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Crosstex Energy, L.P. (XTEX)

Q3 2012 Earnings Call

November 9, 2012 11:00 am ET

Executives

Jill McMillan – Director-Public and Industry Affairs

Barry E. Davis – President and Chief Executive Officer

Michael J. Garberding – Senior Vice President and Chief Financial Officer

William W. Davis – Executive Vice President and Chief Operating Officer

Analysts

Darren Horowitz – Raymond James

TJ Schultz – RBC Capital Markets, LLC

John Edwards – Credit Suisse

Sharon Lui – Wells Fargo Securities, LLC

Presentation

Operator

Good day, ladies and gentlemen, and welcome to the Third Quarter 2012 Crosstex Energy Earnings Conference Call. My name is Katarina and I’ll be your coordinator for today. At this time, all participants are in a listen-only mode. We will facilitate a question-and-answer session towards the end of a presentation (Operator Instructions) As a reminder; this conference is being recorded for replay purposes.

I will now turn the presentation over to your host for today’s call Ms. Jill McMillan Director of Public & Industry Affairs, please proceed

Jill McMillan

Thank you, Katarina, and good morning, everyone. Thank you for joining us today to discuss Crosstex’s third quarter 2012 results. On the call today are Barry Davis, President and Chief Executive Officer; Bill Davis, Executive Vice President and Chief Operating Officer, and Mike Garberding, Senior Vice President and Chief Financial Officer.

Our third quarter 2012 earnings release was issued yesterday evening. For those of you who didn’t receive copies, they are 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.

I will 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. Forward-looking statements are subject to a number of assumptions and uncertainties that may cause our actual results to differ materially from those expressed in these statements. And we undertake no obligation to update or revise any forward-looking statements. We encourage you to review the cautionary statements and other disclosures made in our SEC filings, specifically those under the heading Risk Factors.

Before I turn the call over to Barry Davis, I want to mention two upcoming Crosstex events that I’m sure you’ll be interested in attending. On November the 28th, we are hosting a West Texas Permian facilities tour for analysts and investors in Midland. We will be visiting our assets in the Permian Basin, the Deadwood processing plant and the Miski rail terminal.

Our management team will be available for discussion and questions during the event. Apache also is scheduled to make an operations presentation. If you haven't responded, we urge you to do so as space is limited. If you did not receive an invitation or want more information, please contact me. Also in 2013, we are hosting our Annual Bankers Group Dinner on January 22, and Analyst Conference on January 23. So please put these dates on your calendars. Both events will be held in Fort Worth at the Museum of Science and Histories Energy Blast Gallery. We will be communicating more details soon.

I will now turn the call over to Barry.

Barry E. Davis

Thank you, Jill. Good morning, everyone, and thank you, all, for joining us on the call today. I will begin by discussing several key themes and I want emphasize today followed by our third quarter 2012 financial results.

Next, I will cover how we are executing our plan in the challenging commodity price environment and delivering what we said, we would accomplish, and finally, I’ll discuss our outlook for the remainder of the year and beyond.

Mike will go into more detail about our quarterly results. And then Bill will complete our prepared remarks with an update on the status of our Ohio River Valley assets and our growth projects, and review of our operational results.

Before I recap top-level third quarter results, there are a few major themes or headlines that I want to make sure you take away from the call today. First we have achieved significant growth of our NGL and crude businesses this year with our Deadwood Mesquite project, our Ohio River Valley acquisition and our Cajun-Sibon pipeline expansion project.

In total, we are currently executing our capital spending program of approximately $620 million in 2012 and 2013 which is focused on fee based projects that align our long-term business plans.

Second, we completed the equity funding for our announced growth projects, such as our Cajun-Sibon pipeline expansion in our crude terminal expansion. Our balance sheet is in great shape.

Third, we are off to a great start with our Ohio River Valley operations, which had a solid third quarter, our first since the acquisition and is ahead of our expectations, we have many prospects for developing these assets primarily located in the Utica Shale where we have a solid position in this competitive arena.

Fourth, we have dealt quite well with the current commodity price environment and our business is stable, because we are focused on fee-based growth. We are continuing the successful transition to a much higher concentration in accrued and NGL businesses. All of these together allow us to maintain strong distribution coverage and good visibility to growth in the future.

Now moving to our third quarter results, we are pleased to report improved results from over our second quarter and the year-ago period despite the impact that the continued downturn in commodity prices has had on our results. Adjusted EBITDA for the third quarter was $55.2 million compared with $48.7 million for the second quarter, and $50.1 million for the third quarter of 2011.

Read the rest of this transcript for free on seekingalpha.com