Le Lézard
Classified in: Oil industry, Business
Subjects: ERN, CCA

American Midstream Reports Fourth Quarter and Full Year 2017 Results


HOUSTON, March 12, 2018 /PRNewswire/ -- American Midstream Partners, LP (NYSE: AMID) ("American Midstream" or the "Partnership") today reported financial results for the three and twelve months ended December 31, 2017.

American Midstream Partners Logo (PRNewsfoto/American Midstream Partners, LP)

During 2017, American Midstream made considerable progress in executing on a capital redeployment strategy of simplifying its businesses while gaining asset scale and density in core operating areas.  The Partnership has effectively reallocated over $530 million in capital in eight highly accretive transactions, which have high graded the Partnership's asset base and provide a foundation for meaningful future growth.  With this expanded asset base and in conjunction with numerous organic growth projects, the Partnership is poised for materially higher 2018 Adjusted EBITDA and distributable cash flows.

Highlights

Financial

Operational

EXECUTIVE COMMENTARY

"This has been a tremendously active fourth quarter and 2017 for the Partnership.  We have taken meaningful strides in our capital optimization program as we continue to build a fully integrated midstream company.  In 2017 we acquired or announced more than $1.8 billion of accretive growth transactions ultimately continuing the transformation into a growth-oriented Partnership.  We continue to redeploy capital to higher growth opportunities allowing us to capture greater cash flow.

"In the fourth quarter of 2017, we announced the Southcross acquisition, which furthers the Partnership's ability to participate in the full midstream value chain, from well head supply to downstream end user markets in the strategic Gulf Coast.  It is a meaningful step in the continuing pursuit of strategic opportunities allowing American Midstream to grow, compete and thrive in the midstream space.  We have significantly high graded the Partnership's asset base and are now solidifying our strategic footprint allowing us to focus on meaningful organic growth opportunities," stated Lynn Bourdon III, President and Chief Executive Officer.

SEGMENT PERFORMANCE


Segment Gross Margin


(In thousands)







Three months ended
December 31,


Twelve months ended
December 31,


2017


2016


2017

2016








Offshore Pipelines and Services

$

22,926



$

24,399



$

103,664


$

82,346


Gas Gathering and Processing Services

11,231



10,659



47,894


48,245


Liquid Pipelines and Services

7,906



7,727



29,115


31,556


Natural Gas Transportation Services

6,318



5,501



23,424


18,616


Terminalling Services

7,558



11,112



37,987


42,872


     Total Segment Gross Margin (1)

$

55,939



$

59,398



$

242,084


$

223,635









(1)

Non-GAAP supplemental financial measure.  Please read "Note About Non-GAAP Financial Measures" in Appendix A.

Offshore Pipelines and Services

Segment gross margin was $22.9 million for the three months ended December 31, 2017, a decrease of 6% compared to the same period in 2016.  Cash distributions were $29.6 million for the three months ended December 31, 2017, a 40% increase compared to the same period in 2016.  Cash distributions increased due to additional equity ownership interests in Delta House to 35.7% and Destin to 66.7%.  The Partnership also realized a 19% increase in throughput volumes on our Okeanos Pipeline due to increased deepwater production.  In the fourth quarter of 2017, the Partnership was notified by the operator of the Delta House FPS that certain third-party owned upstream infrastructure would require remedial work, resulting in a temporary delay of production volumes flowing into Delta House.  This remediation is scheduled to be completed later in the second quarter of 2018, at which time full production is anticipated to resume flowing into Delta House.  The Partnership and an affiliate of ArcLight expect to enter into an agreement providing for the contribution of additional capital to the Partnership to help offset any impact to cash distributions from Delta House resulting from this issue.  Further, there are four new well tie backs planned for connection to Delta House in the second half of 2018 and they remain on schedule.  When full production resumes, along with these four tie backs, the Partnership anticipates Delta House to run near nameplate capacity for the foreseeable future.  The Partnership expects the associated resource potential in the prolific deepwater Gulf of Mexico, specifically the Mississippi Canyon block, will continue to drive predictable fee-based cash flow across our entire offshore segment.

Gas Gathering and Processing Services

Gross margin was $11.2 million for the three months ended December 31, 2017, an increase of 5% compared to the same period in 2016.  The increase reflected additional NGL volumes from new contracts in our East Texas assets attributable to higher prices and producer development activity.  The Partnership anticipates increased volumes across its entire Gas Gathering and Processing Services segment throughout 2018 resulting from significant commercial opportunities in the Permian and Eagle Ford Basins, as the Partnership foresees continued growth in producer development activity.

Liquid Pipelines and Services

Segment gross margin was $7.9 million for the three months ended December 31, 2017, an increase of 2% as compared to the same period in 2016.  Cash distributions were $2.3 million for the three months ended December 31, 2017, a 72% increase compared to the same period in 2016.  Growth was driven by higher throughput volumes on the Tri-States pipeline from increased activity and incremental volume from higher natural gas liquid deepwater Gulf of Mexico production.  The Partnership continues to see growth potential across the liquids business and is evaluating multiple organic growth opportunities for new volume dedications on the Silver Dollar crude pipeline.  The Partnership is also seeing increased drilling activity around its Bakken assets, as Williston Basin rig counts increased over 50% in 2017 and is currently evaluating multiple organic growth projects which it projects would generate double digit returns.

Natural Gas Transportation Services

Segment gross margin was $6.3 million for the three months ended December 31, 2017, a 15% increase compared to the same period in 2016.  The increase was primarily attributable to the acquisition of Trans-Union pipeline in November 2017 that further strengthened our growing Southeast gas transmission assets.  The Partnership also realized higher rates due to continued strong industrial and residential demand within the rapidly growing Southeast markets.

Terminalling Services

Segment gross margin was $7.6 million for the three months ended December 31, 2017, down 32% compared to the same period in 2016.  The decrease in gross margin was primarily attributable to a reduction in storage and utilization at our Cushing terminal and higher operating costs.  This decline was partially offset by an increase in commodity sales at our refined products terminals.  In February 2018, we announced the execution of an agreement to sell our refined products terminals for approximately $138 million, further demonstrating our ability to reallocate capital to higher growth strategic opportunities.

CAPITAL MANAGEMENT

As of December 31, 2017, the Partnership had approximately $1.2 billion of total debt outstanding, comprised of $698 million outstanding under its revolving credit facility down approximately $190 million from 2016. At year-end, the Partnership had remaining borrowing capacity of approximately $178 million. The Partnership has $418 million outstanding under its 8.50% senior unsecured notes, including the $125 million add-on in December of 2017 issued at 7.57%, as well as $88 million outstanding in non-recourse senior secured notes. The Partnership had a consolidated total leverage ratio of approximately 5.3 times at year end. To mitigate the potential negative impact of rising interest rates and ensure more predictable and stable cash flow, the Partnership has a series of interest rate swap agreements for approximately $550 million at an average rate of LIBOR plus 130 basis points extending through 2022.

For the three months ended December 31, 2017, capital expenditures totaled approximately $20 million, including approximately $2 million of maintenance capital expenditures.  For the twelve months ended December 31, 2017, capital expenditures totaled $117 million, including $9 million of maintenance capital expenditures.

OTHER

During the fourth quarter, the Partnership conducted required asset impairment tests associated with certain non-core, legacy gathering and processing assets, which resulted in a non-cash book value adjustment of $99.3 million. The adjustment estimates reflected in this press release are preliminary and subject to refinement in connection with completion of the Partnership's audited financial statements.  The non-cash accounting adjustment has limited relevance for the Partnership going forward and does not impact adjusted EBITDA or Distributable Cash Flow and is not an indication of the Partnership's quarterly performance. Furthermore, the book value adjustments have no influence on the Partnership executing its strategies or future performance.

CONFERENCE CALL INFORMATION

The Partnership will host a conference call at 10:00 AM Eastern Time on Monday, March 12, 2018 to discuss these results. The call will be webcast and archived on the Partnership's website for a limited time.

Date: 

Monday, March 12, 2018

Time: 

10:00 AM ET / 9:00 AM CT

Dial-In Numbers:

(888) 317-6003 (Domestic toll-free)


(412) 317-6061 (International)



Conference ID:

5290943



Webcast URL: 

www.AmericanMidstream.com/investor-relations

Non-GAAP Financial Measures

This press release and the accompanying tables include supplemental non-GAAP financial measures, including "Adjusted EBITDA," "Total Segment Gross Margin," "Operating Margin," and "Distributable Cash Flow." For definitions and required reconciliations of supplemental non-GAAP financial measures to the nearest comparable GAAP financial measures, please read a "Note About Non-GAAP Financial Measures" set forth in a later section of this press release.

About American Midstream Partners, LP

American Midstream Partners, LP is a growth-oriented limited partnership formed to provide critical midstream infrastructure that links producers of natural gas, crude oil, NGLs, condensate and specialty chemicals to end-use markets. American Midstream's assets are strategically located in some of the most prolific offshore and onshore basins in the Permian, Eagle Ford, East Texas, Bakken and Gulf Coast. American Midstream owns or has an ownership interest in approximately 5,100 miles of interstate and intrastate pipelines, as well as ownership in gas processing plants, fractionation facilities, an offshore semisubmersible floating production system with nameplate processing capacity of 100 MBbl/d of crude oil and 240 MMcf/d of natural gas; and terminal sites with approximately 6.7 MMBbls of storage capacity.

For more information about American Midstream Partners, LP, visit: www.americanmidstream.com. The content of our website is not part of this release.

Forward-Looking Statements

This press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of the Securities Exchange Act of 1934, as amended, including statements related to the Partnership's expectations regarding the timing of the proposed offering and use of proceeds. We have used the words "could," "expect," "intend," "may," "will," "poised," "potential," "would" and similar terms and phrases to identify forward-looking statements in this press release. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. Many of the factors that will determine these results are beyond our ability to control or predict. These factors include the risk factors described in Part I, Item 1A. in our Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 28, 2017,  our Registration Statement on Form S-4 related to the Southcross acquisition, and our other filings with the SEC. All future written and oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the previous statements. The forward-looking statements herein speak as of the date of this press release. We undertake no obligation to update such statements for any reason, except as required by law.

The preliminary financial results for the Partnership's fourth quarter and year ended December 31, 2017 included in this press release represent the most current information available to management. The Partnership's actual results when disclosed in its Annual Report on Form 10-K for the year ended December 31, 2017 may differ from these preliminary results as a result of the completion of the Partnership's  financial statement closing procedures, final adjustments, completion of the independent registered public accounting firm's review and audit procedures, and other developments that may arise between now and the disclosure of the final results and audited financials. In particular, the impairment charges reflected in this press release reflect management's current estimates and actual impairments could be in amounts greater or less than those currently estimated or impact additional assets, and any such difference could be material.

Additional Information and Where to Find it

This communication relates to a proposed business combination between American Midstream and Southcross Energy Partners, L.P. ("Southcross"). In connection with the proposed transaction, American Midstream and/or Southcross expect to file a proxy statement/prospectus and other documents with the Securities and Exchange Commission ("SEC").

WE URGE INVESTORS AND SECURITY HOLDERS TO READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT MAY BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

Any definitive proxy statement(s) (if and when available) will be mailed to unitholders of Southcross. Investors and security holders will be able to obtain these materials (if and when they are available) free of charge at the SEC's website, www.sec.gov. In addition, copies of any documents filed with the SEC may be obtained free of charge from Southcross' internet website for investors at http://investors.southcrossenergy.com, and from American Midstream's investor relations website at http://www.americanmidstream.com/investorrelations. Investors and security holders may also read and copy any reports, statements and other information filed by American Midstream and Southcross with the SEC at the SEC public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 or visit the SEC's website for further information on its public reference room.

No Offer or Solicitation

This communication does not constitute an offer to sell or the solicitation of an offer to buy any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

Participation in the Solicitation of Votes

American Midstream and Southcross Energy and their respective directors and executive officers may be considered participants in the solicitation of proxies in connection with the proposed transaction. Information regarding Southcross Energy's directors and executive officers is available in its Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 9, 2017. Information regarding American Midstream's directors and executive officers is available in its Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 28, 2017. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.

Investor Contact
American Midstream Partners, LP
Mark Schuck
Director of Investor Relations
(346) 241-3497
[email protected]

American Midstream Partners, LP and Subsidiaries

Condensed Consolidated Balance Sheets

(Unaudited, in thousands)



December 31,
2017


December 31,
2016

Assets








Cash and cash equivalents

$

8,782



$

5,666


Other assets, net

1,988,075



2,343,655


Total assets

$

1,996,857



$

2,349,321


Liabilities, Equity and Partners' Capital




Current portion of long-term liabilities

7,551



5,485


3.77% Senior notes (non-recourse)

55,198



55,979


3.97% Senior notes (non-recourse)

29,937



?


8.50% Senior notes

418,421



291,309


Revolving credit agreements

697,900



888,250


Other liabilities, net

187,289



189,051


Convertible preferred units

317,180



334,090


Equity and partners' capital

283,381



585,157


Total liabilities, equity and partners' capital

$

1,996,857



$

2,349,321


 

American Midstream Partners, LP and Subsidiaries

Condensed Consolidated Statements of Operations

(Unaudited, in thousands, except for per unit amounts)



Three Months ended
December 31,


Years Ended December 31,


2017


2016


2017


2016









Revenues

$

167,582



$

175,873



$

655,980



$

589,026


Operating expenses:








Cost of sales

119,030



122,639



461,916



393,351


Direct operating expenses

25,437



17,672



82,256



71,544


Corporate expenses

27,488



28,493



112,058



89,438


Depreciation, amortization and accretion expense

24,614



24,945



103,448



90,882


Non-cash impairment of property, plant and equipment

99,279



697



99,279



697


Other

1



3,045



(4,063)



3,342


Operating Loss

(128,267)



(21,618)



(198,914)



(60,228)


Other income (expense):








Interest expense

(15,428)



3,290



(66,465)



(21,433)


Other income (expense), net

15,893



(2,908)



134,110



30,351


Net loss attributable to the Partnership

$

(127,802)



$

(21,236)



$

(131,269)



$

(51,310)










Distribution declared per common unit

$

0.4125



$

0.49



$

1.65



$

1.95










Limited Partners' net income (loss) per common unit:














Basic and diluted:








Loss from continuing operations

$

(2.58)



$

(0.33)



$

(3.97)



$

(1.51)


Income (loss) from discontinued operations

0.04



(0.27)



0.85



(0.09)


Net loss

$

(2.54)



$

(0.60)



$

(3.12)



$

(1.60)


Weighted average number of common units outstanding:














Basic and diluted

52,697



51,363



52,043



51,176


 

American Midstream Partners, LP and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited, in thousands)



Years Ended December 31,


2017


2016





Cash flows provided by operating activities

$

27,606



$

90,639


Cash flows provided by / (used) in investing activities

237,620



(564,504)


Cash flows provided by / (used) in financing activities

(262,110)



477,544






Net increase in cash and cash equivalents

3,116



3,679






Cash and cash equivalents




Beginning of period

5,666



1,987


End of period

$

8,782



$

5,666


 

American Midstream Partners, LP and Subsidiaries

Reconciliation of Net income (loss) attributable to the Partnership to

Adjusted EBITDA and Distributable Cash Flow

(Unaudited, in thousands)



Three Months ended
December 31,


Years Ended December 31,


2017


2016


2017


2016

Reconciliation of Net loss attributable to the Partnership to Adjusted EBITDA:








Net loss attributable to the Partnership

$

(127,802)



$

(21,236)



$

(131,269)



$

(51,310)


Add backs and net impact of discontinued operations








Depreciation, amortization and accretion

24,593



24,945



102,766



90,882


Interest expense

16,818



6,177



60,587



28,572


Non-cash equity compensation expense

1,965



1,373



8,032



5,658


Non-cash loss on impairment of property, plant and equipment

99,279



697



99,279



697


Distributions from unconsolidated affiliates

31,870



20,249



90,846



83,046


Other, net

9,440



24,910



46,096



60,972


Deductions








Earnings in unconsolidated affiliates

13,269



10,645



63,050



40,158


 Other, net

189



736



36,893



794


Adjusted EBITDA

$

42,705



$

45,734



$

176,394



$

177,565


Deduct:








Cash interest expense

16,511



9,019



60,070



31,808


Maintenance capital

2,322



2,543



8,892



6,751


Preferred distribution

?



7,116



16,311



15,142


Distributable Cash Flow

$

23,872



$

27,056



$

91,121



$

123,864










Limited Partner Distributions

$

21,745



$

24,915



$

86,215



$

99,475










Distribution Coverage

1.1

x


1.1

x


1.1

x


1.2

x

 

American Midstream Partners, LP and Subsidiaries

Reconciliation of Total Gross Margin to Net income (loss) attributable to the Partnership

(Unaudited, in thousands)



Three Months ended
December 31,


Years Ended December 31,


2017


2016


2017


2016

Reconciliation of Gross Margin to Net income (loss)

attributable to the Partnership








Total Segment Gross Margin

$

55,939



$

59,398



$

242,084



$

223,635










Operating margin

35,638



44,635



174,467



162,873


Add backs

(86)



312



(119)



(1,617)


Deducts

163,354



66,183



305,617



212,566


Net loss attributable to the Partnership

$

(127,802)



$

(21,236)



$

(131,269)



$

(51,310)


 

American Midstream Partners, LP and Subsidiaries

Segment Financial and Operating Data

(Unaudited, in thousands, except for operating and pricing data)



Three Months ended
December 31,


Years Ended December 31,


2017


2016


2017


2016

Segment Financial and Operating Data:
















Offshore Pipelines & Services








Financial data:








          Segment gross margin

$

22,926



$

24,399



$

103,664



$

82,346


Less:  Direct operating expenses

7,160



2,991



16,973



10,945


              Segment operating margin

15,766



21,408



86,691



71,401










Distributions:








         Destin/Okeanos

12,000



4,545



38,667



19,928


         Delta House

17,572



15,571



43,746



55,590


         Other

?



887



1,100



3,679


              Total

29,572



21,003



83,513



79,197










     Operating data:








          Average throughput (MMcf/d)

254.6



445.9



309.6



466.4


          Average Destin/Okeanos throughput (MMcf/d)

1,035.1



1,163.0



1,094.0



1,166.8


          Average Delta House throughput (MBoe/d)

63.2



100.1



101.0



96.0


          Average Other throughput (MBbls/d)

?



29.6



20.3



29.9










Gas Gathering and Processing Services Segment








Financial data:








Segment gross margin

$

11,231



$

10,659



$

47,894



$

48,245


Less:  Direct operating expenses

7,016



8,458



32,003



33,802


              Segment operating margin

4,215



2,201



15,891



14,443


Operating data:








Average throughput (MMcf/d)

193.0



208.0



202.0



220.6










Liquid Pipelines & Services








Financial data:








Segment gross margin

$

7,906



$

7,727



$

29,115



$

31,556


Less:  Direct operating expenses

5,193



1,905



12,330



10,091


              Segment operating margin

2,713



5,822



16,785



21,465










Distributions:








         Tri-States/Wilprise

2,298



1,339



7,334



3,849


         Operating data:








             Average Tri-States/Wilprise throughput (MBbls/d)

90.1



68.4



87.8



72.3


             Average other Liquid Pipelines throughput (MBbls/d)

36.0



35.8



34.4



33.0










Natural Gas Transportation Services








Financial data:








Segment gross margin

$

6,318



$

5,501



$

23,424



$

18,616


Less:  Direct operating expenses

908



1,408



6,311



5,923


              Segment operating margin

5,410



4,093



17,113



12,693


Operating data:








Average throughput (MMcf/d)

460.9



494.1



420.4



389.9










Terminalling Services








Financial data:








Segment gross margin

$

7,558



$

11,112



$

37,987



$

42,872


Less:  Cost of sales

5,243



4,981



12,855



11,564


Direct operating expenses

5,136



2,910



14,639



10,783


Segment operating margin

(2,821)



3,221



10,493



20,525


Operating data:








Contracted Capacity (Bbls)

4,630,300



5,282,933



4,957,328



5,011,133


Design Capacity (Bbls)

5,400,800



5,400,800



5,400,800



5,173,717


Storage Utilization

85.7

%


97.8

%


91.8

%


96.9

%

Terminalling and storage throughput (Bbls/d)

58,319



54,038



58,670



56,741


Appendix A

Note About Non-GAAP Financial Measures

Total segment gross margin, operating margin and Adjusted EBITDA are performance measures that are non-GAAP financial measures. Each has important limitations as an analytical tool because they exclude some, but not all, items that affect the most directly comparable GAAP financial measures. Management compensates for the limitations of these non-GAAP measures as analytical tools by reviewing the comparable GAAP measures, understanding the differences between the measures and incorporating these data points into management's decision-making process.

You should not consider total segment gross margin, operating margin, or Adjusted EBITDA in isolation or as a substitute for, or more meaningful than analysis of, our results as reported under GAAP. Total segment gross margin, operating margin and Adjusted EBITDA may be defined differently by other companies in our industry. Our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.

Adjusted EBITDA is a supplemental non-GAAP financial measure used by our management and external users of our financial statements, such as investors, commercial banks, research analysts and others, to assess: the financial performance of our assets without regard to financing methods, capital structure or historical cost basis; the ability of our assets to generate cash flow to make cash distributions to our unitholders and our General Partner; our operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing or capital structure; and the attractiveness of capital projects and acquisitions and the overall rates of return on alternative investment opportunities.

We define Adjusted EBITDA as net income (loss) attributable to the Partnership, plus depreciation, amortization and accretion expense, interest expense, debt issuance costs, unrealized (gains) losses on derivatives, non-cash charges such as non-cash equity compensation expense, and charges that are unusual such as transaction expenses primarily associated with our acquisitions (such as JPE, Viosca Knoll, Delta House and Panther), income tax expense, distributions from unconsolidated affiliates and general partner's contribution, less earnings in unconsolidated affiliates, gains (losses) that are unusual such as gain on revaluation of equity interest, and gain on sale of the Propane Business, other, net, and gain (loss) on sale of assets, net.

Distributable cash flow ("DCF") is a significant performance metric used by us and by external users of the Partnership's financial statements, such as investors, commercial banks and research analysts, to compare basic cash flows generated by us to the cash distributions we expect to pay the Partnership's unitholders. Using this metric, management and external users of the Partnership's financial statements can quickly compute the coverage ratio of estimated cash flows to planned cash distributions. DCF is also an important financial measure for the Partnership's unitholders since it serves as an indicator of the Partnership's success in providing a cash return on investment. Specifically, this financial measure may indicate to investors whether we are generating cash flow at a level that can sustain or support an increase in the Partnership's quarterly distribution rates. DCF is also a quantitative standard used throughout the investment community with respect to publicly traded partnerships and limited liability companies because the value of a unit of such an entity is generally determined by the unit's yield (which in turn is based on the amount of cash distributions the entity pays to a unitholder). DCF will not reflect changes in working capital balances.

We define DCF as Adjusted EBITDA, less interest expense, normalized maintenance capital expenditures, and distributions related to the Series A, Series C, and Series D convertible preferred units. The GAAP financial measure most comparable to DCF is Net income (loss) attributable to the Partnership.

Segment gross margin and total segment gross margin are metrics that we use to evaluate our performance.

We define segment gross margin in our Gas Gathering and Processing Services segment as total revenue plus unconsolidated affiliate earnings less unrealized gains or plus unrealized losses on commodity derivatives, construction and operating management agreement income and the cost of natural gas, and NGLs and condensate purchased.

We define segment gross margin in our Liquid Pipelines and Services segment as total revenue plus unconsolidated affiliate earnings less unrealized gains or plus unrealized losses on commodity derivatives and the cost of crude oil purchased in connection with fixed-margin arrangements. Substantially all of our gross margin in this segment is fee-based or fixed-margin, with little to no direct commodity price risk.

We define segment gross margin in our Natural Gas Transportation Services segment as total revenue plus unconsolidated affiliate earnings less the cost of natural gas purchased in connection with fixed-margin arrangements. Substantially all of our gross margin in this segment is fee-based or fixed-margin, with little to no direct commodity price risk.

We define segment gross margin in our Offshore Pipelines and Services segment as total revenue plus unconsolidated affiliate earnings less the cost of natural gas purchased in connection with fixed-margin arrangements.  Substantially all of our gross margin in this segment is fee-based or fixed-margin, with little to no direct commodity price risk.

We define segment gross margin in our Terminalling Services segment as total revenue less direct operating expense which includes direct labor, general materials and supplies and direct overhead.

Total segment gross margin is a supplemental non-GAAP financial measure that we use to evaluate our performance. We define total segment gross margin as the sum of the segment gross margins for our Gas Gathering and Processing Services, Liquid Pipelines and Services, Natural Gas Transportation Services, Offshore Pipelines and Services and Terminalling Services segments. The GAAP measure most directly comparable to total segment gross margin is Net income (loss) attributable to the Partnership.

 

SOURCE American Midstream Partners, LP


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