Atlas Pipeline Partners, L.P. (APL) broke even in its earnings for fourth-quarter 2013 missing the Zacks Consensus Estimate of 12 cents.
The lower-than-expected earnings evoked a negative market reaction with the units losing 6.29% to close at $31.00 yesterday.
Total Revenue
Total revenues at the end of the fourth quarter were $580.1 million, missing the Zacks Consensus Estimate by 3.8%. The year-over-year improvement of 64.8% was primarily driven by a rise in natural gas & liquid sales and revenues generated from transportation and processing.
Gathered gas volumes in the fourth quarter stood at 1.5 billion cubic feet per day (Bcfd).
Atlas Pipeline’s total revenues in 2013 surged 69.1% year over year to $2.1 billion, mainly on the heels of strong natural gas and liquid sales.
Operational Update
Atlas Pipeline’s total operating expenses in the reported quarter were $581.9 million, up 61.3% year over year mainly due to higher cost of sales and expenses allocated to depreciation and amortization.
Gross margin in fourth quarter 2013 was 20.6%, compared with 22.6% in the prior-year quarter.
Interest expenses totaled $24.0 million, up 70.5% year over year primarily attributable to the rising long-term debt level.
Financial Update
Atlas Pipeline Partners’ cash and cash equivalents as of Dec 31, 2013, increased to $4.9 million versus $3.4 million as of Dec 31, 2012.
Long-term debt as of Dec 31, 2013, was $1.7 billion versus $1.2 billion as of Dec 31, 2012.
Cash provided by operating activities in the twelve months ending Dec 31, 2013, was $65.7 million compared with $48.9 million in the year-ago comparable period.
In 2013, the partnership invested $1.4 billion in capital expenditure.
Systems Update
WestTX System – WestTX system's average natural gas volumes processed in the fourth quarter were 364.0 million cubic feet per day (MMcfd), an increase of 34.0% year over year. The increase in volumes processed was due to expansion of drilling activities and completion of Driver plant.
WestOK System – Average natural gas volumes processed in this system were 512.6 MMcfd, up 24.2% year over year. The increase can be attributed to modifications at Atlas Pipeline’s Waynoka I and II processing facilities.
SouthOK System – For the reported quarter, natural gas processed volumes were 151.9 MMcfd, up 42.6% from the year-ago comparable period. The higher output was mainly due to the addition of production facility in Woodford Shale, Ardmore Basin and South Central Oklahoma Oil Province ("SCOOP") in southern Oklahoma.
SouthTX System – The total processing capacity of SouthTX system is 200 MMcfd while it processed a total of 133.2 MMcfd natural gas volumes during the reported quarter.
Guidance
Atlas Pipeline expects total adjusted EBITDA for 2014 in the range of $400 million to $425.0 million.
The adjusted EBITDA guidance assumes average price of $4.375 per million BTU (MMBTU) for natural gas, $1.065 per gallon for natural gas liquids and $92.785 per barrel for crude oil.
The partnership also provided an adjusted EBITDA guidance of $450 million to $500 million for 2015.
Atlas Pipeline anticipates a growth of processed natural gas volumes at each of its systems. The partnership anticipates total processed volumes to reach 1.8 Bcfd in 2014 from 1.5 Bcfd achieved during fourth quarter 2013.
Zacks Rank
Atlas Pipeline Partners currently has a Zacks Rank #3 (Hold). However, better-ranked stocks from the Oil & Gas Pipeline sector include Crestwood Equity Partners LP (CEQP), Energy Transfer Equity, L.P. (ETE) and Magellan Midstream Partners LP (MMP). While Crestwood Equity currently holds a Zacks Rank #1 (Strong Buy), Energy Transfer and Magellan Midstream carry a Zacks Rank #2 (Buy).
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