ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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DELAWARE
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45-5045230
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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1717 Main Street, Suite 5200
Dallas, TX
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75201
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
o
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Accelerated filer
x
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Condensed Consolidated Balance Sheets as of June 30, 2016 and December 31, 2015
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Condensed Consolidated Statements of Operations for the Three
and Six Months Ended June 30, 2016 and 2015
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Condensed Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 2016 and 2015
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Condensed Consolidated Statements of Changes in Partners’ Capital for the
Six Months Ended June 30, 2016 and 2015
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June 30, 2016
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December 31, 2015
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||||
ASSETS
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Current assets:
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Cash and cash equivalents
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$
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4,859
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$
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11,348
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Trade accounts receivable
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29,860
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39,585
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Accounts receivable - affiliates
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16,269
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49,734
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Prepaid expenses
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2,576
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3,915
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Deposits to suppliers
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3,837
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—
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Other current assets
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961
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1,256
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Total current assets
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58,362
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105,838
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Property, plant and equipment, net
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1,034,266
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1,066,001
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Investments in joint ventures
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138,461
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140,526
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Other assets
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1,675
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6,595
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Total assets
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$
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1,232,764
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$
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1,318,960
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LIABILITIES AND PARTNERS' CAPITAL
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Current liabilities:
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Accounts payable and accrued liabilities
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$
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36,081
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$
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66,458
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Accounts payable - affiliates
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7,304
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7,871
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Current portion of long-term debt
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4,500
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4,500
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Other current liabilities
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6,472
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10,406
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Total current liabilities
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54,357
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89,235
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Long-term debt
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552,685
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604,518
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Other non-current liabilities
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10,341
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3,871
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Total liabilities
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617,383
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697,624
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Commitments and contingencies (Note 7)
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Partners' capital:
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Common units (36,902,492 and 28,420,619 units outstanding as of June 30, 2016 and December 31, 2015, respectively)
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274,990
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271,236
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Class B Convertible units (16,522,484 and 15,958,990 units issued and outstanding as of June 30, 2016 and December 31, 2015)
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295,801
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300,596
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Subordinated units (12,213,713 units issued and outstanding as of June 30, 2016 and December 31, 2015)
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32,995
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37,920
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General partner interest
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11,595
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11,584
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Total partners' capital
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615,381
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621,336
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Total liabilities and partners' capital
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$
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1,232,764
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$
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1,318,960
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Three Months Ended June 30,
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Six Months Ended June 30,
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2016
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2015
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2016
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2015
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Revenues:
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Revenues
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$
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100,141
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$
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146,129
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$
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195,596
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$
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324,620
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Revenues - affiliates
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24,561
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21,091
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48,832
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28,538
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Total revenues
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124,702
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167,220
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244,428
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353,158
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Expenses:
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Cost of natural gas and liquids sold
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85,619
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124,595
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165,066
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265,710
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Operations and maintenance
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19,615
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19,834
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36,393
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42,388
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Depreciation and amortization
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18,908
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17,571
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37,449
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34,603
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General and administrative
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8,162
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9,003
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16,048
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16,809
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Impairment of assets
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—
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193
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—
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193
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Loss (gain) on sale of assets, net
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(12,576
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(38
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(12,576
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180
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Total expenses
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119,728
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171,158
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242,380
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359,883
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Income (loss) from operations
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4,974
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(3,938
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2,048
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(6,725
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Other expense:
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Equity in losses of joint venture investments
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(3,534
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(3,604
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(6,963
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(7,155
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Interest expense
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(8,833
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(7,900
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(18,003
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(15,398
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Total other expense
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(12,367
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(11,504
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(24,966
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(22,553
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Loss before income tax benefit (expense)
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(7,393
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(15,442
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(22,918
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(29,278
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Income tax benefit (expense)
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(3
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(9
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3
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(78
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)
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Net loss
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$
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(7,396
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$
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(15,451
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$
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(22,915
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)
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$
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(29,356
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)
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General partner unit in-kind distribution
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(26
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(61
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(26
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(137
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)
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Net loss attributable to Holdings
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—
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(1,103
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—
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(4,258
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)
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Net loss attributable to partners
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$
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(7,422
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)
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$
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(14,409
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$
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(22,941
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)
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$
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(25,235
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)
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Earnings per unit and distributions declared
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Net loss allocated to limited partner common units
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$
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(3,953
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)
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$
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(6,928
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$
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(11,782
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)
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$
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(11,830
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)
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Weighted average number of limited partner common units outstanding
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33,921
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26,477
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31,183
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25,143
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Basic and diluted loss per common unit
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$
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(0.12
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)
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$
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(0.26
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)
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$
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(0.38
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)
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$
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(0.47
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)
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Net loss allocated to limited partner subordinated units
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$
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(1,423
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)
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$
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(3,194
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)
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$
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(4,613
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)
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$
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(5,744
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)
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Weighted average number of limited partner subordinated units outstanding
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12,214
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12,214
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12,214
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12,214
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Basic and diluted loss per subordinated unit
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$
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(0.12
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)
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$
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(0.26
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)
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$
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(0.38
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)
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$
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(0.47
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)
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Distributions declared and paid per common unit
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$
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—
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$
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0.40
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$
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—
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$
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0.80
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Six Months Ended June 30,
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2016
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2015
|
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Cash flows from operating activities:
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Net loss
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$
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(22,915
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)
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$
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(29,356
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)
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Adjustments to reconcile net loss to net cash provided by operating activities:
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Depreciation and amortization
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37,449
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34,603
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Unit-based compensation
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1,706
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2,475
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Amortization of deferred financing costs and PIK interest
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1,904
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1,727
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Loss (gain) on sale of assets, net
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(12,576
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)
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180
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Unrealized loss (gain) on financial instruments
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(55
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)
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221
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|
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Equity in losses of joint venture investments
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6,963
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7,155
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Distribution from joint venture investment
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390
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—
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Impairment of assets
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—
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193
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Other, net
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(184
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)
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(2
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)
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Changes in operating assets and liabilities:
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Trade accounts receivable, including affiliates
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44,409
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16,951
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Prepaid expenses and other current assets
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1,502
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|
780
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|
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Deposits paid to suppliers
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(3,837
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)
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—
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|
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Other non-current assets
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—
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|
76
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|
||
Accounts payable and accrued liabilities
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(27,808
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)
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(31,404
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)
|
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Other liabilities, including affiliates
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3,000
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|
904
|
|
||
Net cash provided by operating activities
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29,948
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|
4,503
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|
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Cash flows from investing activities:
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|
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Capital expenditures
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(12,434
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)
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(64,959
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)
|
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Insurance proceeds from property damage claims, net of expenditures
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125
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|
|
100
|
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Net proceeds from sales of assets
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20,402
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|
4,693
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|
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Consideration paid for Holdings' drop-down acquisition
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—
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(15,000
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)
|
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Investment contributions to joint venture investments
|
(5,287
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)
|
|
(2,474
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)
|
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Net cash provided by (used in) investing activities
|
2,806
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(77,640
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)
|
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Cash flows from financing activities:
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|
|
|
|
|
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Borrowings under our credit facility
|
3,110
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|
|
102,000
|
|
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Repayments under our credit facility
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(54,250
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)
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(15,000
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)
|
||
Repayments under our term loan agreement
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(2,250
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)
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|
(2,250
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)
|
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Payments on capital lease obligations
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(204
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)
|
|
(276
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)
|
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Financing costs
|
(86
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)
|
|
(602
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)
|
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Tax withholdings on unit-based compensation vested units
|
(57
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)
|
|
—
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Payments of distributions and distribution equivalent rights
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—
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|
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(23,306
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)
|
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Expenses paid by Holdings on behalf of Valley Wells' assets
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—
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|
|
17,858
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|
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Borrowing of senior unsecured PIK notes
|
14,000
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|
|
—
|
|
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Repayment of senior unsecured PIK notes and PIK interest
|
(14,260
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)
|
|
—
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|
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Valley Wells operating expense cap adjustment
|
2,637
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|
|
—
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|
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Contributions from general partner
|
—
|
|
|
1,281
|
|
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Common unit issuances to Holdings related to equity cures
|
11,884
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|
|
—
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|
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Interest on receivable due from Holdings
|
233
|
|
|
—
|
|
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Net cash provided by (used in) financing activities
|
(39,243
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)
|
|
79,705
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||
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|
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|
||||
Net increase (decrease) in cash and cash equivalents
|
(6,489
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)
|
|
6,568
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|
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Cash and cash equivalents — Beginning of period
|
11,348
|
|
|
1,649
|
|
||
Cash and cash equivalents — End of period
|
$
|
4,859
|
|
|
$
|
8,217
|
|
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Partners' Capital
|
|
|
||||||||||||||||
|
Limited Partners
|
|
|
|
|
||||||||||||||
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Common
|
|
Class B Convertible
|
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Subordinated
|
|
General Partner
|
|
Total
|
||||||||||
BALANCE - December 31, 2015
|
$
|
271,236
|
|
|
$
|
300,596
|
|
|
$
|
37,920
|
|
|
$
|
11,584
|
|
|
$
|
621,336
|
|
Net loss
|
(11,768
|
)
|
|
(6,081
|
)
|
|
(4,607
|
)
|
|
(459
|
)
|
|
(22,915
|
)
|
|||||
Unit-based compensation on long-term incentive plan
|
1,706
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,706
|
|
|||||
Accrued distribution equivalent rights on long-term incentive plan
|
11
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11
|
|
|||||
Tax withholdings on unit-based compensation vested units
|
(57
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(57
|
)
|
|||||
Interest on receivable due from Holdings
|
—
|
|
|
—
|
|
|
—
|
|
|
233
|
|
|
233
|
|
|||||
Common unit issuances to Holdings related to equity cures
|
12,416
|
|
|
—
|
|
|
—
|
|
|
245
|
|
|
12,661
|
|
|||||
Valley Wells' operating expense cap adjustment
|
2,406
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,406
|
|
|||||
General partner unit in-kind distribution
|
(15
|
)
|
|
(7
|
)
|
|
(4
|
)
|
|
26
|
|
|
—
|
|
|||||
Class B Convertible unit in-kind distribution
|
(945
|
)
|
|
1,293
|
|
|
(314
|
)
|
|
(34
|
)
|
|
—
|
|
|||||
BALANCE - June 30, 2016
|
$
|
274,990
|
|
|
$
|
295,801
|
|
|
$
|
32,995
|
|
|
$
|
11,595
|
|
|
$
|
615,381
|
|
|
Partners' Capital
|
|
|||||||||||||||||||||
|
Limited Partners
|
|
|
|
|
|
|
||||||||||||||||
|
Common
|
|
Class B Convertible
|
|
Subordinated
|
|
General Partner
|
|
Southcross Holdings' equity in contributed subsidiaries
|
|
Total
|
||||||||||||
BALANCE - December 31, 2014
|
$
|
259,735
|
|
|
$
|
298,833
|
|
|
$
|
48,831
|
|
|
$
|
12,385
|
|
|
$
|
77,320
|
|
|
$
|
697,104
|
|
Net loss
|
(11,802
|
)
|
|
(7,100
|
)
|
|
(5,694
|
)
|
|
(502
|
)
|
|
(4,258
|
)
|
|
(29,356
|
)
|
||||||
Contributions from general partner
|
—
|
|
|
—
|
|
|
—
|
|
|
1,281
|
|
|
—
|
|
|
1,281
|
|
||||||
Class B Convertible unit in-kind distribution
|
(4,414
|
)
|
|
6,706
|
|
|
(2,158
|
)
|
|
(134
|
)
|
|
—
|
|
|
—
|
|
||||||
Unit-based compensation on long-term incentive plan
|
2,333
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,333
|
|
||||||
Cash distributions and distribution equivalent rights paid
|
(19,040
|
)
|
|
—
|
|
|
(3,432
|
)
|
|
(834
|
)
|
|
—
|
|
|
(23,306
|
)
|
||||||
Accrued distribution equivalent rights on long-term incentive plan
|
(444
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(444
|
)
|
||||||
General partner unit in-kind distribution
|
(92
|
)
|
|
—
|
|
|
(45
|
)
|
|
137
|
|
|
—
|
|
|
—
|
|
||||||
Valley Wells' operating expense cap adjustment
|
518
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
518
|
|
||||||
Purchase of assets in Holdings drop-down acquisition
|
62,640
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(77,640
|
)
|
|
(15,000
|
)
|
||||||
Contribution of NGL pipelines in Holdings drop-down acquisition
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,000
|
|
|
15,000
|
|
||||||
Net assets contributed in Holdings drop-down acquisition in excess of consideration paid
|
14,806
|
|
|
7,929
|
|
|
6,387
|
|
|
594
|
|
|
(29,716
|
)
|
|
—
|
|
||||||
Expenses paid by Holdings on behalf of Valley Wells' assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,858
|
|
|
17,858
|
|
||||||
Net liabilities assumed by Holdings in Holdings drop-down acquisition
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,436
|
|
|
1,436
|
|
||||||
BALANCE - June 30, 2015
|
$
|
304,240
|
|
|
$
|
306,368
|
|
|
$
|
43,889
|
|
|
$
|
12,927
|
|
|
$
|
—
|
|
|
$
|
667,424
|
|
Consideration paid
(1)
|
$
|
77,640
|
|
Total net assets contributed
|
107,356
|
|
|
Net assets contributed in excess of consideration paid
|
$
|
29,716
|
|
Allocation of increase to partners' capital:
|
|
||
Common limited partner interest
|
$
|
14,806
|
|
Class B Convertible limited partner interest
|
7,929
|
|
|
Subordinated limited partner interest
|
6,387
|
|
|
General Partner interest
|
594
|
|
|
Total increase to partners' capital
|
$
|
29,716
|
|
|
|
Three Months Ended June 30, 2015
|
|
Six Months Ended June 30, 2015
|
||||
Partnership revenues
|
$
|
165,560
|
|
|
$
|
346,109
|
|
Valley Wells System and Compression Assets revenue
|
1,660
|
|
|
7,049
|
|
||
Combined revenues
|
$
|
167,220
|
|
|
$
|
353,158
|
|
|
|
|
|
|
|
||
Partnership net loss
|
$
|
(14,348
|
)
|
|
$
|
(25,098
|
)
|
Valley Wells System and Compression Assets net loss
|
(1,103
|
)
|
|
(4,258
|
)
|
||
Combined net loss
|
$
|
(15,451
|
)
|
|
$
|
(29,356
|
)
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net loss
|
|
$
|
(7,396
|
)
|
|
$
|
(15,451
|
)
|
|
$
|
(22,915
|
)
|
|
$
|
(29,356
|
)
|
General partner unit in-kind distribution
|
|
(26
|
)
|
|
(61
|
)
|
|
(26
|
)
|
|
(137
|
)
|
||||
Net loss attributable to Holdings
|
|
—
|
|
|
(1,103
|
)
|
|
—
|
|
|
(4,258
|
)
|
||||
Net loss attributable to partners
|
|
$
|
(7,422
|
)
|
|
$
|
(14,409
|
)
|
|
$
|
(22,941
|
)
|
|
$
|
(25,235
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
General partner's interest (1)
|
|
$
|
(156
|
)
|
|
$
|
(306
|
)
|
|
$
|
(465
|
)
|
|
$
|
(561
|
)
|
Class B Convertible limited partner interest (1)
|
|
(1,890
|
)
|
|
(3,981
|
)
|
|
(6,081
|
)
|
|
(7,100
|
)
|
||||
Limited partners' interest (1)
|
|
|
|
|
|
|
|
|
||||||||
Common
|
|
$
|
(3,953
|
)
|
|
$
|
(6,928
|
)
|
|
$
|
(11,782
|
)
|
|
$
|
(11,830
|
)
|
Subordinated
|
|
(1,423
|
)
|
|
(3,194
|
)
|
|
(4,613
|
)
|
|
(5,744
|
)
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
Common Units
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Interest in net loss
|
|
$
|
(3,953
|
)
|
|
$
|
(6,928
|
)
|
|
$
|
(11,782
|
)
|
|
$
|
(11,830
|
)
|
Effect of dilutive units - numerator
(1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Dilutive interest in net loss
|
|
$
|
(3,953
|
)
|
|
$
|
(6,928
|
)
|
|
$
|
(11,782
|
)
|
|
$
|
(11,830
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average units - basic
|
|
33,920,732
|
|
|
26,476,520
|
|
|
31,183,306
|
|
|
25,143,455
|
|
||||
Effect of dilutive units - denominator (1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted-average units - dilutive
|
|
33,920,732
|
|
|
26,476,520
|
|
|
31,183,306
|
|
|
25,143,455
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted net loss per common unit
|
|
$
|
(0.12
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.38
|
)
|
|
$
|
(0.47
|
)
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
Subordinated Units
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Interest in net loss
|
|
$
|
(1,423
|
)
|
|
$
|
(3,194
|
)
|
|
$
|
(4,613
|
)
|
|
$
|
(5,744
|
)
|
Effect of dilutive units - numerator (1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Dilutive interest in net loss
|
|
$
|
(1,423
|
)
|
|
$
|
(3,194
|
)
|
|
$
|
(4,613
|
)
|
|
$
|
(5,744
|
)
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average units - basic
|
|
12,213,713
|
|
|
12,213,713
|
|
|
12,213,713
|
|
|
12,213,713
|
|
||||
Effect of dilutive units - denominator (1)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted-average units - dilutive
|
|
12,213,713
|
|
|
12,213,713
|
|
|
12,213,713
|
|
|
12,213,713
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Basic and diluted net loss per subordinated unit
|
|
$
|
(0.12
|
)
|
|
$
|
(0.26
|
)
|
|
$
|
(0.38
|
)
|
|
$
|
(0.47
|
)
|
|
Payment Date
|
|
Attributable to the Quarter Ended
|
|
Per Unit Distribution
|
|
In-Kind Class B Convertible Unit
Distributions to Class B Convertible Holders |
|
In-Kind
Class B Convertible Distributions
Value (1) |
|
In-Kind
Unit
Distribution
to General
Partner
|
|
In-Kind General Partner Distribution Value
(1)
|
||||||||
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
August 9, 2016
|
|
June 30, 2016
|
|
$
|
0.3257
|
|
|
289,165
|
|
|
$
|
581
|
|
|
5,901
|
|
|
$
|
12
|
|
May 9, 2016
|
|
(2)
|
|
0.3257
|
|
|
563,494
|
|
|
1,293
|
|
|
11,499
|
|
|
26
|
|
|
•
|
Level 1—Represents unadjusted quoted market prices in active markets for identical assets or liabilities that are accessible at the measurement date. This category primarily includes our cash and cash equivalents, accounts receivable and accounts payable.
|
•
|
Level 2—Represents quoted market prices for similar assets or liabilities in active markets, quoted market prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data. This category primarily includes variable rate debt, over-the-counter swap contracts based upon natural gas price indices and interest rate derivative transactions.
|
•
|
Level 3—Represents derivative instruments whose fair value is estimated based on internally developed models and methodologies utilizing significant inputs that are generally less readily observable from market sources. We do not have financial assets and liabilities classified as Level 3.
|
|
|
|
|
|
|
|
|
Estimated Fair Value
|
|||||
Notional Amount
|
|
Fixed Rate
|
|
Effective Date
|
|
Maturity Date
|
|
June 30, 2016
|
|||||
$
|
100,000
|
|
|
1.195
|
%
|
|
June 30, 2015
|
|
January 1, 2017
|
|
$
|
(104
|
)
|
|
|
|
|
|
|
|
|
Estimated Fair Value
|
|||||
Notional Amount
|
|
Cap Rate
|
|
Effective Date
|
|
Maturity Date
|
|
June 30, 2016
|
|||||
$
|
20,000
|
|
|
1.500
|
%
|
|
December 31, 2014
|
|
December 31, 2016
|
|
$
|
—
|
|
80,000
|
|
|
3.000
|
%
|
|
June 30, 2015
|
|
June 30, 2017
|
|
—
|
|
||
50,000
|
|
|
3.000
|
%
|
|
December 31, 2015
|
|
December 31, 2017
|
|
—
|
|
||
50,000
|
|
|
3.000
|
%
|
|
June 30, 2016
|
|
June 30, 2018
|
|
1
|
|
||
|
|
|
|
|
|
|
|
$
|
1
|
|
|
Significant Other Observable Inputs (Level 2)
|
||||||
|
Fair Value Measurement as of
|
||||||
|
June 30, 2016
|
|
December 31, 2015
|
||||
Current interest rate derivative assets
|
$
|
—
|
|
|
$
|
6
|
|
Non-current interest rate derivative assets
|
—
|
|
|
4
|
|
||
Current interest rate derivative (liabilities)
|
(104
|
)
|
|
(169
|
)
|
||
Total interest rate derivatives
|
$
|
(104
|
)
|
|
$
|
(159
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Unrealized loss (gain) on interest rate derivatives
|
$
|
(85
|
)
|
|
$
|
54
|
|
|
$
|
(55
|
)
|
|
$
|
109
|
|
Realized loss on interest rate derivatives
|
99
|
|
|
154
|
|
|
198
|
|
|
258
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Realized gain on commodity swap derivatives
|
$
|
—
|
|
|
$
|
125
|
|
|
$
|
—
|
|
|
$
|
136
|
|
Unrealized loss on commodity swap derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
(112
|
)
|
|
Estimated
Useful Life (yrs)
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
Pipelines
|
15-30
|
|
$
|
552,197
|
|
|
$
|
542,790
|
|
Gas processing, treating and other plants
|
15
|
|
556,917
|
|
|
547,253
|
|
||
Compressors
|
7-15
|
|
76,661
|
|
|
72,750
|
|
||
Rights of way and easements
|
15
|
|
50,160
|
|
|
46,692
|
|
||
Furniture, fixtures and equipment
|
5
|
|
9,320
|
|
|
9,252
|
|
||
Capital lease vehicles
|
3-5
|
|
2,442
|
|
|
2,442
|
|
||
Total property, plant and equipment
|
|
|
1,247,697
|
|
|
1,221,179
|
|
||
Accumulated depreciation and amortization
|
|
|
(249,944
|
)
|
|
(212,991
|
)
|
||
Total
|
|
|
997,753
|
|
|
1,008,188
|
|
||
|
|
|
|
|
|
||||
Construction in progress
|
|
|
12,798
|
|
|
32,214
|
|
||
Land and other
|
|
|
23,715
|
|
|
25,599
|
|
||
Property, plant and equipment, net
|
|
|
$
|
1,034,266
|
|
|
$
|
1,066,001
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
Revolving credit facility due 2019
|
$
|
130,555
|
|
|
$
|
181,695
|
|
Term loans (including original issue discount of $1.6 million and $1.8 million as of June 30, 2016 and December 31, 2015, respectively) due 2021
|
439,378
|
|
|
441,464
|
|
||
Total long-term debt (including current portion)
|
569,933
|
|
|
623,159
|
|
||
Current portion of long-term debt
|
(4,500
|
)
|
|
(4,500
|
)
|
||
Deferred financing costs
|
(12,748
|
)
|
|
(14,141
|
)
|
||
Total long-term debt
|
$
|
552,685
|
|
|
$
|
604,518
|
|
|
|
|
|
|
|
||
Outstanding letters of credit
|
$
|
16,378
|
|
|
$
|
18,305
|
|
Remaining unused borrowings
|
$
|
53,067
|
|
|
$
|
—
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Weighted average interest rate
|
5.24
|
%
|
|
5.15
|
%
|
|
5.23
|
%
|
|
5.13
|
%
|
||||
Average outstanding borrowings
|
$
|
608,382
|
|
|
$
|
276,441
|
|
|
$
|
617,368
|
|
|
$
|
265,537
|
|
Maximum borrowings
|
$
|
626,680
|
|
|
$
|
563,625
|
|
|
$
|
628,055
|
|
|
$
|
563,625
|
|
(a)
|
the letters of credit sublimit is
$75 million
; and
|
(b)
|
if we fail to comply with the consolidated total leverage ratio, consolidated senior secured leverage ratio and the consolidated interest coverage ratio covenants (the “Financial Covenants”) (a “Financial Covenant Default”), we have the right (a limited number of times) to cure such Financial Covenant Default by having the Sponsors purchase equity interests in or make capital contributions to us resulting in, among other things, proceeds that, if added to consolidated EBITDA, as defined in the Third A&R Revolving Credit Agreement, would result in us satisfying the Financial Covenants.
|
|
2016
|
|
2015
|
||||
Deferred financing costs, January 1
|
$
|
14,141
|
|
|
$
|
16,602
|
|
Capitalization of deferred financing costs
|
130
|
|
|
597
|
|
||
Less:
|
|
|
|
||||
Amortization of deferred financing costs
|
(1,523
|
)
|
|
(1,557
|
)
|
||
Deferred financing costs, June 30
|
$
|
12,748
|
|
|
$
|
15,642
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
Other current liabilities
|
$
|
376
|
|
|
$
|
362
|
|
Other non-current liabilities
|
304
|
|
|
522
|
|
||
Total
|
$
|
680
|
|
|
$
|
884
|
|
|
|
Partners’ Capital
|
|||||||||||||
|
|
|
|
Owned by Parent
|
|||||||||||
|
|
Public
|
|
Holdings
|
|
Class B
|
|
|
|
General
|
|||||
|
|
Common
|
|
Common
|
|
Convertible
|
|
Subordinated
|
|
Partner
|
|||||
Units outstanding as of December 31, 2015
|
|
21,804,219
|
|
|
6,616,400
|
|
|
15,958,990
|
|
|
12,213,713
|
|
|
1,154,965
|
|
Vesting of LTIP units, net
|
|
92,685
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
In-kind distributions and issuances to general partner to maintain 2.0% ownership
|
|
—
|
|
|
—
|
|
|
563,494
|
|
|
—
|
|
|
184,600
|
|
Common unit issuances to Holdings related to equity cures
|
|
—
|
|
|
8,389,188
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Units outstanding as of June 30, 2016
|
|
21,896,904
|
|
|
15,005,588
|
|
|
16,522,484
|
|
|
12,213,713
|
|
|
1,339,565
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Charlesbank Capital Partners, LLC(1)
|
$
|
30
|
|
|
$
|
42
|
|
|
$
|
94
|
|
|
$
|
80
|
|
EIG
|
16
|
|
|
17
|
|
|
45
|
|
|
33
|
|
||||
Tailwater
|
18
|
|
|
17
|
|
|
44
|
|
|
33
|
|
||||
Total fees and expenses paid for director services to affiliated entities
|
$
|
64
|
|
|
$
|
76
|
|
|
$
|
183
|
|
|
$
|
146
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Reimbursements included in general and administrative expenses
|
$
|
3,538
|
|
|
$
|
3,845
|
|
|
$
|
7,034
|
|
|
$
|
7,080
|
|
Reimbursements included in operations and maintenance expenses
|
5,548
|
|
|
5,133
|
|
|
10,846
|
|
|
10,432
|
|
||||
Total reimbursements to our General Partner and its affiliates
|
$
|
9,086
|
|
|
$
|
8,978
|
|
|
$
|
17,880
|
|
|
$
|
17,512
|
|
|
Units
|
|
Weighted-Average Fair
Value at Grant Date |
|||
Unvested - December 31, 2015
|
687,920
|
|
|
$
|
15.56
|
|
Granted units
|
47,500
|
|
|
$
|
3.56
|
|
Forfeited units
|
(32,265
|
)
|
|
$
|
17.03
|
|
Units recaptured for tax withholdings
|
(41,605
|
)
|
|
$
|
12.80
|
|
Vested units
|
(92,686
|
)
|
|
$
|
13.00
|
|
Unvested - June 30, 2016
|
568,864
|
|
|
$
|
14.86
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Unit-based compensation
|
$
|
725
|
|
|
$
|
1,662
|
|
|
$
|
1,706
|
|
|
$
|
2,475
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Matching contributions expensed for employee savings plan
|
$
|
399
|
|
|
$
|
172
|
|
|
$
|
608
|
|
|
$
|
340
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Sales of natural gas
|
$
|
53,456
|
|
|
$
|
92,518
|
|
|
$
|
116,059
|
|
|
$
|
205,304
|
|
Sales of NGLs and condensate
|
41,832
|
|
|
39,427
|
|
|
68,022
|
|
|
76,610
|
|
||||
Transportation, gathering and processing fees
|
28,157
|
|
|
33,823
|
|
|
57,292
|
|
|
68,876
|
|
||||
Other
|
1,257
|
|
|
1,452
|
|
|
3,055
|
|
|
2,368
|
|
||||
Total revenues
|
$
|
124,702
|
|
|
$
|
167,220
|
|
|
$
|
244,428
|
|
|
$
|
353,158
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenue
|
|
|
|
|
|
|
|
||||||||
T2 Eagle Ford
|
$
|
1,642
|
|
|
$
|
1,215
|
|
|
$
|
3,044
|
|
|
$
|
2,136
|
|
T2 Cogen
|
1,077
|
|
|
1,187
|
|
|
1,999
|
|
|
2,849
|
|
||||
T2 LaSalle
|
414
|
|
|
450
|
|
|
794
|
|
|
829
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net loss
|
|
|
|
|
|
|
|
||||||||
T2 Eagle Ford
|
$
|
(4,924
|
)
|
|
$
|
(4,993
|
)
|
|
$
|
(9,511
|
)
|
|
$
|
(9,975
|
)
|
T2 Cogen
|
(1,424
|
)
|
|
(1,492
|
)
|
|
(2,966
|
)
|
|
(2,853
|
)
|
||||
T2 LaSalle
|
(1,468
|
)
|
|
(1,445
|
)
|
|
(2,936
|
)
|
|
(2,965
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
T2 Eagle Ford
|
$
|
(2,462
|
)
|
|
$
|
(2,496
|
)
|
|
$
|
(4,755
|
)
|
|
$
|
(4,988
|
)
|
T2 Cogen
|
(709
|
)
|
|
(746
|
)
|
|
(1,479
|
)
|
|
(1,426
|
)
|
||||
T2 LaSalle
|
(363
|
)
|
|
(362
|
)
|
|
(729
|
)
|
|
(741
|
)
|
||||
Equity in losses of joint venture investments
|
$
|
(3,534
|
)
|
|
$
|
(3,604
|
)
|
|
$
|
(6,963
|
)
|
|
$
|
(7,155
|
)
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
T2 Eagle Ford
|
$
|
106,411
|
|
|
$
|
105,755
|
|
T2 Cogen
|
14,872
|
|
|
16,747
|
|
||
T2 LaSalle
|
17,178
|
|
|
18,024
|
|
||
Investments in joint ventures
|
$
|
138,461
|
|
|
$
|
140,526
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Top ten customers
|
53.2
|
%
|
|
55.8
|
%
|
|
57.7
|
%
|
|
56.8
|
%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
TexStar Midstream(b)
|
10.3
|
%
|
|
(a)
|
|
|
11.4
|
%
|
|
(a)
|
|
Trafigura AG
|
(a)
|
|
|
13.0
|
%
|
|
(a)
|
|
|
11.8
|
%
|
|
|
Six Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Supplemental Disclosures:
|
|
|
|
||||
Cash paid for interest, net of amounts capitalized
|
$
|
18,162
|
|
|
$
|
14,221
|
|
Cash received for tax refunds
|
53
|
|
|
58
|
|
||
Supplemental disclosures of non-cash investing and financing activities:
|
|
|
|
||||
Accounts payable related to capital expenditures
|
2,796
|
|
|
9,615
|
|
||
Capital lease obligations
|
—
|
|
|
342
|
|
||
Accrued distribution equivalent rights on LTIP units
|
10
|
|
|
444
|
|
||
Class B Convertible unit in-kind distributions
|
1,293
|
|
|
6,706
|
|
||
Net assets contributed in Holdings drop-down acquisition in excess of consideration paid
|
—
|
|
|
29,716
|
|
||
Valley Wells' operating expense cap adjustment
|
1,415
|
|
|
518
|
|
||
Purchase of assets in Holdings drop-down acquisition
|
—
|
|
|
62,640
|
|
||
Net liabilities assumed by Holdings in Holdings drop-down acquisition
|
—
|
|
|
1,436
|
|
||
PIK interest
|
260
|
|
|
—
|
|
||
Common unit issuances to General Partner related to equity cures
|
245
|
|
|
—
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Total interest costs
|
$
|
9,027
|
|
|
$
|
8,531
|
|
|
$
|
18,555
|
|
|
$
|
16,406
|
|
Capitalized interest included in property, plant and equipment, net
|
(194
|
)
|
|
(631
|
)
|
|
(552
|
)
|
|
(1,008
|
)
|
||||
Interest expense
|
$
|
8,833
|
|
|
$
|
7,900
|
|
|
$
|
18,003
|
|
|
$
|
15,398
|
|
•
|
the volatility of natural gas, crude oil and NGL prices and the price and demand of products derived from these commodities, particularly in the depressed energy price environment that began in the second half of 2014, which has resulted in a material reduction in exploration, development and production of crude oil and natural gas;
|
•
|
competitive conditions in our industry and the extent and success of producers increasing production or replacing declining production and our success in obtaining new sources of supply;
|
•
|
industry conditions and supply of pipelines, processing and fractionation capacity relative to available natural gas from producers;
|
•
|
our dependence upon a relatively limited number of customers for a significant portion of our revenues;
|
•
|
actions taken or inactions or nonperformance by third parties, including suppliers, contractors, operators, processors, transporters and customers;
|
•
|
the financial condition and creditworthiness of our customers;
|
•
|
our ability to recover NGLs effectively at a rate equal to or greater than our contracted rates with customers;
|
•
|
our ability to produce and market NGLs at the anticipated differential to NGL index pricing;
|
•
|
our access to markets enabling us to match pricing indices for purchases and sales of natural gas and NGLs;
|
•
|
our ability to complete projects within budget and on schedule, including but not limited to, timely receipt of necessary government approvals and permits, our ability to control the costs of construction and other factors that may impact projects;
|
•
|
our ability to consummate acquisitions, successfully integrate the acquired businesses and realize anticipated cost savings and other synergies from any acquisitions, including with respect to our acquisition of certain gathering and processing assets from TexStar Midstream Services, LP in August 2014 and other assets acquired in May 2015;
|
•
|
our ability to manage, over time, changing exposure to commodity price risk;
|
•
|
the effectiveness of our hedging activities or our decisions not to undertake hedging activities;
|
•
|
our access to financing and ability to remain in compliance with our financial covenants, and the potential for lack of access to debt and equity capital markets as a result of the depressed energy price environment;
|
•
|
our ability to generate sufficient operating cash flow to resume funding our quarterly distributions;
|
•
|
the effects of downtime associated with our assets or the assets of third parties interconnected with our systems;
|
•
|
operating hazards, fires, natural disasters, weather-related delays, casualty losses and other matters beyond our control;
|
•
|
the failure of our processing, fractionation and treating plants to perform as expected, including outages for unscheduled maintenance or repair;
|
•
|
the effects of laws and governmental regulations and policies;
|
•
|
the effects of existing and future litigation;
|
•
|
the impact on our financial condition and operations resulting from the financial condition and operations of our controlling unitholder, Southcross Holdings LP;
|
•
|
changes in general economic conditions;
|
•
|
other financial, operational and legal risks and uncertainties detailed from time to time in our filings with the U.S. Securities and Exchange Commission; and
|
•
|
the financial health of our controlling unitholder, Southcross Holdings LP, and its ability to pay amounts owed to us on a timely basis.
|
•
|
Fixed-Fee.
We receive a fixed-fee per unit of natural gas volume that we gather at the wellhead, process, treat, compress and/or transport for our customers, or we receive a fixed-fee per unit of NGL volume that we fractionate. Some of our arrangements also provide for a fixed-fee for guaranteed transportation capacity on our systems.
|
•
|
Fixed-Spread.
Under these arrangements, we purchase natural gas and NGLs from producers or suppliers at receipt points on our systems at an index price plus or minus a fixed price differential and sell these volumes of natural gas and NGLs at delivery points off our systems at the same index price, plus or minus a fixed price differential. By entering into such back-to-back purchases and sales, we are able to mitigate our risk associated with changes in the general commodity price levels of natural gas and NGLs. We remain subject to variations in our fixed-spreads to the extent we are unable to match precisely volumes purchased and sold in a given time period or are unable to secure the supply or to produce or market the necessary volume of products at our anticipated differentials to the index price.
|
•
|
Commodity-Sensitive.
In exchange for our processing services, we may remit to a customer a percentage of the proceeds from our sales, or a percentage of the physical volume, of residue natural gas and/or NGLs that result from our natural gas processing, or we may purchase NGLs from customers at set fixed NGL recoveries and retain the balance of the proceeds or physical commodity for our own account. These arrangements are generally combined with fixed-fee and fixed-spread arrangements for processing services and, therefore, represent only a portion of a processing contract's value. The revenues we receive from these arrangements directly correlate with fluctuating general commodity price levels of natural gas and NGLs and the volume of NGLs recovered relative to the fixed recovery obligations.
|
•
|
the ability of our assets to generate cash sufficient to support our indebtedness and make future cash distributions;
|
•
|
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 investment opportunities.
|
•
|
the ability of our assets to generate cash sufficient to support our indebtedness and make future cash distributions to our unitholders; and
|
•
|
the attractiveness of capital projects and acquisitions and the overall rates of return on alternative investment opportunities.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net cash provided by operating activities
|
$
|
47,119
|
|
|
$
|
2,455
|
|
|
$
|
29,948
|
|
|
$
|
4,503
|
|
Add (deduct):
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
(18,908
|
)
|
|
(17,571
|
)
|
|
(37,449
|
)
|
|
(34,603
|
)
|
||||
Unit-based compensation
|
(725
|
)
|
|
(1,662
|
)
|
|
(1,706
|
)
|
|
(2,475
|
)
|
||||
Amortization of deferred financing costs and PIK interest
|
(831
|
)
|
|
(902
|
)
|
|
(1,904
|
)
|
|
(1,727
|
)
|
||||
Gain (loss) on sale of assets, net
|
12,576
|
|
|
38
|
|
|
12,576
|
|
|
(180
|
)
|
||||
Unrealized gain (loss) on financial instruments
|
85
|
|
|
(54
|
)
|
|
55
|
|
|
(221
|
)
|
||||
Equity in losses of joint venture investments
|
(3,534
|
)
|
|
(3,604
|
)
|
|
(6,963
|
)
|
|
(7,155
|
)
|
||||
Distribution from joint venture investment
|
—
|
|
|
—
|
|
|
(390
|
)
|
|
—
|
|
||||
Impairment of assets
|
—
|
|
|
(193
|
)
|
|
—
|
|
|
(193
|
)
|
||||
Other, net
|
62
|
|
|
14
|
|
|
184
|
|
|
2
|
|
||||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
||||||||
Trade accounts receivable, including affiliates
|
(35,310
|
)
|
|
1,356
|
|
|
(44,409
|
)
|
|
(16,951
|
)
|
||||
Prepaid expenses and other current assets
|
(329
|
)
|
|
(1,077
|
)
|
|
(1,502
|
)
|
|
(780
|
)
|
||||
Other non-current assets
|
(280
|
)
|
|
94
|
|
|
—
|
|
|
(76
|
)
|
||||
Accounts payable and accrued liabilities
|
9,145
|
|
|
3,771
|
|
|
27,808
|
|
|
31,404
|
|
||||
Deposits paid to suppliers
|
(11,463
|
)
|
|
—
|
|
|
3,837
|
|
|
—
|
|
||||
Other liabilities, including affiliates
|
(5,003
|
)
|
|
1,884
|
|
|
(3,000
|
)
|
|
(904
|
)
|
||||
Net loss
|
$
|
(7,396
|
)
|
|
$
|
(15,451
|
)
|
|
$
|
(22,915
|
)
|
|
$
|
(29,356
|
)
|
Add (deduct):
|
|
|
|
|
|
|
|
||||||||
Depreciation and amortization
|
$
|
18,908
|
|
|
$
|
17,571
|
|
|
$
|
37,449
|
|
|
$
|
34,603
|
|
Interest expense
|
8,833
|
|
|
7,900
|
|
|
18,003
|
|
|
15,398
|
|
||||
Income tax (benefit) expense
|
3
|
|
|
9
|
|
|
(3
|
)
|
|
78
|
|
||||
Unrealized loss on commodity swap derivatives
|
—
|
|
|
—
|
|
|
—
|
|
|
112
|
|
||||
Loss (gain) on sale of assets, net
|
(12,576
|
)
|
|
(38
|
)
|
|
(12,576
|
)
|
|
180
|
|
||||
Revenue deferral adjustment
|
754
|
|
|
754
|
|
|
1,508
|
|
|
1,508
|
|
||||
Unit-based compensation
|
725
|
|
|
1,662
|
|
|
1,706
|
|
|
2,475
|
|
||||
Major litigation costs, net of recoveries
|
118
|
|
|
38
|
|
|
243
|
|
|
491
|
|
||||
Transaction-related costs
|
—
|
|
|
871
|
|
|
6
|
|
|
1,172
|
|
||||
Equity in losses of joint venture investments
|
3,534
|
|
|
3,604
|
|
|
6,963
|
|
|
7,155
|
|
||||
Severance expense
|
16
|
|
|
734
|
|
|
16
|
|
|
734
|
|
||||
Retention bonus due from Holdings
|
898
|
|
|
—
|
|
|
1,796
|
|
|
—
|
|
||||
Valley Wells' operating expense cap adjustment
|
1,415
|
|
|
518
|
|
|
2,406
|
|
|
518
|
|
||||
Fees related to Equity Cure Agreement
|
67
|
|
|
—
|
|
|
577
|
|
|
—
|
|
||||
Distribution from joint venture investment
|
—
|
|
|
—
|
|
|
390
|
|
|
—
|
|
||||
Other, net (1)
|
300
|
|
|
486
|
|
|
726
|
|
|
572
|
|
||||
Adjusted EBITDA
|
$
|
15,599
|
|
|
$
|
18,658
|
|
|
$
|
36,295
|
|
|
$
|
35,640
|
|
Cash interest, net of capitalized costs
|
(8,046
|
)
|
|
(6,937
|
)
|
|
(18,162
|
)
|
|
(13,573
|
)
|
||||
Income tax benefit (expense)
|
(3
|
)
|
|
(9
|
)
|
|
3
|
|
|
(78
|
)
|
||||
Maintenance capital expenditures
|
(836
|
)
|
|
(3,091
|
)
|
|
(3,112
|
)
|
|
(5,618
|
)
|
||||
Distributable cash flow
|
$
|
6,714
|
|
|
$
|
8,621
|
|
|
$
|
15,024
|
|
|
$
|
16,371
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues:
|
|
|
|
|
|
|
|
||||||||
Revenues
|
$
|
100,141
|
|
|
$
|
146,129
|
|
|
$
|
195,596
|
|
|
$
|
324,620
|
|
Revenues - affiliates
|
24,561
|
|
|
21,091
|
|
|
48,832
|
|
|
28,538
|
|
||||
Total revenues
|
124,702
|
|
|
167,220
|
|
|
244,428
|
|
|
353,158
|
|
||||
Expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of natural gas and liquids sold
|
85,619
|
|
|
124,595
|
|
|
165,066
|
|
|
265,710
|
|
||||
Operations and maintenance
|
19,615
|
|
|
19,834
|
|
|
36,393
|
|
|
42,388
|
|
||||
Depreciation and amortization
|
18,908
|
|
|
17,571
|
|
|
37,449
|
|
|
34,603
|
|
||||
General and administrative
|
8,162
|
|
|
9,003
|
|
|
16,048
|
|
|
16,809
|
|
||||
Impairment of assets
|
—
|
|
|
193
|
|
|
—
|
|
|
193
|
|
||||
Loss (gain) on sale of assets, net
|
(12,576
|
)
|
|
(38
|
)
|
|
(12,576
|
)
|
|
180
|
|
||||
Total expenses
|
119,728
|
|
|
171,158
|
|
|
242,380
|
|
|
359,883
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income (loss) from operations
|
4,974
|
|
|
(3,938
|
)
|
|
2,048
|
|
|
(6,725
|
)
|
||||
Other expense:
|
|
|
|
|
|
|
|
||||||||
Equity in losses of joint venture investments
|
(3,534
|
)
|
|
(3,604
|
)
|
|
(6,963
|
)
|
|
(7,155
|
)
|
||||
Interest expense
|
(8,833
|
)
|
|
(7,900
|
)
|
|
(18,003
|
)
|
|
(15,398
|
)
|
||||
Total other expense
|
(12,367
|
)
|
|
(11,504
|
)
|
|
(24,966
|
)
|
|
(22,553
|
)
|
||||
Loss before income tax benefit (expense)
|
(7,393
|
)
|
|
(15,442
|
)
|
|
(22,918
|
)
|
|
(29,278
|
)
|
||||
Income tax benefit (expense)
|
(3
|
)
|
|
(9
|
)
|
|
3
|
|
|
(78
|
)
|
||||
Net loss
|
$
|
(7,396
|
)
|
|
$
|
(15,451
|
)
|
|
$
|
(22,915
|
)
|
|
$
|
(29,356
|
)
|
|
|
|
|
|
|
|
|
||||||||
Other financial data:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Adjusted EBITDA
|
$
|
15,599
|
|
|
$
|
18,658
|
|
|
$
|
36,295
|
|
|
$
|
35,640
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Maintenance capital expenditures
|
$
|
836
|
|
|
$
|
3,091
|
|
|
$
|
3,112
|
|
|
$
|
5,618
|
|
Growth capital expenditures
|
$
|
6,124
|
|
|
$
|
20,866
|
|
|
$
|
9,322
|
|
|
$
|
59,341
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Operating data:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Average volume of processed gas (MMcf/d)
|
319
|
|
|
423
|
|
|
331
|
|
|
435
|
|
||||
Average volume of NGLs produced (Bbls/d)
|
35,912
|
|
|
40,654
|
|
|
37,771
|
|
|
41,264
|
|
||||
Average daily throughput Mississippi/Alabama (MMcf/d)
|
147
|
|
|
169
|
|
|
151
|
|
|
193
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Realized prices on natural gas volumes ($/Mcf)
|
$
|
1.88
|
|
|
$
|
2.69
|
|
|
$
|
1.90
|
|
|
$
|
2.81
|
|
Realized prices on NGL volumes ($/gal)
|
0.30
|
|
|
0.37
|
|
|
0.33
|
|
|
0.39
|
|
•
|
growth capital expenditures, which are capital expenditures to expand or increase the efficiency of the existing operating capacity of our assets. Growth capital expenditures include expenditures that facilitate an increase in volumes within our operations, but exclude expenditures for acquisitions; and
|
•
|
maintenance capital expenditures, which are capital expenditures that are not considered growth capital expenditures.
|
|
Three Months Ended June 30,
|
|
Six months ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Maintenance capital expenditures
|
$
|
836
|
|
|
$
|
3,091
|
|
|
$
|
3,112
|
|
|
$
|
5,618
|
|
Growth capital expenditures
|
6,124
|
|
|
20,866
|
|
|
9,322
|
|
|
59,341
|
|
||||
Capital expenditures
|
$
|
6,960
|
|
|
$
|
23,957
|
|
|
$
|
12,434
|
|
|
$
|
64,959
|
|
|
Six Months Ended June 30, 2016
|
||||||
|
2016
|
|
2015
|
||||
Net cash provided by operating activities
|
$
|
29,948
|
|
|
$
|
4,503
|
|
Net cash provided by (used in) investing activities
|
2,806
|
|
|
(77,640
|
)
|
||
Net cash provided by (used in) financing activities
|
(39,243
|
)
|
|
79,705
|
|
|
|
SOUTHCROSS ENERGY PARTNERS, L.P.
|
|
|
|
|
|
|
|
By:
|
Southcross Energy Partners GP, LLC, its general partner
|
|
|
|
|
|
|
|
|
Date:
|
August 5, 2016
|
By:
|
/s/ Bret M. Allan
|
|
|
|
Bret M. Allan
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
Date:
|
August 5, 2016
|
By:
|
/s/ G. Tracy Owens
|
|
|
|
G. Tracy Owens
|
|
|
|
Vice President and Chief Accounting Officer
|
|
|
|
(Principal Accounting Officer)
|
|
BORROWER:
|
|
SOUTHCROSS ENERGY PARTNERS, L.P.
|
|
|
|
|
|
|
By:
|
Southcross Energy Partner GP, LLC, its general partner
|
|
|
|
|
|
|
By:
|
/s/ Bret M. Allan
|
|
|
Name:
|
Bret M. Allan
|
|
|
Title:
|
Senior Vice President and Chief Financial Officer
|
|
|
|
|
CONSENTED, ACKNOWLEDGED AND AGREED TO BY:
|
|
|
|
|
|
|
|
SOUTHCROSS ENERGY OPERATING, LLC
|
|
|
|
SOUTHCROSS ENERGY LP LLC
|
|
|
|
SOUTHCROSS ENERGY GP LLC
|
|
|
|
SOUTHCROSS DELTA PIPELINE LLC
|
|
|
|
SOUTHCROSS PROCESSING LLC
|
|
|
|
SOUTHCROSS ALABAMA PIPELINE LLC
|
|
|
|
SOUTHCROSS NUECES PIPELINES LLC
|
|
|
|
SOUTHCROSS ENERGY FINANCE CORP.
|
|
|
|
FL RICH GAS SERVICES GP, LLC
|
|
|
|
|
|
|
|
By:
/s/ Bret M. Allan
|
|
|
|
Name: Bret M. Allan
|
|
|
|
Title: Senior Vice President and Chief
|
|
|
|
Financial Officer
|
|
|
SOUTHCROSS CCNG GATHERING LTD.
|
|
|
|
SOUTHCROSS CCNG TRANSMISSION LTD.
|
|
|
|
SOUTHCROSS GULF COAST
|
|
|
|
|
TRANSMISSION LTD.
|
|
|
SOUTHCROSS MISSISSIPPI PIPELINE, L.P.
|
|
|
|
SOUTHCROSS MISSISSIPPI GATHERING,
|
|
|
|
|
L.P.
|
|
|
SOUTHCROSS MIDSTREAM SERVICES, L.P.
|
|
|
|
SOUTHCROSS MARKETING COMPANY
|
|
|
|
|
LTD.
|
|
|
SOUTHCROSS NGL PIPELINE LTD.
|
|
|
|
SOUTHCROSS GATHERING LTD.
|
|
|
|
SOUTHCROSS MISSISSIPPI INDUSTRIAL
|
|
|
|
|
GAS SALES, L.P.
|
|
|
|
|
|
|
By:
|
Southcross Energy GP LLC, as general partner
|
|
|
|
|
|
|
By:
|
/s/ Bret M. Allan
|
|
|
|
Name: Bret M. Allan
|
|
|
|
Title: Senior Vice President and Chief
|
|
|
|
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
FL RICH GAS SERVICES, LP
|
|
|
|
|
|
|
|
By:
|
FL Rich Gas Services GP, LLC, its general partner
|
|
|
|
|
|
|
By:
|
/s/ Bret M. Allan
|
|
|
|
Name: Bret M. Allan
|
|
|
|
Title: Senior Vice President and Chief
|
|
|
|
Financial Officer
|
|
|
FL RICH GAS UTILITY GP, LLC
|
|
|
|
|
|
|
|
By:
|
/s/ Bret M. Allan
|
|
|
|
Name: Bret M. Allan
|
|
|
|
Title: Senior Vice President and Chief
|
|
|
|
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
FL RICH GAS UTILITY LP
|
|
|
|
TEXSTAR TRANSMISSION, LP
|
|
|
|
|
|
|
|
By:
|
FL Rich Gas Utility GP, LLC, its general partner
|
|
|
|
|
|
|
By:
|
/s/ Bret M. Allan
|
|
|
|
Name: Bret M. Allan
|
|
|
|
Title: Senior Vice President and Chief
|
|
|
|
Financial Officer
|
|
|
|
|
ADMINISTRATIVE AGENT,
ISSUING BANK AND LENDER:
|
WELLS FARGO BANK, N.A.
, as the Administrative Agent, Issuing Bank and a Lender
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Trent J. Brendon
|
|
Name:
|
Trent J. Brendon
|
|
Title:
|
Senior Vice President
|
LENDER:
|
Barclays Bank PLC, as a Lender
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Sean Duggan
|
|
|
|
Name:
|
Sean Duggan
|
|
|
|
Title:
|
Assistant Vice President
|
|
LENDER:
|
USG AG, STAMFORD BRANCH, as a Lender
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Denise Bushee
|
|
|
|
Name:
|
Denise Bushee
|
|
|
|
Title:
|
Assistant Director
|
|
|
|
|
|
|
|
|
By:
|
/s/ Darlene Arias
|
|
|
|
Name:
|
Darlene Arias
|
|
|
|
Title:
|
Director
|
|
LENDER:
|
JPMorgan Chase Bank, N.A., as a Lender
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Stephanie Balette
|
|
|
|
Name:
|
Stephanie Balette
|
|
|
|
Title:
|
Authorized Officer
|
|
LENDER:
|
ABN AMRO CAPITAL USA LLC, as a Lender
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Darrell Holley
|
|
|
|
Name:
|
Darrell Holley
|
|
|
|
Title:
|
Managing Director
|
|
|
|
|
|
|
|
|
By:
|
/s/ Kaylan Hopson
|
|
|
|
Name:
|
Kaylan Hopson
|
|
|
|
Title:
|
Vice President
|
|
LENDER:
|
BANK OF AMERICA, N.A., as a Lender
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ C. Mark Hedrick
|
|
|
|
Name:
|
C. Mark Hedrick
|
|
|
|
Title:
|
Managing Director
|
|
LENDER:
|
Cadence Bank, N.A., as a Lender
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ David Anderson
|
|
|
|
Name:
|
David Anderson
|
|
|
|
Title:
|
Senior Vice President
|
|
LENDER:
|
Royal Bank of Canada, as a Lender
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Leslie P. Vowell
|
|
|
|
Name:
|
Leslie P. Vowell
|
|
|
|
Title:
|
Attorney-in-Fact
|
|
LENDER:
|
Regions Bank, as a Lender
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ Arthur E. Cutler
|
|
|
|
Name:
|
Arthur E. Cutler
|
|
|
|
Title:
|
Vice President
|
|
LENDER:
|
MidFirst Bank, as a Lender
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ W. Thomas Portman
|
|
|
|
Name:
|
W. Thomas Portman
|
|
|
|
Title:
|
Vice President
|
|
LENDER:
|
Raymond James Bank, N.A., as a Lender
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
/s/ H. Fred Coble, Jr.
|
|
|
|
Name:
|
H. Fred Coble, Jr.
|
|
|
|
Title:
|
Senior Vice President
|
|
Date:
|
August 5, 2016
|
|
|
|
|
|
|
|
|
By:
|
/s/ JOHN E. BONN
|
|
|
|
|
John E. Bonn
|
|
|
|
|
Chief Executive Officer of Southcross Energy Partners GP, LLC (the general partner of Southcross Energy Partners, L.P.)
|
|
|
|
|
|
|
|
|
Date:
|
August 5, 2016
|
|
|
|
|
|
|
By:
|
/s/ BRET M. ALLAN
|
|
|
|
Bret M. Allan
|
|
|
|
Senior Vice President and Chief Financial Officer of Southcross Energy Partners GP, LLC (the general partner of Southcross Energy Partners, L.P.)
|
|
|
Date:
|
August 5, 2016
|
|
|
|
|
By:
|
/s/ JOHN E. BONN
|
|
|
John E. Bonn, Chief Executive Officer of Southcross Energy Partners GP, LLC (the general partner of Southcross Energy Partners, L.P.)
|
|
|
|
|
|
|
|
By:
|
/s/ BRET M. ALLAN
|
|
|
Bret M. Allan, Senior Vice President and Chief Financial Officer of Southcross Energy Partners GP, LLC (the general partner of Southcross Energy Partners, L.P.)
|
|