CONE Midstream Reports Second Quarter Results

CANONSBURG, Pa., Aug. 07, 2017 (GLOBE NEWSWIRE) -- CONE Midstream Partners LP (NYSE:CNNX) ("CONE Midstream" or the "Partnership") today reported financial and operational results for the three months ended June 30, 2017⁽¹⁾.

Second Quarter Results

Highlights of second quarter 2017 results attributable to the Partnership as compared to the second quarter of 2016 include:⁽²⁾

• Net income of $29.0 million as compared to $23.2 million
• Average daily throughput volumes of 981 billion Btu per day (BBtu/d) as compared to 857 BBtu/d
• Net cash provided by operating activities of $42.3 million as compared to $41.8 million
• Adjusted EBITDA⁽³⁾ of $34.4 million as compared to $26.9 million
• Distributable cash flow (DCF)⁽³⁾ of $29.6 million as compared to $23.6 million
• Cash distribution coverage⁽³⁾ of 1.50x on an as-declared basis

Management Comment

"Second quarter financial and operating results were in-line with expectations," said John T. Lewis, Chief Executive Officer of CONE Midstream GP LLC (the "General Partner").  "Benefiting from the fourth quarter 2016 acquisition of the remaining 25% interest in the Anchor Systems and our continuing attention to operating cost control, net income attributable to the Partnership, Adjusted EBITDA and distributable cash flow all increased by approximately 25% as compared to the second quarter of 2016.  These results keep us on-track to achieve full year 2017 results in line with our current EBITDA and DCF guidance.

"I would also like to highlight the June 28th closing of Noble Energy's sale of their Appalachian acreage position in southwestern Pennsylvania and West Virginia to HG Energy," continued Mr. Lewis.  "We are pleased to welcome HG as a new shipper on the CONE system and are actively engaged with them to provide gathering services to support and increase their current production as well as the future development of their acquired acreage."

Quarterly Distribution

As previously announced, the Board of Directors of the General Partner declared a quarterly cash distribution of  $0.2922 per unit with respect to the second quarter of 2017.  The distribution payment will be made on August 14, 2017 to unitholders of record at the close of business on August 4, 2017. The distribution, which equates to an annual rate of $1.1688 per unit, represents an increase of 3.6% over the prior quarter and an increase of 15.1% over the distribution paid with respect to the second quarter of 2016.

Capital Investment and Resources

CONE Midstream's allocated second quarter 2017 share of investment in expansion projects was $6.4 million. Total expansion capital investment at the three development companies in which CONE Midstream holds controlling interests was $7.7 million. CONE Midstream's respective share of maintenance capital expenditures for the three development companies for the second quarter of 2017 was $3.7 million.  Maintenance capital expenditures in the aggregate for the development companies in which CONE Midstream holds controlling interests totaled $4.6 million.

As of June 30, 2017,  CONE Midstream had outstanding borrowings of $161.0 million under its $250 million revolving credit facility and a cash balance of $4.9 million.

Second Quarter Financial and Operational Results Conference Call

A conference call and webcast, during which management will discuss second quarter 2017 financial and operational results and 2017 guidance, is scheduled for August 7, 2017 at 11:00 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 by using the link posted on the "Events" page of our website, www.conemidstream.com, or at  http://services.choruscall.com/links/cnnx170807.html. 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  http://services.choruscall.com/links/cnnx170807.html shortly after the conclusion of the conference call.  A telephonic replay will be available through August 21, 2017 by dialing 877-344-7529 (international: 412-317-0088) and using the conference playback number 10110565.

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CONE Midstream Partners LP is a master limited partnership that owns, operates, develops and acquires gathering and other midstream energy assets to service natural gas production in the Appalachian Basin 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.

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This press release serves a qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b).  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 non-U.S. 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 "will," "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. You should not place undue reliance on 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.  You should not place undue reliance on forward-looking statements.

Although forward-looking statements reflect our good faith beliefs at the time they are made, they involve known and unknown risks, uncertainties and other factors.  For more information concerning factors that could cause actual results to differ materially from those conveyed in the forward-looking statements, including, among others, that our business plans may change as circumstances warrant, please refer to the "Risk Factors" and "Forward-Looking Statements" sections of our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q.  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
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA AND DISTRIBUTABLE CASH FLOW
(in thousands)

Definition of Non-GAAP Financial Measures

EBITDA and Adjusted EBITDA

We define EBITDA as net income (loss) before net interest expense, depreciation and amortization, and Adjusted EBITDA as EBITDA adjusted for non-cash items which should not be included in the calculation of distributable cash flow. EBITDA and Adjusted EBITDA are used as supplemental financial measures 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 and Adjusted EBITDA provides information that is useful to investors in assessing our financial condition and results of operations. The GAAP measures most directly comparable to EBITDA and Adjusted EBITDA are net income and net cash provided by operating activities. EBITDA and Adjusted EBITDA should not be considered alternatives to net income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP.  EBITDA and Adjusted EBITDA exclude 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 and Adjusted EBITDA as presented herein may not be comparable to similarly titled measures that other companies may use.

Distributable Cash Flow

We define distributable cash flow as Adjusted EBITDA less net income attributable to noncontrolling interest, cash interest paid and maintenance capital expenditures, each net to the Partnership. 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 release 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 that other companies may use.

The following table presents a reconciliation of the non-GAAP measures of adjusted EBITDA and distributable cash flow to the most directly comparable GAAP financial measures of net income and net cash provided by operating activities.

The following table presents a reconciliation of the non-GAAP measures adjusted EBITDA and distributable cash flow by quarter and for the most recently completed twelve month period with the most directly comparable GAAP financial measures, which are net income and net cash provided by operating activities.

The following table presents a reconciliation of the non-GAAP measures of the Partnership's projected adjusted EBITDA and projected distributable cash flow with the most directly comparable GAAP financial measure, which is projected net income.  The following projections represent the approximate midpoint of the previously announced full year 2017 expected guidance ranges of adjusted EBITDA ($128-$138 million) and full year distributable cash flow ($105-$115 million) attributable to the Partnership.  CONE Midstream’s financial guidance is based on numerous assumptions about future events and conditions and, therefore, could vary materially from actual results.  These estimates are meant to provide guidance only and are subject to revision for acquisitions or operating environment changes.

The Partnership is unable to project net cash provided by operating activities or provide the related reconciliation of projected net cash provided by operating activities to projected distributable cash flow, the most comparable financial measure calculated in accordance with GAAP, because net cash provided by operating activities includes the impact of changes in operating assets and liabilities. Changes in operating assets and liabilities relate to the timing of the Partnership’s cash receipts and disbursements that may not relate to the period in which the operating activities occurred, and the Partnership is unable to project these timing differences with any reasonable degree of accuracy.