CONE Midstream Reports Third Quarter Results

CANONSBURG, Pa., Oct. 30, 2014 /PRNewswire/ -- CONE Midstream Partners LP (NYSE: CNNX) ("CONE Midstream" or "the Partnership") today reported financial and operational results for the three months ending September 30, 2014.  Because the closing of the initial public offering of CNNX occurred on September 30, the net financial and operating results attributable to CONE Midstream during third quarter 2014 are for a one day period.  Since reporting measures for a single day results are insufficient to communicate a full understanding of the historical business activity of CONE Midstream's predecessor, unless otherwise indicated the reporting measures discussed in this news release reflect the unallocated total activity of CONE Gathering LLC, the midstream joint venture formed by CONSOL and Noble Energy that owns the Partnership's general partner and that is the predecessor to CONE Midstream.  Reporting beginning with fourth quarter 2014 will include net financial and operational measures attributable to CONE Midstream, excluding CONE Gathering's non-controlling interests.

Third Quarter Results

Highlights of third quarter 2014 results include:

• Net income of $19.3 million, up 87% compared to $10.3 million in third quarter 2013 (last year), and up 48% compared to $13.0 million in second quarter 2014 (last quarter).
• Average daily throughput volumes of 778 billion Btu per day (BBtu/d), up 88% compared to 413 BBtu/d last year, and up 28% compared to 608 BBtu/d last quarter.
• EBITDA⁽¹⁾ of $21.1 million, up 77% compared to $11.9 million last year, and up 44% compared to $14.7 million last quarter.
• Distributable cash flow (DCF)⁽¹⁾ of $19.5 million, up 76% compared to $11.1 million last year, and up 40% compared to $13.9 million last quarter.

Management Comment

"We are pleased with our operational and financial results for the quarter, which demonstrate the continued rapid growth of our business," said John T. Lewis, Chairman of the Board and Chief Executive Officer of CONE Midstream GP LLC, the general partner of the Partnership.  "Volume throughput, operating income, EBITDA and DCF for the third quarter exceeded our expectations.  The strong volume growth came primarily from 37 new well connections completed during the quarter."

Quarterly Distribution

The Board of Directors of CONE Midstream GP LLC will declare the first quarterly cash distribution for the Partnership following the conclusion of the fourth quarter 2014.  As stated in the final prospectus for CONE Midstream's  initial public offering, the Partnership will not make a cash distribution for the period from July 1, 2014 through September 29, 2014 (the day prior to the closing of the offering).  The amount of the cash distribution declared with respect to the fourth quarter 2014 will be adjusted to reflect the additional day (September 30, 2014) from the closing of the offering to the start of the fourth quarter on October 1, 2014.

Capital Investment and Resources

CONE Midstream's single day allocated third quarter 2014 share of total investment in internal growth projects at the three development companies in which it holds controlling interests was approximately $225 thousand.   CONE Gathering's total internal growth capital investment at the three development companies in which CONE Midstream holds interests was $62.5 million, with individual development company totals as follows:

• Anchor Systems (Development Company 1): Investments totaled approximately $25.0 million and were primarily directed to continued expansion of the gathering system, increasing station compression and stabilization capacity in the Majorsville field, additional well connections in the North Nineveh area, and expansion of compression capacity at Mamont Station.
• Growth Systems (Development Company 2): Investments totaled approximately $3.8 million and primarily funded the connection of two well pads in Barbour County, WV, and permitting work related to the Tygart Valley Pipeline.
• Additional Systems (Development Company 3): Investments totaled approximately $33.7 million and represents CONE Gathering's largest single quarterly capital investment to date.  The capital investment on the Additional Systems supported new production from the Oxford and Shirley systems and projects in the Pennsboro, Moundsville and ACAA project areas that are anticipated to result in wet gas volume throughput growth in these areas in fourth quarter 2014.

CONE Midstream's single day respective share of maintenance capital expenditures for third quarter 2014 was approximately $17 thousand.  CONE Gathering's maintenance capital expenditures in the aggregate for all three development companies in which the Partnership holds interests totaled $1.6 million.

As of September 30, 2014, CONE Midstream had no borrowings under its $250 million revolving credit facility.

Third Quarter Financial and Operational Results Conference Call

A conference call and webcast, during which management will discuss third quarter 2014 financial and operational results, is scheduled for October 30, 2014 at 10:30 a.m. Eastern Time.  Prepared remarks by members of management will be followed by a question and answer period.  Interested parties may listen via webcast at http://www.videonewswire.com/event.asp?id=100717. Participants who would like to ask questions may join the conference by phone at 877-870-4263 (international 412-317-0790) five to 10 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  http://www.videonewswire.com/event.asp?id=100717 shortly after the conclusion of the conference.  A telephonic replay will be available through November 7, 2014 by dialing 877-344-7529 (international: 412-317-0088) and using the conference playback number 10054321.

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⁽¹⁾    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.

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CONE Midstream Partners is a growth-oriented master limited partnership recently formed by CONSOL and Noble Energy, referred to as our Sponsors, to own, operate, develop and acquire natural gas gathering and other midstream energy assets to service our Sponsors' rapidly growing 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.

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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.

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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.  These forward-looking statements involve certain risks and uncertainties, including, among others, that our business plans may change as circumstances warrant.  For more information concerning factors that could cause actual results to differ materially from those conveyed in the forward-looking statements, please refer to the "Risk Factors" section of the prospectus included in the registration statement on Form S-1, in the form last filed with the SEC.  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.

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 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 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, to analyze our performance. 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 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.

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 basis, for each of the periods indicated.

SOURCE CONE Midstream Partners LP

Related Links

http://www.conemidstream.com