HOUSTON, May 7, 2009 (GLOBE NEWSWIRE) -- Targa Resources Partners LP ("Targa Resources Partners" or the "Partnership") (Nasdaq:NGLS) today reported a $2.1 million net loss for the first quarter 2009 (which includes an $18.5 million non-cash hedge loss), or $0.09 loss per diluted limited partner unit as compared to net income of $24.9 million, or $0.50 per diluted limited partner unit for the first quarter of 2008. The Partnership reported earnings before interest, income taxes, depreciation and amortization and non-cash income or loss related to derivative instruments ("Adjusted EBITDA") of $45.5 million for the first quarter of 2009 compared to Adjusted EBITDA of $52.6 million for the first quarter of 2008.
Distributable cash flow for the first quarter of 2009 was $33.6 million which corresponds to distribution coverage of approximately 1.3 times for the 47.2 million total units outstanding on March 31, 2009 (see the section of this release entitled "Non-GAAP Financial Measures" for a discussion of Adjusted EBITDA, operating margin and distributable cash flow, and reconciliations of such measures to the comparable GAAP measures).
"The strong performance of our operations combined with our cost control efforts and hedge program result in strong distribution coverage for the first quarter. These efforts along with our quarter end liquidity of approximately $400 million and discipline regarding capital expenditures position us to bridge the time required to determine what the long-term operating environment looks like for our business," said Rene Joyce, Chief Executive Officer of the Partnership's general partner and of Targa Resources, Inc. ("Targa").
On April 23, 2009, the Partnership announced a cash distribution of 51.75 cents per common and subordinated unit, or $2.07 per unit on an annualized basis, for the first quarter of 2009. This cash distribution will be paid May 15, 2009 on all outstanding common and subordinated units to holders of record as of the close of business on May 6, 2009. The distribution was equal to the previous quarter's distribution and reflects an increase of approximately 24% over the distribution for the first quarter of 2008.
Review of First Quarter Results
Net loss for the first quarter of 2009 was $2.1 million compared to $24.9 million of net income for the 2008 period. The decrease in net income was primarily attributable to an $18.5 million non-cash hedge loss compared to a $0.5 million non-cash hedge loss for the comparable period in 2008. The decrease in net income was also impacted by lower commodity prices and higher operating, depreciation, G&A, and interest expenses, partially offset by lower deferred income tax expenses and other income.
Revenues decreased $273.1 million, or 53%, to $239.0 million for the first quarter of 2009 from $512.1 million for the first quarter of 2008, driven primarily by lower prices for natural gas, NGL and condensate and lower natural gas, NGL and condensate sales volumes.
Gathering throughput (the volume of natural gas gathered and passed through natural gas gathering pipelines) for the first quarter of 2009 decreased 7% to 429.4 MMcf/d compared to 462.9 MMcf/d for the same period in 2008. Plant natural gas inlet volume (the volume of natural gas passing through the meters located at the inlets of our processing plants) was 7% lower at 408.2 MMcf/d for the first quarter of 2009 compared to 437.8 MMcf/d for the same period in 2008. These decreases result primarily from the impact of processing economics on our purchases of lower-margin, discretionary volumes at our LOU System from third party pipeline systems, somewhat offset by increases at our North Texas and SAOU Systems.
Gross NGL production of 41.6 MBbl/d for the first quarter of 2009 was 6% lower than gross NGL production of 44.4 MBbl/d for the first quarter of 2008. NGL sales of 37.2 MBbl/d for the first quarter of 2009 were 2% lower than the 38.0 MBbl/d sold during the first quarter of 2008. The decrease in NGL sales is primarily due to lower plant inlets. Natural gas sales volumes decreased 15% to 355.1 BBtu/d in the first quarter of 2009 compared to 418.4 BBtu/d during the first quarter of 2008. The decrease in natural gas sales is primarily the result of a decrease in demand by our industrial customers and a decrease in purchases from affiliates for resale.
The average realized natural gas price decreased by $3.46 per MMBtu, or 43%, to $4.56 per MMBtu for the first quarter of 2009 compared to $8.02 per MMBtu for the same period in 2008. The average realized price for NGLs decreased by $0.66 per gallon, or 55%, to $0.55 per gallon for the first quarter of 2009 compared to $1.21 per gallon for the same period in 2008. The average realized price for condensate decreased by $44.46 per barrel, or 52%, to $41.13 per barrel for the first quarter of 2009 compared to $85.59 per barrel for the first quarter of 2008. Realized prices reflect the impact of our hedging program.
Three Months Ended
March 31,
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2009 2008
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(In millions)
Revenues $239.0 $512.1
Product purchases 194.5 442.2
Operating expense, excluding DD&A 12.9 12.6
Depreciation and amortization expense 18.9 18.2
General and administrative expense 5.3 5.2
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Income from operations 7.4 33.9
Interest expense, net (9.9) (8.7)
Deferred income tax expense (0.3) (0.3)
Other 0.7 --
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Net income $ (2.1) $ 24.9
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Financial data:
Operating margin $ 31.6 $ 57.3
Adjusted EBITDA 45.5 52.6
Distributable cash flow 33.6 39.9
Operating data:
Gathering throughput, MMcf/d
LOU System 145.7 196.1
SAOU System 101.7 97.8
North Texas System 182.0 169.0
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429.4 462.9
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Plant natural gas inlet, MMcf/d
LOU System 140.6 185.1
SAOU System 91.4 90.4
North Texas System 176.2 162.3
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408.2 437.8
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Gross NGL production, MBbl/d
LOU System 7.6 10.9
SAOU System 14.3 14.1
North Texas System 19.7 19.4
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41.6 44.4
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Natural gas sales, BBtu/d 355.1 418.4
NGL sales, MBbl/d 37.2 38.0
Condensate sales, MBbl/d 3.4 3.7
Average realized prices:
Natural gas, $/MMBtu 4.56 8.02
NGLs, $/gal 0.55 1.21
Condensate, $/ Bbl 41.13 85.59
Capitalization and Liquidity Update
Total funded debt as of March 31, 2009 was approximately $697 million including approximately $488 million outstanding under our $850 million senior secured revolving credit facility and $209 million of senior unsecured notes. As of March 31, 2009, we had approximately $337 million in capacity available under our credit facility after giving effect to the Lehman default and the issuance of $15 million of letters of credit.
As of March 31, 2009, we had approximately $62 million of cash, bringing total liquidity to approximately $400 million. In addition to our strong liquidity position, we are well within our financial covenants and have no near term maturities under our credit facility or our senior unsecured notes.
We are revising our capital expenditures estimate for 2009 to be more inline with the approximately $55 million in 2008 due to cost control programs and cost savings. As we move through the year we may see additional impacts from these programs. Maintenance capital expenditures account for approximately 40% of the 2009 estimate.
Conference Call
Targa Resources Partners will host a conference call for investors and analysts at 11 a.m. Eastern Time (10 a.m. Central Time) on May 7, 2009 to discuss first quarter 2009 financial results. The conference call can be accessed via Webcast through the Investor's section of the Partnership's website at http://www.targaresources.com or by dialing 800-762-8795. The pass code is 4058507. Please dial in ten minutes prior to the scheduled start time. A replay will be available approximately two hours following completion of the Webcast through the Investor's section of the Partnership's website and will remain available until May 21, 2009.
