EX-99.1 2 a5471868ex99_1.txt EXHIBIT 99.1 Exhibit 99.1 BreitBurn Energy Partners L.P. Reports Second Quarter 2007 Results in Line with Management Expectations LOS ANGELES--(BUSINESS WIRE)--Aug. 14, 2007--BreitBurn Energy Partners L.P. (the "Partnership") (NASDAQ:BBEP), an oil and gas master limited partnership ("MLP") that was formed from the contribution of certain oil and gas properties from the Partnership's predecessor, BreitBurn Energy Company L.P. ("BreitBurn Energy"), today announced results for its second quarter 2007 and filed with the Securities and Exchange Commission its Quarterly Report on Form 10-Q. Summary of Second Quarter 2007 Results Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") totaled $12.2 million. (See "Non-GAAP Financial Measures" and the associated tables for a discussion of management's use of Adjusted EBITDA in this release.) Including unrealized losses on derivative instruments of $8.4 million, net loss for the second quarter totaled $1.1 million, or 4 cents per diluted limited partnership unit. Hal Washburn, Co-CEO of BreitBurn, said, "Our results for the quarter were in line with management expectations and as a result we are reaffirming the guidance for 2007 that we released on May 29. We are pleased that the two acquisitions we completed in May provided results that led to management's recommendation to the BreitBurn Board of Directors to increase cash distributions. " Randy Breitenbach, Co-CEO of BreitBurn said, "We continue to be well positioned to pursue acquisitions that best fit our business model and which are capable of supporting additional increases in our cash distributions." Financial and Operating Results: The Partnership completed two acquisitions in May of 2007 for approximately $200 million. These acquisitions included certain oil properties and related assets along the Sunniland Trend in south Florida ("the Calumet acquisition") and the majority interest in a partnership that owns the East Coyote and Sawtelle Fields in the Los Angeles Basin in California ("the California acquisition"). Results reported reflect closing dates for the Calumet acquisition and the California acquisition of May 24th and May 25th, respectively. See our 10-Q filing for more details on these acquisitions. Production During the second quarter, average daily production increased 24% from the first quarter of 2007 to 5,889 boe per day (boe/d). Aggregate production during the second quarter totaled 536,000 boe. Production growth was principally driven by the Calumet and California acquisitions completed in the middle of the second quarter as well as from higher Wyoming production resulting from successful optimization and drilling projects. Revenues and Realized Prices Excluding the effect of derivatives, our oil, natural gas and natural gas liquid sales were $32.4 million, reflecting the closing of the Calumet and California acquisitions. Specifically, oil sales during the second quarter included 110,000 barrels sold from inventory purchased in the Calumet acquisition. Realized prices during the second quarter were $54.40 per boe. Including the effects of realized gains on derivative instruments, realized prices were $55.80 per boe. Lease Operating Expenses Lease operating expenses for the second quarter totaled $10.7 million, or $19.98 per boe, and are 10 cents per boe higher than the first quarter and in line with management expectations. For the first quarter, approximately $80,000, or 18 cents per boe, was reclassified from lease operating expenses to operating costs to conform to the lease operating expense presentation required as a result of our Calumet acquisition. Depletion, Depreciation and Amortization (DD&A) DD&A expense for the second quarter totaled $4.5 million, or $8.42 per boe compared with $3.1 million, or $7.13 per boe, for the first quarter of 2007, reflecting the two acquisitions. General and Administrative Expenses (G&A) G&A expenses for the second quarter totaled $6.6 million, which included $3.9 million of incentive compensation expenses, and were in line with management expectations. During the first quarter of 2007, G&A expenses totaled $7.5 million, which included $3.5 million of incentive compensation expenses. Crude Oil Derivative Instruments The Partnership has entered into various derivative instruments to manage exposure to volatility in the market price of crude oil. The Partnership intends to use options (including collars) and fixed price swaps for managing risk relating to commodity prices. A detailed list of the Partnership's contractual positions is included in our Form 10-Q. 2007 Guidance 2007 Guidance ---------------------- Total Net Production (Mboe) 2,277 - 2,477 Average Daily Production (BOE) (Jun - Dec) 7,240 - 8,175 Average Price of Hedged Volumes $67.10 Price Differential % 18% - 20% Operating Expenses ($000's) $45,250 - $47,750 G&A ($000's) $14,000 - $15,500 (excluding management incentive plans) G&A - management incentive plans (see footnote 1) Cash Interest Expense ($000's) $1,250 Capital Expenditures ($000's) $20,700 - $22,700 (1) The Partnership's management incentive plan is tied to unit price and other metrics. Excluding the impact of any appreciation over the 2006 year-end unit price, management incentive plan expense is estimated to be $3.5 million. The Partnership's unit price at December 31, 2006 and June 30, 2007 was $24.10 and $34.10 per unit, respectively. Non-GAAP Financial Measures This press release, the financial tables and other supplemental information, including the reconciliations of certain non-generally accepted accounting principles ("non-GAAP") measures to their nearest comparable generally accepted accounting principles ("GAAP") measures, may be used periodically by management when discussing the Partnership's financial results with investors and analysts and they are also available on the Partnership's website under the Investor Relations tab. Among the non-GAAP financial measures used are "Adjusted EBITDA." This non-GAAP financial measure should not be considered as an alternative to GAAP measures, such as net income, operating income or any other GAAP measure of liquidity or financial performance. Adjusted EBITDA is presented as management believes it provides additional information and metrics relative to the performance of the Partnership's business, such as the cash distributions we expect to pay to our unitholders, as well as our ability to meet our debt covenant compliance tests. Management believes that these financial measures indicate to investors whether or not cash flow is being generated at a level that can sustain or support an increase in our quarterly distribution rates. Adjusted EBITDA may not be comparable to a similarly titled measure of other publicly traded partnerships or limited liability companies because all companies may not calculate Adjusted EBITDA in the same manner. The following table presents a reconciliation of the Partnership's consolidated net income to Adjusted EBITDA: Quarter Quarter Six Ended Ended Months June 30, March 31, Ended June 30, Thousands of dollars 2007 2007 2007 ----------------------------------------- -------- --------- --------- Reconciliation of consolidated net income to Adjusted EBITDA: Net income $(1,068) $ (4,756) $ (5,824) Unrealized loss on derivative instruments 8,373 9,696 18,069 Depreciation expense 4,511 3,087 7,598 Interest and other financing costs 603 498 1,101 Income tax provision (215) (97) (312) ----------------------------------------- -------- --------- --------- Adjusted EBITDA $12,204 $ 8,428 $ 20,632 ========================================= ======== ========= ========= Quarter Quarter Six Ended Ended Months June 30, March 31, Ended June 30, Thousands of dollars 2007 2007 2007 ----------------------------------------- -------- --------- --------- Reconciliation of net cash from operating activities to Adjusted EBITDA: Net cash from operating activities $13,568 $ 13,421 $ 26,989 Add: Increase(decrease) in assets net of liabilities relating to operating activities (6,731) (15,133) (21,864) Unrealized loss on derivative instruments 8,373 9,696 18,069 Cash interest expense 651 143 794 Equity in earnings from affiliates, net (12) (82) (94) Stock based compensation, net of payments (4,072) 183 (3,889) Other 427 200 627 ----------------------------------------- -------- --------- --------- Adjusted EBITDA $12,204 $ 8,428 $ 20,632 ========================================= ======== ========= ========= Cash Distribution Today, the Partnership paid a cash distribution of approximately $12.4 million, or $0.4225 per common unit, to its general partner and common unitholders of record as of the close of business on August 7, 2007. Conference Call As announced on August 6, 2007, BreitBurn Energy Partners L.P. will host an investor conference call to discuss the Partnership's results today at 5 p.m. (Eastern). Investors may access the conference call over the Internet via the Investor Relations tab of the Partnership's website (www.breitburn.com), or via telephone by dialing 877-704-5379 (international callers dial +1 913-312-1293) a few minutes prior to register. Those listening via the Internet should go to the site 15 minutes early to register, download and install any necessary audio software. In addition, a replay of the call will be available through Tuesday, August 21, by dialing 888-203-1112 (international callers dial +1 719-457-0820) and entering replay PIN 4144015, or by going to the Investor Relations tab of the Partnership's website (www.breitburn.com). BreitBurn Energy Partners L.P. will take live questions from securities analysts and institutional portfolio managers; the complete call is open to all other interested parties on a listen-only basis. About BreitBurn Energy Partners L.P. BreitBurn Energy Partners L.P. is an independent oil and gas MLP, formed by a subsidiary of Provident Energy Trust, focused on the acquisition, exploitation and development of oil and gas properties. The Partnership's assets consist primarily of producing and non-producing crude oil reserves located in the Los Angeles Basin in California, the Wind River and Big Horn Basins in central Wyoming, the Permian Basin in West Texas and the Sunniland Trend in south Florida. Additional information is available at www.breitburn.com. Cautionary Statement Relevant to Forward - Looking Information for the Purpose of "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995 This press release contains forward-looking statements relating to the Partnership's operations that are based on management's current expectations, estimates and projections about its operations. Words such as "anticipates," "expects," "intends," "plans," "targets," "projects," "believes," "seeks," "schedules," "estimated," and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. Among the factors contained in these forward-looking statements are uncertainties as to the actual amount and timing of the Partnership's transition costs from a private entity to a publicly held MLP. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, the Partnership undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Among the important factors that could cause actual results to differ materially from those in the forward-looking statements are crude oil and natural gas prices; the competitiveness of alternate energy sources or product substitutes; technological developments; potential disruption or interruption of the Partnership's net production due to accidents or severe weather; the effects of changes in accounting rules under generally accepted accounting principles promulgated by rule-setting bodies; and the factors set forth under the heading "Risk Factors" in our Annual Report on Form 10-K, Quarterly Report on Form 10-Q for the quarters ended March 31, 2007 and June 30, 2007, and other filings with the Securities and Exchange Commission. Unpredictable or unknown factors not discussed herein also could have material adverse effects on forward-looking statements. BBEP-IR BreitBurn Energy Partners L.P. and Subsidiaries Unaudited Consolidated Statements of Operations Successor Predecessor Successor Predecessor ------------ ------------- ------------ ------------- Three Months Three Months Six Months Six Months Ended June Ended June Ended June Ended June 30, 30, 30, 30, Thousands of dollars, except per unit amounts 2007 2006 2007 2006 ---------------- ------------ ------------- ------------ ------------- Revenues and other income items: Oil, natural gas and natural gas liquid sales $ 32,413 $ 37,848 $ 53,802 $ 69,429 Losses on derivative instruments, net (7,551) (13,725) (14,219) (19,657) Other revenue, net 237 268 478 536 ------------ ------------- ------------ ------------- Total revenues and other income items 25,099 24,391 40,061 50,308 Operating costs and expenses: Operating costs 14,604 10,883 23,296 22,212 Depletion, depreciation and amortization 4,511 3,527 7,598 7,007 General and administrative expenses 6,633 7,863 14,136 12,187 ------------ ------------- ------------ ------------- Total operating costs and expenses 25,748 22,273 45,030 41,406 ------------ ------------- ------------ ------------- Operating income (loss) (649) 2,118 (4,969) 8,902 ------------ ------------- ------------ ------------- Interest and other financing costs, net 603 965 1,101 1,696 Other expenses, net 21 47 56 96 ------------ ------------- ------------ ------------- Income (loss) before taxes and minority interest (1,273) 1,106 (6,126) 7,110 ------------ ------------- ------------ ------------- Income tax expense (benefit) (215) - (312) - Minority interests 10 (853) 10 (1,258) ------------ ------------- ------------ ------------- Net income (loss) before change in accounting principle (1,068) 1,959 (5,824) 8,368 ------------ ------------- ------------ ------------- Cumulative effect of change in accounting principle - - - 577 ------------ ------------- ------------ ------------- Net income (loss) $ (1,068) $ 1,959 $ (5,824) $ 8,945 ============= ============= General Partner's interest in net (loss) (16) (111) ------------ ------------ Net loss available to common unitholders $ (1,052) $ (5,713) ============ ============ Basic net income (loss) per unit $ (0.04) $ 0.01 $ (0.24) $ 0.05 ============ ============= ============ ============= Diluted net income (loss) per unit $ (0.04) $ 0.01 $ (0.24) $ 0.05 ============ ============= ============ ============= Weighted average number of units used to calculate: Basic net income per unit 24,816,419 179,795,294 23,396,088 179,795,294 ============ ============= ============ ============= Diluted net income per unit 24,816,419 179,795,294 23,396,088 179,795,294 ============ ============= ============ ============= BreitBurn Energy Partners L.P. and Subsidiaries Unaudited Consolidated Balance Sheets Successor Successor --------- ------------ June 30, December 31, Thousands of dollars 2007 2006 ----------------------------------------------- --------- ------------ ASSETS Current assets: Cash and cash equivalents $ 1,041 $ 93 Accounts receivable, net 19,554 10,356 Non-hedging derivative instruments - 3,998 Related party receivables 2,301 6,209 Inventory 7,672 - Prepaid expenses 2,342 215 Intangibles - current portion 1,126 - Other current assets 160 85 --------- ------------ Total current assets 34,195 20,956 Investments 235 142 Property, plant and equipment Oil and gas properties 436,143 203,911 Non-oil and gas assets 1,243 569 --------- ------------ 437,386 204,480 Accumulated depletion and depreciation (25,727) (18,610) --------- ------------ Net property, plant and equipment 411,659 185,870 Other long-term assets Intangibles 2,144 - Other long-term assets 226 276 --------- ------------ Total assets $448,460 $ 207,244 ========= ============ LIABILITIES AND PARTNERS' EQUITY Current liabilities: Accounts payable $ 8,091 $ 3,308 Book overdraft 1,850 2,036 Non-hedging derivative instruments 5,157 - Related party payables 7,996 5,913 Accrued liabilities and other current liabilities 5,763 2,201 --------- ------------ Total current liabilities 28,857 13,458 Long-term debt (note 8) 13,500 1,500 Long-term related party payables 1,911 467 Deferred income taxes 3,763 4,303 Asset retirement obligation 15,353 10,253 Non-hedging derivative instruments 8,969 55 Other long-term liability 440 - --------- ------------ Total liabilities 72,793 30,036 Minority interest 497 - Commitments and contingencies Partners' equity 375,170 177,208 --------- ------------ Total liabilities and partners' equity $448,460 $ 207,244 ========= ============ BreitBurn Energy Partners L.P. and Subsidiaries Unaudited Consolidated Statement of Cash Flows Successor Predecessor -------------- -------------- Six Months Six Months Ended June 30, Ended June 30, Thousands of dollars 2007 2006 ---------------------------------------- -------------- -------------- Cash flows from operating activities Net income (loss) $ (5,824) $ 8,945 Adjustments to reconcile to cash flow from operating activities: Depletion, depreciation and amortization 7,598 7,007 Deferred stock based compensation 7,566 6,152 Stock based compensation paid (3,677) (3,343) Equity in earnings of affiliates, net of dividends (94) (21) Deferred income tax (540) - Minority interests 10 (1,258) Cumulative effect of change in accounting principle - (577) Other 86 302 Changes in net assets and liablities: Increase in accounts receivable and other assets (4,876) (2,232) Decrease in inventory 2,862 - Due to (from) related parties 2,342 - Increase in accounts payable and other liabilities 21,536 17,305 -------------- -------------- Net cash provided by operating activities 26,989 32,280 -------------- -------------- Cash flows from investing activities Capital expenditures (11,250) (26,477) Property acquisitions (230,989) - Proceeds from sale of assets, net - 1,752 Payments of acquisition transaction costs - (79) -------------- -------------- Net cash used by investing activities (242,239) (24,804) -------------- -------------- Cash flows from financing activities Issuance of common units 222,000 - Repayments of initial distributions by predecessor members 581 - Distributions (18,197) - Proceeds from the issuance of long- term debt 76,500 55,000 Repayments of long-term debt (64,500) (46,000) Book overdraft (186) 2,156 Distributions paid to the predecessor members - (20,659) Cash contributed by minority interest - 1,199 Payment of offering costs - (1,331) -------------- -------------- Net cash provided (used) by financing activities 216,198 (9,635) -------------- -------------- Increase (decrease) in cash 948 (2,159) Cash beginning of period 93 2,740 -------------- -------------- Cash end of period $ 1,041 $ 581 ============== ============== CONTACT: BreitBurn Energy Partners L.P. James G. Jackson, 213-225-5900 ext. 273 Executive Vice President and Chief Financial Officer