CNX Midstream Partners LP (NYSE: CNXM) today reported financial and operational results for the three months ended September 30, 2018(1).
Third Quarter ResultsHighlights of third quarter 2018 results attributable to the Partnership as compared to the third quarter of 2017 include:
- Net Income of $33.6 million as compared to $28.9 million
- Adjusted EBITDA(2) of $45.0 million as compared to $34.2 million
- Distributable cash flow (DCF)(2) of $35.0 million as compared to $29.4 million
- Cash distribution coverage(2) of 1.36x on an as-declared basis
"CNXM continued to deliver strong results for the third quarter," commented Nicholas J. DeIuliis, CEO of CNX Midstream GP LLC (the "General Partner"). "As compared to the third quarter of 2017, Adjusted EBITDA increased by 32% and distributable cash flow was up by 19%. These results have outpaced our original expectations, and as a result, we are modestly increasing full year 2018 EBITDA and DCF guidance. CNXM's focus on operational execution is driving strong financial performance, which continues to organically de-risk the 15% annual distribution growth through 2023, which assumes no drop down transactions or need to access the equity capital markets."
OperationsDuring the quarter, despite CNXM having its highest monthly man hour rate since the end of 2015, the company had zero reportable injuries or notice of violations (NOVs), highlighting the continued focus on safety and environmental compliance. Also during the quarter, CNXM had record throughput, largely driven by an increase in well turn-in-lines. Operating expenses continued to improve during the quarter, driven largely by reductions to labor costs and continued system optimization.
The Partnership expects its 2018 EBITDA and DCF to increase, driven primarily by improvements in operating expenses.
The Partnership expects its 2018 capital expenditures to increase to approximately $135-$145 million, compared to the previous guidance of $100-$110 million, due primarily to strategic land acquisitions, system upsizing to accommodate higher throughput levels resulting from CNX's continued well improvements, and the additional acceleration of completing planned projects and construction activity from 2019 into 2018. CNXM reduces its construction and permitting risks by completing projects ahead of schedule.
Quarterly DistributionAs previously announced, the Board of Directors of the General Partner declared a quarterly cash distribution of $0.3479 per unit with respect to the third quarter of 2018. The distribution payment will be made on November 13, 2018 to unitholders of record at the close of business on November 5, 2018. The distribution, which equates to an annual rate of $1.3916 per unit, represents an increase of 3.5% over the prior quarter and an increase of 15% over the distribution paid with respect to the third quarter of 2017.
Capital Investment and ResourcesCNX Midstream's allocated third quarter 2018 share of investment in expansion projects was $37.9 million. Total expansion capital investment at the development companies in which CNX Midstream holds controlling interests was $39.8 million. CNX Midstream's respective share of maintenance capital expenditures for the development companies for third quarter 2018 was $4.4 million. Maintenance capital expenditures in the aggregate for the development companies in which CNX Midstream holds controlling interests totaled $4.4 million.
As of September 30, 2018, CNX Midstream had outstanding borrowings of $44 million under its $600 million revolving credit facility.
CNX Midstream is a growth-oriented 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 at our website www.cnxmidstream.com.
