Delaware | 001-32678 | 03-0567133 |
(State or other jurisdiction of incorporation) | (Commission File No.) | (IRS Employer Identification No.) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
(Millions) | (Millions) | ||||||||||||
Net (loss) income attributable to partners | $ | (20 | ) | $ | 89 | $ | 169 | $ | 132 | ||||
Net cash provided by operating activities | $ | 324 | $ | 217 | $ | 684 | $ | 521 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||
(Millions) | (Millions) | ||||||||||||
Gathering and Processing segment: | |||||||||||||
Segment net income attributable to partners | $ | 29 | $ | 134 | $ | 322 | $ | 310 | |||||
Logistics and Marketing segment: | |||||||||||||
Segment net income attributable to partners | $ | 99 | $ | 103 | $ | 278 | $ | 273 |
(d) | Exhibits. |
Exhibit No. | Description | |
DCP MIDSTREAM, LP | |||
By: | DCP MIDSTREAM GP, LP, | ||
its General Partner | |||
By: | DCP MIDSTREAM GP, LLC, | ||
its General Partner | |||
By: | /s/ Sean P. O'Brien | ||
Name: | Sean P. O'Brien | ||
Title: | Group Vice President and Chief Financial Officer |
• | Reported net (loss) income attributable to partners of $(20) million and $169 million for the three and nine months ended September 30, 2017, or $(0.41) and $0.33 per basic and diluted limited partner unit, respectively. |
• | Reported adjusted EBITDA of $276 million and $737 million for the three and nine months ended September 30, 2017, respectively. |
• | Generated distributable cash flow of $187 million and $467 million for the three and nine months ended September 30, 2017, respectively. |
• | Distribution coverage ratio was 1.21 times for the three months ended September 30, 2017. |
• | Achieved record NGL throughput of 193 thousand barrels per day (MBpd) on the Sand Hills NGL pipeline, net to DCP's two-thirds interest, during the three months ended September 30, 2017, up more than 15 percent from the same period in 2016. |
• | Achieved record wellhead volumes of 863 million cubic feet per day (MMcf/d) in the DJ Basin during the three months ended September 30, 2017, up 10 percent from the same period in 2016. |
Three Months Ended | Nine Months Ended | |||||||||||
September 30, | September 30, | |||||||||||
2017 | 2016 (2) | 2017 | 2016 (2) | |||||||||
(Unaudited) | ||||||||||||
(Millions, except per unit amounts) | ||||||||||||
Net (loss) income attributable to partners | $ | (20 | ) | $ | 89 | $ | 169 | $ | 132 | |||
Net (loss) income per limited partner unit - basic and diluted | $ | (0.41 | ) | $ | 0.78 | $ | 0.33 | $ | 1.26 | |||
Adjusted EBITDA(1) | $ | 276 | $ | 244 | $ | 737 | $ | 777 | ||||
Distributable cash flow(1) | $ | 187 | $ | ** | $ | 467 | $ | ** |
(1) | This press release includes the following financial measures not presented in accordance with U.S. generally accepted accounting principles, or GAAP: adjusted EBITDA, distributable cash flow, adjusted segment EBITDA, forecasted adjusted EBITDA and forecasted distributable cash flow. Each such non-GAAP financial measure is defined below under “Non-GAAP Financial Information”, and each is reconciled to its most directly comparable GAAP financial measure under “Reconciliation of Non-GAAP Financial Measures” in schedules at the end of this press release. |
(2) | Includes the DCP Midstream Business, which DCP acquired in January 2017 (the "Transaction"), retrospectively adjusted. Transfers of net assets between entities under common control are accounted for as if the transactions had occurred at the beginning of the period, and prior years are retrospectively adjusted to furnish comparative information similar to the pooling method. |
• | The 2017 Sand Hills natural gas liquids (NGL) pipeline capacity expansion to 365 MBpd to meet growth in the Permian Basin is underway, with two pumps placed into service during the third quarter increasing capacity to 285 MBpd. The full 85 MBpd of capacity expansion is expected to be in service late fourth quarter of 2017 or early first quarter of 2018, for an estimated cost of $70 million, net to DCP's two-thirds interest. |
• | The 2018 Sand Hills expansion announced in May 2017 is progressing and is expected to further increase capacity by 85 MBpd to approximately 450 MBpd via partial looping of the pipeline and the addition of new pump stations. This expansion is expected to be in service in the third quarter of 2018, for an estimated cost of $300 million, net to DCP's two-thirds interest. |
• | DCP signed a letter of intent with respect to the joint development of the Gulf Coast Express pipeline project (GCX project) with Kinder Morgan Texas Pipeline LLC and Targa Resources Corp., which would provide an outlet for increased natural gas production from the Permian Basin to growing markets along the Texas Gulf Coast. The capacity of the GCX project is expected to be 1.92 Bcf/d. The mostly 42-inch pipeline would traverse approximately 500 miles and be in service in the second half of 2019, pending final shipper commitments and a final investment decision by all three entities. Under the terms of the letter of intent, DCP would own a 25 percent equity interest in the project and would commit significant volumes. |
• | DCP has started construction of its 200 MMcf/d Mewbourn 3 plant and additional compression and gathering infrastructure. The plant and gathering infrastructure are expected to be in service in the fourth quarter of 2018 for an estimated cost of $395 million. |
• | DCP is moving forward with the 200 MMcf/d O'Connor 2 plant, its eleventh plant in the DJ Basin. The O'Connor 2 plant and associated gathering infrastructure are expected to be in service in mid-2019 for an estimated cost of $350 million to $400 million. |
• | DCP holds an option to invest in the Cheyenne Connector Pipeline, a joint development project with Tallgrass Energy Partners, LP and Western Gas Partners, LP. The Cheyenne Connector Pipeline's initial capacity is expected to be at least 600 MMcf/d and will transport natural gas approximately 70 miles from the DJ Basin area to the Rockies Express Pipeline's ("REX") Cheyenne Hub where it can then be delivered to numerous demand markets across the country on either REX or other interconnected pipelines. The pipeline is expected to be in service in the third quarter of 2019, pending final shipper commitments. |
• | financial performance of DCP's assets without regard to financing methods, capital structure or historical cost basis; |
• | DCP's operating performance and return on capital as compared to those of other companies in the midstream energy industry, without regard to financing methods or capital structure; |
• | viability and performance of acquisitions and capital expenditure projects and the overall rates of return on investment opportunities; |
• | performance of DCP's business excluding non-cash commodity derivative gains or losses; and |
• | in the case of Adjusted EBITDA, the ability of DCP's assets to generate cash sufficient to pay interest costs, support its indebtedness, make cash distributions to its unitholders and general partner, and pay maintenance capital expenditures. |
Three Months Ended | Nine Months Ended | |||||||||||||
September 30, | September 30, | |||||||||||||
2017 | 2016 (1) | 2017 | 2016 (1) | |||||||||||
(Millions, except per unit amounts) | ||||||||||||||
Sales of natural gas, NGLs and condensate | $ | 1,936 | $ | 1,646 | $ | 5,641 | $ | 4,431 | ||||||
Transportation, processing and other | 162 | 162 | 474 | 469 | ||||||||||
Trading and marketing (losses) gains, net | (43 | ) | 15 | 10 | 10 | |||||||||
Total operating revenues | 2,055 | 1,823 | 6,125 | 4,910 | ||||||||||
Purchases of natural gas and NGLs | (1,695 | ) | (1,437 | ) | (4,939 | ) | (3,866 | ) | ||||||
Operating and maintenance expense | (168 | ) | (161 | ) | (513 | ) | (506 | ) | ||||||
Depreciation and amortization expense | (94 | ) | (94 | ) | (282 | ) | (284 | ) | ||||||
General and administrative expense | (69 | ) | (64 | ) | (202 | ) | (187 | ) | ||||||
Asset impairments | (48 | ) | — | (48 | ) | — | ||||||||
Gain on sale of assets, net | — | 41 | 34 | 35 | ||||||||||
Restructuring costs | — | (2 | ) | — | (10 | ) | ||||||||
Other (expense) income | — | (14 | ) | (15 | ) | 68 | ||||||||
Total operating costs and expenses | (2,074 | ) | (1,731 | ) | (5,965 | ) | (4,750 | ) | ||||||
Operating (loss) income | (19 | ) | 92 | 160 | 160 | |||||||||
Interest expense, net | (73 | ) | (77 | ) | (219 | ) | (235 | ) | ||||||
Earnings from unconsolidated affiliates | 74 | 75 | 234 | 214 | ||||||||||
Income tax expense | (2 | ) | (1 | ) | (5 | ) | (6 | ) | ||||||
Net income attributable to noncontrolling interests | — | — | (1 | ) | (1 | ) | ||||||||
Net (loss) income attributable to partners | (20 | ) | 89 | 169 | 132 | |||||||||
Net loss attributable to predecessor operations | — | 31 | — | 105 | ||||||||||
General partner's interest in net income | (39 | ) | (31 | ) | (122 | ) | (93 | ) | ||||||
Net (loss) income allocable to limited partners | $ | (59 | ) | $ | 89 | $ | 47 | $ | 144 | |||||
Net (loss) income per limited partner unit — basic and diluted | $ | (0.41 | ) | $ | 0.78 | $ | 0.33 | $ | 1.26 | |||||
Weighted-average limited partner units outstanding — basic and diluted | 143.3 | 114.7 | 143.3 | 114.7 |
September 30, | December 31, | |||||
2017 | 2016 (1) | |||||
(Millions) | ||||||
Cash and cash equivalents | $ | 312 | $ | 1 | ||
Other current assets | 999 | 993 | ||||
Property, plant and equipment, net | 8,926 | 9,069 | ||||
Other long-term assets | 3,534 | 3,548 | ||||
Total assets | $ | 13,771 | $ | 13,611 | ||
Current liabilities | $ | 1,284 | $ | 1,123 | ||
Current portion of long-term debt | 500 | 500 | ||||
Long-term debt | 4,711 | 4,907 | ||||
Other long-term liabilities | 233 | 228 | ||||
Partners' equity | 7,016 | 6,821 | ||||
Noncontrolling interests | 27 | 32 | ||||
Total liabilities and equity | $ | 13,771 | $ | 13,611 |
(1) | Includes the DCP Midstream Business, which DCP acquired in January 2017, retrospectively adjusted. Transfers of net assets between entities under common control are accounted for as if the transactions had occurred at the beginning of the period, and prior years are retrospectively adjusted to furnish comparative information similar to the pooling method. |
Three Months Ended | Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2017 | 2016 (1) | 2017 | 2016 (1) | ||||||||||
(Millions) | |||||||||||||
Reconciliation of Non-GAAP Financial Measures: | |||||||||||||
Net (loss) income attributable to partners | $ | (20 | ) | $ | 89 | $ | 169 | $ | 132 | ||||
Interest expense | 73 | 77 | 219 | 235 | |||||||||
Depreciation, amortization and income tax expense, net of noncontrolling interests | 96 | 96 | 287 | 291 | |||||||||
Distributions from unconsolidated affiliates, net of earnings | 19 | 23 | 36 | 60 | |||||||||
Asset impairments | 48 | — | 48 | — | |||||||||
Other non-cash charges | 1 | 9 | 13 | 14 | |||||||||
Gain on sale of assets, net | — | (41 | ) | (34 | ) | (35 | ) | ||||||
Non-cash commodity derivative mark-to-market | 59 | (9 | ) | (1 | ) | 80 | |||||||
Adjusted EBITDA | 276 | $ | 244 | 737 | $ | 777 | |||||||
Interest expense | (73 | ) | (219 | ) | |||||||||
Maintenance capital expenditures, net of noncontrolling interest portion and reimbursable projects | (20 | ) | (64 | ) | |||||||||
Other, net | 4 | 13 | |||||||||||
Distributable cash flow | $ | 187 | ** | $ | 467 | ** | |||||||
Net cash provided by operating activities | $ | 324 | $ | 217 | $ | 684 | $ | 521 | |||||
Interest expense | 73 | 77 | 219 | 235 | |||||||||
Net changes in operating assets and liabilities | (175 | ) | (34 | ) | (153 | ) | (48 | ) | |||||
Non-cash commodity derivative mark-to-market | 59 | (9 | ) | (1 | ) | 80 | |||||||
Other, net | (5 | ) | (7 | ) | (12 | ) | (11 | ) | |||||
Adjusted EBITDA | 276 | $ | 244 | 737 | $ | 777 | |||||||
Interest expense | (73 | ) | (219 | ) | |||||||||
Maintenance capital expenditures, net of noncontrolling interest portion and reimbursable projects | (20 | ) | (64 | ) | |||||||||
Other, net | 4 | 13 | |||||||||||
Distributable cash flow | $ | 187 | ** | $ | 467 | ** |
(1) | Includes the DCP Midstream Business, which DCP acquired in January 2017, retrospectively adjusted. Transfers of net assets between entities under common control are accounted for as if the transactions had occurred at the beginning of the period, and prior years are retrospectively adjusted to furnish comparative information similar to the pooling method. |
Three Months Ended | Nine Months Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2017 | 2016 (1) | 2017 | 2016 (1) | ||||||||||
(Millions, except as indicated) | (Millions, except as indicated) | ||||||||||||
Gathering and Processing Segment: | |||||||||||||
Financial results: | |||||||||||||
Segment net income attributable to partners | $ | 29 | $ | 134 | $ | 322 | $ | 310 | |||||
Non-cash commodity derivative mark-to-market | 51 | 5 | 4 | 73 | |||||||||
Depreciation and amortization expense, net of noncontrolling interest | 85 | 85 | 256 | 258 | |||||||||
Asset impairments | 48 | — | 48 | — | |||||||||
Gain on sale of assets, net | — | (25 | ) | (34 | ) | (19 | ) | ||||||
Distributions from unconsolidated affiliates, net of earnings | 6 | 5 | 10 | 18 | |||||||||
Other charges | 1 | 13 | 4 | 13 | |||||||||
Adjusted segment EBITDA | $ | 220 | $ | 217 | $ | 610 | $ | 653 | |||||
Operating and financial data: | |||||||||||||
Natural gas wellhead (MMcf/d) | 4,460 | 5,005 | 4,508 | 5,230 | |||||||||
NGL gross production (MBpd) | 376 | 392 | 365 | 401 | |||||||||
Operating and maintenance expense | $ | 154 | $ | 146 | $ | 469 | $ | 458 | |||||
Logistics and Marketing Segment: | |||||||||||||
Financial results: | |||||||||||||
Segment net income attributable to partners | $ | 99 | $ | 103 | $ | 278 | $ | 273 | |||||
Non-cash commodity derivative mark-to-market | 8 | (14 | ) | (5 | ) | 7 | |||||||
Depreciation and amortization expense | 4 | 4 | 11 | 12 | |||||||||
Gain on sale of assets, net | — | (16 | ) | — | (16 | ) | |||||||
Distributions from unconsolidated affiliates, net of earnings | 13 | 18 | 26 | 42 | |||||||||
Other charges | — | — | 9 | — | |||||||||
Adjusted segment EBITDA | $ | 124 | $ | 95 | $ | 319 | $ | 318 | |||||
Operating and financial data: | |||||||||||||
NGL pipelines throughput (MBpd) | 462 | 434 | 447 | 421 | |||||||||
NGL fractionator throughput (Bbls/d) | 49 | 52 | 48 | 50 | |||||||||
Operating and maintenance expense | $ | 9 | $ | 13 | $ | 31 | $ | 33 |
(1) | Includes the DCP Midstream Business, which DCP acquired in January 2017, retrospectively adjusted. Transfers of net assets between entities under common control are accounted for as if the transactions had occurred at the beginning of the period, and prior years are retrospectively adjusted to furnish comparative information similar to the pooling method. |
Three Months Ended | Nine Months Ended | |||||||
September 30, | September 30, | |||||||
2017 | 2017 | |||||||
(Millions, except as indicated) | ||||||||
Reconciliation of Non-GAAP Financial Measures: | ||||||||
Distributable cash flow | $ | 187 | $ | 467 | ||||
Distributions declared ** | $ | 155 | $ | 424 | ||||
Distribution coverage ratio - declared | 1.21 | x | 1.10 | x | ||||
Distributable cash flow | $ | 187 | $ | 467 | ||||
Distributions declared without IDR giveback | $ | 155 | $ | 464 | ||||
Distribution coverage ratio - declared without IDR giveback | 1.21 | x | 1.01 | x | ||||
Distributable cash flow | $ | 187 | $ | 467 | ||||
Distributions paid *** | $ | 134 | $ | 390 | ||||
Distribution coverage ratio - paid | 1.40 | x | 1.20 | x |
Twelve Months Ended | |||||||||
December 31, 2017 | |||||||||
Low | High | ||||||||
Forecast | Forecast | ||||||||
(Millions) | |||||||||
Reconciliation of Non-GAAP Measures: | |||||||||
Forecasted net income attributable to partners | $ | 165 | $ | 324 | |||||
Distributions from unconsolidated affiliates, net of earnings | 75 | 85 | |||||||
Interest expense, net of interest income | 288 | 288 | |||||||
Income taxes | 7 | 7 | |||||||
Depreciation and amortization, net of noncontrolling interests | 398 | 398 | |||||||
Non-cash commodity derivative mark-to-market | 7 | 8 | |||||||
Forecasted adjusted EBITDA | 940 | 1,110 | |||||||
Interest expense, net of interest income | (288) | (288) | |||||||
Maintenance capital expenditures, net of reimbursable projects | (100) | (145) | |||||||
Income taxes and other | (7) | (7) | |||||||
Forecasted distributable cash flow | $ | 545 | $ | 670 |
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