PVR Partners L.P.
) reported third-quarter 2013 pro forma earnings per unit of 5
cents, missing the Zacks Consensus Estimate by 3 cents. Quarterly
earnings also declined by 4 cents year over year.
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The disappointing result was primarily due to higher units
outstanding and a rise in interest expenses as well as total
On a GAAP basis, the partnership's earnings per unit were 18
cents. A 13 cents difference between GAAP and pro forma earnings
was due to a combined effect of a derivative gain, cash receipts
from derivatives settlement and a gain on sale of assets.
PVR Partners posted revenues of $289.0 million, surpassing the
Zacks Consensus Estimate by $14.0 million. The top line also
increased by 7.5% year over year.
The improvement in revenues was primarily due to a 93% and 2.1%
rise at the partnership's
segments' sales, respectively, on the back of an increase in
trunkline and gathering fees. The positives were partially offset
by a 26.5% year-over-year drop in
Coal and Natural Resource Management
segment's revenues due to weak performance from coal royalties
and coal services businesses.
The partnership's average daily natural gas throughput volumes
increased 80% year over year to 1.8 billion cubic feet per day
Total expenses jumped 16.1% year over year to $241.9 million due
to a rise in cost of gas purchased, general and administrative
expenses and depreciation expenses.
In the quarter under review, the partnership's adjusted earnings
before interest, tax, depreciation and amortization ("EBITDA")
surged 30.6% year over year to $79.9 million.
PVR Partners' cash and cash equivalents as of Sep 30, 2013, were
$7.9 million, down from $14.7 million as of Dec 31, 2012.
Net cash flow from operating activities in the third quarter was
$74.1 million, higher than $66.2 million in the year-ago
During the quarter, PVR Partners invested $76.9 million in its
internal growth projects for the midstream activities, including
an investment of $64.8 million at the Eastern Midstream Segment.
PVR Partners recently completed a couple of projects, including
two new compressor facilities in the Eastern Midstream segment
and an added phase of the Lycoming gathering system.
In addition, the partnership entered into an agreement with
) to provide trunkline plus gathering and compression services.
During the third quarter, the partnership connected 144 new
wells, including 39 wells in the Midcontinent Midstream segment.
On Oct 10, 2013, both PVR Partners and
Regency Energy Partners LP
) approved the deal, where the former will be acquired by Regency
Energy for $5.6 billion in first-quarter 2014. The transaction is
expected to be a unit-for-unit transaction, with a one-time cash
payment to the PVR unitholders.
Other Company Releases
) is slated to release its third-quarter earnings on Oct 31. The
Zacks Consensus Estimate is 31 cents.
Despite beating revenues, PVR Partners' bottom line again
missed the Zacks Consensus Estimate like last quarter mainly due
to a rise in units outstanding. In the last six months, the
partnership issued both common units and senior notes, which will
increase its debt level as well as the cost of funding.
We are also concerned about PVR Partners' current cash position.
In the last couple of quarters, the cash position is declining
continuously. If this trend prevails, then the partnership will
face challenge to service debts.
However, we appreciate the partnership's steady effort toward
expansion of its growth projects. The partnership currently has a
Zacks Rank #4 (Sell).