El Paso Corp. (ticker: EP, exchange: New York Stock Exchange (.N))
News Release -
26-Feb-2009
El Paso Pipeline Partners Reports 2008 Results and Guidance for 2009HOUSTON, TX, Feb 26, 2009 (MARKET WIRE via COMTEX) -- El Paso Pipeline Partners, L.P. (NYSE: EPB) is reporting today
fourth quarter and full-year 2008 financial and operational results
for the partnership as well as its outlook for 2009.
Highlights:
-
Net income increased to $43.1 million from $19.0 million in the fourth
quarter of 2007
- Earnings of $0.37 per common unit in the fourth quarter 2008
- Increased cash distributions to $0.32 per common and subordinated
unit, a 6.7 percent increase from prior quarter
- WIC Medicine Bow expansion placed into service in October
- CIG High Plains Pipeline placed into service in November
"I am proud of the financial and operational success we've
accomplished during the first full year of our partnership," said Jim
Yardley, president and chief executive officer of El Paso Pipeline
Partners. "In 2008, we placed five pipeline projects in service,
announced two new expansions, and completed our first acquisition,
which increased interests in our existing pipeline assets. Most
importantly, we are managing this growth while preserving our
financial strength and managing liquidity as we look to the future."
A summary of financial results for the quarters and 12 months ended
December 31, 2008 and 2007 are as follows:
Financial Results Quarters Twelve Months
Ended Ended
December 31, December 31,
($ in millions, except per unit amounts) 2008 2007 2008 2007
------- ------- ------- -------
Operating revenues $ 38.1 $ 29.5 $ 141.1 $ 110.4
Operating expenses
Operation and maintenance 9.0 9.5 33.6 27.8
Depreciation and amortization 6.5 3.9 26.1 15.7
Taxes, other than income 1.2 1.0 4.3 3.8
------- ------- ------- -------
Operating income 21.4 15.1 77.1 63.1
Earnings from unconsolidated affiliates 29.6 4.7 58.8 4.7
Other income, net 0.6 3.3 1.5 7.4
------- ------- ------- -------
Earnings before interest expenses and taxes
(EBIT) 51.6 23.1 137.4 75.2
Interest and debt expense 8.5 4.1 22.9 9.6
------- ------- ------- -------
Net income $ 43.1 $ 19.0 $ 114.5 $ 65.6
======= ======= ======= =======
Net income per common unit $ 0.37 $ 0.13 $ 1.22 $ 0.13
Financial Results
For the quarter and 12 months ended December 31, 2008, El Paso
Pipeline Partners reported net income of $43.1 million and $114.5
million, respectively, compared with $19.0 million and $65.6 million,
respectively, for the same periods in 2007. EBIT for the quarter and
12 months ended December 31, 2008, were $51.6 million and $137.4
million, respectively, compared with $23.1 million and $75.2 million,
respectively, for the same 2007 period. The increase in net income
and EBIT for both periods is due primarily to increased earnings from
equity investments following the acquisition of additional interests
in Colorado Interstate Gas (CIG) and Southern Natural Gas (SNG), and
the completion of pipeline expansion projects, which offset higher
operating expenses.
The partnership began recording earnings from its equity investments
following the initial contribution of 10 percent interests in CIG and
SNG from El Paso Corporation in connection with its initial public
offering. Subsequently, the partnership acquired additional 30 percent
and 15 percent interests in CIG and SNG on September 30, 2008,
respectively, and accounts for these transactions prospectively from
the date of acquisition.
Operating income for the quarter and 12 months ended December 31,
2008 was $21.4 million and $77.1 million, respectively, compared with
$15.1 million and $63.1 million, respectively, for the same 2007
periods. Operating costs for the quarter increased as a result of
public company expenses, acquisition costs, and increased
transportation costs related to the acquisition of capacity on third
party pipelines to support the Piceance Lateral expansion.
Distributable cash flow for the year ended December 31, 2008 was
$146.2 million, with distribution coverage of 1.20 times.
Equity Investments
Following the acquisition of additional ownership interests in CIG
and SNG, El Paso Pipeline Partners now owns 40 percent and 25 percent
of each, respectively.
Equity earnings from CIG for the quarter and 12 months ended December
31, 2008, were $18.9 million and $29.0 million, respectively. For the
quarter and 12 months ended December 31, 2008, the partnership's share
of CIG's distributable cash flow was $17.4 million and $35.0 million,
respectively.
SNG generated equity earnings of $10.7 million and $29.8 million for
the quarter and 12 months ended December 31, 2008, respectively. El
Paso Pipeline Partners' share of SNG's distributable cash flow was
$8.8 million, and $32.9 million for the quarter, and 12 months ended
December 31, 2008, respectively.
Debt and Interest Expense
For the quarter and 12 months ended December 31, 2008, interest and
debt expense was $8.5 million and $22.9 million, respectively.
Interest and debt expense relates primarily to amounts borrowed under
the partnership's credit facility and the private placement debt
issued September 30, 2008, to finance acquisition of additional
ownership interests in CIG and SNG.
Liquidity
El Paso Pipeline Partners maintains a $750 million revolving credit
facility, which is underwritten by a diverse group of 25 financial
institutions. The facility, which has a November 2012 maturity date,
had available capacity of approximately $150 million as of December
31, 2008. The partnership will utilize this facility, cash
distributions from its unconsolidated affiliated pipelines, and a $20
million demand note receivable from El Paso Corporation to fund its
on-going growth capital expenditures. The partnership does not
expect a need to access the capital markets until after 2009.
Capital Projects
During the 12 months ended December 31, 2008, WIC invested $82.7
million, primarily for the Kanda Lateral, Piceance Lateral, and
Medicine Bow expansions. Maintenance capital expenditures for the
year ended December 31, 2008 were $1.3 million. The partnership was
not required to make any capital contributions to either CIG or SNG
during 2008. During the quarter, the WIC Medicine Bow expansion and
the CIG High Plains Pipeline were placed in service.
2009 Outlook
Building on a successful 2008, the partnership also announced future
outlook highlights. In 2009, the partnership expects to generate
approximately $180 million of distributable cash flow. This
represents an increase of more than 20 percent over 2008, due to
higher interests in its equity pipelines CIG and SNG, and recently
completed expansion projects.
The partnership expects to spend $64 million in expansion capital,
and $2 million in maintenance capital.
CIG and SNG are expected to spend total growth capital of
approximately $200 million for expansion projects in 2009, which will
be funded by amounts recovered from notes receivable under the cash
management program with El Paso, and by capital contributions from
their partners, including El Paso Pipeline Partners. The partnership
anticipates its share of such capital contributions to be
approximately $40 million in 2009.
Webcast Information
El Paso Pipeline Partners has scheduled a live webcast of a review of
its 2008 results, and guidance for 2009 on February 26, 2009,
beginning at 11:30 a.m. Eastern Time, 10:30 a.m. Central Time, which
may be accessed online through El Paso Pipeline Partners' Web site at
www.eppipelinepartners.com in the Investors section. During the
webcast, management will refer to slides that will be posted on the
Web site. The slides will be available one hour before the webcast
and can be accessed in the Investors section. A limited number of
telephone lines will also be available to participants by dialing
(888) 710-3574 (conference ID # 85268843) ten minutes prior to the
start of the webcast.
A replay of the webcast will be available online through the
partnership's Web site in the Investors section. A telephone audio
replay will be also available through March 5, 2009 by dialing (800)
642-1687 (conference ID # 85268843). If you have any questions
regarding this procedure, please contact Margie Fox at (713)
420-2903.
The partnership's financial statements, including its December 31,
2008, Form 10-K, will be available in the Investors section of the
partnership's Web site at www.eppipelinepartners.com. Copies of the
filed documents, including the partnership's Quarterly Reports on
Form 10-Q are also available, free of charge, by calling (877)
357-2766.
El Paso Pipeline Partners, L.P. is a Delaware limited partnership
formed by El Paso Corporation to own and operate natural gas
transportation pipelines and storage assets. El Paso Corporation owns
72 percent of the limited partner units, and the 2 percent general
partner interest. El Paso Pipeline Partners, L.P. owns Wyoming
Interstate Company, an interstate pipeline system serving the Rocky
Mountain region, and a 40 percent interest in Colorado Interstate Gas
Company which operates in the Rocky Mountain region, and a 25 percent
interest in Southern Natural Gas Company, which operates in the
southeastern region of the United States. For more information about
El Paso Pipeline Partners, visit www.eppipelinepartners.com.
Disclosure of Non-GAAP Financial Measures
The SEC's Regulation G applies to any public disclosure or release of
material information that includes a non-GAAP financial measure. In
the event of such a disclosure or release, Regulation G requires (i)
the presentation of the most directly comparable financial measure
calculated and presented in accordance with GAAP and (ii) a
reconciliation of the differences between the non-GAAP financial
measure presented and the most directly comparable financial measure
calculated and presented in accordance with GAAP. The required
presentations and reconciliations are attached.
El Paso Pipeline Partners uses the non-GAAP financial measure
"earnings before interest expense and income taxes" or "EBIT" to
assess the operating results and effectiveness of its businesses. The
partnership defines EBIT as net income (loss) adjusted for interest
and debt expense. The partnership excludes interest and debt expense
so that investors may evaluate the partnership's operating results
without regard to its financing methods or capital structure. El Paso
Pipeline Partner's business operations consist of both consolidated
businesses as well as investments in unconsolidated affiliates. As a
result, the partnership believes that EBIT, which includes the
results of both these consolidated and unconsolidated operations, is
useful to its investors because it allows them to evaluate more
effectively the performance of all of El Paso Pipeline Partner's
businesses and investments.
El Paso Pipeline Partners uses the non-GAAP financial measure
"Distributable Cash Flow" to measure its cash generation ability. The
partnership defines Distributable Cash Flow as Adjusted EBITDA less
cash interest expense, maintenance capital expenditures, and other
income and expenses, net, which primarily includes a non-cash
allowance for equity funds during construction ("AFUDC equity") and
other non-cash items. Adjusted EBITDA is defined as net income plus
depreciation and amortization expense, interest and debt expense, net
of interest income and the partnership's share of distributions
declared by CIG and SNG for the applicable period, less equity in
earnings of CIG and SNG. Distribution coverage is distributable cash
flow divided by cash distributions.
El Paso Pipeline Partners believes that the non-GAAP financial
measures described above are also useful to investors because these
measurements are used by many companies in the industry as a
measurement of operating and financial performance and are commonly
employed by financial analysts and others to evaluate the operating
and financial performance of the partnership and to compare the
operating and financial performance of the partnership with the
performance of other publicly traded partnerships within the
industry.
These non-GAAP financial measures may not be comparable to similarly
titled measurements used by other companies and should not be used as
a substitute for net income, earnings per unit, cash flow from
operating activities or other GAAP operating measurements.
Twelve Months Ended
Non-GAAP Reconciliation Schedule December 31,
($ millions) 2008 2007
---------- ----------
Net income $ 114.5 $ 65.6
Add: Interest and debt expense 22.9 9.6
---------- ----------
EBIT 137.4 75.2
Add: Depreciation and amortization 26.1 15.7
Distributions declared by CIG and SNG 67.9 -
Less: Equity earnings from CIG and SNG (58.8) (4.7)
---------- ----------
Adjusted EBITDA $ 172.6 $ 86.2
==========
Less: Cash interest expense, net (22.9)
Maintenance capital expenditures (1.3)
Other, net (2.2)
----------
Distributable cash flow $ 146.2
==========
Twelve Months Ending
Non-GAAP Reconciliation Schedule December 31, 2009
($ millions)
----------
Net income $ 164
Add: Interest and debt expense 34
----------
EBIT 198
Add: Depreciation and amortization 28
Distributions declared by CIG and SNG 98
Less: Equity earnings from CIG and SNG (105)
----------
Adjusted EBITDA 219
Less: Cash interest expense, net (34)
Maintenance capital expenditures (2)
Other, net (3)
----------
Distributable cash flow $ 180
==========
Cautionary Statement Regarding Forward-Looking Statements
This release includes forward-looking statements and projections,
made in reliance on the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. El Paso Pipeline Partners
has made every reasonable effort to ensure that the information and
assumptions on which these statements and projections are based are
current, reasonable, and complete. However, a variety of factors
could cause actual results to differ materially from the projections,
anticipated results or other expectations expressed in this release,
including, without limitation, the ability to obtain necessary
governmental approvals for proposed pipeline projects and to
successfully construct and operate such projects; operating hazards,
natural disasters, weather-related delays, casualty losses and other
matters beyond our control; the risks associated with recontracting
of transportation commitments; regulatory uncertainties associated
with pipeline rate cases; actions taken by third-party operators,
processors and transporters; conditions in geographic regions or
markets served by El Paso Pipeline Partners and its affiliates and
equity investees or where its operations and affiliates are located;
the effects of existing and future laws and governmental regulations;
competitive conditions in our industry; changes in the availability
and cost of capital; and other factors described in El Paso Pipeline
Partners' (and its affiliates') Securities and Exchange Commission
filings. While these statements and projections are made in good
faith, El Paso Pipeline Partners and its management cannot guarantee
that anticipated future results will be achieved. Reference must be
made to those filings for additional important factors that may
affect actual results. El Paso Pipeline Partners assumes no obligation
to publicly update or revise any forward-looking statements made
herein or any other forward-looking statements made, whether as a
result of new information, future events, or otherwise.
Contacts:
Investor-Media Relations
Bruce L. Connery
Vice President
(713) 420-5855
Media Relations
Bill Baerg
Manager
(713) 420-2906
SOURCE: El Paso Pipeline Partners
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El Paso Corp.
