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Marlin Midstream Partners LP (FISH)

Q3 2013 Earnings Call

October 31, 2013 1:00 p.m. ET


Kristen McNally - Financial Profiles

Keith Maxwell - Chairman and CEO

Mandy Bush - CFO


Justin Agnew - Robert W. Baird

Selman Akyol - Stifel Nicolaus



Good day ladies and gentlemen. Welcome to the Marlin Midstream Partners LP Third Quarter 2013 Earnings Conference Call. My name is Douglas and I will be your operator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes and this call will be posted on Marlin Midstream Partners’ website.

I would now like to turn the conference over to Kristen McNally of Financial Profiles, Investor Relations for Marlin Midstream Partners. Please go ahead.

Kristen McNally

Thank you for joining today to discuss Marlin Midstream Partners’ financial results for the three months ended September 20, 2013. With me today from management is W. Keith Maxwell, III Chairman and CEO, and Mandy Bush, Chief Financial Officer.

Before we begin, I would like to review Marlin Midstream safe harbor statement. During the course of today’s conference call, management may make forward-looking statements concerning Marlin’s operations, economic performance and financial conditions. These statements can be identified by the use of forward looking terminology including "may," "will," "believe," "expect," "anticipate," "estimate," "continue," or other similar words. These statements discuss future expectations, contain projections of results of operations or financial condition or include other "forward-looking" information.

Although Marlin believes that the expectations reflected in such forward-looking statements are reasonable, the Partnership can give no assurance that such expectations will be realized. These forward-looking statements involve risks and uncertainties. Such risks and uncertainties could cause actual results to differ materially from those contained in any forward looking statement. Except as required by law, Marlin undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise

With that, I would like to introduce Keith Maxwell, Chairman and CEO of Marlin Midstream Partners.

Keith Maxwell

Thank you, Kristen. I would like to welcome our unitholders and analysts to Marlin’s third quarter 2013 conference call today. For today’s call, I will make some brief opening remarks about our third quarter operation. Then our Chief Financial Officer, Mandy Bush, will provide some detail on the financial results and I will follow with some comments on our opportunities ahead of us as we take – and then take our questions.

As stated in our press release, I would like to remind participants on the call that Marlin’s financial results for the third quarter of 2013 reflect one month of operations prior to the IPO when we were a private company, plus two months of post-IPO. The pre-IPO results are primarily for the midstream natural gas segment and do not include the gathering and processing capacity agreement and the transloading capacity agreements entered into with Associated Energy Services at the close of the offering. The results of the month of August and September include both midstream segment as well as crude oil logistic segment, with three fee-based tranloading agreements at Wildcat and Big Horn, which also began at the close of the IPO. This period is indicative of our go-forward business model.

I am pleased to report that our results in the two months following the IPO exceeded our expectations. We think this is a direct reflection of both the strength and the future potential of our strategically located operating assets as well as the value of our relationship with the sponsor NuDevco and its affiliates.

In the midstream natural gas business segment, our primary assets are located in long-lived oil and gas producing regions of East Texas. We gather, process, NGL-rich natural gas streams associated with production, primarily from the Cotton Valley Sands, the Haynesville Shale, the Austin Chalk and the Eaglebine formations.

Effective the 31st, we are not benefitting from minimum volume commitments for services in transloading and gathering processes, including its 80 million a day commitment at our Panola facility by AES. In terms of drilling activity around the Panola assets, we have seen an uptick of 6% year-over-year rise in well permits through September ’13 – or September 2013. More than 250 wells were permitted in the last 12 months at Panola and for well permits by the top 5 producers, the permits increased 37% from year ago levels.

Turning to the crude oil logistics segment, our Wildcat and Big Horn facilities provide transloading services for production originating from well-established crude oil basins, such as the Uinta [ph] and Powder River Basin. These are proven producing regions with logistical bottlenecks where we provide valuable transportation services from field to railroads and ultimately to refinery and source centers. We believe these areas offer good upside for the opportunity of expansion and potential for new service offering.

With that brief segment overview, I will pause now and turn it over to Mandy Bush for her financial review. Mandy?

Mandy Bush

Thanks, Keith. To reiterate what Keith said earlier, our financial statements for the third quarter of 2013 reflect one month of pre-IPO results and two months of post-IPO result. August and September reflect post-IPO operations, which include both the midstream natural gas business segment and the crude oil logistics business segment.

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