BreitBurn Energy Partners L.P. Reports Preliminary Fourth Quarter 2006 Results; Announces Increased Proved Reserve Volumes; and Provides 2007 Guidance.LOS ANGELES Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. -- BreitBurn Energy Partners L.P. (the "Partnership") (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :BBEP), an oil and gas master limited partnership ("MLP (Meridian Lossless Packing) The compression technique used in DVD-Audio that provides the highest audio quality. It delivers two channels at 192 kHz with 24-bit samples or six channels at 96 kHz. ") 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 preliminary, unaudited results for its fourth quarter 2006 and provided initial guidance for full year 2007. The Partnership's fourth quarter 2006 began on October 10, 2006, when the Partnership's initial public offering was completed, and ended on December 31, 2006. This unaudited financial information is preliminary and is subject to adjustments in connection with the final audited financial statements to be released on or about April 2, 2007 within the Partnership's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . Management is disclosing these preliminary results, proved reserve information and guidance for 2007 in order to provide the opportunity to discuss the Partnership's financial results and plans at the upcoming National Association of Publicly Traded Partnerships' MLP Conference. "We are pleased to have this first opportunity to report as a public entity," said Hal Washburn, Co-CEO of BreitBurn. "The fourth quarter of 2006 was a very active period for the Partnership. We completed the Partnership's initial public offering in October. The Partnership's properties realized a more than 160% reserve replacement for the year. Reserves increased from 29.7 million boe as of December 31, 2005 to 30.7 million boe as of December 31, 2006 after annual production of over 1.6 million boe. Furthermore, we recently added another 2 million barrels of reserves with the completion of the Partnership's first acquisition in January of 2007." Randy Breitenbach, Co-CEO of BreitBurn said "Our recent production results further demonstrate that our long-lived assets are well suited for an upstream MLP. We recently paid our first distribution to unitholders and will continue to evaluate opportunities to execute on our growth strategy in the year ahead." Summary of Fourth Quarter 2006 Results Results for the quarter reflect the 83 days from October 10, 2006, the day the Partnership completed its initial public offering, through December 31, 2006. Forecast results included in the Partnership's final prospectus Final Prospectus A legal document stating the price of a newly issued security, the delivery date, and other facts that are important for investors. Notes: The final prospectus must be given to every investor who purchases a new issue of registered securities. (dated October 4, 2006) reflected the 92 day period from October 1, 2006 through December 31, 2006. The accompanying Table I, attached, restates these forecast results ("management expectations") to reflect the forecast for the 83 day period, ending December 31, 2006. Unless stated otherwise, all results in this press release are for the 83 day period ending December 31, 2006. Net income for the period totaled $7.3 million, or $0.32 cents per limited partnership unit. Results were impacted by a $4.5 million general and administrative expense associated with the Partnership's management incentive plans and a $3.9 million unrealized gain Unrealized Gain A profit that results from holding on to an asset rather than cashing it in and using the funds. Notes: Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. on derivative instruments Derivative instruments Contracts such as options and futures whose price is derived from the price of an underlying financial asset. . Adjusted earnings before interest, taxes, depreciation and amortization Earnings before interest, taxes, depreciation and amortization (EBITDA) is a non-GAAP metric that can be used to evaluate a company's profitability.
n.pl the overhead expenses incurred in the operation of a dental benefits program, excluding costs of dental services provided. (including the previously mentioned approximately $4.5 million expense resulting from the 30% appreciation in the market price of the Partnership's units appreciating from the initial public offering price of $18.50 to $24.10 at December 31, 2006) and increased operating costs operating costs npl → gastos mpl operacionales . Unrealized gains on derivative instruments of $3.9 million are excluded from the calculation of Adjusted EBITDA. (See "Non-GAAP Financial Measures" and the associated tables for a discussion of management's use of Adjusted EBITDA in this release.) Financial and Operating Results: Production Average daily production totaled 4,572 boe per day, which was slightly ahead of management expectations of 4,522 boe per day. Aggregate volumes for the period totaled 379,495 boe. Revenues and Realized Prices Oil, natural gas and natural gas liquid sales were $18.5 million, excluding the effects of derivatives. Revenues, including a realized gain Realized Gain A gain resulting from selling an asset at a price higher than the original purchase price. Notes: There may be tax consequences for a realized profit. on derivative instruments of $2.2 million, totaled $20.8 million, which was in line with management expectations. There was an unrealized gain on derivative instruments of $3.9 million during the period. Realized prices during the period were $48.73 per boe compared with the forecast of $54.81. Including the effects of realized gains on derivative instruments, realized prices were $54.48 per boe. As mentioned above, realized prices benefited from the Partnership's active hedging program. Derivative instruments covered approximately 77% of the Partnership's production at a weighted average NYMEX See New York Mercantile Exchange. NYMEX See New York Mercantile Exchange (NYM). price of $67.77. The Partnership's realized prices are less than NYMEX due to quality and location differentials. Operating Costs Operating costs for the period totaled $6.7 million, or $17.69 per boe, 9% higher than management expectations primarily attributable to the effects of industry-wide service and material cost increases, especially in California. Partially offsetting this increase were operating improvements implemented in the Partnership's fields. One example of an operating improvement is the Partnership's Santa Fe Springs Santa Fe Springs, city (1990 pop. 15,520), Los Angeles co., SW Calif., inc. 1957. The city lies in an oil and natural gas region and has diversified manufacturing. field where well pulling work was reduced by 38% between 2005 and 2006. Depletion, Depreciation and Amortization (DD&A) DD&A expense for the period totaled $2.7 million, or $7.05 per boe. Under the successful efforts method of accounting, the Partnership calculates DD&A on an individual producing field basis. Changes in reserve estimates and in the timing and amount of abandonment cost estimates as well as changes in the timing and amount of development projects of one or two fields can cause variations in the aggregate DD&A rate. General and Administrative Expenses (G&A) G&A expenses for the period totaled $7.8 million, which were $5.1 million more than management expectations due principally to previously mentioned management incentive plan expenses of $4.5 million, which resulted from the 30% increase in the price of Partnership's units during the period. In addition, accounting, audit, legal and other professional fees exceeded expectations by $500,000, primarily attributable to the Partnership's transition to a public entity. Reserves Total proved reserves proved reserves The quantity of minerals expected to be recoverable under current economic and operating conditions. The amount of proved reserves is important in valuing the stock of a company with significant holdings in natural resources. attributable to the properties contributed to the Partnership were 29.7 million boe as of December 31, 2005. As of December 31, 2006, total proved reserves for these properties increased to 30.7 million boe. This increase of 1 million boe is net of 1.6 million boe produced during 2006 for those same properties. On that basis, these properties realized an approximate 160% reserve replacement during 2006. This increase does not include the estimated 2 million boe of total proved reserves added to the Partnership as a result of the previously announced acquisition of the Lazy JL Field in the Permian Basin The Permian Basin is a sedimentary basin largely contained in the western part of the U.S. state of Texas. It reaches from just south of Lubbock, Texas, to just south of Midland & Odessa, extending westward into the southeastern part of the adjacent state of New Mexico. in West Texas, which closed on January 23, 2007. 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 relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc commodity prices. As of January 31, 2007, the Partnership had entered into swap agreements and collars to receive average NYMEX West Texas Intermediate prices as summarized below:
Volume > Aver-
Bbls/d > Price
July 1, 2006 - June 30, 2007 3,625 > $
67.77
July 1, 2007 - June 30, 2008 3,375 > $
66.16
July 1, 2008 - September 30, 2008 2,775 > $
59.93
October 1, 2008 - December 31, 2008 2,275 > $
59.84
January 1, 2009 - September 30, 2009 2,325 > $
59.89
October 1, 2009 - December 31, 2009 325 > $
59.25
Location and quality differentials attributable to the Partnership properties are not reflected in the above prices. The agreements provide for monthly settlement based on the difference between the agreement price and the actual NYMEX crude oil price. 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 The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See 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 Investor relations The process by which the corporation communicates with its investors. 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 Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. or any other GAAP measure of liquidity or financial performance. Adjusted EBITDA is presented as management believes it provides additional information and metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. 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 Publicly Traded Partnership A limited partnership that also has interests traded in the equity securities market. Notes: This is also known as a master limited partnership. See also: Master Limited Partnership, Partnership, Public Company 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: [TABLE OMITTED] [TABLE OMITTED] Annual Report on Form 10-K The consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge and related footnotes will be available on our 2006 Form 10-K, which will be filed on or before April 2, 2007. Conference Call As announced on March 1, 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 800-289-0726 (international callers dial +1 913-981-5545) 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. For those who cannot listen to the live broadcast, a replay of the call will be available through Monday, March 12, by dialing 888-203-1112 (international callers dial +1 719-457-0820) and entering replay PIN 1504823, 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, recently formed by a subsidiary of Provident prov·i·dent adj. 1. Providing for future needs or events. 2. Frugal; economical. [Middle English, from Latin pr 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 Oil reserves refer to portions of oil in place that are claimed to be recoverable under economic constraints. Oil in the ground is not a "reserve" unless it is claimed to be economically recoverable, since as the oil is extracted, the cost of recovery increases incrementally located in the Los Angeles Basin The Los Angeles Basin is the coastal sediment-filled plain located between the peninsular and transverse ranges in southern California in the United States containing the central part of the city of Los Angeles as well as its southern and southeastern suburbs (both in Los Angeles in California, the Wind River and Big Horn Big Horn is a tall peak in the Cascade Range in Washington, USA. At 2438+ meters (8,000 feet) in elevation, it is the highest point in Lewis County, Washington.[1] Big Horn, one of the Goat Rocks, is the second highest point on the ridge west of Mt. Basins in central Wyoming, and the Permian Basin in West Texas. Additional information is available at www.breitburn.com. BBEP-IR Cautionary Statement Relevant to Forward-Looking Information for the Purpose of "Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " Provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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," "2007 Guidance" 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 INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's. 2. Interruption of the use of a thing is natural or civil. of the Partnership's net production due to accidents or severe weather; the effects of changed accounting rules under generally accepted accounting principles promulgated prom·ul·gate tr.v. prom·ul·gat·ed, prom·ul·gat·ing, prom·ul·gates 1. To make known (a decree, for example) by public declaration; announce officially. See Synonyms at announce. 2. by rule-setting bodies; and the factors set forth under the heading "Risk Factors" incorporated by reference from our Prospectus filed pursuant to Rule 424(b)(4) on October 5, 2006 (File No.333-134049). Unpredictable or unknown factors not discussed herein also could have material adverse effects on forward-looking statements. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] For ease of comparison purposes, forecast information for this quarter originally presented in the Partnership's final prospectus dated October 4th, 2006, has been adjusted for the 83 day period the Partnership was public during the fourth quarter (i.e. forecast x 83/92). [TABLE OMITTED] |
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