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Southcross Reports 1Q 2013 Financial & Operating Results

Source: www.gulfoilandgas.com 5/8/2013, Location: North America

Southcross Energy Partners, L.P. (“Southcross” or the “Partnership”) announced first quarter 2013 financial and operating results.

First Quarter 2013 Highlights

- Processed natural gas volumes of 239,757 million BTU per day (“MMBtu/d”) during the first quarter of 2013, an increase of 11% from the fourth quarter of 2012
- Natural gas liquid (“NGL”) production of 10,152 barrels per day during the first quarter of 2013, a decrease of 8% from the fourth quarter of 2012
- Completion of our Bonnie View fractionation facility expansion to a capacity of 22,500 barrels per day
- Commencement of flow through the final phase of our Bee Line pipeline, augmenting delivery capacity to our processing plants by a total of 320 million cubic feet per day
- Commencement of new NGL sales contracts on May 1, 2013 that improve sales prices and help secure our markets
- Resumed operations on April 1, 2013 at our repaired Gregory processing and NGL fractionation facility

First Quarter Results

Southcross’ Adjusted EBITDA (as defined below) was $4.5 million for the three month period ended March 31, 2013, which is within the quarterly guidance issued in our prior release, compared to $12.0 million for the same period in the prior year. Adjusted EBITDA for the first quarter of 2013 was impacted negatively by the continuation of start-up issues related to our Bonnie View fractionation facility, costs related to the establishment of public reporting accounting processes and the effects of a fire at our Gregory plant.

“Southcross has continued to make progress in completing construction of our key asset base,” said David Biegler, Chairman, President and Chief Executive Officer of Southcross’ general partner. “Because NGL recoveries at our processing plants and production of on-specification products at our fractionation plants have improved significantly since the beginning of the first quarter of 2013, we have confidence that our second quarter financial performance will reflect significant improvement over the first quarter of 2013. This is strengthened by the beneficial effects of our new NGL sales contracts that commenced on May 1, 2013.”

Gross operating margin (as defined below) totaled $18.9 million for the three month period ended March 31, 2013, compared to $21.4 million for the same period in the prior year. Net (loss)/income (before deemed distributions on preferred units) was $(6.4) million for the three month period ended March 31, 2013, compared to $6.2 million for the same period in the prior year.

During the three month period ended March 31, 2013, total gas volumes averaged 602,820 MMBtu/d, an increase of 7% compared to 563,915 MMBtu/d during the same period in the prior year. Processed gas volumes averaged 239,757 MMBtu/d during the three month period ended March 31, 2013, an increase of 13% over the 212,699 MMBtu/d for the same period in the prior year. NGL production for the three month period ended March 31, 2013 averaged 10,152 barrels per day, an increase of 11% from the 9,172 barrels per day for the same period in the prior year, reflecting an increase in liquids-rich gas volumes from the Eagle Ford.

Capital Expenditures

For the three month period ended March 31, 2013, capital additions to property, plant and equipment were $26.2 million. Capital expenditures on the consolidated cash flow statement for the quarter were $49.2 million, which included growth and maintenance expenditures and cash paid for capital additions incurred in 2012. Capital additions during the quarter were largely attributable to the completion of the Bonnie View fractionation facility and Bee Line pipeline. Consistent with its prior guidance, Southcross continues to expect that capital additions for growth projects over the last three quarters of 2013 will be between $20 million and $25 million.

Cash Distributions

On April 30, 2013, Southcross announced that it would pay on May 15, 2013 to all unitholders of record on May 10, 2013, a cash distribution of $0.40 per common unit for the three month period ended March 31, 2013. This distribution corresponds to the minimum quarterly distribution of $0.40 per unit, or $1.60 on an annualized basis.

Capital and Liquidity

Effective April 12, 2013, Southcross entered into an agreement to issue $40 million of additional equity capital through new convertible preferred units and additional general partner contributions and, contemporaneously, entered into an agreement with its lenders that amended its existing credit facility. Southcross’ outstanding debt at March 31, 2013, prior to completion of the additional equity contributions and associated debt reduction, was $246 million.

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