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Crosstex Energy LP (XTEX)
Q1 2009 Earnings Call
May 8, 2009 11:00 am ET
Jill McMillan - Manager, Public & Industry Affairs
Barry Davis - President and CEO
Bill Davis - EVP and CFO
Bob Purgason - EVP and COO
Sharon Lui - Wachovia
John Edwards - Morgan, Keegan & Company
James Jampel - HITE
Previous Statements by XTEX
» Crosstex Energy L.P. Q3 2009 Earnings Call Transcript
» Crosstex Energy L.P. Q2 2009 Earnings Call Transcript
» Crosstex Energy, L.P. Business Update Call Transcript
I would now like to turn the call over to Ms. Jill McMillan of Crosstex Energy. Please proceed, madam.
Thank you, Jerry, and good morning everyone. Thank you for joining us today to discuss Crosstex first quarter 2009 results. On the call today are, Barry Davis, President and Chief Executive Officer; Bill Davis, Executive Vice President and Chief Financial Officer; and Bob Purgason, Executive Vice President and Chief Operating Officer. Barry will begin our call with some brief introductory remarks and an overview of our first quarter performance, then Bill will discuss detailed financial results and Bob will provide an operational update.
Finally, Barry will briefly discuss the outlook for Crosstex. At the end of the call, Barry, Bill, and Bob will answer your questions. Our first quarter 2009 earnings release was issued early this morning. For those of you who didn't receive a copy, it is available on our website at crosstexenergy.com. If you want to listen to a recording of today's call, you have 90 days to access the replay by phone or webcast on our website.
As we begin this morning's call, I'll remind you that any statements that might include our expectations or predictions should be considered forward-looking statements within the meaning of the federal securities laws. These statements are based on certain assumptions, based on management's experience and perception of historical trends, current conditions, expected future developments, and other factors we believe are appropriate in the circumstances. These statements include but are not limited to statements with respect to future financial performance and access to capital.
Such statements are subject to a number of assumptions, risks and uncertainties many of which are beyond our control, which may cause our actual results to differ materially from those implied or expressed by the forward-looking statements. Factors that could cause actual results to differ materially from their expectations are included in the periodic reports we filed with the SEC. We encourage you to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading risk factors. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
I will now turn the call over to Barry Davis.
Thank you, Jill. Good morning and thanks all of you for joining us on the call today. As you know, the last several months have been extremely challenging for companies in the energy industry and the economy as a whole. Considering these challenges, we are pleased with our first quarter results and with the solid progress that we have made. Recently we have seen an improvement in crude prices and a stabilization of natural gas prices based on tentative indications of economic improvement and an improved capital market.
Earlier this week crude oil future stride near their 2009 high, boosted by optimism about the economic outlook. However, the U.S. oil rig count is down 54% from its peak last November, and the natural gas rig count has fallen 51% to its lowest level since 2003.
In the first quarter, continued deterioration of the financial markets and lower natural gas prices and volatile commodity prices caused our producer customers to further reduce their drilling activity, which has had a direct negative impact on our business. Several months ago, we outlined our plan to increase liquidity, reduce leverage, and improve profitability. Last quarter, we announced important amendments to our debt agreements, which have increased our financial flexibility and provided us with adequate time to execute our strategies.
We continue to focus on efforts to increase liquidity and are evaluating the sale of assets to de-lever the company. We are looking at assets sales strategically and expect to be able to accomplish them in the near future. I would like to emphasize that we will only consider and complete a sale that is in the best interest of the company and its stake holders.
Turning to operating results. We are focused on optimizing our operations, while satisfying and growing our customer base. For the first quarter, adjusted cash flow was $51.5 million, a decrease of $16 million from the prior year period, but a strong improvement of $27.1 million compared to the fourth quarter of '08. We continue to have adequate liquidity to run our business and have approximately $246 million available under our revolver.
We are aggressively pursuing margin enhancement initiatives in our mid-stream and treating segments and projected in 2009 our operating expense reductions will exceed $6 million year-over-year. In addition, a 10% headcount reduction completed in January is expected to result in net savings of $7 million for 2009. At the same time, we recognize that we can expect to grow our business by simply cutting cost, we are executing on what we previously announced in the fourth quarter year end call.