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|Sanchez Production Partners Reports Third Quarter 2015 Results; Announces Unit Repurchase Program and 2016 Forecast|
"Our primary focus during the third quarter 2015 was the execution and closing of the Western Catarina Midstream Transaction, our second transaction with
"Having closed the Western Catarina Midstream Transaction last month, we were pleased, earlier this week, to declare a distribution on our common units, initially set at an annualized rate of
"We also believe the Western Catarina Midstream Transaction provides a solid foundation for next year's business activity. Our base case forecast currently shows our Adjusted EBITDA ranging from
"Our base case 2016 forecast assumes divestiture of our Mid-Continent operated assets this year with no additional acquisition or divestiture activity. However, with recent disruptions in the energy markets and line of sight to over
"While we are excited about the Partnership's progress and prospects, we recognize that current conditions in the energy markets have created an environment in which energy companies, generally, and master limited partnerships, in particular, have fallen out of favor in the investment community. As a result, we believe we currently trade at an implied yield that does not yet fully reflect the Partnership's value proposition. We view this as a near-term opportunity, and so are pleased to announce a plan to implement a unit repurchase program of up to
OPERATING AND FINANCIAL RESULTS
The Partnership produced 367 MBOE during the third quarter 2015 for average net production of 3,991 BOE/D during the quarter. Net oil and liquids production for the third quarter 2015, which accounted for approximately 33% of the Partnership's total production during the quarter, was 1,308 BBL/D. For the first nine months of 2015, the Partnership produced 1,093 MBOE for average net production of 4,002 BOE/D, a decrease of 4% when compared to the same nine month period of 2014. Net oil and liquids production for the first nine months of 2015 was 1,190 BBL/D, an increase of 13% when compared to the same nine month period of 2014.
The Partnership's total revenue for the third quarter 2015 includes revenue from sales of
Operating costs, which include lease operating expenses, production taxes and general and administrative expenses, net of certain non-cash items and out-of-period expenses totaling approximately
The Partnership reported third quarter 2015 Adjusted EBITDA of
The Partnership's capital spending during the third quarter 2015 totaled approximately
CREDIT FACILITY AND HEDGING UPDATE
For the period
The Partnership's issued and outstanding common units as of
UNIT REPURCHASE PROGRAM
The Partnership announced that the board of directors of its general partner has approved a plan pursuant to which the Partnership may, from time to time, repurchase common units of SPP in open market or private transactions for an aggregate amount not to exceed
Based on hedges in place and forward prices as of
The Partnership's base case forecast assumes divestiture of its Oklahoma and
CONFERENCE CALL INFORMATION
The Partnership will host a conference call at
To participate in the conference call, analysts, investors, media and the public in the U.S. may dial (888) 849-8924 shortly before
A replay will be available beginning approximately one hour after the end of the call by dialing (866) 388-5359 or (203) 369-0414 (international). A live audio webcast of the conference call and the earnings release will be available on the Partnership's website (www.sanchezpp.com) under the Investor Relations page. The call will also be recorded and archived on the site.
ABOUT THE PARTNERSHIP
Additional information about SPP can be found in the Partnership's documents on file with the
The Partnership anticipates that it will file its third quarter 2015 Form 10-Q with the
We present Adjusted EBITDA in addition to our reported net income (loss) in accordance with GAAP in this news release. We also provide our earnings forecast in terms of Adjusted EBITDA and Distributable Cash Flow.
Adjusted EBITDA is a non-GAAP financial measure that is defined as net income (loss) adjusted by interest (income) expense, net; income tax expense (benefit); depreciation, depletion and amortization; asset impairments; accretion expense; (gain) loss on sale of assets; (gain) loss from equity investment; unit-based compensation programs; and (gain) loss on mark-to-market activities. Distributable Cash Flow is defined as Adjusted EBITDA less cash interest expense; distributions on preferred units; and maintenance capital.
Adjusted EBITDA and Distributable Cash Flow are used as quantitative standards by our management and by external users of our financial statements such as investors, research analysts and others to assess the financial performance of our assets without regard to financing methods, capital structure or historical cost basis; the ability of our assets to generate cash sufficient to pay interest costs and support our indebtedness; and our operating performance and return on capital as compared to those of other companies in our industry, without regard to financing or capital structure. Adjusted EBITDA and Distributable Cash Flow are not intended to represent cash flows for the period, nor are they presented as a substitute for net income, operating income, cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP.
We are unable to reconcile our forecast range of Adjusted EBITDA or Distributable Cash Flow to GAAP net income, operating income or net cash flow provided by operating activities because we do not predict the future impact of adjustments to net income (loss), such as (gains) losses from mark-to-market activities and equity investments or asset impairments due to the difficulty of doing so, and we are unable to address the probable significance of the unavailable reconciliation, in significant part due to ranges in our forecast impacted by changes in oil and natural gas prices and reserves which affect certain reconciliation items.
This press release contains, and the officers and representatives of the Partnership and its general partner may from time to time make, statements that are considered forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control, which may include statements about our: business strategy; acquisition strategy; financial strategy; anticipated effects of transactions; timing or ability to make, maintain and grow distributions; the ability of our customers to meet their drilling and development plans on a timely basis or at all and perform under gathering and processing agreements; future operating results, including our forecast of Adjusted EBITDA and Distributable Cash Flow; future capital expenditures; and plans, objectives, expectations, forecasts, outlook and intentions. All of these types of statements, other than statements of historical fact included in this press release, are forward-looking statements. In some cases, forward-looking statements can be identified by terminology such as "may," "will," "could," "should," "expect," "plan," "project," "intend," "anticipate," "believe," "estimate," "predict," "potential," "pursue," "target," "continue," the negative of such terms or other comparable terminology.
The forward-looking statements contained in this press release are largely based on our expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although we believe such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, management's assumptions about future events may prove to be inaccurate. Management cautions all readers that the forward-looking statements contained in this press release are not guarantees of future performance, and we cannot assure any reader that such statements will be realized or the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to factors listed in the "Risk Factors" section in our
(Operating and Financial Highlights Follow)