BreitBurn Energy Partners L.P. (BBEP)
Q3 2009 Earnings Call
November 6, 2009 01:00 p.m. ET
Jim Jackson - CFO
Hal Washburn - Chairman and Co-CEO
Randy Breitenbach - Co-CEO
Mark Pease - COO
Scott Hanold - RBC Capital
Michael Blum - Wells Fargo
Bryan Verona - Vanadium Capital
» BreitBurn Energy Partners Q4 2008 Earnings Call Transcript
» Talisman Energy, Inc. Q3 2009 Earnings Call Transcript
Thank you and good morning everyone. On with me today are Hal Washburn, BreitBurn's Chairman and Co-Chief Executive Officer, Randy Breitenbach, BreitBurn's Co-Chief Executive Officer and Mark Pease BreitBurn's Chief Operating Officer. Also with us are Greg Brown, our Executive Vice President of Land Legal and Governmental Affairs and our General Counsel. After our formal remarks, we'll open the call for questions from securities analyst and institutional investors.
Before I turn the call over to Hal, let me remind you, that today’s call contains projections, guidance and other forward-looking statements within the meaning of the Federal Securities Laws. All statements other the statements of historical facts that address future activities and outcomes are forward-looking statements.
These statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from those expressed or implied in such statements. These forward-looking statements are our best estimates today and are based upon our current expectations and assumptions, many of which are beyond our control. Actual conditions and those assumptions may, and probably will change from those we projected over the course of the year.
A detailed discussion of many of these uncertainties is set forth in the cautionary statement relative to forward-looking information section of our today’s release and under the heading Risk Factors incorporated by reference from our Annual Report on Form 10-K for the year-ended December 31, 2008, our Quarterly Reports on Form 10-Q, our current reports on Form 8-K and our other filings with the Securities and Exchange Commission.
Unpredictable or unknown factors not discussed in those documents also could have material adverse effects on forward-looking statements. The partnership undertakes no obligation to update publicly any forward-looking statements to reflect new information or events. Additionally, during the course of today’s discussion, management will refer to adjusted EBITDA, which is a non-GAAP financial measure when discussing the Partnership's financial results.
Adjusted EBITDA is reconciled to its most directly comparable GAAP measure in the earnings press release made earlier this morning and posted on the Partnership's website. These non-GAAP financial measure should not be considered as an alternative to GAAP measures such as net income, operating income, cash flow from operating activities or any other GAAP measure of liquidity or financial performance. Adjusted EBITDA is presented as management believes that provides additional information relative to the performance of the Partnership’s business such as our ability to meet our best compliance tests and covenants.
This non-GAAP financial measure 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 in the same manner. With that, let me turn the call over to Hal.
Thank you Jim. Welcome everyone. We're pleased to report another successful quarter in which the partnership has met or exceeded our annualized 2009 guidance. Our operations team is doing a great job in oil and gas production for the quarter continues to track above the high end of our 2009 guidance range.
From a financial point of view, we continue to reiterate and pursue the goals that we established at the beginning of the year and our financial flexibility continues to improve. Since year-end 2008, we’ve paid down approximately $160 million in debt and we will continue to pursue aggressive debt reduction through internally generated cash flows.
On October 5, 2009, we announced the results of our semi-annual borrowing redetermination. We're extremely pleased that our borrowing base was reaffirmed at $732 million and that we were able to successfully complete redetermination process without any modification to the other terms of our credit agreement. As we move into 2010, our improved liquidity position will allow us the flexibility to increase capital spending to at least maintenance capital levels.
Now let me turn to a few third quarter highlights. Total production for the third quarter was 1.63 million barrels of oil equivalent, which pro forma for the sales Lazy JL Field was virtually flat with the second quarter. Moreover I am pleased to report that even with the sales of Lazy JL, our third quarter production on annualized basis exceeded our 2009 production guidance. Fundamentally the business is performing very well and we're particularly pleased with the ongoing improvement in our Eastern Division.
Cost and expense reduction remain an important name both from an operational and the general and administrative perspective. We continue to pursue cost cutting initiatives and year-to-date LOV and G&A per Boe are well within our guidance. However, it appears that a few of our operating cost components are bottoming out this quarter with some service and materials expenses increasing slightly in response to recent increases in oil prices. Mark will expand on this shortly.