• | Total production was 4,848 MBoe in the first quarter of 2016, compared to 5,106 MBoe in the fourth quarter of 2015. Average daily production was 53.3 MBoe/day in the first quarter of 2016 compared to 55.5 MBoe/day in the fourth quarter of 2015. |
• | Oil production decreased to 2,589 MBbl, compared to 2,795 MBbl in the fourth quarter of 2015. |
• | NGL production decreased to 498 MBbl, compared to 526 MBbl in the fourth quarter of 2015. |
• | Natural gas production decreased to 10,567 MMcf, compared to 10,712 MMcf in the fourth quarter of 2015. |
• | Adjusted EBITDA was $131.5 million (including $2.2 million of restructuring costs) in the first quarter of 2016 compared to $169.0 million in the fourth quarter of 2015, a 22% decrease. The decrease was primarily due to lower sales revenue due to lower average realized prices, lower sales volume, lower commodity derivative instrument settlement receipts, lower other revenue, higher cash restructuring costs and higher G&A expenses, partially offset by lower operating costs. |
• | Net loss attributable to common unitholders was $115.3 million, or $0.54 per diluted common unit, in the first quarter of 2016, which included $97.4 million in unrealized losses on commodity derivative instruments and non-cash impairment charges of approximately $2.8 million, or $0.01 per diluted common unit, primarily related to the impact that further deterioration in future commodity prices had on our projected net revenues for certain of our oil and gas properties, compared to net loss of $902.3 million or $4.25 per diluted common unit, in the fourth quarter of 2015, which included non-cash impairment charges of approximately $878.3 million, or $4.14 per diluted common unit. |
• | Oil, NGL and natural gas sales revenues were $105.5 million in the first quarter of 2016 compared to $139.7 million in the fourth quarter of 2015, primarily due to lower realized oil and natural gas prices. |
• | Lease operating expenses, which include district expenses, processing fees, and transportation costs but exclude taxes and non-cash unit-based compensation expense, were $16.29 per Boe in the first quarter of 2016 compared to $17.74 per Boe in the fourth quarter of 2015. The decrease was primarily due to our continued focus on lowering costs and lower commodity prices. |
• | General and administrative expenses, excluding non-cash unit-based compensation expenses, were $17.6 million in the first quarter of 2016, compared to $14.5 million in the fourth quarter of 2015. The increase was primarily due to higher employee related costs and professional fees. |
• | Gains on commodity derivative instruments were $37.9 million in the first quarter of 2016 compared to gains of $141.8 million in the fourth quarter of 2015, primarily due to unrealized losses of $97.4 million during the first quarter of 2016 compared to unrealized losses of $2.2 million during the fourth quarter of 2015. Derivative instrument settlement receipts were $135.4 million in the first quarter of 2016 compared to receipts of $144.1 million in the fourth quarter of 2015, primarily due to lower hedged volumes. |
• | NYMEX WTI oil spot prices averaged $33.35 per Bbl and Brent oil spot prices averaged $33.84 per Bbl in the first quarter of 2016 compared to $41.94 per Bbl and $43.56 per Bbl, respectively, in the fourth quarter of 2015. Henry Hub natural gas spot prices averaged $1.99 per Mcf in the first quarter of 2016 compared to $2.12 per Mcf in the fourth quarter of 2015. |
• | Average realized crude oil, NGL, and natural gas prices, excluding the effects of commodity derivative settlements, were $29.37 per Bbl, $10.81 per Bbl and $2.05 per Mcf, respectively, in the first quarter of 2016 compared to $37.31 per Bbl, $13.03 per Bbl and $2.32 per Mcf, respectively, in the fourth quarter of 2015. |
• | Oil, NGL and natural gas capital expenditures were approximately $16 million in the first quarter of 2016 compared to $36 million in the fourth quarter of 2015. |
Three Months Ended | ||||||||||||
March 31, | December 31, | March 31, | ||||||||||
Thousands of dollars, except as indicated | 2016 | 2015 | 2015 | |||||||||
Oil sales | $ | 78,358 | $ | 108,024 | $ | 123,843 | ||||||
NGL sales | 5,382 | 6,852 | 7,591 | |||||||||
Natural gas sales | 21,710 | 24,812 | 31,189 | |||||||||
Gain on commodity derivative instruments | 37,923 | 141,842 | 137,192 | |||||||||
Other revenues, net | 4,593 | 5,934 | 6,469 | |||||||||
Total revenues | 147,966 | 287,464 | 306,284 | |||||||||
Lease operating expenses (a) | 79,842 | 90,563 | 100,079 | |||||||||
Production and property taxes (b) | 9,909 | 9,033 | 13,544 | |||||||||
Total lease operating expenses | 89,751 | 99,596 | 113,623 | |||||||||
Purchases and other operating costs | 2,618 | 2,119 | 158 | |||||||||
Salt water disposal costs | 2,980 | 2,408 | 4,021 | |||||||||
Change in inventory | (375 | ) | 2,116 | 176 | ||||||||
Total operating costs | 94,974 | 106,239 | 117,978 | |||||||||
Lease operating expenses before taxes, per Boe (a)(c) | 16.29 | 17.74 | 19.81 | |||||||||
Production and property taxes per Boe (b) | 2.04 | 1.77 | 2.68 | |||||||||
Total lease operating expenses per Boe | 18.33 | 19.51 | 22.49 | |||||||||
General and administrative expenses (excluding non-cash unit-based compensation) | 17,616 | 14,508 | 25,335 | |||||||||
Net loss attributable to the partnership | $ | (103,786 | ) | $ | (890,878 | ) | $ | (58,825 | ) | |||
Basic net loss per unit | $ | (0.54 | ) | $ | (4.25 | ) | $ | (0.29 | ) | |||
Diluted net loss per unit | $ | (0.54 | ) | $ | (4.25 | ) | $ | (0.29 | ) | |||
Total production (MBoe) (d) | 4,848 | 5,106 | 5,051 | |||||||||
Oil (MBbl) | 2,589 | 2,795 | 2,890 | |||||||||
NGLs (MBbl) | 498 | 526 | 459 | |||||||||
Natural gas (MMcf) | 10,567 | 10,712 | 10,211 | |||||||||
Average daily production (Boe/d) | 53,275 | 55,500 | 56,122 | |||||||||
Sales volumes (MBoe) (e)(f)(g) | 4,927 | 5,151 | 4,999 | |||||||||
Average realized sales price (per Boe) (g) | $ | 21.40 | $ | 26.72 | $ | 32.52 | ||||||
Oil (per Bbl) (g) | 29.37 | 37.31 | 43.62 | |||||||||
NGLs (per Bbl) (g) | 10.81 | 13.03 | 16.54 | |||||||||
Natural gas (per Mcf) (g) | $ | 2.05 | $ | 2.32 | $ | 3.05 |
(a) | Includes district expenses, processing fees, and transportation expenses. | |||||
(b) | Includes ad valorem and severance taxes. | |||||
(c) | Excludes non-cash unit-based compensation expenses of $0.9 million for the three months ended March 31, 2016. | |||||
(d) | Natural gas is converted on the basis of six Mcf of gas per one Bbl of oil equivalent. This ratio reflects an energy content equivalency and not a price or revenue equivalency. Given commodity price disparities, the price for a Bbl of oil equivalent for natural gas is significantly less than the price for a Bbl of oil. | |||||
(e) | Oil sales were 2,668 MBbl, 2,841 MBbl and 2,837 MBbl for the three months ended March 31, 2016, December 31, 2015 and March 31, 2015, respectively. | |||||
(f) | Includes 90 MBoe of condensate purchased from third parties during the three months ended March 31, 2016. | |||||
(g) | Excludes the effect of commodity derivative settlements. |
Three Months Ended | ||||||||||||
March 31, | December 31, | March 31, | ||||||||||
Thousands of dollars, except as indicated | 2016 | 2015 | 2015 | |||||||||
Reconciliation of net loss to Adjusted EBITDA: | ||||||||||||
Net loss attributable to the partnership | $ | (103,786 | ) | $ | (890,878 | ) | $ | (58,825 | ) | |||
Gain on commodity derivative instruments | (37,923 | ) | (141,842 | ) | (137,192 | ) | ||||||
Commodity derivative instrument settlements (a) (b) | 135,360 | 144,083 | 126,357 | |||||||||
Depletion, depreciation and amortization expense | 83,723 | 123,312 | 109,824 | |||||||||
Impairment of oil and natural gas properties | 2,793 | 878,335 | 59,113 | |||||||||
Interest expense and other financing costs | 58,332 | 50,319 | 41,477 | |||||||||
(Gain) loss on sale of assets | (12,260 | ) | (1,542 | ) | 15 | |||||||
Income tax (benefit) expense | (95 | ) | 1,162 | 92 | ||||||||
Unit-based compensation expense (c) | 4,673 | 6,091 | 6,927 | |||||||||
Restructuring costs - unit-based compensation (c) | 638 | — | 814 | |||||||||
Adjusted EBITDA | $ | 131,455 | $ | 169,040 | $ | 148,602 | ||||||
Reconciliation of net cash flows from operating activities to Adjusted EBITDA: | ||||||||||||
Net cash provided by operating activities | $ | 126,809 | $ | 85,521 | $ | 141,149 | ||||||
(Decrease) increase in assets net of liabilities relating to operating activities | (44,142 | ) | 35,665 | (30,968 | ) | |||||||
Interest expense (d) | 48,846 | 48,364 | 38,729 | |||||||||
Income from equity affiliates, net | 90 | 94 | (325 | ) | ||||||||
Noncontrolling interest | 220 | (202 | ) | — | ||||||||
Income taxes | 44 | (413 | ) | 93 | ||||||||
(Loss) gain on marketable securities | (412 | ) | 11 | (76 | ) | |||||||
Adjusted EBITDA | $ | 131,455 | $ | 169,040 | $ | 148,602 |
(a) | Excludes premiums paid at contract inception related to those derivative contracts that settled during the applicable periods of: | $ | 2,086 | $ | 1,682 | $ | 1,645 | ||||||
(b) | Includes net cash settlements on derivative instruments for: | ||||||||||||
- Oil settlements received: | $ | 121,988 | $ | 123,492 | $ | 111,879 | |||||||
- Natural gas settlements received: | 13,372 | 20,592 | 14,478 | ||||||||||
(c) | Represents non-cash long-term unit-based incentive compensation expense. | ||||||||||||
(d) | Excludes amortization of debt issuance costs and amortization of senior note discount/premium. |
Year | ||||||||||||||||
2016 | 2017 | 2018 | 2019 | |||||||||||||
Oil Positions: | ||||||||||||||||
Fixed Price Swaps - NYMEX WTI | ||||||||||||||||
Volume (Bbl/d) | 17,404 | 14,519 | 1,493 | 1,000 | ||||||||||||
Average Price ($/Bbl) | $ | 82.92 | $ | 82.81 | $ | 64.02 | $ | 56.35 | ||||||||
Fixed Price Swaps - ICE Brent | ||||||||||||||||
Volume (Bbl/d) | 4,300 | 298 | — | — | ||||||||||||
Average Price ($/Bbl) | $ | 95.17 | $ | 97.50 | $ | — | $ | — | ||||||||
Collars - NYMEX WTI | ||||||||||||||||
Volume (Bbl/d) | 1,500 | — | — | — | ||||||||||||
Average Floor Price ($/Bbl) | $ | 80.00 | $ | — | $ | — | $ | — | ||||||||
Average Ceiling Price ($/Bbl) | $ | 102.00 | $ | — | $ | — | $ | — | ||||||||
Collars - ICE Brent | ||||||||||||||||
Volume (Bbl/d) | 500 | — | — | — | ||||||||||||
Average Floor Price ($/Bbl) | $ | 90.00 | $ | — | $ | — | $ | — | ||||||||
Average Ceiling Price ($/Bbl) | $ | 101.25 | $ | — | $ | — | $ | — | ||||||||
Puts - NYMEX WTI | ||||||||||||||||
Volume (Bbl/d) | 1,000 | — | — | — | ||||||||||||
Average Price ($/Bbl) | $ | 90.00 | $ | — | $ | — | $ | — | ||||||||
Total: | ||||||||||||||||
Volume (Bbl/d) | 24,704 | 14,817 | 1,493 | 1,000 | ||||||||||||
Average Price ($/Bbl) | $ | 85.31 | $ | 83.11 | $ | 64.02 | $ | 56.35 | ||||||||
Gas Positions: | ||||||||||||||||
Fixed Price Swaps - MichCon City-Gate | ||||||||||||||||
Volume (MMBtu/d) | 29,000 | 24,000 | 17,500 | 10,000 | ||||||||||||
Average Price ($/MMBtu) | $ | 3.91 | $ | 3.71 | $ | 3.10 | $ | 3.15 | ||||||||
Fixed Price Swaps - Henry Hub | ||||||||||||||||
Volume (MMBtu/d) | 42,050 | 21,016 | 2,870 | — | ||||||||||||
Average Price ($/MMBtu) | $ | 4.02 | $ | 4.29 | $ | 3.74 | $ | — | ||||||||
Collars - Henry Hub | ||||||||||||||||
Volume (MMBtu/d) | 630 | 595 | — | — | ||||||||||||
Average Floor Price ($/MMBtu) | $ | 4.00 | $ | 4.00 | $ | — | $ | — | ||||||||
Average Ceiling Price ($/MMBtu) | $ | 5.55 | $ | 6.15 | $ | — | $ | — | ||||||||
Puts - Henry Hub | ||||||||||||||||
Volume (MMBtu/d) | 11,350 | 10,445 | — | — | ||||||||||||
Average Price ($/MMBtu) | $ | 4.00 | $ | 4.00 | $ | — | $ | — | ||||||||
Deferred Premium ($/MMBtu) | $ | 0.66 | $ | 0.69 | $ | — | $ | — | ||||||||
Total: | ||||||||||||||||
Volume (MMBtu/d) | 83,030 | 56,056 | 20,370 | 10,000 | ||||||||||||
Average Price ($/MMBtu) | $ | 3.98 | $ | 3.98 | $ | 3.19 | $ | 3.15 |
Year | ||||||||
Thousands of dollars | 2016 | 2017 | ||||||
Oil | $ | 5,589 | $ | 734 | ||||
Natural gas | 715 | — |
March 31, | December 31, | |||||||
Thousands of dollars | 2016 | 2015 | ||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 81,691 | $ | 10,464 | ||||
Accounts and other receivables, net | 113,215 | 128,589 | ||||||
Derivative instruments | 388,829 | 439,627 | ||||||
Related party receivables | 1,518 | 2,274 | ||||||
Inventory | 1,345 | 926 | ||||||
Prepaid expenses | 3,470 | 6,447 | ||||||
Total current assets | 590,068 | 588,327 | ||||||
Equity investments | 6,657 | 6,567 | ||||||
Property, plant and equipment | ||||||||
Oil and natural gas properties | 7,855,082 | 7,898,117 | ||||||
Other property, plant and equipment | 194,876 | 188,795 | ||||||
8,049,958 | 8,086,912 | |||||||
Accumulated depletion and depreciation | (4,185,936 | ) | (4,154,030 | ) | ||||
Net property, plant and equipment | 3,864,022 | 3,932,882 | ||||||
Other long-term assets | ||||||||
Derivative instruments | 179,658 | 226,764 | ||||||
Other long-term assets | 74,981 | 80,847 | ||||||
Total assets | $ | 4,715,386 | $ | 4,835,387 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 42,169 | $ | 50,412 | ||||
Current portion of long-term debt | 172,000 | 154,000 | ||||||
Derivative instruments | 4,309 | 4,462 | ||||||
Distributions payable | 733 | 733 | ||||||
Current portion of asset retirement obligation | 1,679 | 2,341 | ||||||
Revenue and royalties payable | 33,476 | 35,462 | ||||||
Wages and salaries payable | 12,928 | 21,654 | ||||||
Accrued interest payable | 61,415 | 19,517 | ||||||
Production and property taxes payable | 20,178 | 24,292 | ||||||
Other current liabilities | 7,834 | 5,133 | ||||||
Total current liabilities | 356,721 | 318,006 | ||||||
Credit facility | 1,025,000 | 1,075,000 | ||||||
Senior notes, net | 1,754,840 | 1,752,194 | ||||||
Other long-term debt | 3,779 | 3,148 | ||||||
Total long-term debt | 2,783,619 | 2,830,342 | ||||||
Deferred income taxes | 3,704 | 3,844 | ||||||
Asset retirement obligation | 247,956 | 252,037 | ||||||
Derivative instruments | 752 | 255 | ||||||
Other long-term liabilities | 19,751 | 25,008 | ||||||
Total liabilities | 3,412,503 | 3,429,492 | ||||||
Equity | ||||||||
Series A preferred units, 8.0 million units issued and outstanding at March 31, 2016 and December 31, 2015 | 193,215 | 193,215 | ||||||
Series B preferred units, 49.6 million and 48.8 million units issued and outstanding at March 31, 2016 and December 31, 2015, respectively | 359,611 | 353,471 | ||||||
Common units, 213.7 million and 213.5 million units issued and outstanding at March 31, 2016 and December 31, 2015, respectively | 742,713 | 852,114 | ||||||
Accumulated other comprehensive income (loss) | 49 | (229 | ) | |||||
Total partners' equity | 1,295,588 | 1,398,571 | ||||||
Noncontrolling interest | 7,295 | 7,324 | ||||||
Total equity | 1,302,883 | 1,405,895 | ||||||
Total liabilities and equity | $ | 4,715,386 | $ | 4,835,387 |
Three Months Ended | ||||||||
March 31, | ||||||||
Thousands of dollars, except per unit amounts | 2016 | 2015 | ||||||
Revenues and other income items | ||||||||
Oil, natural gas and natural gas liquid sales | $ | 105,450 | $ | 162,623 | ||||
Gain on commodity derivative instruments, net | 37,923 | 137,192 | ||||||
Other revenue, net | 4,593 | 6,469 | ||||||
Total revenues and other income items | 147,966 | 306,284 | ||||||
Operating costs and expenses | ||||||||
Operating costs | 94,974 | 117,978 | ||||||
Depletion, depreciation and amortization | 83,723 | 109,824 | ||||||
Impairment of oil and natural gas properties | 2,793 | 59,113 | ||||||
General and administrative expenses | 21,414 | 32,262 | ||||||
Restructuring costs | 2,809 | 4,918 | ||||||
(Gain) loss on sale of assets | (12,260 | ) | 15 | |||||
Total operating costs and expenses | 193,453 | 324,110 | ||||||
Operating loss | (45,487 | ) | (17,826 | ) | ||||
Interest expense, net of capitalized interest | 55,989 | 39,665 | ||||||
Loss on interest rate swaps | 2,343 | 1,812 | ||||||
Other expense (income), net | 282 | (477 | ) | |||||
Total other expense | 58,614 | 41,000 | ||||||
Loss before taxes | (104,101 | ) | (58,826 | ) | ||||
Income tax (benefit) expense | (95 | ) | 92 | |||||
Net loss | (104,006 | ) | (58,918 | ) | ||||
Less: Net loss attributable to noncontrolling interest | (220 | ) | (93 | ) | ||||
Net loss attributable to the partnership | (103,786 | ) | (58,825 | ) | ||||
Less: Distributions to Series A preferred unitholders | 4,125 | 4,125 | ||||||
Less: Non-cash distributions to Series B preferred unitholders | 7,386 | — | ||||||
Less: Net loss attributable to participating units | — | (1,432 | ) | |||||
Net loss used to calculate basic and diluted net loss per unit | $ | (115,297 | ) | $ | (61,518 | ) | ||
Basic net loss per common unit | $ | (0.54 | ) | $ | (0.29 | ) | ||
Diluted net loss per common unit | $ | (0.54 | ) | $ | (0.29 | ) | ||
Weighted average number of units used to calculate basic and diluted net loss per unit (in thousands): | ||||||||
Basic | 213,661 | 210,931 | ||||||
Diluted | 213,661 | 210,931 |
Three Months Ended March 31, | ||||||||
Thousands of dollars, except per unit amounts | 2016 | 2015 | ||||||
Net loss | $ | (104,006 | ) | $ | (58,918 | ) | ||
Other comprehensive income, net of tax: | ||||||||
Change in fair value of available-for-sale securities (a) | 470 | 173 | ||||||
Total other comprehensive income | 470 | 173 | ||||||
Total comprehensive loss | (103,536 | ) | (58,745 | ) | ||||
Less: Comprehensive loss attributable to noncontrolling interest | (28 | ) | (23 | ) | ||||
Comprehensive loss attributable to the partnership | $ | (103,508 | ) | $ | (58,722 | ) |
Three Months Ended March 31, | ||||||||
Thousands of dollars | 2016 | 2015 | ||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (104,006 | ) | $ | (58,918 | ) | ||
Adjustments to reconcile cash flows from operating activities: | ||||||||
Depletion, depreciation and amortization | 83,723 | 109,824 | ||||||
Impairment of oil and natural gas properties | 2,793 | 59,113 | ||||||
Unit-based compensation expense | 5,311 | 7,741 | ||||||
Gain on derivative instruments | (35,580 | ) | (135,380 | ) | ||||
Derivative instrument settlement receipts | 133,828 | 124,904 | ||||||
Income from equity affiliates, net | (90 | ) | 325 | |||||
Deferred income taxes | (140 | ) | 168 | |||||
(Gain) loss on sale of assets | (12,260 | ) | 15 | |||||
Other | 8,182 | (41 | ) | |||||
Changes in assets and liabilities: | ||||||||
Accounts receivable and other assets | 12,109 | 30,043 | ||||||
Inventory | (419 | ) | (185 | ) | ||||
Net change in related party receivables and payables | 756 | 2,462 | ||||||
Accounts payable and other liabilities | 32,602 | 1,078 | ||||||
Net cash provided by operating activities | 126,809 | 141,149 | ||||||
Cash flows from investing activities | ||||||||
Property acquisitions | (3,942 | ) | (13,993 | ) | ||||
Capital expenditures | (26,965 | ) | (97,230 | ) | ||||
Proceeds from sale of assets | 11,796 | — | ||||||
Proceeds from sale of available-for-sale securities | 5,118 | — | ||||||
Purchases of available-for-sale securities | (5,416 | ) | — | |||||
Other | — | (853 | ) | |||||
Net cash used in investing activities | (19,409 | ) | (112,076 | ) | ||||
Cash flows from financing activities | ||||||||
Proceeds from issuance of common units, net | — | (63 | ) | |||||
Distributions to preferred unitholders | (4,126 | ) | (4,125 | ) | ||||
Distributions to common unitholders | — | (54,122 | ) | |||||
Proceeds from issuance of long-term debt, net | 37,000 | 193,600 | ||||||
Repayments of long-term debt | (69,000 | ) | (168,500 | ) | ||||
Principal payments on capital lease obligations | (19 | ) | — | |||||
Change in book overdraft | (25 | ) | 199 | |||||
Debt issuance costs | (3 | ) | — | |||||
Net cash used in financing activities | (36,173 | ) | (33,011 | ) | ||||
Increase (decrease) in cash | 71,227 | (3,938 | ) | |||||
Cash beginning of period | 10,464 | 12,628 | ||||||
Cash end of period | $ | 81,691 | $ | 8,690 |