Azure Midstream Partners (AZUR) Reports Q4 Revenue of $18.1M, Says 10-K to Include Going Concern Paragraph

Azure Midstream Partners (NYSE: AZUR) reported Adjusted EBITDA for the fourth quarter 2015 of $11.0 million and net loss of ($1.8) million. Revenue for the quarter came in at $18.1 million versus the consensus estimate of $21.26 million.

Bank Waiver

The precipitous decline in oil and natural gas prices during 2015 and into 2016 has had a significant adverse impact on our business, and has impacted the Partnership's ability to comply with financial covenants and ratios in its credit agreement. Pursuant to an amendment to the credit agreement entered into on March 29, 2016 (the "Third Amendment"), we have received an agreement from our lenders that the default resulting from non-compliance with our covenants and ratios has been waived for the 2015 consolidated financial statements. Additionally, the Third Amendment includes waivers for certain other events of default through June 30, 2016. Notwithstanding the effects of these waivers, it is unlikely that we can comply with the leverage covenant currently contained in the credit agreement during the next twelve months.

Our credit agreement requires us to deliver audited financial statements with an unqualified opinion free of any going concern language. Based upon our current estimates and expectations for commodity prices in 2016, we do not expect to remain in compliance with all of the restrictive covenants contained in the credit agreement throughout 2016 unless those requirements are waived or amended. Absent future waivers or amendments, failure to meet these covenants and ratios would result in a default and, to the extent the applicable lenders so elect, an acceleration of the existing indebtedness, causing such debt of approximately $231.7 million to be immediately due and payable. The Partnership does not currently have adequate liquidity to repay all of its outstanding debt in full if such debt were accelerated. As a result of this potential default and acceleration, the Partnership's independent registered public accounting firm has informed us that its report on the Partnership's consolidated financial statements to be included in the Partnership's annual report on Form 10-K will include an explanatory paragraph to the effect that these conditions raise substantial doubt about the Partnership's ability to continue as a going concern for a reasonable period of time.

The partnership currently has $14.4M of cash on hand and intends to keep minimum liquidity of $9.0M through June 30, 2016. We expect ongoing sources of liquidity to include cash generated from operations, and we believe that cash generated from these sources will be sufficient to sustain operations.

For earnings history and earnings-related data on Azure Midstream Partners (AZUR) click here.

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