Crestwood Equity Partners (CEQP) Misses Q2 EPS, Revs

Crestwood Equity Partners (NYSE: CEQP) reported Q2 EPS of ($0.68), $0.61 worse than the analyst estimate of ($0.07). Revenue for the quarter came in at $352.7 million versus the consensus estimate of $495.13 million.

Management Commentary

“Despite the unprecedented volatility and uncertainty faced by the energy industry during the first half of the year, I am very pleased with the resiliency of our diversified midstream portfolio in the second quarter generating Adjusted EBITDA of $127.8 million and Distributable Cash Flow of $74.4 million. Importantly, even in an extremely challenging quarter, both cash flow metrics were improved year-over-year and were well-above consensus estimates, driving robust leverage and coverage metrics of 4.2x and 1.6x, respectively, reflecting the current financial health of our partnership,” said Robert G. Phillips, Chairman, President and Chief Executive Officer of Crestwood’s general partner. “Our stronger than expected second quarter results were driven by improving oil demand, commodity prices and access to market that allowed our Bakken and Delaware Basin producers to swiftly restart shut-in production. Additionally, impressive contributions came from our crude oil storage and terminal assets at COLT, Dry Fork and Arrow, which enabled us to assist our Bakken producers during the market disruption this quarter. Finally, our recently acquired NGL storage and terminal assets were quickly integrated and made a timely contribution to stronger than normal second quarter performance by our MS&L segment.”

Mr. Phillips continued, “Looking to the second half of 2020, we have increasing confidence in our ability to deliver the mid-to-upper range of our revised annual guidance based on several factors including lower shut-in production on our oil-weighted systems, the resumption of completion activities of the DUC inventory on the Bakken Arrow system, and higher operating margins across our portfolio due to significantly reduced O&M and G&A costs. Moreover, while we are currently dealing with uncertainty regarding both the DAPL pipeline in the Bakken and the bankruptcy of Chesapeake Energy, primarily affecting our Powder River Basin and Marcellus assets, we do not expect these situations to be long-term impediments to meeting our future expectations. With respect to DAPL, Crestwood is taking aggressive steps to mitigate the impact of a potential DAPL shut-in by enhancing our other Arrow downstream connections and offering increased COLT availability for our Arrow producers. On Chesapeake, our G&P contracts in the Powder River Basin are not currently subject to the bankruptcy proceeding and are market-based and competitive with third parties in the region. Chesapeake is current on all payables and we continue to provide critical midstream services in the Powder River Basin and Marcellus. Chesapeake production volumes are currently running at reduced levels in the Powder River Basin due to current lower net-back prices but are at near-record production levels in the Marcellus through our Stagecoach assets. As we work through the challenges 2020 presents, our conservative financial strategy will continue to focus on liquidity and balance sheet strength to provide flexibility in a volatile market, and we will continue to navigate the company through this down cycle to drive increased value for our unitholders, including generating free cash flow after capital expenditures and distributions beginning in the third quarter.”

For earnings history and earnings-related data on Crestwood Equity Partners (CEQP) click here.

You May Also Be Interested In

• Nanometrics (NANO) Issues Business Update, Reports FY23 Results
• Empire State Realty Trust (ESRT) Reports Q1 EPS of $0.03
• Towne Bank (TOWN) Reports In-Line Q1 EPS