EX-99.1 2 ex991q22015pressrelease.htm EXHIBIT 99.1 Ex. 99.1 Q2 2015 PRESS RELEASE


 NEWS RELEASE

CONE MIDSTREAM REPORTS SECOND QUARTER RESULTS
CANONSBURG, PA (August 5, 2015) — CONE Midstream Partners LP (NYSE:CNNX) ("CONE Midstream" or the "Partnership") today reported financial and operational results for the three months ending June 30, 2015.(1) 
Second Quarter Results
Highlights of second quarter 2015 results attributable to the Partnership include:
•
Net income of $14.9 million
•
Average daily throughput volumes of 568 billion Btu per day (BBtu/d)
•
EBITDA(2) of $17.0 million
•
Distributable cash flow (DCF)(2) of $14.8 million
Management Comment
"Continued volume growth, solid unit operating expenses, and disciplined cost control produced strong second quarter financial and operational results for CONE Midstream," said John T. Lewis, Chairman of the Board and Chief Executive Officer of CONE Midstream GP LLC (the "General Partner"). "We are pleased with our better-than projected results for the quarter, and anticipate continued volume growth from both new well connections and the impact of debottlenecking projects scheduled to come on line in the third and fourth quarters of 2015.
"Although the first year projections in the IPO prospectus did not include any increase in the quarterly cash distributions, in light of our actual performance to date and the outlook for the balance of this year and 2016, the Board felt it was appropriate to make an initial distribution increase earlier than originally anticipated. The announced distribution of $0.22 per unit represents a quarterly increase of 3.5%. This is our first increase, it’s earlier than projected, and it should not be viewed as indicative of the rate of future distribution increases. We remain committed to what we have communicated previously, which is to grow cash distributions at annual rate of between 15% and 20%."
Quarterly Distribution
As previously announced, the Board of Directors of the General Partner declared a quarterly cash distribution of $0.22 per unit with respect to the second quarter of 2015. The distribution payment will be made on August 14, 2015 to unitholders of record at the close of business on August 5, 2015. The distribution, which equates to an annual rate of $0.88 per unit, represents an increase of 3.5% over the prior quarter.

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Capital Investment and Resources
CONE Midstream's allocated second quarter 2015 share of investment in expansion projects was $29.5 million. Total expansion capital investment at the three development companies in which CONE Midstream holds controlling interests was $72.8 million, with individual development company totals as follows:
•
Anchor Systems (Development Company 1): Expansion investments totaled approximately$36.9 million and were primarily expended for continued gathering system extensions to nine well pads in Greene and Washington Counties (PA), additional compression at McQuay and Majorsville Stations, along with pipeline expansion and an additional tap to relieve bottlenecks in the North Nineveh field.
•
Growth Systems (Development Company 2): Expansion investments totaled approximately$7.0 million and primarily were expended on land and permitting associated with future development in Harrison and Lewis Counties (WV).
•
Additional Systems (Development Company 3): Expansion investments totaled approximately$28.8 million for the continued construction of Shirley Station, construction of our Sherwood South gathering pipeline that connects the Oxford field in southern Doddridge County to MarkWest Sherwood, and additional pipeline construction in the Moundsville field and Allegheny County Airport project areas.
CONE Midstream's respective share of maintenance capital expenditures for the three development companies for the second quarter 2015 was $2.1 million. Maintenance capital expenditures in the aggregate for the development companies in which CONE Midstream holds controlling interests totaled $3.6 million.
As of June 30, 2015, CONE Midstream had outstanding borrowings of $23.0 million under its $250 million revolving credit facility.
Second Quarter Financial and Operational Results Conference Call
A conference call and webcast, during which management will discuss second quarter 2015 financial and operational results, is scheduled for August 5, 2015 at 11:00 a.m. Eastern Time. Reference material for the call will be available on the "Events" page of our website, www.conemidstream.com, shortly before the start of the call. Prepared remarks by members of management will be followed by a question and answer period. Interested parties may listen via webcast by using the link posted on the "Events" page of our website or at www.webcaster4.com/Webcast/Page/998/9436. Participants who would like to ask questions may join the conference by phone at 888-349-0097 (international 412-902-0126) five to ten minutes prior to the scheduled start time (reference the CONE Midstream call). An on-demand replay of the webcast will be also be available at www.webcaster4.com/Webcast/Page/998/9436 shortly after the conclusion of the conference. A telephonic replay will be available through August 13, 2015 by dialing 877-344-7529 (international: 412-317-0088) and using the conference playback number 10068783.
_______________
(1)  
Unless otherwise indicated, the reporting measures included in this news release reflect the unallocated total activity of the three development companies jointly owned by the Partnership and CONE Gathering LLC (“CONE Gathering”).  Because the Partnership owns a controlling interest in each of the three development companies, it fully consolidates their financial results. The Partnership's current financial interests in the development companies are: 75% in the Anchor Systems, 5% in the Growth Systems, and 5% in the Additional Systems. CONE Gathering is a midstream joint venture formed by CONSOL Energy Inc. and Noble Energy, Inc. and owns non-controlling interests in the Partnership’s development companies. 

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(2) 
EBITDA and DCF are not Generally Accepted Accounting Principles (“GAAP”) measures. Definitions and reconciliations of these non-GAAP measures to GAAP reporting measures appear in the financial tables which follow.

Contact:
Stephen R. Milbourne
CONE Investor Relations
Phone:
724-485-4408
Email:
smilbourne@conemidstream.com

* * * * *
CONE Midstream Partners is a master limited partnership formed by CONSOL Energy Inc. (NYSE: CNX) and Noble Energy, Inc. (NYSE: NBL), referred to as our Sponsors, to own, operate, develop and acquire natural gas gathering and other midstream energy assets to service our Sponsors' production in the Marcellus Shale in Pennsylvania and West Virginia. Our assets include natural gas gathering pipelines and compression and dehydration facilities, as well as condensate gathering, collection, separation and stabilization facilities. More information is available on our website www.conemidstream.com.
* * * * *
This press release is intended to be a qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b). Brokers and nominees should treat one hundred percent (100.0%) of CONE Midstream’s distributions to non-U.S. investors as being attributed to income that is effectively connected with a United States trade or business. Accordingly, CONE Midstream's distributions to non-U.S. investors are subject to federal income tax withholding at the highest applicable effective tax rate. Nominees, and not CONE Midstream, are treated as withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.
* * * * *
This press release contains forward-looking statements within the meaning of the federal securities laws. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words "believe," "expect," "anticipate," "intend," "estimate" and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements. Forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict, and there can be no assurance that actual outcomes and results will not differ materially from those expected by our management. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include, among others: the effects of changes in market prices of natural gas, NGLs and crude oil on our Sponsors’ drilling and development plan on our dedicated acreage and the volumes of natural gas and condensate that are produced on our dedicated acreage; changes in our Sponsors’ drilling and development plan in the Marcellus Shale; our Sponsors’ ability to meet their drilling and development plan in the Marcellus Shale; the demand for natural gas and condensate gathering services; changes in general economic conditions; competitive conditions in our industry; actions taken by third-party operators, gatherers, processors and transporters; our ability to successfully implement our business plan; and our ability to complete internal growth projects on time and on budget. You should not place undue reliance on our forward-looking statements. Although forward-looking statements reflect our good faith beliefs at the time they are made, forward-looking statements involve known and unknown risks, uncertainties and other factors, including the factors described under “Risk Factors” and “Forward-Looking Statements” in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.

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CONE MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per unit data)
(unaudited)
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2015
 
2014
 
2015
 
2014
Revenue
 
 
 
 
 
 
 
Gathering Revenue — Related Party
$
47,717

 
$
27,811

 
$
90,885

 
$
51,917

Total Revenue
47,717

 
27,811

 
90,885

 
51,917

Expenses
 
 
 
 
 
 
 
Operating Expense — Third Party
8,940

 
6,082

 
17,470

 
11,428

Operating Expense — Related Party
6,940

 
5,893

 
13,984

 
12,523

General and Administrative Expense — Third Party
1,223

 
8

 
2,565

 
829

General and Administrative Expense — Related Party
1,995

 
1,117

 
3,972

 
1,358

Depreciation Expense
3,667

 
1,679

 
6,661

 
3,297

Interest Expense
47

 
—

 
112

 
—

Total Expense
22,812

 
14,779

 
44,764

 
29,435

Net Income
24,905

 
13,032

 
46,121

 
22,482

Less: Net Income Attributable to Noncontrolling Interest
9,993

 
—

 
16,997

 
—

Net Income Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP
$
14,912

 
$
13,032

 
$
29,124

 
$
22,482

 
 
 
 
 
 
 
 
Calculation of Limited Partner Interest in Net Income:
 
 
 
 
 
 
 
Net Income Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP (1)
$
14,912

 
$
13,032

 
$
29,124

 
$
22,482

Less: General Partner Interest in Net Income
298

 
N/A
 
582

 
N/A
Limited Partner Interest in Net Income
$
14,614

 
N/A
 
$
28,542

 
N/A
 
 
 
 
 
 
 
 
Net Income per Limited Partner Unit - Basic
$
0.25

 
N/A
 
$
0.49

 
N/A
Net Income per Limited Partner Unit - Diluted
$
0.25

 
N/A
 
$
0.49

 
N/A
 
 
 
 
 
 
 
 
Limited Partner Units Outstanding - Basic
58,326

 
N/A
 
58,326

 
N/A
Limited Partner Unit Outstanding - Diluted
58,364

 
N/A
 
58,365

 
N/A
 
 
 
 
 
 
 
 
Cash Distributions Declared per Unit (2)
$
0.2200

 
N/A
 
$
0.4325

 
N/A
(1)
Reflective of general and limited partner interest in net income since closing of the IPO.
(2)
Represents the cash distributions declared related to the period presented.


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CONE MIDSTREAM PARTNERS LP
RECONCILIATION OF NET INCOME TO EBITDA AND DISTRIBUTABLE CASH FLOW
(in thousands)

Definition of Non-GAAP Financial Measures
EBITDA
We define EBITDA as net income (loss) before income taxes, net interest expense, depreciation and amortization. EBITDA is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:
•
our operating performance as compared to those of other companies in the midstream energy industry, without regard to financing methods, historical cost basis or capital structure;
•
the ability of our assets to generate sufficient cash flow to make distributions to our partners;
•
our ability to incur and service debt and fund capital expenditures; and
•
the viability of acquisitions and other capital expenditure projects and the returns on investment of various investment opportunities.
We believe that the presentation of EBITDA provides information useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to EBITDA are net income and net cash provided by operating activities. EBITDA should not be considered an alternative to net income, net cash provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA excludes some, but not all, items that affect net income or net cash, and these measures may vary from those of other companies. As a result, EBITDA as presented below may not be comparable to similarly titled measures of other companies.
Distributable Cash Flow
We define distributable cash flow as EBITDA less net cash interest paid and maintenance capital expenditures. Distributable cash flow does not reflect changes in working capital balances.
Distributable cash flow is used as a supplemental financial measure by management and by external users of our financial statements, such as investors, industry analysts, lenders and ratings agencies, to assess:
•
the ability of our assets to generate cash sufficient to support our indebtedness and make future cash distributions to our unitholders; and
•
the attractiveness of capital projects and acquisitions and the overall rates of return on alternative investment opportunities.
We believe that the presentation of distributable cash flow in this report provides information useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to distributable cash flow are net income and net cash provided by operating activities. Distributable cash flow should not be considered an alternative to net income, net cash provided by (used in) operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Distributable cash flow excludes some, but not all, items that affect net income or net cash, and these measures may vary from those of other companies. As a result, our distributable cash flow may not be comparable to similarly titled measures of other companies.


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The following tables present a reconciliation of EBITDA to net income and net cash provided by operating activities, the most directly comparable GAAP financial measures, on a historical basis, for each of the periods indicated.
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
(unaudited)
 
2015
 
2014
 
2015
 
2014
Net Income
 
$
24,905

 
$
13,032

 
$
46,121

 
$
22,482

Add:
 
 
 
 
 
 
 
 
Interest Expense
 
47

 
—

 
112

 
—

Depreciation Expense
 
3,667

 
1,679

 
6,661

 
3,297

EBITDA
 
28,619

 
14,711

 
52,894

 
25,779

Less: Net Income Attributable to Noncontrolling Interest
 
9,993

 
—

 
16,997

 
—

Less: Interest Expense Attributable to Noncontrolling Interest
 
14

 
—

 
33

 
—

Less: Depreciation Expense Attributable to Noncontrolling Interest
 
1,659

 
—

 
2,825

 
—

EBITDA Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP
 
$
16,953

 
$
14,711

 
$
33,039

 
$
25,779

Less: Ongoing Maintenance Capital Expenditures, Net of Expected Reimbursements
 
2,148

 
1,399

 
4,139

 
2,562

Distributable Cash Flow
 
$
14,805

 
$
13,312

 
$
28,900

 
$
23,217

 
 
 
 
 
 
 
 
 
Net Cash Provided by Operating Activities
 
$
50,254

 
$
17,897

 
$
60,460

 
$
38,632

Adjustments:
 
 
 
 
 
 
 
 
Less: Interest Expense
 
47

 
—

 
112

 
—

Less: Other, Including Changes in Working Capital
 
21,588

 
3,186

 
7,454

 
12,853

EBITDA
 
28,619

 
14,711

 
52,894

 
25,779

Less: Net Income Attributable to Noncontrolling Interest
 
9,993

 
—

 
16,997

 
—

Less: Interest Expense Attributable to Noncontrolling Interest
 
14

 
—

 
33

 
—

Less: Depreciation Expense Attributable to Noncontrolling Interest
 
1,659

 
—

 
2,825

 
—

EBITDA Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP
 
$
16,953

 
$
14,711

 
$
33,039

 
$
25,779

Less: Ongoing Maintenance Capital Expenditures, Net of Expected Reimbursements
 
2,148

 
1,399

 
4,139

 
2,562

Distributable Cash Flow
 
$
14,805

 
$
13,312

 
$
28,900

 
$
23,217

 
 
QTD
 
QTD
 
QTD
 
 
December 31, 2014
 
March 31, 2015
 
June 30, 2015
(unaudited)
 
 
 
 
 
 
Distributable Cash Flow
 
$
14,844

 
$
14,114

 
$
14,805

Distributions Declared (1)
 
$
12,784

 
$
12,647

 
$
13,094

Distribution Coverage Ratio - Declared
 
1.16
x
 
1.12
x
 
1.13
x
 
 
 
 
 
 
 
Distributable Cash Flow
 
$
14,844

 
$
14,114

 
$
14,805

Distributions Paid
 
$
—

 
$
12,784

 
$
12,647

Distribution Coverage Ratio - Paid
 
—

 
1.10
x
 
1.17
x
(1) The Partnership's cash distribution for the period ended December 31, 2014 was $0.2148 per unit, which was prorated with respect to the period commencing on September 30, 2014 (the closing date of the Partnership's initial public offering) through December 31, 2014.  The prorated amount corresponds to the Partnership's minimum quarterly distribution of $0.2125 per unit, or $0.85 per unit on an annualized basis.  

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CONE MIDSTREAM PARTNERS LP
CONSOLIDATED BALANCE SHEETS
(in thousands, except number of units)
 
(unaudited)
 
 
 
June 30,
2015
 
December 31,
2014
ASSETS
 
 
 
Current Assets:
 
 
 
Cash
$
161

 
$
3,252

Receivables — Related Party
26,998

 
58,749

Inventory
16,632

 
—

Prepaid Expenses
757

 
1,280

Other Current Assets
164

 
164

Total Current Assets
44,712

 
63,445

Property and Equipment:
 
 
 
Property and Equipment
756,489

 
639,735

Less — Accumulated Depreciation
23,448

 
16,989

Property and Equipment — Net
733,041

 
622,746

Other Non-Current Assets
531

 
613

TOTAL ASSETS
$
778,284

 
$
686,804

LIABILITIES AND EQUITY
 
 
 
Current Liabilities:
 
 
 
Accounts Payable
$
63,955

 
$
70,635

Accounts Payable — Related Party
2,230

 
2,106

Total Current Liabilities
66,185

 
72,741

Other Liabilities:
 
 
 
Revolving Credit Facility
23,000

 
31,300

Total Liabilities
89,185

 
104,041

Partners' Capital:
 
 
 
Common Units (29,163,121 Units Issued and Outstanding at June 30, 2015 and December 31, 2014)
391,614

 
389,612

Subordinated Units (29,163,121 Units Issued and Outstanding at June 30, 2015 and December 31, 2014)
(90,475
)
 
(92,285
)
General Partner Interest
(3,699
)
 
(3,772
)
Partners' Capital Attributable to CONE Midstream Partners LP
297,440

 
293,555

Noncontrolling Interest
391,659

 
289,208

Total Partners' Capital
689,099

 
582,763

TOTAL LIABILITIES AND PARTNERS' CAPITAL
$
778,284

 
$
686,804



Page 7



CONE MIDSTREAM PARTNERS LP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
 
Three Months Ended 
 June 30, 2015
 
2015
 
2014
Cash Flows from Operating Activities:
 
 
 
Net Income
$
24,905

 
$
13,032

Adjustments to Reconcile Net Income to Net Cash Provided By Operating Activities:
 
 
 
Depreciation and Amortization
3,708

 
1,679

Unit Based Compensation
96

 
—

Changes in Operating Assets:
 
 
 
Receivables — Related Party
6,330

 
5,718

Inventory
2,240

 
—

Prepaid Expenses
310

 
—

Changes in Operating Liabilities:
 
 
 
Accounts Payable
12,051

 
(414
)
Accounts Payable — Related Party
614

 
(2,118
)
Net Cash Provided by Operating Activities
50,254

 
17,897

Cash Flows from Investing Activities:
 
 
 
Capital Expenditures
(76,363
)
 
(70,936
)
Net Cash Used in Investing Activities
(76,363
)
 
(70,936
)
Cash Flows from Financing Activities:
 
 
 
Partners' Investments
22,957

 
59,000

Distributions to Unitholders
(12,647
)
 
—

Payment of Revolver
15,500

 
—

Net Cash Provided By Financing Activities
25,810

 
59,000

Net (Decrease) Increase in Cash
(299
)
 
5,961

Cash at Beginning of Period
460

 
3,407

Cash at End of Period
$
161

 
$
9,368



















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Development Companies Jointly Owned by CONE Midstream Partners LP and CONE Gathering LLC
Operating Income Summary, Selected Operating Statistics and Capital Investment
(in thousands)
(unaudited)

 
Three Months Ended June 30, 2015
 
 Development Company
 
Anchor
 
Growth
 
Additional
 
 TOTAL
Income Summary
 
 
 
 
 
 
 
Revenue
$
35,351

 
$
3,913

 
$
8,453

 
$
47,717

Expenses
15,827

 
2,980

 
4,005

 
22,812

Net Income
19,524

 
933

 
4,448

 
24,905

Less: Net Income Attributable to Noncontrolling Interest
4,881

 
886

 
4,226

 
9,993

Net Income Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP
$
14,643

 
$
47

 
$
222

 
$
14,912

 
 
 
 
 
 
 
 
Operating Statistics - Gathered Volumes
 
 
 
 
 
 
 
Dry Gas (BBtu/d)
395

 
92

 
8

 
495

Wet Gas (BBtu/d)
334

 
11

 
163

 
508

Condensate (MMcfe/d)
9

 
—

 
14

 
23

Total Gathered Volumes
738

 
103

 
185

 
1,026

 
 
 
 
 
 
 
 
Total Volumes Net to CONE Midstream Partners LP
554

 
5

 
9

 
568

 
 
 
 
 
 
 
 
Capital Investment
 
 
 
 
 
 
 
Maintenance Capital
$
2,813

 
$
319

 
$
448

 
$
3,580

Expansion Capital
36,941

 
7,014

 
28,828

 
72,783

Total Capital Investment
$
39,754

 
$
7,333

 
$
29,276

 
$
76,363

 
 
 
 
 
 
 
 
Capital Investment Net to CONE Midstream Partners LP
 
 
 
 
 
 
 
Maintenance Capital
$
2,110

 
$
16

 
$
22

 
$
2,148

Expansion Capital
27,706

 
351

 
1,441

 
29,498

Total Capital Investment Net to CONE Midstream Partners LP
$
29,816

 
$
367

 
$
1,463

 
$
31,646






Page 9


Development Companies Jointly Owned by CONE Midstream Partners LP and CONE Gathering LLC
Operating Income Summary, Selected Operating Statistics and Capital Investment
(in thousands)
(unaudited)

 
Three Months Ended June 30, 2014
 
 Development Company
 
Anchor
 
Growth
 
Additional
 
 TOTAL (1)
Income Summary
 
 
 
 
 
 
 
Revenue
$
25,212

 
$
2,211

 
$
—

 
$
27,423

Expenses
12,867

 
1,531

 
171

 
14,569

Net Income
12,345

 
680

 
(171
)
 
12,854

Less: Net Income Attributable to Noncontrolling Interest
—

 
—

 
—

 
—

Net Income Attributable to General and Limited Partner Ownership Interest in CONE Midstream Partners LP
$
12,345

 
$
680

 
$
(171
)
 
$
12,854

 
 
 
 
 
 
 
 
Operating Statistics - Gathered Volumes
 
 
 
 
 
 
 
Dry Gas (BBtu/d)
318

 
55

 
—

 
373

Wet Gas (BBtu/d)
214

 
—

 
—

 
214

Condensate (MMcfe/d)
—

 
—

 
—

 
—

Total Gathered Volumes
532

 
55

 
—

 
587

 
 
 
 
 
 
 
 
Total Volumes Net to CONE Midstream Partners LP
399

 
3

 
—

 
402

 
 
 
 
 
 
 
 
Capital Investment
 
 
 
 
 
 
 
Maintenance Capital
$
1,857

 
$
121

 
$
—

 
$
1,978

Expansion Capital
37,209

 
2,737

 
25,965


65,911

Total Capital Investment
$
39,066

 
$
2,858

 
$
25,965


$
67,889

 
 
 
 
 
 
 
 
Capital Investment Net to CONE Midstream Partners LP
 
 
 
 
 
 
 
Maintenance Capital
$
1,393

 
$
6

 
$
—

 
$
1,399

Expansion Capital
27,907

 
137

 
1,298

 
29,342

Total Capital Investment Net to CONE Midstream Partners LP
$
29,300

 
$
143

 
$
1,298

 
$
30,741


(1)
Total consists of the 100% activity of the three Development Companies (Anchor, Growth and Additional) which CONE Midstream Partners LP owns a controlling interest of 75%, 5% and 5%, respectively. Other systems that were part of the Predecessor, CONE Gathering LLC, that have been included in the Historical Financial statements as the Predecessor are excluded from the table above, as these systems are not included in the consolidated operations of the Partnership.



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