Aug 12 - Blueknight Energy Partners, L.P. Announces Second Quarter 2012 Results

Source Press Release
Company Blueknight Energy Partners, L.P. 
Tags Financial & Operating Data
Date August 07, 2012

Blueknight Energy Partners, L.P. announced adjusted EBITDA of $15.7 million and $31.5 million for the three and six months ended June 30, 2012, respectively. Reported adjusted EBITDA represents an increase of $1.9 million or 14% and $3.7 million or 13% as compared to the three and six months ended June 30, 2011, respectively. An explanation of adjusted EBITDA, including a reconciliation of such measure to net income (loss), is provided in the section of this release entitled “Non-GAAP Financial Measures.”

The Partnership reported net income of $6.1 million on total revenues of $43.8 million for the three months ended June 30, 2012, compared to a net loss of $5.3 million on total revenues of $43.1 million for the three months ended June 30, 2011. For the six months ended June 30, 2012, the Partnership reported net income of $18.1 million on total revenues of $88.3 million, compared to a net loss of $2.7 million on total revenues of $84.6 million for the six months ended June 30, 2011. Net income for the six months ended June 30, 2012 was impacted by a $12.2 million decrease in non-cash interest expense primarily related to the redemption of the subordinated convertible debentures which occurred in the fourth quarter of 2011. The Partnership also previously announced a quarterly cash distribution of $0.11 per common unit and $0.17875 per preferred unit payable on August 15, 2012 on all outstanding common and preferred units to unitholders of record as of the close of business on August 3, 2012. For further information regarding the Partnership's results of operations, please see the Partnership's Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, which was filed with the Securities and Exchange Commission.

“We are pleased with our second quarter results as reflected by our 14% increase in quarter over quarter adjusted EBITDA,” said J. Michael Cockrell, BKEP's president and COO. “Demand for crude oil trucking and field services continues to be strong. We completed construction of TransMontaigne’s one million barrels of crude oil storage at Cushing, Oklahoma and we expect to complete the construction of Vitol’s one million barrel crude oil storage terminal in Midland, Texas during the third quarter. BKEP will operate both of these facilities for our customers. With respect to growth, we currently have $50 million of capital projects underway with cashflows expected to begin in mid-2013, the most significant of which is the 65-mile Arbuckle pipeline which will transport crude oil from southeast Oklahoma to Cushing, Oklahoma. We remain optimistic that we will meet our objectives for 2012 and believe we have positioned BKEP for growth in future quarters.”

Results of Operations

The following table summarizes the financial results for the three and six months ended June 30, 2011 and 2012 (in thousands except per unit data):

      Three months ended      Six months ended 
      June 30,      June 30, 
      2011      2012      2011      2012 
      (unaudited) 
Service revenue:                         
Third party revenue      32,670        32,912      64,624        66,046 
Related party revenue        10,421          10,846        19,990          22,288 
Total revenue        43,091          43,758        84,614          88,334 
Expenses:                         
Operating        30,182          30,518        58,819          59,806 
General and administrative        4,777          4,386        9,386          9,489 
Total expenses        34,959          34,904        68,205          69,295 
Gain on sale of assets        687          263        710          5,219 
Operating income        8,819          9,117        17,119          24,258 
Other (income) expenses:                         
Interest expense        9,112          2,897        18,164          5,968 
Change in fair value of embedded derivative within convertible debt        3,431          —        (4,866        — 
Change in fair value of rights offering liability        1,544          —        6,386          — 
Income (loss) before income taxes        (5,268        6,220        (2,565        18,290 
Provision for income taxes        77          73        147          149 
Net income (loss)      (5,345      6,147      (2,712      18,141 
Allocation of net income (loss) for calculation of earnings per unit:                         
General partner interest in net income (loss)      (46      186      111        493 
Preferred interest in net income      2,975        5,391      8,149        10,782 
Beneficial conversion feature attributable to preferred units      11,021        —      21,920        1,853 
Income (loss) available to limited partners      (19,295      570      (32,892      5,013 
                         
Basic and diluted net income (loss) per common unit      (0.55      0.02      (0.94      0.22 
Basic and diluted net income (loss) per subordinated unit      (0.55      —      (0.94      — 
                         
Weighted average common units outstanding - basic and diluted        21,890          22,670        21,890          22,665 
Weighted average subordinated units outstanding - basic and diluted        12,571          —        12,571          — 
                                     
                                     

Non-GAAP Financial Measures

This press release contains the non-GAAP financial measure of adjusted EBITDA. Adjusted EBITDA is defined as earnings before interest, income taxes, depreciation, amortization, impairment, gain on sale of assets, and other miscellaneous non-cash items, including changes in the fair values of the embedded derivative within convertible debt and the rights offering liability. The use of adjusted EBITDA should not be considered as an alternative to GAAP measures such as net income or cash flows from operating activities. Adjusted EBITDA is presented because the Partnership believes it provides additional information with respect to its business activities and is used as a supplemental financial measure by management and external users of the Partnership's financial statements, such as investors, commercial banks and others, to assess, among other things, the Partnership's operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing or capital structure.

The following table presents a reconciliation of adjusted EBITDA to net income for the periods shown (in thousands):

      Three months ended      Six months ended 
      June 30,      June 30, 
        2011          2012          2011          2012   
Net income (loss)      (5,345      6,147        (2,712      18,141   
Interest expense        9,112          2,897          18,164          5,968   
Income taxes        77          73          147          149   
Depreciation and amortization        5,710          5,726          11,415          11,382   
Asset impairment charge        —          1,073          —          1,073   
Gain on sale of assets        (687        (263        (710        (5,219 
Change in fair value of embedded derivative within convertible debt        3,431          —          (4,866        —   
Change in fair value of rights offering liability        1,544          —          6,386          —   
Adjusted EBITDA      13,842        15,653        27,824        31,494   
Source: EvaluateEnergy® ©2019 EvaluateEnergy Ltd