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Noble Midstream Partners Reports Fourth Quarter and Full Year 2019 Results


Noble Midstream Partners LP (NASDAQ: NBLX) (Noble Midstream or the Partnership) today reported fourth quarter and full year 2019 financial and operational results. The Partnership’s results are


Noble Midstream Partners LP (NASDAQ: NBLX) (Noble Midstream or the Partnership) today reported fourth quarter and full year 2019 financial and operational results. The Partnership’s results are consolidated to include the non-controlling interests in the Partnership’s development companies (DevCos) retained by Noble Energy, Inc. (Noble Energy) as well as Greenfield Midstream, LLC’s (Greenfield Midstream) 45.6% ownership of Black Diamond Gathering, LLC (Black Diamond Gathering).

Certain results are shown as “attributable to the Partnership,” which exclude the aforementioned non-controlling interests retained by Noble Energy and Greenfield Midstream. Noble Midstream believes the results “attributable to the Partnership” provide the best representation of the ongoing operations from which the Partnership’s unitholders will benefit. Due to the acquisition of the remaining DevCo interests during the quarter, results to the Partnership include 45 days of the Partnership's previous ownership in the acquired DevCos, including 25% ownership in Green River DevCo and San Juan River DevCo and 40% ownership in Blanco River DevCo.

Fourth-Quarter, Full-Year 2019 and Recent Highlights

  • Invested $48 million in fourth-quarter 2019, well below the low end of guidance of $60 to $70 million
  • Executed a $149 million net capital program in 2019 with material well-connect savings
  • Achieved record gross oil and gas gathering throughput of 355 thousand barrels of oil and gas equivalent per day (MBoe/d) and 219 thousand barrels of produced water per day (Mbw/d), in fourth-quarter 2019; increased gross annual combined gathering and sales volumes for oil, gas and produced water more than 40%
  • Generated $51 million in net income or $39 million attributable to the Partnership, and $95 million of Gross EBITDA1 or $73 million of Adjusted Net EBITDA1 attributable to the Partnership
  • Completed the simplification transaction, which eliminated the General Partner's Incentive Distribution Rights
  • Acquired substantially all the remaining DevCo interests from Noble Energy, increasing the Partnership's exposure to high margin growth opportunities in the DJ and Delaware Basins
  • Exercised accordion feature of the Partnership's unsecured revolving credit facility and ended 2019 with $568 million in liquidity

2020 Investment Program and Guidance Highlights

  • $190 to $230 million in 2020 net organic Capital Expenditures, approximately 25% below original 2020 guidance provided in November 2019
  • 348 to 377 MBoe/d of oil and gas gathering volumes, an annual increase of 13% at the midpoint in 2020
  • 185 to 205 Mbw/d of produced water volumes, adjusted lower from previous guidance to account for the sale of certain water assets
  • $500 million to $540 million in Adjusted EBITDA attributable to the Partnership, updated to reflect most recent customer plans and partnership forecasts
  • $325 million to $355 million of Distributable Cash Flow1 (DCF) with coverage ratio of 1.2x to 1.4x
  • Acquired 20% ownership of the Saddlehorn Pipeline in the DJ Basin through Black Diamond joint venture, effective February 1, 2020

“2019 marked an impressive year for Noble Midstream, whereby we continued to grow the core business, progressed our equity method investments and positioned the partnership for success into the next decade through the elimination of the Incentive Distribution Rights and acquisition of the remaining DevCo interests. Our performance in 2019 showcases our ability to enhance cost efficiencies and create sustainable unitholder value in 2020. We have the talent in place and portfolio to grow the business efficiently and set ourselves on a path to generate free cash flow longer term,” stated Brent J. Smolik, Chief Executive Officer of the general partner of Noble Midstream.

1 Adjusted EBITDA and DCF are not Generally Accepted Accounting Principles (GAAP) measures. Definitions and reconciliations of these non-GAAP measures to their most directly comparable GAAP reporting measures appear in Schedule 4 of the financial tables which follow.

Strong Throughput Enabled Record Quarterly Gathering

During the fourth quarter, Noble Midstream achieved record oil and gas volumes of 355 MBoe/d from its core gathering business, up 11% sequentially and above the top end of guidance. Produced water gathering throughput was up 22% sequentially and came in above the top end of guidance. Fresh water delivered in fourth-quarter 2019 averaged 126 MBw/d, down 7% from the third quarter due to lower operator activity levels at the end of the year.

Fourth-quarter 2019 revenue totaled $191 million, up 12% compared to the third quarter. An increase in revenue from gathering and crude oil sales was partially offset by lower fresh water delivery revenue and lower equity method income from investments. Fourth-quarter 2019 net income of $51 million and Adjusted EBITDA attributable to the Partnership of $73 million were impacted by a $10 million EBITDA loss on EPIC interim oil service due to lower than forecasted interim service volumes and realized tariffs, as well as other one-time accruals.

Maintenance capital expenditures attributable to the Partnership totaled $7.0 million during the fourth-quarter 2019. Along with the strong operational performance, this resulted in DCF attributable to the Partnership of $65 million and a Distribution Coverage Ratio of 1.1x, or 1.3x pro-forma for the acquisition.

Enhanced Capital Efficiency

Capital expenditures in the fourth quarter primarily reflected spending for customer well connections in the DJ Basin and Delaware Basin. Fourth-quarter gross capital expenditures of $67 million and capital expenditures attributable to the Partnership of $48 million were below guidance and reflect 2019's progress on reduced costs and increased capital efficiency through contracting practices, pipeline installation costs, and the use of existing facility and infrastructure.

The Partnership contributed $105 million to equity investments during fourth-quarter 2019 at the low end of guidance. This primarily included capital contributions of $83 million related to the EPIC Crude, $3 million for the EPIC Y-Grade, and $19 million for the Delaware Crossing joint ventures.

 

 

 

4Q 2019 Capital Expenditures (in millions)

DevCo

Basin

NBLX Ownership**

Gross

Net

Colorado River

DJ

100%

$

7

 

$

7

 

Green River

DJ

25%

$

13

 

$

9

 

Laramie River *

DJ

100%

$

33

 

$

21

 

Blanco River

Delaware

40%

$

10

 

$

7

 

Trinity River

Delaware

100%

$

4

 

$

4

 

Total Capital Expenditures

$

67

 

$

48

 

Additions to Equity Investments

$

105

 

$

105

 

Capital Expenditures and Investments

$

172

 

$

153

 

*

Includes capital expenditures for Black Diamond, in which Noble Midstream owns 54.4%

**

As of November 15, 2019, all DevCo interests increased to 100%

Continued DJ Basin Activity

In the Partnership's wholly-owned DJ Basin assets, oil and gas gathering throughput was 166 MBoe/d, up 3% sequentially. Average produced water volumes of 37 MBw/d were down from 42 MBw/d in the third-quarter 2019. The Partnership connected 37 wells in the fourth quarter, including 25 Noble Energy wells, focused in East Pony and Wells Ranch. Completion activity in the Mustang development area resumed in the fourth-quarter 2019. The Partnership delivered fresh water volumes of 126 MBw/d to two crews during the quarter. In 2020, the fresh water minimum volume commitment at Wells Ranch will increase from 50 MBw/d to 60 MBw/d, effective through 2021.

Fourth-quarter 2019 Black Diamond oil gathering and sales volumes averaged 103 thousand barrels of oil per day (MBo/d), up 12% from the third-quarter 2019. The Partnership connected a combined 35 wells during the fourth quarter on Black Diamond's gathering system, lower than the prior quarter due to timing of pad completions. As a result, the Partnership expects the first-quarter 2020 volumes to trend lower before inflecting mid-year 2020.

Increasing Third-Party Volumes in the Delaware Basin

In the Delaware Basin, oil and gas gathering throughput was a record 85 MBoe/d of oil and gas during fourth-quarter 2019, up 13% sequentially. Produced water gathering volumes were also up more than 25% on a sequential basis. The growth in gathering throughput reflects 15 new well connections during the quarter, including 2 third-party customer wells. Volumes also reflect contributions from nine third-party wells that came online on the last day of the third-quarter 2019. The Partnership completed 11 third-party well connections in the second half of 2019, compared to two in the first half of the year. In 2020, third-party volume contribution is expected to approach 10% to 15% of total Delaware Basin volumes.

Fourth-quarter 2019 volumes on the Advantage Pipeline system totaled 80 MBo/d, compared to 70 MBo/d during the third quarter. The Partnership expects 2020 annual volumes to remain flat with the partner on the pipeline returning to match volumes late in the fourth quarter.

Permian Basin Equity Investments Nearing Completion

EPIC interim crude service first oil volumes were transported in July and increased in the back half of 2019 on the EPIC Y-Grade pipeline via the Advantage Crane West interconnect. While lower-than-expected tariffs and utilization rates impacted financials in fourth-quarter 2019, the Partnership expects an improvement from interim service in first-quarter 2020.

The Delaware Crossing JV construction is progressing as planned with the completion of the Wink crude terminal during the quarter. The Partnership assumed operatorship during the fourth quarter and is currently transporting dedicated volumes on the northern portion of the pipeline. The Liberty Terminal is more than 90% complete and the 16-inch mainline connecting the two terminals is beginning line fill later this month. Associated gathering projects are progressing as planned. All core infrastructure construction was completed in early January 2020.

Balance Sheet Management while Executing Growth Opportunities

As of December 31, 2019, the Partnership had $13 million in cash on hand. During the quarter, Noble Midstream exercised the $350 million accordion feature on its unsecured revolving credit facility, expanding the facility to $1.15 billion and increasing liquidity at year end 2019 to $568 million.

The balance of the preferred equity commitment for the EPIC Crude pipeline was $106 million at the end of the fourth quarter, up from $103 million in the third quarter.

Quarterly Distribution Realigned with Current Market Environment

Concurrent with the IDR simplification and acquisition during the quarter, Noble Midstream has restated its distribution growth rate from 20% to 10% per unit.

As a result, on January 23, 2020, the board of directors of Noble Midstream’s general partner, Noble Midstream GP LLC, declared a fourth quarter cash distribution of $0.6878 per unit, a 17% increase from the fourth quarter 2018 and a 2.4% sequential increase.

Reduced Full-Year 2020 Capital Outlook on Continued Capital Efficiency Gains

Noble Midstream expects 2020 organic capital expenditures of $190 to $230 million. The Partnership has lowered previously-issued full-year 2020 organic net capital expectations by 25%, due to 2019 progress on sustainable costs savings and better line of sight to customer activity.

In addition, Noble Midstream expects combined equity investments of $220 to $260 million, including the Saddlehorn commitment. This is an increase to 2020 guidance as a result of scope changes, phasing of investments from 2019 to 2020, and cost assumptions to complete the projects.

First-quarter 2020 organic net capital expectations are $60 to $70 million and equity investment capital expectations are $180 to $220 million. The Partnership's 2020 gross total capital expectations are expected to decrease more than 50% annually as continued efficiencies are realized within core operating areas and equity investments start up in the first half of the year.

2020 gathering throughput growth will be driven by Mustang and Wells Ranch in the DJ Basin, as well as additional completion activity in the Delaware Basin. The Partnership expects to connect more than 500 wells in 2020. Noble Midstream anticipates 348 to 377 MBoe/d 2020 gross oil and gas gathering and sales volumes, up 13% annually. In 2020, the Partnership expects 160 to 170 well connections in the wholly-owned DJ Basin assets. We anticipate 110 to 120 Noble Energy connections, driven mostly by Mustang with 80 to 90 wells online and Wells Ranch with 20 to 30 wells. Activity is expected to pick up in Mustang in first-quarter 2020 with 10 to 14 connections. Completion activity is expected to increase in 2020 on Black Diamond with 250 to 300 well connections.

In the Delaware Basin, the Partnership anticipates similar activity levels to 2019 with 60 to 75 well connections, including 10 to 15 third-party wells. Overall, the 2020 connection schedule in the Delaware and DJ Basin will be more weighted to the second and third-quarter 2020 and drive a second-half volume ramp.

Produced water gathering throughput is anticipated to be 185 to 205 MBw/d, a slight increase to 2019 volumes. These volumes have been adjusted due to accounting changes on the commercial terms of certain produced water assets in the Permian Basin.

Full-year 2020 Adjusted EBITDA attributable to the Partnership is anticipated to be $500 million to $540 million, compared to prior guidance of $500 million to $560 million. This update reflects better visibility into operator activity and forecasts in the DJ and Delaware Basin as well as deferred capital projects.

First-quarter 2020 Adjusted EBITDA attributable to the Partnership is expected to increase to a range of $94 to $101 million. Full-year 2020 Distribution Coverage Ratio remains unchanged at 1.2x to 1.4x. First-quarter 2020 fresh water delivery volumes are anticipated to be 210 to 230 MBw/d. The Partnership expects fresh water delivered volumes to increase in first-half 2020 as completion activity resumes.

Noble Midstream expects to delever through 2020 as equity investment projects generate income and anticipates Net Debt to Trailing 12 Month (TTM) 2020 EBITDA of 3.3x to 3.7x.

Conference Call

Noble Midstream will host a webcast and conference call today at 10:30 a.m. Central Time to discuss fourth quarter and full year 2019 financial and operational results as well as 2020 guidance. The live audio webcast and related presentation material is accessible on the ‘Investors’ page of the Partnership’s website at www.nblmidstream.com. Conference call numbers for participation are 877-883-0383, or 412-902-6506 for international calls. The passcode number is 6304607. A replay of the conference call will be available at the same web location following the event.

About Noble Midstream Partners

Noble Midstream is a growth-oriented Delaware master limited partnership formed by Noble Energy, to own, operate, develop and acquire domestic midstream infrastructure assets. Noble Midstream currently provides crude oil, natural gas, and water-related midstream services in the DJ Basin in Colorado and the Delaware Basin in Texas. For more information, please visit www.nblmidstream.com.

Forward Looking Statements

This news release contains certain “forward-looking statements” within the meaning of federal securities law.

Words such as “anticipates”, “believes”, “expects”, “intends”, “will”, “should”, “may”, “estimates”, and similar expressions may be used to identify forward-looking statements. Forward-looking statements are not statements of historical fact and reflect the Partnership’s current views about future events. No assurances can be given that the forward-looking statements contained in this news release will occur as projected and actual results may differ materially from those projected. Forward-looking statements are based on current expectations, estimates and assumptions that involve a number of risks and uncertainties that could cause actual results to differ materially from those projected. These risks include, without limitation, the Partnership's customers’ ability to meet their drilling and development plans, changes in general economic conditions, competitive conditions in the Partnership’s industry, actions taken by third-party operators, gatherers, processors and transporters, the demand for crude oil and natural gas gathering and processing services, the Partnership’s ability to successfully implement its business plan, the Partnership’s ability to complete internal growth projects on time and on budget, the ability of third parties to complete construction of pipelines in which the Partnership holds equity interests on time and on budget, the price and availability of debt and equity financing, the availability and price of crude oil and natural gas to the consumer compared to the price of alternative and competing fuels, and other risks inherent in the Partnership’s business, including those described under “Risk Factors” and “Forward-Looking Statements” in the Partnership’s most recent Annual Report on Form 10-K and in other reports we file with the Securities and Exchange Commission. These reports are also available from the Partnership’s office or website, www.nblmidstream.com. Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. Noble Midstream does not assume any obligation to update forward-looking statements should circumstances, management’s estimates, or opinions change.

This news release also contains certain non-GAAP measures of financial performance that management believes are good tools for internal use and the investment community in evaluating Noble Midstream’s overall financial performance. Please see the attached schedules for reconciliations of the non-GAAP financial measures used in this news release to the most directly comparable GAAP financial measures.

This release serves as a qualified notice to nominees and brokers as provided for under Treasury Regulation Section 1.1446-4(b) that 100% of the Partnership’s distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership’s distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate. Nominees, and not the Partnership, are treated as withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.

Schedule 1

Noble Midstream Partners LP

Revenue and Throughput Volume Statistics

(unaudited)

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

2019

 

2018

 

2019

 

2018

DJ Basin

 

 

 

 

 

 

 

Crude Oil Sales Volumes (Bbl/d)

10,935

 

 

6,027

 

 

9,354

 

 

6,129

 

Crude Oil Gathering Volumes (Bbl/d)

190,216

 

 

184,246

 

 

182,121

 

 

143,095

 

Natural Gas Gathering Volumes (MMBtu/d)

531,559

 

 

351,717

 

 

476,605

 

 

308,929

 

Natural Gas Processing Volumes (MMBtu/d)

47,712

 

 

59,076

 

 

50,039

 

 

61,766

 

Produced Water Gathering Volumes (Bbl/d)

37,122

 

 

39,611

 

 

39,629

 

 

29,903

 

Fresh Water Delivery Volumes (Bbl/d)

125,823

 

 

179,653

 

 

164,524

 

 

175,754

 

 

 

 

 

 

 

 

 

Delaware Basin

 

 

 

 

 

 

 

Crude Oil Gathering Volumes (Bbl/d)

59,671

 

 

47,266

 

 

49,842

 

 

34,032

 

Natural Gas Gathering Volumes (MMBtu/d)

200,491

 

 

120,556

 

 

155,155

 

 

78,875

 

Produced Water Gathering Volumes (Bbl/d)

181,581

 

 

121,852

 

 

148,886

 

 

91,312

 

 

 

 

 

 

 

 

 

Total Gathering Systems

 

 

 

 

 

 

 

Crude Oil Sales Volumes (Bbl/d)

10,935

 

 

6,027

 

 

9,354

 

 

6,129

 

Crude Oil Gathering Volumes (Bbl/d)

249,887

 

 

231,512

 

 

231,963

 

 

177,127

 

Natural Gas Gathering Volumes (MMBtu/d)

732,050

 

 

472,273

 

 

631,760

 

 

387,804

 

Total Barrels of Oil Equivalent (Boe/d)

354,675

 

 

298,087

 

 

322,312

 

 

232,974

 

Natural Gas Processing Volumes (MMBtu/d)

47,712

 

 

59,076

 

 

50,039

 

 

61,766

 

Produced Water Gathering Volumes (Bbl/d)

218,703

 

 

161,463

 

 

188,515

 

 

121,215

 

 

 

 

 

 

 

 

 

Total Fresh Water Delivery

 

 

 

 

 

 

 

Fresh Water Services Volumes (Bbl/d)

125,823

 

 

179,653

 

 

164,524

 

 

175,754

 

Schedule 2

Noble Midstream Partners LP

Consolidated Statements of Operations

(in thousands, except per unit amounts, unaudited)

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

2019

 

2018

 

2019

 

2018

Midstream Services Revenues

 

 

 

 

 

 

 

Gathering and Processing — Affiliate

$

92,985

 

 

$

76,660

 

 

$

337,086

 

 

$

265,505

 

Gathering and Processing — Third Party

22,381

 

 

20,779

 

 

76,645

 

 

54,017

 

Fresh Water Delivery Affiliate

10,765

 

 

12,492

 

 

77,566

 

 

69,266

 

Fresh Water Delivery — Third Party

4,196

 

 

6,413

 

 

12,591

 

 

19,345

 

Crude Oil Sales — Third Party

57,938

 

 

31,709

 

 

189,772

 

 

141,490

 

Other — Affiliate

790

 

 

996

 

 

3,183

 

 

3,976

 

Other — Third Party

1,710

 

 

2,101

 

 

6,958

 

 

5,136

 

Total Midstream Services Revenues

190,765

 

 

151,150

 

 

703,801

 

 

558,735

 

Costs and Expenses

 

 

 

 

 

 

 

Cost of Crude Oil Sales

56,173

 

 

30,538

 

 

181,390

 

 

136,368

 

Direct Operating

27,763

 

 

27,209

 

 

116,675

 

 

95,852

 

Depreciation and Amortization

25,396

 

 

22,815

 

 

96,981

 

 

79,568

 

General and Administrative

11,789

 

 

5,014

 

 

25,777

 

 

25,910

 

Other Operating Expense

 

 

1,806

 

 

(488

)

 

2,159

 

Total Operating Expenses

121,121

 

 

87,382

 

 

420,335

 

 

339,857

 

Operating Income

69,644

 

 

63,768

 

 

283,466

 

 

218,878

 

Other (Income) Expense

 

 

 

 

 

 

 

Interest Expense, Net of Amount Capitalized

4,734

 

 

4,261

 

 

16,236

 

 

10,447

 

Investment Loss (Income)

12,720

 

 

(5,464

)

 

17,748

 

 

(16,289

)

Total Other (Income) Expense

17,454

 

 

(1,203

)

 

33,984

 

 

(5,842

)

Income Before Income Taxes

52,190

 

 

64,971

 

 

249,482

 

 

224,720

 

Income Tax Provision

796

 

 

1,946

 

 

4,015

 

 

8,001

 

Net Income

51,394

 

 

63,025

 

 

245,467

 

 

216,719

 

Less: Net Income Prior to the Drop-Down and Simplification

1,692

 

 

6,430

 

 

12,929

 

 

27,843

 

Net Income Subsequent to the Drop-Down and Simplification

49,702

 

 

56,595

 

 

232,538

 

 

188,876

 

Less: Net Income Attributable to Noncontrolling Interests

10,306

 

 

14,423

 

 

72,542

 

 

26,142

 

Net Income Attributable to Noble Midstream Partners LP

39,396

 

 

42,172

 

 

159,996

 

 

162,734

 

Less: Net Income Attributable to Incentive Distribution Rights

 

 

2,421

 

 

13,967

 

 

5,836

 

Net Income Attributable to Limited Partners

$

39,396

 

 

$

39,751

 

 

$

146,029

 

 

$

156,898

 

 

 

 

 

 

 

 

 

Net Income Attributable to Limited Partners Per Limited Partner Unit Basic

 

 

 

 

 

 

 

Common Units

$

0.65

 

 

$

1.00

 

 

$

3.09

 

 

$

3.96

 

Subordinated Units

$

 

 

$

1.00

 

 

$

3.86

 

 

$

3.96

 

 

 

 

 

 

 

 

 

Net Income Attributable to Limited Partners Per Limited Partner Unit Diluted

 

 

 

 

 

 

 

Common Units

$

0.65

 

 

$

1.00

 

 

$

3.08

 

 

$

3.96

 

Subordinated Units

$

 

 

$

1.00

 

 

$

3.86

 

 

$

3.96

 

 

 

 

 

 

 

 

 

Weighted Average Limited Partner Units Outstanding Basic

 

 

 

 

 

 

 

Common Units

60,431

 

 

23,688

 

 

40,083

 

 

23,686

 

Subordinated Units

 

 

15,903

 

 

5,795

 

 

15,903

 

 

 

 

 

 

 

 

 

Weighted Average Limited Partner Units Outstanding Diluted

 

 

 

 

 

 

 

Common Units

60,454

 

 

23,703

 

 

40,105

 

 

23,701

 

Subordinated Units

 

 

15,903

 

 

5,795

 

 

15,903

 

Schedule 3

Noble Midstream Partners LP

Consolidated Balance Sheets

(in thousands, unaudited)

 

December 31,
2019

 

December 31,
2018

ASSETS

 

 

 

Current Assets

 

 

 

Cash and Cash Equivalents

$

12,676

 

 

$

14,761

 

Accounts Receivable — Affiliate

42,428

 

 

41,812

 

Accounts Receivable — Third Party

44,093

 

 

23,459

 

Other Current Assets

8,730

 

 

5,875

 

Total Current Assets

107,927

 

 

85,907

 

Property, Plant and Equipment

 

 

 

Total Property, Plant and Equipment, Gross

2,006,995

 

 

1,752,122

 

Less: Accumulated Depreciation and Amortization

(244,038

)

 

(181,199

)

Total Property, Plant and Equipment, Net

1,762,957

 

 

1,570,923

 

Investments

660,778

 

 

82,317

 

Intangible Assets, Net

277,900

 

 

310,202

 

Goodwill

109,734

 

 

109,734

 

Other Noncurrent Assets

6,786

 

 

33,095

 

Total Assets

$

2,926,082

 

 

$

2,192,178

 

LIABILITIES, MEZZANINE EQUITY AND EQUITY

 

 

 

Current Liabilities

 

 

 

Accounts Payable — Affiliate

$

8,155

 

 

$

7,182

 

Accounts Payable — Trade

107,705

 

 

94,265

 

Other Current Liabilities

11,680

 

 

13,790

 

Total Current Liabilities

127,540

 

 

115,237

 

Long-Term Liabilities

 

 

 

Long-Term Debt

1,495,679

 

 

559,021

 

Asset Retirement Obligations

37,842

 

 

30,533

 

Other Long-Term Liabilities

4,160

 

 

832

 

Total Liabilities

1,665,221

 

 

705,623

 

Mezzanine Equity

 

 

 

Redeemable Noncontrolling Interest, Net

106,005

 

 

 

Equity

 

 

 

Parent Net Investment

 

 

170,322

 

Partners’ Equity

 

 

 

Limited Partner

 

 

 

Common Units (90,136 and 23,759 units outstanding, respectively)

813,999

 

 

699,866

 

Subordinated Units (15,903 units outstanding as of December 31, 2018)

 

 

(130,207

)

General Partner

 

 

2,421

 

Total Partners’ Equity and Parent Net Investment

813,999

 

 

742,402

 

Noncontrolling Interests

340,857

 

 

744,153

 

Total Equity

1,154,856

 

 

1,486,555

 

Total Liabilities, Mezzanine Equity and Equity

$

2,926,082

 

 

$

2,192,178

 

Schedule 4
Noble Midstream Partners LP
Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures

Non-GAAP Financial Measures

This news release, the financial tables and other supplemental information include Adjusted EBITDA, Distributable Cash Flow, and Distribution Coverage Ratio, all of which are non-GAAP measures which may be used periodically by management when discussing our financial results with investors and analysts.

As a result of our increased investment in midstream entities during first quarter 2019, we have refined our presentation of Adjusted EBITDA to adjust for items with respect to our equity method investments. We now define Adjusted EBITDA as net income before income taxes, net interest expense, depreciation and amortization, transaction expenses, unit-based compensation and certain other items that we do not view as indicative of our ongoing performance. Additionally, Adjusted EBITDA reflects the adjusted earnings impact of our equity method investments by adjusting our equity earnings or losses from our equity method investments to reflect our proportionate share of the EBITDA of such equity method investments. The tables below also reflect Adjusted EBITDA prior to Drop-Down and Simplification Transaction. Prior period Adjusted EBITDA has been reclassified to conform to the current period presentation.

Adjusted 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.

As a result of our increased investment in midstream entities during first quarter 2019, we have also refined our presentation of distributable cash flow to adjust for items with respect to our equity method investments. We now define distributable cash flow as Adjusted EBITDA plus distributions received from our equity method investments less our proportionate share of Adjusted EBITDA from such equity method investments, estimated maintenance capital expenditures and cash interest paid. The tables below also reflect Adjusted EBITDA prior to Drop-Down and Simplification Transaction. Prior period distributable cash flow has been reclassified to conform to the current period presentation.

Distributable Cash Flow is used by management to evaluate our overall performance. Our partnership agreement requires us to distribute all available cash on a quarterly basis, and Distributable Cash Flow is one of the factors used by the board of directors of our general partner to help determine the amount of available cash that is available to our unitholders for a given period. We define Distribution Coverage Ratio as Distributable Cash Flow divided by total distributions declared. The Distribution Coverage Ratio is used by management to illustrate our ability to make our distributions each quarter.

We believe that the presentation of Adjusted EBITDA, Distributable Cash Flow, and Distribution Coverage Ratio provide information useful to investors in assessing our financial condition and results of operations. The GAAP measure most directly comparable to Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio is net income. Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio should not be considered alternatives to net income or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio exclude some, but not all, items that affect net income, and these measures may vary from those of other companies. As a result, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio as presented herein may not be comparable to similarly titled measures of other companies.

Noble Midstream does not provide guidance on the reconciling items between forecasted Net Income, forecasted Adjusted EBITDA, forecasted Distributable Cash Flow and forecasted Distribution Coverage Ratio due to the uncertainty regarding timing and estimates of these items. Noble Midstream provides a range for the forecasts of Net Income, Adjusted EBITDA, Distributable Cash Flow and Distribution Coverage Ratio to allow for the variability in timing and uncertainty of estimates of reconciling items between forecasted Net Income, forecasted Adjusted EBITDA, forecasted Distributable Cash Flow and forecasted Distribution Coverage Ratio. Therefore, the Partnership cannot reconcile forecasted Net Income to forecasted Adjusted EBITDA, forecasted Distributable Cash Flow or forecasted Distribution Coverage Ratio without unreasonable effort.

In addition to Net Income, the GAAP measure most directly comparable to Adjusted EBITDA and Distributable Cash Flow is net cash provided by operating activities. Adjusted EBITDA and Distributable Cash Flow 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. Due to the forward-looking nature of net cash provided by operating activities, management cannot reliably predict certain of the necessary components of the most directly comparable forward-looking GAAP measures, such as future impairments and future changes in working capital. Accordingly, Noble Midstream is unable to present a quantitative reconciliation of the aforementioned forward-looking non-GAAP financial measures to net cash provided by operating activities. Amounts excluded from these non-GAAP measures in future periods could be significant.

Schedule 4 (Continued)

Noble Midstream Partners LP

Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures

 

Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP)

and Distributable Cash Flow (Non-GAAP)

(in thousands, unaudited)

 

Three Months Ended
December 31,

 

2019

 

2018

Reconciliation from Net Income (GAAP)

 

 

 

Net Income (GAAP)

$

51,394

 

 

$

63,025

 

Add:

 

 

 

Depreciation and Amortization

25,396

 

 

22,815

 

Interest Expense, Net of Amount Capitalized

4,734

 

 

4,261

 

Tax Provision

796

 

 

1,946

 

Transaction and Integration Expenses

6,163

 

 

52

 

Proportionate Share of Equity Method Investment EBITDA Adjustments

6,330

 

 

(221

)

Unit-Based Compensation and Other

369

 

 

1,335

 

Adjusted EBITDA (Non-GAAP)

95,182

 

 

93,213

 

Less:

 

 

 

Adjusted EBITDA Prior to Drop-Down and Simplification Transaction

4,593

 

 

11,892

 

Adjusted EBITDA subsequent to Drop-Down and Simplification Transaction (Non-GAAP)

90,589

 

 

81,321

 

Less:

 

 

 

Adjusted EBITDA Attributable to Noncontrolling Interests

17,202

 

 

22,393

 

Adjusted EBITDA Attributable to Noble Midstream Partners LP (Non-GAAP)

73,387

 

 

58,928

 

Add:

 

 

 

Distribution from Equity Method Investments

1,480

 

 

2,900

 

Less:

 

 

 

Proportionate Share of Equity Method Investment Adjusted EBITDA

(7,247

)

 

4,090

 

Cash Interest Paid

9,772

 

 

5,065

 

Maintenance Capital Expenditures

7,011

 

 

5,721

 

Distributable Cash Flow of Noble Midstream Partners LP (Non-GAAP)

$

65,331

 

 

$

46,952

 

Distributions (Declared)

$

62,004

 

 

$

25,613

 

Distribution Coverage Ratio (Declared)

1.1x

 

 

1.8x

 

Schedule 4 (Continued)

Noble Midstream Partners LP

Reconciliations of GAAP Financial Measures to Non-GAAP Financial Measures

 

Reconciliation of Net Cash Provided by Operating Activities (GAAP) to

Adjusted EBITDA (Non-GAAP) and Distributable Cash Flow (Non-GAAP)

(in thousands, unaudited)

 

Three Months Ended
December 31,

 

2019

 

2018

Reconciliation from Net Cash Provided by Operating Activities (GAAP)

 

 

 

Net Cash Provided by Operating Activities (GAAP)

$

95,106

 

 

$

85,608

 

Add:

 

 

 

Interest Expense, Net of Amount Capitalized

4,734

 

 

4,272

 

Changes in Operating Assets and Liabilities

(5,261

)

 

7,526

 

Transaction and Integration Expenses

6,163

 

 

52

 

Equity Method Investment EBITDA Adjustments

(8,729

)

 

(1,609

)

Other Adjustments

3,169

 

 

(2,636

)

Adjusted EBITDA (Non-GAAP)

95,182

 

 

$

93,213

 

Less:

 

 

 

Adjusted EBITDA Prior to Drop-Down and Simplification Transaction

4,593

 

 

11,892

 

Adjusted EBITDA subsequent to Drop-Down and Simplification Transaction (Non-GAAP)

90,589

 

 

81,321

 

Less:

 

 

 

Adjusted EBITDA Attributable to Noncontrolling Interests

17,202

 

 

22,393

 

Adjusted EBITDA Attributable to Noble Midstream Partners LP (Non-GAAP)

73,387

 

 

58,928

 

Add:

 

 

 

Distribution from Equity Method Investments

1,480

 

 

2,900

 

Less:

 

 

 

Proportionate Share of Equity Method Investment Adjusted EBITDA

(7,247

)

 

4,090

 

Cash Interest Paid

9,772

 

 

5,065

 

Maintenance Capital Expenditures

7,011

 

 

5,721

 

Distributable Cash Flow of Noble Midstream Partners LP (Non-GAAP)

$

65,331

 

 

$

46,952

 

Distributions (Declared)

$

62,004

 

 

$

25,613

 

Distribution Coverage Ratio (Declared)

1.1x

 

 

1.8x

 

 

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