Breitburn Energy Partners LP
Feb 26, 2016

Breitburn Energy Partners Reports Fourth Quarter and Full Year 2015 Results and Provides Full Year 2016 Operational Guidance

LOS ANGELES--(BUSINESS WIRE)-- Breitburn Energy Partners LP (NASDAQ:BBEP) today announced financial and operating results for the fourth quarter and full year 2015 as well as operational guidance for its expected performance in 2016.

Key Highlights

Management Commentary

Halbert S. Washburn, Breitburn's Chief Executive Officer, said: "We were very proactive last year in adapting to a volatile commodity price environment. We had strong operating and financial results, with production coming in at the high end of our guidance and our capital, operating, and G&A costs performing in line with or better than our guidance. We were also one of the first oil and gas companies to raise significant capital last year, and through our financing and cost cutting efforts, we were able to reduce our bank borrowings by nearly $1 billion in 2015. In light of the ongoing weakness in commodity prices, we are cutting our 2016 capital program by 60% to approximately $80 million, but because of our quality, long-lived, low-decline assets we only expect a 9% reduction to our 2016 production. With the continued hard work of our experienced team, we believe we are well-positioned to execute our operating plan successfully again this year."

Fourth Quarter 2015 Operating and Financial Results Compared to Third Quarter 2015

Full Year 2015 Results

Liquidity

As of February 25, 2016, we had approximately $1.2 billion in borrowings outstanding under our credit facility. The borrowing base at December 31, 2015 was $1.8 billion and is scheduled to be redetermined in April 2016, at which time we expect it to be significantly decreased. Although our lenders have the discretion to redetermine the borrowing base below our current outstanding borrowings, we do not expect that to occur in April 2016. If commodity prices remain depressed or further decline, we expect our borrowing base to be reduced again at the subsequent borrowing base redetermination in October 2016, which could further impact and limit our liquidity.

2015 Estimated Proved Reserves

Total estimated proved reserves as of December 31, 2015, were 239.3 MMBoe compared to total estimated proved reserves of 315.3 MMBoe as of December 31, 2014. The standardized measure of discounted future net cash flows related to our estimated proved reserves was approximately $1.3 billion as of December 31, 2015, compared to approximately $4.5 billion as of December 31, 2014. Of the total estimated proved reserves, 54% were oil, 8% were NGLs and 38% were natural gas, and 80% were classified as proved developed. Set forth below is a breakdown of Breitburn's total estimated proved reserves among its seven operating areas:

     
% Estimated Proved
Operating Area Reserves
Midwest 21.5%
Ark-La-Tex 19.6%
Permian Basin 18.7%
Mid-Continent 13.5%
Rockies 10.7%
Southeast 8.5%
California 7.5%
 

The unweighted average first-day-of-the-month oil and natural gas prices used to determine our total estimated proved reserves as of December 31, 2015, were $50.28 per Bbl of oil for WTI NYMEX and $2.59 per MMBtu of natural gas for Henry Hub.

2016 Operational Guidance (Excludes Acquisitions, Divestitures or Financing Transactions)

Breitburn's 2016 Operational Guidance is subject to all of the cautionary statements and limitations described below and therein and under the caption "Cautionary Statement Regarding Forward-Looking Information." Estimates for Breitburn's future production volumes are based on, among other things, assumptions of capital expenditure levels and the assumption that market demand and prices for oil and gas will continue at levels that allow for economic production of these products, and estimated future volumes may be lower due to the impact of wells being shut-in or not being repaired due to their being uneconomic at current or commodity prices. The production, transportation and marketing of oil and gas are extremely complex and are subject to disruption due to transportation and processing availability, mechanical failure, human error, weather, and numerous other factors, including the inability to obtain expected supply of CO2. Breitburn's estimates are based on certain other assumptions, such as well performance, which may actually vary significantly from those assumed. Lease operating costs, including major maintenance costs, vary in response to changes in prices of services and materials used in the operation of our properties and the amount of maintenance activity required. Lease operating costs, including taxes, utilities and service company costs, move directionally with increases and decreases in commodity prices, and we cannot fully predict such future commodity or operating costs. Similarly, interest rates and price differentials are set by the market and are not within our control, and they can vary dramatically from time to time. Capital expenditures are based on our current expectations as to the level of capital expenditures that will be justified based upon the other assumptions set forth below as well as expectations about other operating and economic factors not set forth below. Breitburn's 2016 Operational Guidance does not constitute any form of guarantee, assurance or promise that the matters indicated will actually be achieved; rather it simply sets forth our best estimate today for these matters based upon our current expectations about the future based upon both stated and unstated assumptions. Actual conditions and those assumptions may, and probably will, change over the course of the year.

 
($ in 000s)       2016 Operational Guidance (1)
Total Production (MBoe):       17,000 19,700
Oil Production (MBbls) 9,000 10,500
NGL Production (MBbls) 1,750 1,950
Natural Gas Production (MMcfe)       37,500 43,500
Average Price Differential %:
WTI Oil Price Differential % 85.0% 93.0%
NGL Price Differential % (of WTI) 30.0% 50.0%
Natural Gas Price Differential %       100.0% 105.0%

Oil, NGL, and Natural Gas Sales Revenue (2)

$330,000 $430,000

Other Revenue (3)

$25,000 $33,000

Lease Operating Expenses / Boe (4)

$18.00 $20.00

Other Operating Expenses (5)

$16,000 $18,000
Production / Property Taxes (% of Sales Revenue) 8.00% 8.50%

G&A (Excluding Unit Based Compensation) (6)

$56,000 $60,000

Adjusted EBITDA (7)

$490,000 $525,000

Cash Interest Expense (8)

$191,000 $197,000

Preferred Equity Distributions (9)

 

$16,500

Capital Expenditures (10)

 

$80,000

 
(1)   Breitburn's 2016 Operational Guidance is based on flat $30 per barrel WTI crude oil, $30 per barrel Brent crude oil and $2.30 per Mcf natural gas prices and excludes acquisitions, divestitures or financing transactions. Operating costs and capital expenditures generally track commodity prices but they do not increase or decrease as quickly as commodity prices.
(2) Range based on the low and high values of production and differentials as set forth above.
(3) Primarily consists of other revenues from the East Texas Salt Water Disposal System and the Postle Field in OK.
(4) Pre-tax lease operating expenses include processing fees, district expenses, and transportation costs.
(5) Represents costs related to the East Texas Salt Water Disposal System.
(6) Excludes approximately $10 million in long-term compensation and severance payments paid in cash.
(7) Assuming the high and low ranges of production and LOE guidance (and the midpoint for the remaining guidance components), Adjusted EBITDA is expected to range between $490 million and $525 million, and is comprised of estimated net loss (before non-cash compensation and non-cash distributions paid-in-kind to holders of 8% Series B Preferred Units) between ($541) million (low end of Adjusted EBITDA) and ($500) million (high end of Adjusted EBITDA), plus unrealized losses on commodity derivative instruments of $385 million, plus DD&A of $433 million, plus interest expense between $191 million (high end of Adjusted EBITDA) and $197 million (low end of Adjusted EBITDA), plus preferred distributions to holders of 8.25% Series A Preferred Units of $16.5 million. Differences between actual and forecast prices could result in changes to unrealized gains or losses on commodity derivative instruments, DD&A, including potential impairments of long-lived assets, and ultimately, net income.
(8) Typically, Breitburn's borrowings under its credit facility are based on 1-month LIBOR plus an applicable spread ranging from 175 bps to 275 bps. Cash interest expense assumes a 1-month LIBOR rate of 0.50%.
(9) Reflects cash distributions paid to holders of 8.25% Series A Cumulative Redeemable Perpetual Preferred Units and assumes that distributions owed to holders of 8% Series B Perpetual Convertible Preferred Units will be paid in kind.
(10) Capital expenditures exclude information technology spending of $1.7 million and capitalized engineering of $4.3 million.
 

Impact of Derivative Instruments

Breitburn uses commodity derivative instruments to mitigate risks associated with commodity price volatility and to help maintain cash flows for operating activities, acquisitions, capital expenditures and distributions. Breitburn does not enter into derivative instruments for speculative trading purposes. Since Breitburn does not use hedge accounting to account for its derivative instruments, changes in the fair value of derivative instruments are recorded in Breitburn's earnings during each reporting period. These non-cash changes in the fair value of derivatives do not affect Adjusted EBITDA, cash flow from operations and distributable cash flow presented.

Production, Statement of Operations, and Realized Price Information

The following table presents production, selected income statement and realized price information for the three months ended December 31, 2015 and 2014, the three months ended September 30, 2015, and the full year results for 2015 and 2014:

 
      Three Months Ended       Year Ended
December 31,       September 30,       December 31, December 31,
Thousands of dollars, except as indicated 2015 2015 2014 2015       2014
Oil sales $ 108,024 $ 117,743 $ 151,335 $ 504,035 $ 669,355
NGL sales 6,852 6,032 9,709 29,336 41,031
Natural gas sales 24,812 29,550 36,023 111,901 145,434

Gain on commodity derivative instruments

141,842 253,012 587,590 438,614 566,533
Other revenues, net   5,934     5,922     3,376   24,829     7,616  
Total revenues   287,464     412,259     788,033   1,108,715     1,429,969  
Lease operating expenses (a) 90,563 99,318 90,768 383,827 291,395
Production and property taxes (b)   9,033     13,249     14,084   51,174     62,071  
Total lease operating expenses   99,596     112,567     104,852   435,001     353,466  
Purchases and other operating costs 2,119 367 299 3,056 725
Salt water disposal costs 2,408 4,205 2,168 14,687 2,168
Change in inventory   2,116     (2,004 )   201   2,445     (678 )
Total operating costs   106,239     115,135     107,520   455,189     355,681  
Lease operating expenses, pre taxes, per Boe (a) $ 17.74 $ 19.83 $ 21.77 $ 19.02 $ 20.65
Production and property taxes per Boe (b)   1.77     2.65     3.38   2.54     4.40  
Total lease operating expenses per Boe   19.51     22.48     25.15   21.56     25.05  
General and administrative expenses (excluding non-cash unit-based compensation)   14,508     16,916     28,116   73,537     63,562  
Net (loss) income attributable to the partnership (890,878 ) (1,327,929 ) 405,173 (2,583,339 ) 421,333
 
Basic net (loss) income per unit $ (4.25 ) $ (6.17 ) $ 2.28 $ (12.39 ) $ 3.04
Diluted net (loss) income per unit $ (4.25 ) $ (6.17 ) $ 2.27 $ (12.39 ) $ 3.02
 
Total production (MBoe) (c) 5,106 5,008 4,170 20,180 14,114
Oil (MBbl) 2,795 2,741 2,327 11,248 7,931
NGLs (MBbl) 526 485 368 1,953 1,157
Natural gas (MMcf) 10,712 10,689 8,847 41,876 30,159
Average daily production (Boe/d)   55,500     54,435     45,313   55,288     38,670  
Sales volumes (MBoe) (d)   5,151     4,980     4,022   20,219     13,956  
Average realized sales price (per Boe) (e) (f) $ 26.72 $ 30.78 $ 48.96 $ 31.80 $ 61.30
Oil (per Bbl) (e) (f) 37.31 43.38 69.36 44.46 86.08
NGLs (per Bbl) (e) 13.03 12.44 26.38 15.02 35.46
Natural gas (per Mcf) (e) $ 2.32 $ 2.76 $ 4.07 $ 2.67 $ 4.82
 
(a)   Includes district expenses, processing fees, and transportation expenses.
(b) Includes ad valorem and severance taxes.
(c) Natural gas is converted on the basis of six Mcf of gas per one Bbl of oil equivalent. This ratio reflects an energy content equivalency and not a price or revenue equivalency. Given commodity price disparities, the price for a Bbl of oil equivalent for natural gas is significantly less than the price for a Bbl of oil.
(d) Oil sales were 2,841 MBbl, 2,713 MBbl and 2,180 MBbl for the three months ended December 31, 2015, September 30, 2015 and December 31, 2014, respectively, and 11,287 MBbl and 7,773 MBbl for the twelve months ended December 31, 2015 and 2014, respectively.
(e) Excludes the effect of commodity derivative settlements.
(f) Includes oil purchases.
 

Non-GAAP Financial Measures

This press release, including the financial tables and other supplemental information and reconciliations of certain non-generally accepted accounting principles ("non-GAAP") measures to their nearest comparable generally accepted accounting principles ("GAAP") measures, may be used periodically by management when discussing Breitburn's financial results with investors and analysts, and they are also available at breitburn.com.

"Adjusted EBITDA" and "distributable cash flow" are among the non-GAAP financial measures used in this press release. These non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income, operating income, cash flow from operating activities or any other GAAP measure of liquidity or financial performance. Management believes that these non-GAAP financial measures enhance comparability to prior periods.

Adjusted EBITDA is presented because management believes it provides additional information relative to the performance of Breitburn's assets, without regard to financing methods or capital structure. Distributable cash flow is used by management as a tool to measure the cash distributions we could pay to our unitholders. This financial measure indicates to investors whether or not we are generating cash flow at a level that can support our distribution rate to our unitholders. These non-GAAP financial measures may not be comparable to similarly titled measures of other publicly traded partnerships or limited liability companies because all companies may not calculate Adjusted EBITDA or distributable cash flow in the same manner.

Adjusted EBITDA

The following table presents a reconciliation of net income (loss) and net cash flows from operating activities, our most directly comparable GAAP financial performance and liquidity measures, to Adjusted EBITDA for each of the periods indicated.

 
      Three Months Ended       Year Ended
December 31,       September 30,       December 31, December 31,
Thousands of dollars, except as indicated 2015 2015 2014 2015       2014
Reconciliation of net income (loss) to Adjusted EBITDA:
Net (loss) income attributable to the partnership $ (890,878 ) $ (1,327,929 ) $ 405,173 $ (2,583,339 ) $ 421,333

Gain on commodity derivative instruments

(141,842 ) (253,012 ) (587,590 ) (438,614 ) (566,533 )
Commodity derivative instrument settlements (a) (b) 144,083 128,969 62,053 499,985 27,825
Depletion, depreciation and amortization expense 123,312 117,464 87,292 460,047 291,709
Impairment of oil and natural gas properties 878,335 1,440,167 119,566 2,377,615 149,000
Impairment of goodwill 95,947
Interest expense and other financing costs 50,319 51,915 36,110 205,718 126,470
(Gain) loss on sale of assets (1,542 ) (7,459 ) 306 (8,864 ) 663
Income tax expense (benefit) 1,162 14 (457 ) 1,527 (73 )
Unit-based compensation expense (c) 6,091 6,360 4,947 25,462 23,387
Restructuring costs - unit-based compensation       (192 )       1,343      
Adjusted EBITDA 169,040 156,297 127,400 636,827 473,781
Less:
Maintenance capital (d) $ 51,000 $ 52,000 $ 43,714 $ 200,000 $ 133,079
Cash interest expense 48,374 48,654 35,651 184,007 120,470
Distributions to preferred unitholders   4,125     4,125     4,125     16,500     10,083  
Distributable cash flow available to common unitholders $ 65,541   $ 51,518   $ 43,910   $ 236,320   $ 210,149  
 
Distributable cash flow available per common unit (e) (f) $ 0.296 $ 0.237 $ 0.207 $ 1.086 $ 1.431

Common unit distribution coverage (f)

n/a

1.90x

0.83x

3.26x

0.81x

 
Reconciliation of net cash flows from operating activities to Adjusted EBITDA:
 
Net cash provided by operating activities $ 85,521 $ 136,239 $ 62,839 $ 436,705 $ 357,755
Increase (decrease) in assets net of liabilities relating to operating activities 35,665 (29,063 ) 29,199 16,369 (4,057 )
Interest expense (g) 48,364 48,562 35,563 183,852 120,143
Income from equity affiliates, net 94 163 (88 ) 104 (178 )
Noncontrolling interest (202 ) (91 ) 17 (326 ) 17
Income taxes (413 ) 488 (130 ) 258 101
Gain on marketable securities   11             (135 )    
Adjusted EBITDA $ 169,040   $ 156,297   $ 127,400   $ 636,827   $ 473,781  
 

(a)

 

Excludes premiums paid at contract inception related to those derivative contracts that settled during the applicable periods of:

$

1,682

$

1,681

$

2,141

$

6,672

$

8,494

(b)

Includes net cash settlements on derivative instruments for:

- Oil settlements received:

123,492

112,437

55,975

431,073

18,230

- Natural gas settlements received:

20,592

16,532

6,078

68,913

9,595

(c)

Represents non-cash long-term unit-based incentive compensation expense.

(d)

Maintenance capital is management's estimate of the investment in capital projects and obligatory spending on existing facilities and operations needed to hold production approximately flat over a multi-year period.

(e)

Based on common units outstanding (including outstanding LTIP grants) at each distribution record date within the periods.

(f)

Third quarter 2014 includes the effect of the offering of 14 million common units in October 2014. Fourth quarter 2014 includes only 41 days of QR Energy operating results, $11.7 million of acquisition and integration costs, and the effect of 71.5 million common units issued in connection with the QR Energy merger.

(g)

Excludes amortization of debt issuance costs and amortization of senior note discount/premium.

 

Summary of Commodity Derivative Instruments

The table below summarizes Breitburn's commodity derivative hedge portfolio as of February 25, 2016. Please refer to the Commodity Price Protection Portfolio at breitburn.com for additional information related to our hedge portfolio.

 
      Year
  2016       2017       2018         2019
Oil Positions:
Fixed Price Swaps - NYMEX WTI
Volume (Bbl/d) 17,504 14,519 1,493 1,000
Average Price ($/Bbl) $ 83.62 $ 82.81 $ 64.02 $ 56.35
Fixed Price Swaps - ICE Brent
Volume (Bbl/d) 4,300 298
Average Price ($/Bbl) $ 95.17 $ 97.50 $ $
Collars - NYMEX WTI
Volume (Bbl/d) 1,500
Average Floor Price ($/Bbl) $ 80.00 $ $ $
Average Ceiling Price ($/Bbl) $ 102.00 $ $ $
Collars - ICE Brent
Volume (Bbl/d) 500
Average Floor Price ($/Bbl) $ 90.00 $ $ $
Average Ceiling Price ($/Bbl) $ 101.25 $ $ $
Puts - NYMEX WTI
Volume (Bbl/d) 1,000
Average Price ($/Bbl) $ 90.00 $ $ $
Total:
Volume (Bbl/d) 24,804 14,817 1,493 1,000
Average Price ($/Bbl) $ 85.79 $ 83.11 $ 64.02 $ 56.35
 
Gas Positions:
Fixed Price Swaps - MichCon City-Gate
Volume (MMBtu/d) 29,000 24,000 17,500 10,000
Average Price ($/MMBtu) $ 3.91 $ 3.71 $ 3.10 $ 3.15
Fixed Price Swaps - Henry Hub
Volume (MMBtu/d) 42,050 21,016 2,870
Average Price ($/MMBtu) $ 4.02 $ 4.29 $ 3.74 $
Collars - Henry Hub
Volume (MMBtu/d) 630 595
Average Floor Price ($/MMBtu) $ 4.00 $ 4.00 $ $
Average Ceiling Price ($/MMBtu) $ 5.55 $ 6.15 $ $
Puts - Henry Hub
Volume (MMBtu/d) 11,350 10,445
Average Price ($/MMBtu) $ 4.00 $ 4.00 $ $
Deferred Premium ($/MMBtu) $ 0.66 (a) $ 0.69 (b) $ $
Total:
Volume (MMBtu/d) 83,030 56,056 20,370 10,000
Average Price ($/MMBtu) $ 3.98 $ 3.98 $ 3.19 $ 3.15
 
(a)   Deferred premiums of $0.66 apply to 11,350 MMBtu/d of the 2016 volume.
(b) Deferred premiums of $0.69 apply to 10,445 MMBtu/d of the 2017 volume.
 

Premiums paid in 2012 related to oil and natural gas derivatives to be settled in 2016 and beyond were as follows:

 
      Year
Thousands of dollars 2016       2017       2018       2019
Oil $ 7,438 $ 734 $ $
Natural gas 952
 

Other Information

Breitburn will host a conference call Friday, February 26, 2016, at 9:00 a.m. (ET) to discuss Breitburn's fourth quarter and full year 2015 results. The conference call may be accessed by calling 888-461-2024 (international callers dial 719-325-2494) or via webcast at http://ir.breitburn.com/. An archived edition of the conference call will also be available through March 4th by calling 877-870-5176 (international callers dial 858-384-5517) and entering replay PIN 919731 or by visiting http://ir.breitburn.com/.

About Breitburn Energy Partners LP

Breitburn Energy Partners LP is a publicly traded independent oil and gas master limited partnership focused on the acquisition, development, and production of oil and gas properties throughout the United States. Breitburn's producing and non-producing crude oil and natural gas reserves are located in Ark-La-Tex; the Midwest; the Permian Basin; the Mid-Continent; the Rockies; the Southeast; and California. See www.breitburn.com for more information.

Cautionary Statement Regarding Forward-Looking Information

This press release contains forward-looking statements relating to Breitburn's operations that are based on management's current expectations, estimates and projections about its operations. Words and phrases such as "believes," "expect," "future," "impact," "guidance," "will be," "forecast" and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, some of which are beyond our control and are difficult to predict. These include risks relating to Breitburn's financial performance and results, availability of sufficient cash flow and other sources of liquidity to execute our business plan, prices and demand for natural gas and oil, increases in operating costs, uncertainties inherent in estimating our reserves and production, our ability to replace reserves and efficiently develop our current reserves, political and regulatory developments relating to taxes, derivatives and our oil and gas operations, risks relating to our acquisitions and the factors set forth under the heading "Risk Factors" incorporated by reference from our Annual Report on Form 10-K filed with the Securities and Exchange Commission, and if applicable, our Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The reader should not place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Unless legally required, Breitburn undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Unpredictable or unknown factors not discussed herein also could have material adverse effects on forward-looking statements.

BBEP-IR

 
Breitburn Energy Partners LP and Subsidiaries
Consolidated Balance Sheets
 
      December 31,       December 31,
Thousands of dollars 2015 2014
ASSETS
Current assets
Cash $ 10,464 $ 12,628
Accounts and other receivables, net 128,589 166,436
Derivative instruments 439,627 408,151
Related party receivables 2,274 2,462
Inventory 926 3,727
Prepaid expenses   6,447     7,304  
Total current assets 588,327 600,708
Equity investments 6,567 6,463
Property, plant and equipment
Oil and natural gas properties 7,898,117 7,736,409
Other property, plant and equipment   188,795     60,533  
8,086,912 7,796,942
Accumulated depletion and depreciation   (4,154,030 )   (1,342,741 )
Net property, plant and equipment 3,932,882 6,454,201
Other long-term assets
Goodwill 92,024
Derivative instruments 226,764 319,560
Other long-term assets 117,872 165,378
Total assets $ 4,872,412   $ 7,638,334  
LIABILITIES AND EQUITY
Current liabilities
Accounts payable $ 50,412 $ 129,270
Current portion of long-term debt 154,000 105,000
Derivative instruments 4,462 5,457
Distributions payable 733 733
Current portion of asset retirement obligation 2,341 4,948
Revenue and royalties payable 35,462 40,452
Wages and salaries payable 21,654 22,322
Accrued interest payable 19,517 20,672
Production and property taxes payable 24,292 25,207
Other current liabilities   5,133     7,495  
Total current liabilities 318,006 361,556
Credit facility 1,075,000 2,089,500
Senior notes, net 1,789,219 1,156,560
Other long-term debt   2,938     1,100  
Total long-term debt 2,867,157 3,247,160
Deferred income taxes 3,844 2,575
Asset retirement obligation 252,037 233,463
Derivative instruments 255 2,269
Other long-term liabilities   25,218     25,135  
Total liabilities 3,466,517 3,872,158
Equity
Series A preferred units, 8.0 million units issued and outstanding at December 31, 2015 and December 31, 2014 193,215 193,215
Series B preferred units, 48.8 million and 0 units issued and outstanding at December 31, 2015 and December 31, 2014, respectively 353,471
Common units, 213.5 million and 210.9 million units issued and outstanding at December 31, 2015 and December 31, 2014, respectively 852,114 3,566,468
Accumulated other comprehensive loss   (229 )   (392 )
Total partners' equity 1,398,571 3,759,291
Noncontrolling interest   7,324     6,885  
Total equity   1,405,895     3,766,176  
Total liabilities and equity $ 4,872,412   $ 7,638,334  
 
 
Breitburn Energy Partners LP and Subsidiaries
Consolidated Statements of Operations
 
      Three Months Ended       Year Ended
December 31, December 31,
Thousands of dollars, except per unit amounts 2015       2014 2015       2014
 
Revenues and other income items
Oil, natural gas and natural gas liquid sales $ 139,688 $ 197,067 $ 645,272 $ 855,820
Gain on commodity derivative instruments, net 141,842 587,590 438,614 566,533
Other revenue, net   5,934     3,376     24,829     7,616  
Total revenues and other income items 287,464 788,033 1,108,715 1,429,969
Operating costs and expenses
Operating costs 106,239 107,520 455,189 355,681
Depletion, depreciation and amortization 123,312 87,292 460,047 291,709
Impairment of oil and natural gas properties 878,335 119,566 2,377,615 149,000
Impairment of goodwill 95,947
General and administrative expenses 20,599 33,063 98,999 86,949
Restructuring costs (49 ) 6,364
(Gain) loss on sale of assets   (1,542 )   306     (8,864 )   663  
Total operating costs and expenses   1,126,894     347,747     3,485,297     884,002  
Operating (loss) income (839,430 ) 440,286 (2,376,582 ) 545,967
Interest expense, net of capitalized interest 51,039 36,600 203,027 126,960
Gain on interest rate swaps (720 ) (490 ) 2,691 (490 )
Other income, net   (235 )   (523 )   (814 )   (1,746 )
Total other expense   50,084     35,587     204,904     124,724  
(Loss) income before taxes (889,514 ) 404,699 (2,581,486 ) 421,243
Income tax expense (benefit)   1,162     (457 )   1,527     (73 )
Net (loss) income (890,676 ) 405,156 (2,583,013 ) 421,316
Less: Net income (loss) attributable to noncontrolling interest   202     (17 )   326     (17 )
Net (loss) income attributable to the partnership   (890,878 )   405,173     (2,583,339 )   421,333  
Less: Distributions to Series A preferred unitholders 4,125 4,125 16,500 10,083
Less: Non-cash distributions to Series B preferred unitholders 7,264 20,817
Less: Net income (loss) attributable to participating units 3,927 5,348
Less: Distributions on participating units in excess of earnings           1,731      
Net (loss) income used to calculate basic and diluted net (loss) income per unit $ (902,267 ) $ 397,121   $ (2,622,387 ) $ 405,902  
 
Basic net (loss) income per unit $ (4.25 ) $ 2.28   $ (12.39 ) $ 3.04  
Diluted net (loss) income per unit $ (4.25 ) $ 2.27   $ (12.39 ) $ 3.02  
 
 
Breitburn Energy Partners LP and Subsidiaries
Consolidated Statements of Comprehensive Income
 
      Year Ended December 31,
Thousands of dollars, except per unit amounts 2015       2014
Net (loss) income $ (2,583,013 ) $ 421,316
 
Other comprehensive (loss) income, net of tax:
Change in fair value of available-for-sale securities (a) (402 ) (189 )
Pension and post-retirement benefit actuarial gain (loss) (b)   677     (473 )
Total other comprehensive income (loss), net of tax   275     (662 )
Total comprehensive (loss) income   (2,582,738 )   420,654  
Less: Comprehensive income (loss) attributable to noncontrolling interest   438     (287 )
Comprehensive (loss) income attributable to the partnership $ (2,583,176 ) $ 420,941  
 
(a)   Net of income taxes of $0.3 million and $0.1 million for the years ended December 31, 2015 and 2014, respectively.
(b) Net of income tax (benefit) expense of $(0.1) million and $0.2 million for the years ended December 31, 2015 and 2014, respectively.
 
 
Breitburn Energy Partners LP and Subsidiaries
Consolidated Statements of Cash Flows
 
      Year Ended December 31,
Thousands of dollars 2015       2014
 
Cash flows from operating activities
Net (loss) income $ (2,583,013 ) $ 421,316
Adjustments to reconcile net (loss) income to cash flow from operating activities:
Depletion, depreciation and amortization 460,047 291,709
Impairment of oil and natural gas properties 2,377,615 149,000
Impairment of goodwill 95,947
Unit-based compensation expense 26,805 23,387
Gain on derivative instruments (435,923 ) (567,024 )
Derivative instrument settlement receipts 494,234 26,806
Income from equity affiliates, net (104 ) 178
Deferred income taxes 1,269 (174 )
(Gain) loss on sale of assets (8,864 ) 663
Other 16,142 6,204
Changes in assets and liabilities:
Accounts receivable and other assets 35,367 41,754
Inventory 2,801 163
Net change in related party receivables and payables 188 142
Accounts payable and other liabilities   (45,806 )   (36,369 )
Net cash provided by operating activities   436,705     357,755  
Cash flows from investing activities
Property acquisitions (18,201 ) (401,465 )
Capital expenditures (269,350 ) (417,755 )
Other (853 ) (18,283 )
Proceeds from sale of assets 14,547 499
Proceeds from sale of available-for-sale securities 3,875
Purchases of available-for-sale securities   (4,021 )    
Net cash used in investing activities   (274,003 )   (837,004 )
Cash flows from financing activities
Proceeds from issuance of preferred units, net 337,238 193,215
Proceeds from issuance of common units, net 3,008 277,613
Distributions to preferred unitholders (16,502 ) (9,350 )
Distributions to common unitholders (126,188 ) (264,585 )
Proceeds from issuance of long-term debt, net 1,378,338 2,457,600
Repayments of long-term debt (1,711,500 ) (1,785,000 )
Senior note redemption (352,531 )
Change in book overdraft 11 (2,434 )
Debt issuance costs   (29,271 )   (25,109 )
Net cash (used in) provided by financing activities   (164,866 )   489,419  
(Decrease) increase in cash (2,164 ) 10,170
Cash beginning of period   12,628     2,458  
Cash end of period $ 10,464   $ 12,628  
 

Breitburn Energy Partners LP
Antonio D'Amico
Vice President, Investor Relations & Government Affairs
or
Jessica Tang
Investor Relations Manager
(213) 225-0390

Source: Breitburn Energy Partners LP

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