NEDERLAND, Texas, Aug. 7, 2017 /PRNewswire/ -- OCI Partners
LP, a Delaware limited partnership
(the "Partnership"), announced its results for the three and six
months ended June 30, 2017. The
Partnership owns and operates an integrated methanol and ammonia
production facility that is strategically located on the Texas Gulf
Coast near Beaumont.
Summary of Financial Results for the Three Months Ended
June 30, 2017
- Revenues increased 32% to $74
million compared to $56
million for the same period in 2016
- EBITDA increased 140% to $24
million compared to $10
million for the same period in 2016
- Net loss of $1 million compared
to a net loss of $15 million for the
same period in 2016
- EBITDA and net loss margins were 32% and (1)% respectively,
compared to 18% and (27)%, respectively, during the same period in
2016
Summary of Financial Results for the Six Months Ended
June 30, 2017
- Revenues increased 33% to $167
million compared to $126
million for the same period in 2016
- EBITDA increased 125% to $63
million compared to $28
million for the same period in 2016
- Net income of $12 million
compared to a net loss of $22 million
for the same period in 2016
- EBITDA and net income (loss) margins were 38% and 7%
respectively, compared to 22% and (17)%, respectively, during the
same period in 2016
Unplanned Shutdown
As previously announced, on April
27, both the methanol and ammonia plants tripped and upon
restart a leak was discovered in one of the waste heat boilers that
needed to be repaired. The Partnership decided to take the
opportunity to carry out several other repairs, which were
previously scheduled for a later date, but management accelerated
the timing of these repairs while the plants were down. The ammonia
plant was restarted on May 2, but was
running at reduced capacity utilization rates until the restart of
the methanol plant on May 22. Since
the restart of the methanol plant, both plants have been running at
average utilization rates above nameplate capacity.
Distributions
Based on the results of the three months ended June 30, 2017, the Board of Directors of the
general partner of the Partnership has approved a cash distribution
of $0.12 per common unit or
approximately $10.4 million in the
aggregate. The cash distribution will be paid on September 8, 2017 to unitholders of record at the
close of business on August 18, 2017.
The amount of any subsequent quarterly cash distributions will vary
depending on our future earnings as well as our cash requirements
for working capital, capital expenditures, debt service and other
contractual obligations, and reserves for future operating or
capital needs.
Run-Rate Quarterly Distribution Guidance
Partnership distributions, including the distribution of
$0.12 being declared with respect to
the three months ended June 30, 2017,
remain largely consistent with our prior run-rate guidance, where
the run-rate distribution amount is primarily affected each quarter
for changes in average realized prices of methanol, ammonia and
natural gas.
Our distribution with respect to the three months ended
June 30, 2017 reflects an average
realized methanol price of $331 per
metric ton, an average realized ammonia price of $291 per metric ton, and an average natural gas
price of $3.32 per MMBtu. The lost
volume resulting from the unplanned shutdown had a negative impact
of approximately $0.13 on the
distribution for the three months ended June
30, 2017, based on average contribution margins for the
second quarter of 2017.
To assist investors in making the linkage between these prices
and potential future distributions, we provide below a sensitivity
analysis assuming full utilization:
- A $0.50 per MMBtu change in
annual natural gas prices results in an approximately $0.23 impact on annual distributions
- A $10 per metric ton change in
annual methanol prices results in an approximately $0.10 impact on annual distributions
- A $10 per metric ton change in
annual ammonia prices results in an approximately $0.04 impact on annual distributions
We intend to continue making distributions consistent with our
run-rate guidance, but there can be no assurance we will be able to
do so. In addition to the impact of commodity prices, our
distributions are subject to fluctuations in capacity utilization,
working capital, capital expenditures, debt service and other
contractual obligations, reserves for future operating or capital
needs and other factors, including overall business, regulatory and
financial considerations that may affect the availability of cash
to distribute. Please see "Forward-Looking Statements" below."
Statement from President and Chief Executive Officer – Ahmed
El-Hoshy
"During the quarter, as a result of the unplanned shutdown in
April and May, our ammonia and methanol production units
experienced 6 and 25 days of downtime, resulting in capacity
utilization rates of 87% and 72%, respectively. We are pleased that
the plants have been running consistently at rates above nameplate
capacity since both plants were back up and running.
Despite the unplanned shutdown and higher natural gas costs
compared to last year, second quarter EBITDA improved compared to
the same quarter last year, benefiting from comparatively higher
realized prices for methanol during the quarter.
After the rapid increase in US weighted average methanol
contract prices during the first quarter, prices started to decline
towards the end of March and into the second quarter, largely due
to the return of supply from various methanol plants following
turnarounds, and reduced Methanol-to-Olefins (MTO) operating rates
in China. After reaching a high of
$491 per metric ton in March, the
contract price declined to $377 per
metric ton in June. Ammonia prices (Tampa cfr) also improved rapidly during the
first quarter and reached $330 per
metric ton in May before the June contract price dropped to
$265 per metric ton.
Our average realized methanol price was $331 per metric ton in the second quarter, an
increase of 72% from $192 per metric
ton in the same quarter last year and a drop of 6% from
$353 per metric ton in the first
quarter of 2017. Our average realized ammonia price was
$291 per metric ton in the second
quarter, down 3% from $301 per metric
ton in the same quarter last year, but up 18% from $247 per metric ton in the first quarter of 2017.
Finally, our natural gas price averaged $3.32 per MMBtu during the quarter, up from
$2.13 per MMBtu during the second
quarter of 2016, offsetting some of the benefits of the higher
pricing.
Looking forward, methanol spot prices have been relatively
stable in the past few months. The US weighted average methanol
contract price was $367 per metric
ton for July and $370 per metric ton
for August, only slightly below the $377 per metric ton in June and at levels that
generate healthy returns for our operations. The lower prices have
resulted in improved economics and increases in Chinese MTO
operating rates during the second quarter and into the third.
Global demand is expected to remain underpinned by MTO
affordability.
Ammonia markets weakened into the third quarter of 2017,
reflecting increased supply availability and low seasonal demand.
The Tampa CFR ammonia contract price decreased from $265 per metric ton in June to $240 per metric ton in July and to $190 per metric ton in August."
|
Volume Weighted
Average Price of
|
Volume Weighted
Average Price of
|
|
Methanol and
Ammonia
|
Natural
Gas
|
|
($ per metric
ton)
|
($ per
MMBtu)
|
|
For Three-Months
Ended June 30,
|
For Three-Months
Ended June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Ammonia
|
291
|
|
301
|
|
3.32
|
|
2.13
|
|
Methanol
|
331
|
|
192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
|
Capacity
Utilization
|
|
(in '000
tons)
|
Rate %
|
|
For Three-Months
Ended June 30,
|
For Three-Months
Ended June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Ammonia
|
72
|
|
75
|
|
87%
|
|
91%
|
|
Methanol
|
164
|
|
174
|
|
72%
|
|
77%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Volume Weighted
Average Price of
|
Volume Weighted
Average Price of
|
|
Methanol and
Ammonia
|
Natural
Gas
|
|
($ per metric
ton)
|
($ per
MMBtu)
|
|
For Six-Months
Ended June 30,
|
For Six-Months
Ended June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Ammonia
|
265
|
|
298
|
|
3.22
|
|
2.13
|
|
Methanol
|
343
|
|
191
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Production
|
Capacity
Utilization
|
|
(in '000
tons)
|
Rate %
|
|
For Six-Months
Ended June 30,
|
For Six-Months
Ended June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Ammonia
|
155
|
|
163
|
|
94%
|
|
99%
|
|
Methanol
|
380
|
|
399
|
|
84%
|
|
88%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measure
EBITDA is defined as net income (loss) plus (i) interest
expense and other financing costs, (ii) depreciation expense
and (iii) income tax expense. EBITDA is used as a supplemental
financial measure by management and by external users of our
unaudited financial statements, such as investors and commercial
banks, to assess:
- the financial performance of our assets without regard to
financing methods, capital structure or historical cost basis;
and
- our operating performance and return on invested capital
compared to those of other publicly traded partnerships, without
regard to financing methods and capital structure.
EBITDA should not be considered as an alternative to net income,
operating income, net cash provided by operating activities or any
other measure of financial performance or liquidity presented in
accordance with GAAP. EBITDA may have material limitations as a
performance measure because it excludes items that are necessary
elements of our costs and operations. In addition, EBITDA presented
by other companies may not be comparable to our presentation
because each company may define EBITDA differently.
EBITDA margin is defined as EBITDA divided by revenues. EBITDA
margin is used as a supplemental financial measure by the
Partnership's management in its analysis of our operating
performance.
The tables below reconcile EBITDA to net income, its most
directly comparable financial measure calculated and presented in
accordance with GAAP, for the three months and six months ended
June 30, 2017 (dollars in
thousands).
|
|
Quarter Ended June
30,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,426)
|
|
|
(15,447)
|
Add:
|
|
|
|
|
|
|
Interest
expense
|
|
|
5,725
|
|
|
9,973
|
Interest expense –
related party
|
|
|
4,211
|
|
|
51
|
Income tax
expense
|
|
|
93
|
|
|
(47)
|
Depreciation
expense
|
|
|
15,283
|
|
|
15,513
|
|
|
|
|
|
|
|
EBITDA
|
|
$
|
23,886
|
|
|
10,043
|
|
|
|
|
|
|
|
|
|
Six-Months Ended
June 30,
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
12,318
|
|
|
(21,501)
|
Add:
|
|
|
|
|
|
|
Interest
expense
|
|
|
11,272
|
|
|
18,765
|
Interest expense –
related party
|
|
|
8,741
|
|
|
102
|
Income tax
expense
|
|
|
559
|
|
|
33
|
Depreciation
expense
|
|
|
30,527
|
|
|
30,891
|
|
|
|
|
|
|
|
EBITDA
|
|
$
|
63,417
|
|
|
28,290
|
|
|
|
|
|
|
|
Conference Call with Management
The Partnership will hold a conference call on August 7, 2017, at 10:00
a.m. ET, during which the Partnership's senior management
will review the Partnership's financial results for the second
quarter ended June 30, 2017 and
provide an update on corporate developments. Callers may listen to
the live presentation, which will be followed by a question and
answer segment, by dialing (816) 287-5664 and entering the
conference code 66005923. A replay of the conference call will be
made available until August 21, 2017
and the replay can be accessed by dialing (855) 859-2056 or (404)
537-3406 and entering the same conference code 66005923.
About OCI Partners LP
OCI Partners LP (NYSE: OCIP) owns and operates an integrated
methanol and ammonia production facility that is strategically
located on the Texas Gulf Coast near Beaumont. The Partnership is headquartered in
Nederland, Texas and currently has
a methanol production design capacity of 912,500 metric tons per
year and an ammonia production design capacity of 331,000 metric
tons per year.
Notice to Foreign Investors
This release is intended to be a qualified notice to nominees as
provided for under Treasury Regulation Section 1.1446-4(b)(4) and
(d). Please note that 100% of the Partnership's distributions to
foreign investors are attributable to income that is effectively
connected with a United States
trade or business. Accordingly, all of the Partnership's
distributions to foreign investors are subject to federal income
tax withholding at the highest applicable effective tax rate.
Nominees, and not the Partnership, are treated as the withholding
agents responsible for withholding on the distributions received by
them on behalf of foreign investors.
Forward-Looking Statements
This press release contains forward-looking statements.
Statements that are predictive in nature, that depend upon or refer
to future events or conditions or that include the words "believe,"
"expect," "anticipate," "intend," "estimate" and other expressions
that are predictions of or indicate future events and trends and
that do not relate to historical matters identify forward-looking
statements. These forward-looking statements involve certain risks
and uncertainties, including, among others, the following: our
business plans may change as the methanol and ammonia industry and
markets warrant; the demand and sales prices for methanol, ammonia
and their derivatives may decrease due to market, governmental and
other factors; we may be unable to obtain economically priced
natural gas and other feedstocks; we may be unable to successfully
implement our business strategies, including the completion of
significant capital programs; the occurrence of shutdowns (either
temporary or permanent) or restarts of existing methanol and
ammonia facilities (including our own facility); the timing and
length of planned and unplanned downtime; and the occurrence of
operating hazards from accidents, fire, severe weather, floods or
other natural disasters. For more information concerning factors
that could cause actual results to differ materially from those
conveyed in the forward-looking statements, please refer to the
"Risk Factors" section of the Partnership's Annual Report on Form
10-K for the year ended December 31,
2016. The Partnership has filed its Annual Report on Form
10-K for the year ended December 31,
2016, with the Securities and Exchange Commission. A copy of
the Annual Report on Form 10-K is available to be viewed or
downloaded at www.ocipartnerslp.com by selecting "SEC Filings" on
the "Financial Reporting" sub-tab found under the "Investor and
Media Relations" tab, as well as on the SEC's website at
www.sec.gov. Interested investors may obtain a hard copy of the
Annual Report on Form 10-K, including the Partnership's financial
statements, free of charge by selecting "Annual Report" on the
"Financial Reporting" sub-tab found under the "Investor and Media
Relations" tab. The Partnership undertakes no obligation to
publicly update or revise any forward-looking statement, whether as
a result of new information, future events, changed circumstances
or otherwise, unless required by law.
Contacts:
Hans
Zayed
Director of Investor Relations
Phone: +1 917-817-5159
hans.zayed@oci.nl
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SOURCE OCI Partners LP