continues to be driven by the Green River, Blanco River and Colorado River DevCos.

Fresh water delivered in the third quarter averaged 135 thousand barrels of water per day (MBw/d), down from 179 MBw/d in the second quarter of 2019. The sequential decline in fresh water volumes reflects lower fluid volumes per completion as well as water delivery to approximately 2 completion crews on dedicated acreage in the DJ Basin during the quarter, compared to approximately 2.3 in the second quarter of 2019.

Third quarter revenue totaled $169 million, increasing 7% compared to the second quarter of 2019. An increase in revenue from gathering and crude oil sales was somewhat offset by lower fresh water delivery revenue. Net income of $66 million came in at the high end of guidance. Adjusted EBITDA of $94 million was at the high end of guidance while Adjusted EBITDA attributable to the Partnership was $60 million in the third quarter. A third quarter investment loss of $5.6 million drove Adjusted EBITDA attributable to the Partnership to the lower end of guidance due to lower than forecasted interim service volumes and realized tariffs on the EPIC Y-Grade pipeline for interim crude service.

Maintenance capital expenditures attributable to the Partnership totaled $5.8 million during the third quarter of 2019. Along with the strong operational performance, this resulted in higher DCF attributable to the Partnership of $50 million and a Distribution Coverage Ratio of 1.6x.

Cost Focus Driving Enhanced Capital Efficiencies

Capital expenditures in the third quarter primarily reflected spending for customer well connections in the DJ Basin and Delaware Basin. Third quarter gross capital expenditures of $62 million and capital expenditures attributable to the partnership of $35 million were below guidance due primarily to a consistent cost focus, utilization of existing infrastructure, and to a lesser extent, the timing of customer activity. Cost saving initiatives include project scope and design optimization and more efficient construction processes as well as an enhanced contracting strategy. In addition, the Partnership had additions to equity investments totaling $87 million during the third quarter of 2019. This primarily included capital contributions of $53 million related to the EPIC Crude, $17 million for the EPIC Y-Grade and $13 million for the Delaware Crossing joint ventures. We expect capital on equity investments to increase in the fourth quarter of 2019 before materially decreasing early next year as joint venture projects near completion.

 

 

 

3Q 2019 Capital Expenditures (in millions)

DevCo

Basin

NBLX Ownership

Gross

Net

Colorado River

DJ

100%

$

8

 

$

8

 

Green River

DJ

25%

10

 

3

 

Laramie River *

DJ

100%

21

 

15

 

Blanco River

Delaware

40%

23

 

9

 

Total Capital Expenditures

62

 

35

 

Additions to Equity Investments

87

 

87

 

Capital Expenditures and Investments

$

149

 

$

122

 

* Includes capital expenditures for Black Diamond, which is 54.4% owned by Noble Midstream.

Green River and Colorado River DevCos Leading DJ Basin Throughput Growth

Green River results during the third quarter of 2019 reflect record oil, gas and produced water throughput for Noble Energy’s Mustang development in the DJ Basin. The Partnership connected 15 wells in July, driving average oil and gas gathering throughput to approximately 61 MBoe/d, up 24% from the prior quarter. Average produced water volumes of 15 MBw/d were down from 17 MBw/d in the second quarter of 2019. Completion activity in the Mustang development area is expected to resume in the fourth quarter of 2019, following no completion activity in the area in 3Q19. New well connections are planned for early 2020.

Colorado River combined oil, gas and produced water gathering volumes were up 8% in the third quarter of 2019 compared to the second quarter of 2019. Growth was driven by the Wells Ranch development area, with 23 wells connected during the third quarter. Throughput from the third quarter wells brought online continues to increase in the fourth quarter. The Partnership delivered water to a single crew for a partial quarter, driving a sequential decline in fresh water delivery volumes to 39 MBw/d. In the fourth quarter, the Partnership anticipates connecting 20 wells to production in the Colorado River DevCo.

Laramie River Throughput Declines as Planned

Laramie River oil and gas gathering and sales volumes during the third quarter of 2019 were down 2% compared to the second quarter of 2019. Third quarter Black Diamond Gathering throughput averaged 86 thousand barrels of oil per day (MBbl/d), consistent with the second quarter of 2019. The Partnership connected a combined 101 wells during the quarter on Black Diamond Gathering's system and the Partnership’s wholly-owned third party gathering system for oil gathering.

Inflection Point Nearing in Permian Basin

Oil and gas gathering volumes at Blanco River of 71 MBoe/d for the third quarter of 2019 were up 20% compared to the second quarter of 2019 while produced water gathering volumes were up 13% on a sequential basis. The growth in gathering throughput reflects 26 new well connections during the quarter, including nine third-party customer wells. We continue to expect consistent third party activity and tie-ins in the fourth quarter and into 2020.

In the Trinity River DevCo, quarterly volumes on the Advantage Pipeline system totaled 70 MBbl/d, compared to 66 MBbl/d during the second quarter. First oil volumes were transported in 3Q19 on the EPIC Y-Grade interim crude service through the Advantage Crane West interconnect. Lower-than-expected tariffs and utilization rates negatively impacted results in 3Q19 and will likely persist into the fourth quarter of 2019. The EPIC crude line construction is progressing as planned with an in-service date in the first quarter of 2020. The Delaware Crossing JV construction is progressing as planned with the Wink crude terminal significantly complete and currently moving dedicated volumes. The Liberty Terminal is over 55% complete and the 16” mainline connecting the two terminals is 76% complete. Associated gathering projects are progressing as planned. All core infrastructure construction is planned for completion in early January.

Focused on Managing Prudent Liquidity and Balance Sheet While Executing Growth Opportunities

As of September 30, 2019, the Partnership had $768 million of liquidity with $18 million in cash on hand and $750 million available under its unsecured revolving credit facility. During the third quarter, Noble Midstream entered into a $400 million three-year unsecured term loan facility resulting in expected annual interest savings of $1.5 million per year. Proceeds from the term loan were used to repay borrowings on the revolving credit facility.

The balance of the preferred equity commitment for the EPIC Crude pipeline was $102.8 million at the end of the third quarter, up from $99.6 million in the second quarter.

Consistent Quarterly Distribution Increase

On October 24, 2019, the board of directors of Noble Midstream’s general partner, Noble Midstream GP LLC, declared a third quarter cash distribution of $0.6716 per unit, a 20% increase from the third quarter 2018 and 79% above the minimum quarterly cash distribution. The third quarter distribution is payable on November 11, 2019, to unitholders of record as of November 4, 2019.

Lowering Full Year Capital Expenditures; Increasing Operational Guidance Items

The Partnership has lowered full-year organic net capital expectations due to year to-date progress on sustainable costs savings. Full-year net capital expenditures are now estimated to be $141 million to $151 million or 47% lower than original guidance. For the fourth quarter of 2019, organic net capital expenditures are anticipated between $40 million and $50 million based on project timing. Additions to equity investments in 2019 are still anticipated within original guidance with the range tightened to $590 million to $620 million.

Full year 2019 Adjusted EBITDA attributable to the Partnership is anticipated to be $243 million to $248 million compared to prior guidance of $245 million to $255 million. Guidance reflects lower equity investment income from the EPIC Y-Grade interim crude service. Fourth quarter Adjusted EBITDA attributable to the Partnership is expected to increase to a range of $64 million to $69 million. Full year 2019 Distribution Coverage Ratio remains unchanged at 1.5x to 1.6x.

Tightened volume guidance ranges for the full-year of 2019 result in higher midpoint expectations across the board for combined oil and gas gathering, produced water gathering and fresh water delivery volumes.

 

 

 

 

 

 

 

Guidance

 

1Q19

 

2Q19

 

3Q19

 

4Q19

 

2019

Gross Volumes

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Oil Gathered (MBbl/d)¹

228

 

226

 

240

 

 

248

 

-

 

258

 

236

 

-

 

238

Gas Gathered (MMcf/d)

353

 

413

 

475

 

 

482

 

-

 

502

 

430

 

-

 

435

Oil and Gas Gathered (MBoe/d)¹

287

 

295

 

319

 

 

328

 

-

 

342

 

307

 

-

 

311

Produced Water Gathered (MBw/d)

142

 

164

 

180

 

 

195

 

-

 

205

 

171

 

-

 

173

Fresh Water Delivered (MBw/d)

220

 

179

 

135

 

 

110

 

-

 

145

 

161

 

-

 

169

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financials (in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Income

$63

 

$53

 

$66

 

$56

 

-

 

$61

 

$239

 

-

 

$244

Gross Adjusted EBITDA2

$91

 

$81

 

$94

 

$90

 

-

 

$95

 

$356

 

-

 

$361

Net Adjusted EBITDA2

$63

 

$56

 

$60

 

$64

 

-

 

$69

 

$243

 

-

 

$248

Distributable Cash Flow2

$54

 

$41

 

$50

 

$53

 

-

 

$58

 

$198

 

-

 

$203

Distribution Coverage Ratio2,3

1.9x

 

1.4x

 

1.6x

 

1.5x

 

-

 

1.7x

 

1.5x

 

-

 

1.6x

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Capital, Excluding Investments

$76

 

$57

 

$62

 

$70

 

-

 

$80

 

$265

 

-

 

$275

Net Capital, Excluding Investments

$36

 

$29

 

$35

 

$40

 

-

 

$50

 

$141

 

-

 

$151

1 Includes crude oil sales volume

2 Results “attributable to the Partnership” exclude the non-controlling interests in the DevCos retained by Noble Energy. Adjusted EBITDA, DCF, and Distribution Coverage Ratio are not financial measures calculated in accordance with Generally Accepted Accounting Principles (“GAAP”). For definitions of these non-GAAP measures, see “Non-GAAP Financial Measures” below.

3 Assumes 20% annualized distribution growth

Further details with respect to the third quarter results and guidance can be found in the supplemental presentation on the Partnership's website, www.nblmidstream.com.

Conference Call

Noble Midstream will host a webcast and conference call today at 11:30 a.m. Central Time to discuss third quarter 2019 financial and operational results. Conference call numbers for participation are 877-883-0383, or 412-902-6506 for international calls. The passcode number is 1185599. The live audio webcast and related presentation material is accessible on the ‘Investors’ page of the Partnership’s website at www.nblmidstream.com. A replay of the conference call will be available at the same web location following the event.

About Noble Midstream

Noble Midstream is a growth-oriented master limited partnership formed by Noble Energy, Inc. to own, operate, develop and acquire domestic midstream infrastructure assets. Noble Midstream currently provides crude oil, natural gas, and water-related midstream services in the DJ Basin in Colorado and the Delaware Basin in Texas. For more information, please visit www.nblmidstream.com.

Forward Looking Statements

This news release contains certain “forward-looking statements” within the meaning of federal securities law.

Words such as “anticipates”, “believes”, “expects”, “intends”, “will”, “should”, “may”, “estimates”, and similar expressions may be used to identify forward-looking statements. Forward-looking statements are not statements of historical fact and reflect the Partnership’s current views about future events. No assurances can be given that the forward-looking statements contained in this news release will occur as projected and actual results may differ materially from those projected. Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks and uncertainties that could cause actual results to differ materially from those projected. These risks include, without limitation, the Partnership's customers’ ability to meet their drilling and development plans, changes in general economic conditions, competitive conditions in the Partnership’s industry, actions taken by third-party operators, gatherers, processors and transporters, the demand for crude oil and natural gas gathering and processing services, the Partnership’s ability to successfully implement its business plan, the Partnership’s ability to complete internal growth projects on time and on budget, the ability of third parties to complete construction of pipelines in which the Partnership holds equity interests on time and on budget, the price and availability of debt and equity financing, the availability and price of crude oil and natural gas to the consumer compared to the price of alternative and competing fuels, and other risks inherent in the Partnership’s business, including those described under “Risk Factors” and “Forward-Looking Statements” in the Partnership’s most recent Annual Report on Form 10-K and in other reports we file with the Securities and Exchange Commission. These reports are also available from the Partnership’s office or website, www.nblmidstream.com. Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. Noble Midstream does not assume any obligation to update forward-looking statements should circumstances, management’s estimates, or opinions change.

This news release also contains certain non-GAAP measures of financial performance that management believes are useful tools for internal use and the investment community in evaluating Noble Midstream’s overall financial performance. Please see the attached schedules for reconciliations of the non-GAAP financial measures used in this news release to the most directly comparable GAAP financial measures.

This release serves as a qualified notice to nominees and brokers as provided for under Treasury Regulation Section 1.1446-4(b) that 100% of the Partnership’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership’s distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate. Nominees, and not the Partnership, are treated as withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.

Schedule 1

Noble Midstream Partners LP

Revenue and Throughput Volume Statistics

(unaudited)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2019

 

2018

 

2019

 

2018

Colorado River DevCo LP

 

 

 

 

 

 

 

Crude Oil Gathering Volumes (Bbl/d)

48,089

 

 

59,145

 

 

48,918

 

 

63,630

 

Natural Gas Gathering Volumes (MMBtu/d)

244,069

 

 

223,354

 

 

248,862

 

 

216,191

 

Produced Water Gathering Volumes (Bbl/d)

15,444

 

 

15,007

 

 

13,466

 

 

17,348

 

Fresh Water Delivery Volumes (Bbl/d)

38,880

 

 

72,216

 

 

44,075

 

 

58,295

 

Gathering and Fresh Water Delivery Revenues Affiliate (in thousands)

$

44,454

 

 

$

47,465

 

 

$

128,584

 

 

$

138,975

 

 

 

 

 

 

 

 

 

San Juan River DevCo LP

 

 

 

 

 

 

 

Fresh Water Delivery Volumes (Bbl/d)

68,819

 

 

 

 

36,456

 

 

 

Gathering and Fresh Water Delivery Revenues Affiliate (in thousands)

$

11,326

 

 

$

5

 

 

$

19,593

 

 

$

(327

)

 

 

 

 

 

 

 

 

Green River DevCo LP

 

 

 

 

 

 

 

Crude Oil Gathering Volumes (Bbl/d)

35,808

 

 

5,657

 

 

29,333

 

 

1,942

 

Natural Gas Gathering Volumes (MMBtu/d)

195,544

 

 

9,062

 

 

148,160

 

 

3,111

 

Produced Water Gathering Volumes (Bbl/d)

14,936

 

 

8,123

 

 

14,157

 

 

2,816

 

Fresh Water Delivery Volumes (Bbl/d)

 

 

49,672

 

 

63,223

 

 

61,450

 

Gathering and Fresh Water Delivery Revenues Affiliate (in thousands)

$

18,577

 

 

$

8,392

 

 

$

63,576

 

 

$

29,724

 

 

 

 

 

 

 

 

 

Blanco River DevCo LP

 

 

 

 

 

 

 

Crude Oil Gathering Volumes (Bbl/d)

48,722

 

 

33,689

 

 

43,147

 

 

23,272

 

Natural Gas Gathering Volumes (MMBtu/d)

173,405

 

 

89,439

 

 

135,142

 

 

59,477

 

Produced Water Gathering Volumes (Bbl/d)

138,765

 

 

90,162

 

 

121,995

 

 

58,845

 

Gathering Revenues Affiliate and Third Party (in thousands)

$

23,186

 

 

$

15,211

 

 

$

59,744

 

 

$

30,987

 

 

 

 

 

 

 

 

 

Laramie River DevCo LP

 

 

 

 

 

 

 

Crude Oil Gathering and Sales Volumes (Bbl/d) (1)

107,214

 

 

85,002

 

 

109,954

 

 

79,930

 

Natural Gas Gathering Volumes (MMBtu/d)

4,935

 

 

1,227

 

 

6,266

 

 

1,319

 

Produced Water Gathering Volumes (Bbl/d)

11,127

 

 

8,919

 

 

12,851

 

 

6,468

 

Fresh Water Delivery Volumes (Bbl/d)

26,930

 

 

73,507

 

 

33,811

 

 

54,694

 

Gathering and Fresh Water Delivery Revenues Third Party (in thousands)

$

67,213

 

 

$

64,302

 

 

$

191,521

 

 

$

151,330

 

 

 

 

 

 

 

 

 

Total Gathering Systems

 

 

 

 

 

 

 

Crude Oil Gathering and Sales Volumes (Bbl/d) (1)

239,833

 

 

183,493

 

 

231,352

 

 

168,774

 

Natural Gas Gathering Volumes (MMBtu/d)

617,953

 

 

323,082

 

 

538,430

 

 

280,098

 

Barrels of Oil Equivalent (Boe/d)

319,058

 

 

224,914

 

 

300,381

 

 

204,684

 

Produced Water Gathering Volumes (Bbl/d)

180,272

 

 

122,211

 

 

162,469

 

 

85,477

 

Gathering Revenues (in thousands)

$

144,274

 

 

$

113,226

 

 

$

394,396

 

 

$

283,146

 

 

 

 

 

 

 

 

 

Total Fresh Water Delivery

 

 

 

 

 

 

 

Fresh Water Delivery Volumes (Bbl/d)

134,629

 

 

195,395

 

 

177,565

 

 

174,439

 

Fresh Water Delivery Revenues (in thousands)

$

22,979

 

 

$

23,345

 

 

$

75,196

 

 

$

69,706

 

(1)

Includes crude oil gathering volumes as well as crude oil that is sold to customers and transported on our gathering systems.

 

Schedule 2

Noble Midstream Partners LP

Consolidated Statement of Operations

(in thousands, except per unit amounts, unaudited)

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2019

 

2018

 

2019

 

2018

Revenues

 

 

 

 

 

 

 

Crude Oil, Natural Gas and Produced Water Gathering Affiliate

$

79,208

 

 

$

54,674

 

 

$

209,530

 

 

$

144,569

 

Crude Oil, Natural Gas and Produced Water Gathering — Third Party

16,196

 

 

$

12,459

 

 

51,344

 

 

28,796

 

Fresh Water Delivery Affiliate

20,847

 

 

17,416

 

 

66,801

 

 

56,774

 

Fresh Water Delivery — Third Party

2,132

 

 

5,929

 

 

8,395

 

 

12,932

 

Crude Oil Sales — Third Party

48,870

 

 

46,093

 

 

133,522

 

 

109,781

 

Other — Affiliate

791

 

 

1,046

 

 

2,393

 

 

2,980

 

Other — Third Party

1,279

 

 

1,546

 

 

3,559

 

 

3,035

 

Total Revenues

169,323

 

 

139,163

 

 

475,544

 

 

358,867

 

Costs and Expenses

 

 

 

 

 

 

 

Cost of Crude Oil Sales

46,240

 

 

44,379

 

 

125,217

 

 

105,830

 

Direct Operating

22,524

 

 

23,955

 

 

77,677

 

 

59,496

 

Depreciation and Amortization

20,851

 

 

18,376

 

 

60,487

 

 

46,076

 

General and Administrative

4,129

 

 

4,204

 

 

12,990

 

 

19,626

 

Other Operating (Income) Expense

(469

)

 

 

 

(488

)

 

 

Total Operating Expenses

93,275

 

 

90,914

 

 

275,883

 

 

231,028

 

Operating Income

76,048

 

 

48,249

 

 

199,661

 

 

127,839

 

Other Expense (Income)

 

 

 

 

 

 

 

Interest Expense, Net of Amount Capitalized

3,952

 

 

3,506

 

 

11,507

 

 

6,220

 

Investment Loss (Income)

5,621

 

 

(3,866

)

 

5,028

 

 

(10,825

)

Total Other Expense (Income)

9,573

 

 

(360

)

 

16,535

 

 

(4,605

)

Income Before Income Taxes

66,475

 

 

48,609

 

 

183,126

 

 

132,444

 

State Income Tax Provision

92

 

 

(94

)

 

290

 

 

163

 

Net Income

66,383

 

 

48,703

 

 

182,836

 

 

132,281

 

Less: Net Income Attributable to Noncontrolling Interests

25,751

 

 

4,086

 

 

62,236

 

 

11,719

 

Net Income Attributable to Noble Midstream Partners LP

40,632

 

 

44,617

 

 

120,600

 

 

120,562

 

Less: Net Income Attributable to Incentive Distribution Rights

5,820

 

 

1,462

 

 

13,967

 

 

3,415

 

Net Income Attributable to Limited Partners

$

34,812

 

 

$

43,155

 

 

$

106,633

 

 

$

117,147

 

 

 

 

 

 

 

 

 

Net Income Attributable to Limited Partners Per Limited Partner Unit — Basic

 

 

 

 

 

 

 

Common Units

$

0.88

 

 

$

1.09

 

 

$

2.65

 

 

$

2.96

 

Subordinated Units

$

 

 

$

1.09

 

 

$

2.89

 

 

$

2.96

 

 

 

 

 

 

 

 

 

Net Income Attributable to Limited Partners Per Limited Partner Unit — Diluted

 

 

 

 

 

 

 

Common Units

$

0.88

 

 

$

1.09

 

 

$

2.64

 

 

$

2.96

 

Subordinated Units

$

 

 

$

1.09

 

 

$

2.89

 

 

$

2.96

 

 

 

 

 

 

 

 

 

Weighted Average Limited Partner Units Outstanding Basic

 

 

 

 

 

 

 

Common Units

39,604

 

 

23,688

 

 

31,855

 

 

23,686

 

Subordinated Units

 

 

15,903

 

 

7,747

 

 

15,903

 

Total Limited Partner Units

39,604

 

 

39,591

 

 

39,602

 

 

39,589

 

 

 

 

 

 

 

 

 

Weighted Average Limited Partner Units Outstanding Diluted

 

 

 

 

 

 

 

Common Units

39,624

 

 

23,704

 

 

31,879

 

 

23,701

 

Subordinated Units

 

 

15,903

 

 

7,747

 

 

15,903

 

Total Limited Partner Units

39,624

 

39,607

 

 

39,626

 

39,604

 

 

Schedule 3

Noble Midstream Partners LP

Consolidated Balance Sheet

(in thousands, unaudited)

 

 

September 30,
2019

 

December 31,
2018

ASSETS

 

 

 

Current Assets

 

 

 

Cash and Cash Equivalents

$

17,571

 

 

$

10,740

 

Accounts Receivable — Affiliate

40,475

 

 

31,613

 

Accounts Receivable — Third Party

20,251

 

 

23,091

 

Other Current Assets

8,579

 

 

5,875

 

Total Current Assets

86,876

 

 

71,319

 

Property, Plant and Equipment

 

 

 

Total Property, Plant and Equipment, Gross

1,682,820

 

 

1,500,609

 

Less: Accumulated Depreciation and Amortization

(114,789

)

 

(79,357

)

Total Property, Plant and Equipment, Net

1,568,031

 

 

1,421,252

 

Intangible Assets, Net

286,042

 

 

310,202

 

Goodwill

109,734

 

 

109,734

 

Investments

565,387

 

 

82,317

 

Other Noncurrent Assets

6,696

 

 

3,093

 

Total Assets

$

2,622,766

 

 

$

1,997,917

 

LIABILITIES, MEZZANINE EQUITY AND EQUITY

 

 

 

Current Liabilities

 

 

 

Accounts Payable — Affiliate

$

2,568

 

 

$

2,778

 

Accounts Payable — Trade

100,157

 

 

92,756

 

Other Current Liabilities

10,238

 

 

9,217

 

Total Current Liabilities

112,963

 

 

104,751

 

Long-Term Liabilities

 

 

 

Long-Term Debt

948,907

 

 

559,021

 

Asset Retirement Obligations

19,268

 

 

17,330

 

Other Long-Term Liabilities

1,410

 

 

582

 

Total Liabilities

1,082,548

 

 

681,684

 

Mezzanine Equity

 

 

 

Redeemable Noncontrolling Interest, Net

102,830

 

 

 

Equity

 

 

 

Limited Partner

 

 

 

Common Units (39,712 and 23,759 units outstanding, respectively)

618,049

 

 

699,866

 

Subordinated Units (15,903 units outstanding as of December 31, 2018)

 

 

(130,207

)

General Partner

5,820

 

 

2,421

 

Total Partners’ Equity

623,869

 

 

572,080

 

Noncontrolling Interests

813,519

 

 

744,153

 

Total Equity

1,437,388

 

 

1,316,233

 

Total Liabilities, Mezzanine Equity and Equity

$

2,622,766

 

 

$

1,997,917

 

 

Schedule 4
Noble Midstream Partners LP
Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures

Non-GAAP Financial Measures

This news release, the financial tables and other supplemental information include Adjusted EBITDA, Distributable Cash Flow, and Distribution Coverage Ratio, all of which are non-GAAP measures which may be used periodically by management when discussing our financial results with investors and analysts.

As a result of our increased investment in midstream entities during first quarter 2019, we have refined our presentation of Adjusted EBITDA to adjust for items with respect to our equity method investments. We now define Adjusted EBITDA as net income before income taxes, net interest expense, depreciation and amortization, transaction expenses, unit-based compensation and certain other items that we do not view as indicative of our ongoing performance. Additionally, Adjusted EBITDA reflects the adjusted earnings impact of our equity method investments by adjusting our equity earnings or losses from our equity method investments to reflect our proportionate share of the EBITDA of such equity method investments. Prior period Adjusted EBITDA has been reclassified to conform to the current period presentation.

Adjusted EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:

  • our operating performance as compared to those of other companies in the midstream energy industry, without regard to financing methods, historical cost basis or capital structure;
  • the ability of our assets to generate sufficient cash flow to make distributions to our partners;
  • our ability to incur and service debt and fund capital expenditures;
  • and the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

As a result of our increased investment in midstream entities during first quarter 2019, we have also refined our presentation of distributable cash flow to adjust for items with respect to our equity method investments. We now define distributable cash flow as Adjusted EBITDA plus distributions received from our equity method investments less our proportionate share of Adjusted EBITDA from such equity method investments, estimated maintenance capital expenditures and cash interest paid. Prior period distributable cash flow has been reclassified to conform to the current period presentation.

Distributable Cash Flow is used by management to evaluate our overall performance. Our partnership agreement requires us to distribute all available cash on a quarterly basis, and Distributable Cash Flow is one of the factors used by the board of directors of our general partner to help determine the amount of available cash that is available to our unitholders for a given period. We define Distribution Coverage Ratio as Distributable Cash Flow divided by total distributions declared. The Distribution Coverage Ratio is used by management to illustrate our ability to make our distributions each quarter.

We believe that the presentation of Adjusted EBITDA, Distributable Cash Flow, and Distribution Coverage Ratio provide information useful to investors in assessing our financial condition and results of operations. The GAAP measure most directly comparable to Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio is net income. Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio should not be considered alternatives to net income or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio exclude some, but not all, items that affect net income, and these measures may vary from those of other companies. As a result, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio as presented herein may not be comparable to similarly titled measures of other companies.

Noble Midstream does not provide guidance on the reconciling items between forecasted Net Income, forecasted Adjusted EBITDA, forecasted Distributable Cash Flow and forecasted Distribution Coverage Ratio due to the uncertainty regarding timing and estimates of these items. Noble Midstream provides a range for the forecasts of Net Income, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio to allow for the variability in timing and uncertainty of estimates of reconciling items between forecasted Net Income, forecasted Adjusted EBITDA, forecasted Distributable Cash Flow and forecasted Distribution Coverage Ratio. Therefore, the Partnership cannot reconcile forecasted Net Income to forecasted Adjusted EBITDA, forecasted Distributable Cash Flow or forecasted Distribution Coverage Ratio without unreasonable effort.

In addition to Net Income, the GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is net cash provided by operating activities. Adjusted EBITDA and Distributable Cash Flow should not be considered alternatives to net income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Due to the forward-looking nature of net cash provided by operating activities, management cannot reliably predict certain of the necessary components of the most directly comparable forward-looking GAAP measures, such as future impairments and future changes in working capital. Accordingly, Noble Midstream is unable to present a quantitative reconciliation of the aforementioned forward-looking non-GAAP financial measures to net cash provided by operating activities. Amounts excluded from these non-GAAP measures in future periods could be significant.

Schedule 4 (Continued)

Noble Midstream Partners LP

Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures

 

 

Reconciliation of Net Income (GAAP) to Adjusted EBITDA and Distributable Cash Flow (Non-GAAP)

(in thousands, unaudited)

 

 

 

Three Months Ended September 30,

 

2019

 

2018

Reconciliation from Net Income (GAAP)

 

 

 

Net Income (GAAP)

$

66,383

 

 

$

48,703

 

Add:

 

 

 

Depreciation and Amortization

20,851

 

 

18,376

 

Interest Expense, Net of Amount Capitalized

3,952

 

 

3,506

 

State Income Tax Provision

92

 

 

(94

)

Transaction and Integration Expenses

106

 

 

301

 

Proportionate Share of Equity Method Investment EBITDA Adjustments

3,257

 

 

579

 

Unit-Based Compensation and Other

(630

)

 

343

 

Adjusted EBITDA (Non-GAAP)

94,011

 

 

71,714

 

Less:

 

 

 

Adjusted EBITDA Attributable to Noncontrolling Interests

34,507

 

 

11,784

 

Adjusted EBITDA Attributable to Noble Midstream Partners LP (Non-GAAP)

59,504

 

 

59,930

 

Add:

 

 

 

Distributions from Equity Method Investments

1,711

 

 

 

Less:

 

 

 

Proportionate Share of Equity Method Investment Adjusted EBITDA

(3,518

)

 

3,350

 

Cash Interest Paid

8,662

 

 

4,728

 

Maintenance Capital Expenditures

5,789

 

 

5,406

 

Distributable Cash Flow of Noble Midstream Partners LP (Non-GAAP)

$

50,282

 

 

$

46,446

 

Distributions (Declared)

$

32,418

 

 

$

23,620

 

Distribution Coverage Ratio (Declared)

 

1.6x

 

 

 

2.0x

 

 

Reconciliation of Net Cash Provided by Operating Activities (GAAP) to Adjusted EBITDA

and Distributable Cash Flow (Non-GAAP)

(in thousands, unaudited)

 

 

 

Three Months Ended September 30,

 

2019

 

2018

Reconciliation from Net Cash Provided by Operating Activities (GAAP)

 

 

 

Net Cash Provided by Operating Activities (GAAP)

$

91,075

 

 

$

62,864

 

Add:

 

 

 

Interest Expense, Net of Amount Capitalized

3,952

 

 

3,506

 

Changes in Operating Assets and Liabilities

4,254

 

 

1,981

 

Transaction and Integration Expenses

106

 

 

301

 

Equity Method Investment EBITDA Adjustments

(5,229

)

 

3,350

 

Other Adjustments

(147

)

 

(288

)

Adjusted EBITDA (Non-GAAP)

94,011

 

 

71,714

 

Less:

 

 

 

Adjusted EBITDA Attributable to Noncontrolling Interests

34,507

 

 

11,784

 

Adjusted EBITDA Attributable to Noble Midstream Partners LP (Non-GAAP)

59,504

 

 

59,930

 

Add:

 

 

 

Distributions from Equity Method Investments

1,711

 

 

 

Less:

 

 

 

Proportionate Share of Equity Method Investment Adjusted EBITDA

(3,518

)

 

3,350

 

Cash Interest Paid

8,662

 

 

4,728

 

Maintenance Capital Expenditures

5,789

 

 

5,406

 

Distributable Cash Flow of Noble Midstream Partners LP (Non-GAAP)

$

50,282

 

 

$

46,446

 

Distributions (Declared)

$

32,418

 

 

$

23,620

 

Distribution Coverage Ratio (Declared)

 

1.6x

 

 

 

2.0x

 

 

Schedule 4 (Continued)

Noble Midstream Partners LP

Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures

 

 

Reconciliation of 2019 GAAP Guidance to 2019 Non-GAAP Guidance

(in millions, unaudited)

 

 

2019 Guidance

 

4Q19

 

Full Year

Reconciliation from Net Income (GAAP) to Distributable Cash Flow (Non-GAAP)

 

 

 

Net Income (GAAP)

$56 - $61

 

$239 - $244

Add:

 

 

 

Depreciation and Amortization

22

 

83

Interest Expense, Net of Amount Capitalized

4

 

16

Unit-Based Compensation and Other

0.4

 

0.8

Transaction Expenses

 

Income Tax Provision (Benefit)

0

 

0.3

Proportionate Share of Equity Method Investment EBITDA Adjustments

7.5

 

17

Adjusted EBITDA (Non-GAAP)

$90 - $95

 

$356 - $361

Adjusted EBITDA Attributable to Noncontrolling Interests

26

 

114

Adjusted EBITDA Attributable to Noble Midstream Partners LP

$64 - $69

 

$242 - $247

Plus:

 

 

 

Distributions from Equity Method Investments

 

1.5

 

10

Less:

 

 

 

Proportionate Share of Equity Method Investment Adjusted EBITDA

(3.5) - (5)

 

(2.5) - (4)

Maintenance Capital Expenditures and Cash Interest Paid

16 - 17.5

 

57 - 58

Distributable Cash Flow of Noble Midstream Partners LP

$53 - $58

 

$198 - $203

Distribution Coverage Ratio

1.5x - 1.7x

 

1.5x - 1.6x

 

Contacts

Tom Christensen
Chief Financial Officer
(832) 639-7524
tom.christensen@nblmidstream.com

Contacts

Tom Christensen
Chief Financial Officer
(832) 639-7524
tom.christensen@nblmidstream.com