Rice Midstream Partners Reports First Quarter 2017 Results and Provides Three-Year Outlook

05/03/2017

CANONSBURG, Pa., May 3, 2017 /PRNewswire/ -- Rice Midstream Partners LP (NYSE: RMP) ("RMP" or the "Partnership") today reported first quarter 2017 financial and operating results. Highlights include:

  • Gathering throughput averaged 1,235 MDth/d, a 3% increase from fourth quarter 2016
  • Freshwater delivery volumes averaged 365 MMGal, a 14% increase over 4Q16
  • Net income attributable to limited partners of $36.4 million, or $0.36 per unit
  • Adjusted EBITDA(1) of $48.8 million, a 5% increase relative to fourth quarter 2016
  • Distributable cash flow ("DCF")(1) of $42.4 million, resulting in DCF coverage ratio(1) of 1.52x
  • Raised first quarter distribution to $0.2608 per common unit, an increase of 24% over the first quarter 2016
  • Exited the quarter with low leverage(1) of 1.1x
  • Reaffirming 20% annual distribution growth target through 2023
  • Targeting approximately 1.4x DCF coverage ratio(1) and leverage less than 2.5x through 2019

Commenting on the results, Daniel J. Rice IV, Chief Executive Officer, said, "Our strong first quarter results highlight the strength of our low-risk, high-growth profile and anchoring relationships with our sponsor and third party customers. Our top-tier annual distribution growth and long-term DCF coverage targets are supported by Rice Energy's strong three-year growth outlook, targeting 27% - 33% compound annual Appalachia net production growth through 2019. We are excited to continue executing our plan to drive long-term value for our unitholders."

1.

Please see Supplemental "Non-GAAP Financial Measures" for a description of Adjusted EBITDA, distributable cash flow, DCF coverage ratio and related reconciliations to the comparable GAAP financial measures. Leverage is defined as the ratio of net debt to last twelve months Adjusted EBITDA.

Three-Year Growth Outlook

We are reaffirming our top-tier annual distribution growth target of 20% through 2023. Driven by continued strong growth from Rice Energy and our third party customers, we are targeting DCF coverage(1) of approximately 1.4x and leverage of less than 2.5x through 2019.

1.

Please see Supplemental "Non-GAAP Financial Measures" for a description of DCF coverage ratio.


First Quarter 2017 Results

RMP Results (in thousands, except volumes)


Three Months Ended
March 31, 2017


Operating volumes (MDth/d)



Gathering volumes



Affiliate


1,003


Third-party


232


Total


1,235





Compression volumes



Affiliate


594


Third-party


232


Total


826






Water services assets (MMGal)



Pennsylvania Water


224


Ohio Water


141


Total


365





Operating revenues



Gathering


$

36,220


Compression


$

5,782


Water


$

20,748


Total


$

62,750





Total operating expenses


$

22,154


Operating income


$

40,596





Net income attributable to limited partners


$

36,376


Net income per limited partner unit:



Common units (basic)


$

0.36


Common units (diluted)


$

0.36


Subordinated units (basic and diluted)


$

0.36





Adjusted EBITDA(1)


$

48,762


DCF(1)


$

42,444


DCF coverage ratio(1)


1.52





Capital expenditures (in millions)



Gas gathering and compression


$

29


Water services assets


$

3







Financial position (in millions)



Liquidity


$

673


Cash and cash equivalents


$

13


Revolving credit facility


$

190


Leverage(1)


1.1





RMP 1Q17 Quarterly Distribution


$

0.2608


% Growth YoY


24

%

% Growth QoQ


4

%

First quarter gathering throughput averaged 1,235 MDth/d, consisting of 1,003 MDth/d affiliate volumes and 232 MDth/d third party volumes. There were no third party wells turned to sales during the first quarter. Strong first quarter Adjusted EBITDA(1) of $48.8 million and DCF(1) of $42.4 million, driven by accelerated sponsor well completion activity within our water services segment.

As of March 31, 2017, RMP's concentrated gathering and compression acreage dedication in the Marcellus Shale core covered approximately 218,000 acres in Washington and Greene Counties with approximately 29,000 acres dedicated from high quality, third party customers.

1.

Please see Supplemental "Non-GAAP Financial Measures" for a description of Adjusted EBITDA, distributable cash flow, DCF coverage ratio and related reconciliations to the comparable GAAP financial measures. Leverage is defined as the ratio of net debt to last twelve months Adjusted EBITDA.

Quarterly Cash Distribution

On April 21, 2017, we declared a quarterly distribution of $0.2608 per unit for the first quarter 2017, an increase of $0.0103 per unit, or 4%, relative to fourth quarter 2016. The distribution will be payable on May 18, 2017 to unitholders of record as of May 9, 2017. In addition, a cash distribution of $1.2 million will be made to GP Holdings on May 18, 2017 related to its incentive distribution rights in the Partnership based upon the level of distribution paid per common and subordinated unit.

Conference Call

RMP will host a conference call on May 4, 2017 at 11:00 a.m. Eastern time (10:00 a.m. Central time) to discuss first quarter 2017 financial and operating results. To listen to a live audio webcast of the conference call, please visit RMP's website at www.ricemidstream.com. A replay of the conference call will be available following the call for two weeks and can be accessed from www.ricemidstream.com.

Rice Energy will host a conference call on May 4, 2017 at 10:00 a.m. Eastern time (9:00 a.m. Central time) to discuss first quarter 2017 financial and operating results, and we encourage RMP investors to listen-in. To listen to a live audio webcast of the conference call, please visit Rice Energy's website at www.riceenergy.com. A replay of the conference call will be available for two weeks and can also be accessed from www.riceenergy.com.

About Rice Midstream Partners

Rice Midstream Partners LP is a fee-based, growth-oriented limited partnership formed by Rice Energy Inc. (NYSE: RICE) to own, operate, develop and acquire midstream assets in the Appalachian basin. RMP provides midstream services to Rice Energy and third-party companies through its natural gas gathering, compression and water assets in the rapidly developing dry gas cores of the Marcellus and Utica Shales.

For more information, please visit www.ricemidstream.com.

Forward Looking Statements

This release includes forward-looking statements that are subject to a number of risks and uncertainties, many of which are beyond our control. All statements, other than historical facts included in this release, that address activities, events or developments that we expect or anticipate will or may occur in the future, including such things as, forecasted gathering volumes, revenues, Adjusted EBITDA, distribution growth, and distributable cash flow, Rice Energy's targeted production growth and other operational results, the terms, timing and completion of any sale of a portion of Rice Olympus Midstream LLC to RMP, the timing of completion of midstream projects, future capital expenditures (including the amount and nature thereof), business strategy and measures to implement strategy, competitive strengths, goals, expansion and growth of our business and operations, plans, market conditions, references to future success, references to intentions as to future matters and other such matters are forward-looking statements. All forward-looking statements speak only as of the date of this release. Although we believe that the plans, intentions and expectations reflected in or suggested by the forward-looking statements are reasonable, there is no assurance that these plans, intentions or expectations will be achieved. Therefore, actual outcomes and results could materially differ from what is expressed, implied or forecast in such statements.

We caution you that these forward-looking statements are subject to risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to our gathering and compression and water services businesses. These risks include, but are not limited to: commodity price volatility; inflation; environmental risks; regulatory changes; the uncertainty inherent in projecting future throughput volumes, cash flow and access to capital; and the timing of development expenditures of Rice Energy or our other customers. Information concerning these and other factors can be found in our filings with the Securities and Exchange Commission, including our Forms 10-K, 10-Q and 8-K. Consequently, all of the forward-looking statements made in this news release are qualified by these cautionary statements and there can be no assurances that the actual results or developments anticipated by us will be realized, or even if realized, that they will have the expected consequences to or effects on us, our business or operations. We have no intention, and disclaim any obligation, to update or revise any forward-looking statements, whether as a result of new information, future results or otherwise.

Rice Midstream Partners LP

Statements of Operations

(Unaudited)




Three Months Ended
March 31,

(in thousands, except unit data)


2017


2016

Operating revenues:





Affiliate


$

52,797



$

44,385


Third-party


9,953



10,158


Total operating revenues


62,750



54,543







Operating expenses:





Operation and maintenance expense


8,179



8,545


Equity compensation expense


132



986


General and administrative expense


5,707



3,756


Depreciation expense


7,621



5,370


Acquisition costs




73


Amortization of intangible assets


402



408


Other expense (income)


113



(212)


Total operating expenses


22,154



18,926







Operating income


40,596



35,617


Other income


11




Interest expense


(1,943)



(1,047)


Amortization of deferred finance costs


(1,049)



(144)


Net income


$

37,615



$

34,426







Calculation of limited partner interest in net income:





Net income


$

37,615



$

34,426


Less: General partner interest in net income attributable to incentive distribution rights


1,239




Net income attributable to limited partners


$

36,376



$

34,426







Weighted average limited partner units (in millions)





Common units (basic)


73.5



42.2


Common units (diluted)


73.5



42.4


Subordinated units (basic and diluted)


28.8



28.8







Net income attributable to RMP per limited partner unit





Common units (basic)


$

0.36



$

0.49


Common units (diluted)


$

0.36



$

0.48


Subordinated units (basic and diluted)


$

0.36



$

0.49







Adjusted EBITDA (1)


$

48,762



$

42,242


Distributable cash flow (2)


$

42,444



$

38,395







Quarterly distribution per unit


$

0.2608



$

0.2100







Distributions declared:





Limited partner units - Public


$

19,173



$

8,854


Limited partner units - GP Holdings


7,500



6,039


Incentive distribution rights - General Partner


1,239




Total distributions declared


$

27,912



$

14,893







DCF coverage ratio (3)


1.52



2.58




1.

We define Adjusted EBITDA as net income (loss) before interest expense, depreciation expense, amortization expense, non-cash equity compensation expense, amortization of deferred financing costs and other non-recurring items. Please read Supplemental "Non-GAAP Financial Measures."

2.

We define distributable cash flow as Adjusted EBITDA less interest expense and estimated maintenance capital expenditures. Please read Supplemental "Non-GAAP Financial Measures."

3.

We define DCF coverage ratio as distributable cash flow divided by total distributions declared. Please read Supplemental "Non-GAAP Financial Measures."

 

Rice Midstream Partners LP

Segment Results of Operations

(Unaudited)


Gathering and Compression Segment 



Three Months Ended
March 31,

(in thousands)

2017


2016

Gathering volumes (MDth/d):




Affiliate

1,003



618


Third-party

232



217


Total gathering volumes

1,235



835






Compression volumes (MDth/d):




Affiliate

594



9


Third-party

232



143


Total compression volumes

826



152






Operating results:




Operating revenues:




Affiliate

$

32,049



$

17,306


Third-party

9,953



9,494


Total operating revenues

42,002



26,800






Operating expenses:




Operation and maintenance expense

2,729



1,791


Equity compensation expense

114



742


General and administrative expense

4,837



2,954


Depreciation expense

3,270



1,935


Acquisition costs



73


Amortization of intangible assets

402



408


Other expense (income)

113



(212)


Total operating expenses

11,465



7,691






Operating income

$

30,537



$

19,109


 

Water Services Segment



Three Months Ended
March 31,

(in thousands)

2017


2016

Water services volumes (MMGal):




Affiliate

365



445


Third-party



18


Total water services volumes

365



463






Operating results:




Operating revenues:




Affiliate

$

20,748



$

27,079


Third-party



664


Total operating revenues

20,748



27,743






Operating expenses:




Operation and maintenance expense

5,450



6,754


Equity compensation expense

18



244


General and administrative expense

870



802


Depreciation expense

4,351



3,435


Total operating expenses

10,689



11,235






Operating income

$

10,059



$

16,508



 

Rice Midstream Partners LP
Supplemental Non-GAAP Financial Measures
(Unaudited)

Adjusted EBITDA, distributable cash flow and DCF coverage ratio are non-GAAP supplemental financial measures that management and external users of our consolidated financial statements, such as industry analysts, investors, lenders and rating agencies, may use to assess the financial performance of our assets, without regard to financing methods, capital structure or historical cost basis; our operating performance and return on capital as compared to other companies in the midstream energy sector, without regard to historical cost basis or, in the case of Adjusted EBITDA, financing or capital structure; our ability to incur and service debt and fund capital expenditures; the ability of our assets to generate sufficient cash flow to make distributions to our unitholders; and the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.

We define Adjusted EBITDA  as net income (loss) before interest expense, depreciation expense, amortization of intangible assets, non-cash equity compensation expense, amortization of deferred financing costs and other non-recurring items. Adjusted EBITDA is not a measure of net income as determined by GAAP. We define distributable cash flow as Adjusted EBITDA less cash interest expense and estimated maintenance capital expenditures. We define DCF coverage ratio as distributable cash flow divided by total distributions declared. Distributable cash flow does not reflect changes in working capital balances and is not a presentation made in accordance with GAAP.

We believe that the presentation of Adjusted EBITDA, distributable cash flow and DCF coverage ratio will provide useful information to investors in assessing our financial condition and results of operations. The GAAP measure most directly comparable to Adjusted EBITDA and distributable cash flow is net income. Our non-GAAP financial measures of Adjusted EBITDA and distributable cash flow should not be considered as alternatives to GAAP net income. Each of Adjusted EBITDA and distributable cash flow has important limitations as an analytical tool because they exclude some but not all items that affect net income. You should not consider Adjusted EBITDA, distributable cash flow or DCF coverage ratio in isolation or as a substitute for analysis of our results as reported under GAAP. Because Adjusted EBITDA, distributable cash flow and DCF coverage ratio may be defined differently by other companies in our industry, our definitions of Adjusted EBITDA, distributable cash flow and DCF coverage ratio may not be comparable to similarly titled measures of other companies, thereby diminishing its utility.

(in thousands)

Three Months Ended
March 31, 2017


Twelve Months Ended

March 31, 2017

Reconciliation of Net Income to Adjusted EBITDA and DCF:




Net income

$

37,615



$

124,799


     Interest expense

1,943



4,827


     Acquisition costs



52


     Depreciation expense

7,621



27,421


     Amortization of intangible assets

402



1,628


     Non-cash equity compensation expense

132



2,019


     Amortization of deferred finance costs

1,049



2,384


Adjusted EBITDA

$

48,762



$

163,130






Adjusted EBITDA

$

48,762



$

163,130


     Cash interest expense

(1,943)



(4,827)


     Estimated maintenance capital expenditures

(4,375)



(12,775)


Distributable cash flow

$

42,444



$

145,528






Total distributions declared

$

27,912



$

97,304


DCF coverage ratio

1.52



1.50


 

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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/rice-midstream-partners-reports-first-quarter-2017-results-and-provides-three-year-outlook-300450928.html

SOURCE Rice Midstream Partners LP

Julie Danvers, Director of Investor Relations, (832) 708-3437, Julie.Danvers@RiceMidstream.com