Press

Sanchez Midstream Partners Reports Second Quarter 2018 Financial Results


HOUSTON, Aug. 09, 2018 (GLOBE NEWSWIRE) -- Sanchez Midstream Partners LP (NYSE American: SNMP) (“SNMP” or the “Partnership”) today reported second quarter 2018 results.  Highlights from the report include:

  • The Partnership reported a net loss of $1.8 million for the second quarter 2018, which compares to net income of $0.6 million for the second quarter 2017;

  • Adjusted EBITDA (a non-GAAP financial measure) was $17.6 million for the second quarter 2018, which is approximately 15 percent higher when compared to the Partnership's second quarter 2017 Adjusted EBITDA of $15.3 million;

  • A second quarter 2018 cash distribution on common units of $0.4508 per unit ($1.8032per unit annualized) has been declared by the Partnership, which is payable Aug. 31, 2018; and

  • The Partnership's second quarter 2018 cash available for distribution (a non-GAAP financial measure) was approximately $7.7 million, resulting in a distribution coverage ratio of approximately 1.1 times.

MANAGEMENT COMMENTARY
“The Partnership continues to execute its 2018 operating and financial plan,” said Gerry Willinger, Chief Executive Officer of the general partner of SNMP. “Despite lower than expected throughput volumes on our midstream assets, our second quarter 2018 Adjusted EBITDA increased by approximately 15 percent when compared to Adjusted EBITDA for the second quarter 2017.  As a result, our cash available for distribution in the second quarter 2018 was approximately $7.7 million, which covered our distribution on common units by approximately 1.1 times.

“During the quarter, we also announced the execution of a series of agreements with Targa Resources Corp. (“Targa”) (NYSE: TRGP) to form an expanded 50/50 midstream joint venture, operated by Targa, in South Texas.  The “Carnero JV” enhances our midstream strategy, secures and expands our third-party volumes, and is expected to provide additional stable, fee-based cash flow to the Partnership.  The structure of the transaction greatly simplifies our previous joint ventures with Targa, facilitates greater operating efficiencies, and provides a solid platform to capture benefits that are expected to increase over time as the joint venture services the needs of Sanchez Energy Corporation (NYSE: SN) (“Sanchez Energy”) and other producers and marketers in South Texas.  Importantly, with additional volumes expected through our expanded system in 2018 and the years to come, we have preemptively put ourselves in a position to continue to grow the Partnership while being disciplined with capital.  Accordingly, we see the Carnero JV as a key step in positioning the Partnership for continued growth in South Texas.” 

FINANCIAL RESULTS
The Partnership's revenue totaled $17.0 million during the second quarter 2018.  Included in total revenue for the second quarter 2018 is $14.8 million from the midstream activities of Western Catarina Midstream and the Seco Pipeline and approximately $5.9 million from production activities.  The balance of the Partnership's second quarter 2018 total revenue came from a loss on hedge settlements ($0.5 million) and a loss on mark-to-market activities ($3.2 million), which is a non-cash item.

Earnings from the Carnero JV totaled $3.1 million during the second quarter 2018.  The Partnership's cash distributions from the Carnero JV related to second quarter 2018 operating results total approximately $5.5 million.

On a GAAP basis, the Partnership recorded a net loss of $1.8 million for the second quarter 2018, which compares to net income of $1.4 million for the first quarter 2018 and net income of $0.6 million in the second quarter 2017.

The Partnership's Adjusted EBITDA (a non-GAAP financial measure) for the second quarter 2018 was $17.6 million, which compares to Adjusted EBITDA of approximately $18.6 million for the first quarter 2018 and Adjusted EBITDA of $15.3 million for the second quarter 2017.  The Partnership's calculation of Adjusted EBITDA is discussed in further detail below.

LIQUIDITY UPDATE
As of June 30, 2018, the Partnership had $184 million in debt outstanding under its credit facility, which has a current borrowing base of $310 million and an elected commitment amount of $210 million.  The midstream portion of the borrowing base is $275 million, which results in the Partnership's midstream collateral covering the $210 million elected commitment amount by approximately 1.3 times. 
The Partnership had approximately $2.5 million in cash and cash equivalents as of June 30, 2018. 

HEDGE UPDATE
For the full year 2018, the Partnership has hedged approximately 497,328 million British thermal units (“MMBtu”) of its natural gas production at an effective NYMEX fixed price of approximately $3.00 per MMBtu and approximately 259.6 thousand barrels of its crude oil production at an effective NYMEX fixed price of approximately $59.73 per barrel.  The Partnership has additional hedges covering a portion of its production in 2019 and 2020.  Additional information about SNMP's hedges can be found in the Partnership's documents on file with the U.S. Securities and Exchange Commission (www.sec.gov) and in the “Investor Presentation” available on the Partnership's website (www.sanchezmidstream.com).

DISTRIBUTIONS
On Aug. 8, 2018, the Partnership declared a second quarter 2018 cash distribution on its common units of $0.4508 per unit ($1.8032 per unit annualized).  The Partnership also declared a second quarter 2018 distribution to the holders of its Class B preferred units equal to 310,009 Class B Preferred PIK Units and a cash distribution of $0.22580 per Class B preferred unit. 

Based on second quarter 2018 Adjusted EBITDA of $17.6 million, cash interest expense of approximately $2.5 million, maintenance capital of $0.4 million, and $7.0 million in preferred unit distributions made in cash, the Partnership generated approximately $7.7 million in cash available for distribution (a non-GAAP financial measure) during the second quarter 2018, resulting in a distribution coverage ratio of approximately 1.1 times. 

CONFERENCE CALL INFORMATION
The Partnership will host a conference call at 10:00 a.m. Central Time (11:00 a.m. Eastern Time) on Thursday, Aug. 9, 2018 to discuss second quarter 2018 results.

To participate in the conference call, analysts, investors, media and the public in the U.S. may dial (844) 824-3837 shortly before 10:00 a.m. Central Time (11:00 a.m. Eastern Time).  The international phone number is (412) 317-5161.  Callers should request the “Sanchez Midstream Partners Second Quarter 2018 Conference Call” once reaching the operator.

A live audio webcast of the conference call and the earnings release will be available on the Partnership's website (www.sanchezmidstream.com) under the Investor Relations page.  A replay will be available approximately three hours after the call through Aug. 16, 2018, at 10:59 p.m. Central Time (11:59 p.m. Eastern Time). The replay may be accessed by dialing (844) 512-2921 (U.S.) or (412) 317-6671 (International), and referencing the replay passcode: 10122666.

ABOUT THE PARTNERSHIP
Sanchez Midstream Partners LP (NYSE American: SNMP) is a growth-oriented publicly-traded limited partnership focused on the acquisition, development, ownership and operation of midstream and other energy related assets in North America.  The Partnership has ownership stakes in oil and natural gas gathering systems, natural gas pipelines, and a natural gas processing facility, all located in the Western Eagle Ford in South Texas.

ADDITIONAL INFORMATION
Additional information about SNMP can be found in the Partnership's documents on file with the U.S. Securities and Exchange Commission (www.sec.gov) and in the “Investor Presentation” available on the Partnership's website (www.sanchezmidstream.com).

The Partnership will provide any unitholder with a hard copy of its annual report on Form 10-K, which includes the Partnership's complete audited financial statements, free of charge at any time upon request.  Requests can be directed in writing to SNMP Investor Relations, 1000 Main Street, Suite 3000, Houston, TX 77002 or by email to IR@sanchezmidstream.com.


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