SOURCE: El Paso Pipeline Partners

El Paso Pipeline Partners

January 28, 2011 09:00 ET

El Paso Pipeline Partners Provides 2011 Outlook, Expects Continued Growth

HOUSTON, TX--(Marketwire - January 28, 2011) - El Paso Pipeline Partners (NYSE: EPB) today announced its financial and operational outlook for 2011.

"In only three years from our initial public offering, El Paso Pipeline Partners has increased its quarterly distributions to unit holders by more than 50 percent and is now one of the 10 largest publicly traded master limited partnerships," said Jim Yardley, president and chief executive officer of El Paso Pipeline Partners. "And we have achieved this growth while delivering very stable cash flows from our increasingly diversified asset base. We are very optimistic about our outlook based on the expectation of continued acquisitions from El Paso Corporation as well as future organic growth from our assets that have leading positions in key market and supply areas."

El Paso Pipeline Partners is targeting 2011 Adjusted EBITDA of $895 million to $920 million, which is significantly higher than 2010. Distributable cash flow is also expected to grow substantially as the partnership is targeting $515 million to $545 million in 2011. The continued increase in Adjusted EBITDA and distributable cash flow reflects not only significant 2010 growth activity, which included approximately $2.4 billion of acquisitions from El Paso Corporation and three organic projects placed into service, but also continued acquisition activity in 2011. The partnership's 2011 guidance assumes two to three acquisitions from El Paso Corporation. The size and frequency of acquisitions will largely be dependent on capital market access and will be financed in a manner consistent with maintaining its high-quality balance sheet.

Total consolidated capital expenditures for 2011 are expected to be approximately $260 million, including approximately $110 million of maintenance capital and approximately $150 million of expansion capital. The partnership's growth capital is primarily for Southern Natural Gas Company's (SNG's) South System III expansion, the second phase of which will be placed in-service in June 2011. The third phase of SNG's South System III expansion is expected to go in-service in 2012. El Paso Pipeline Partners continues to evaluate additional expansion opportunities around its well-positioned assets.

El Paso Pipeline Partners, L.P. is a Delaware limited partnership formed by El Paso Corporation to own and operate natural gas transportation pipelines and storage assets. El Paso Corporation currently owns a 49 percent limited partner interest and 2 percent general partner interest in the partnership. El Paso Pipeline Partners, L.P. owns Wyoming Interstate Company (WIC), Southern LNG Company, L.L.C. (SLNG), El Paso Elba Express Company, L.L.C. (Elba Express), a 60 percent interest in Southern Natural Gas Company (SNG), and a 58 percent interest in Colorado Interstate Gas Company (CIG). WIC and CIG are interstate pipeline systems serving the Rocky Mountain region, SLNG owns the Elba Island LNG storage and regasification terminal near Savannah, Georgia, and both Elba Express and SNG are interstate pipeline systems serving the southeastern region of the United States.

Disclosure of Non-GAAP Financial Measures

The SEC's Regulation G applies to any public disclosure or release of material information that includes a non-GAAP financial measure. In the event of such a disclosure or release, Regulation G requires (i) the presentation of the most directly comparable financial measure calculated and presented in accordance with GAAP and (ii) a reconciliation of the differences between the non-GAAP financial measure presented and the most directly comparable financial measure calculated and presented in accordance with GAAP. We use the non-GAAP financial measure Distributable Cash Flow as it provides important information relating our financial operating performance to our cash distribution capability. Additionally, we use Distributable Cash Flow in setting forward expectations and in communications with our board of directors of our general partner. We define Distributable Cash Flow as Adjusted EBITDA less cash interest expense, maintenance capital expenditures, and other income and expenses, net, which primarily includes deferred revenue, a non-cash allowance for equity funds used during construction and other non-cash items. We use EBIT as a measure to assess the operating results and effectiveness of our business, which consists of consolidated operations as well as investments in unconsolidated affiliates. We define the non-GAAP financial measure EBIT as net income attributable to El Paso Pipeline Partners adjusted for interest and debt expense, net of interest income, and net income attributable to non-controlling interests so that investors may evaluate our operating results without regard to our financing methods or capital structure. Adjusted EBITDA, which is also a non-GAAP financial measure, is defined as net income plus, (i) depreciation and amortization expense, (ii) interest and debt expense, net of interest income, (iii) the partnership's share of distributions declared by unconsolidated affiliates for the applicable period, (iv) net income attributable to non-controlling interests, less (i) affiliated interest income, net of affiliated interest expense, (ii) earnings from unconsolidated affiliates, and (iii) our consolidated subsidiaries' declared distributions to El Paso Corporation. We believe that the non-GAAP financial measures described above are also useful to investors because these measurements are used by many companies in the industry as a measurement of operating and financial performance and are commonly employed by financial analysts and others to evaluate the operating and financial performance of the partnership and to compare the operating and financial performance of the partnership with the performance of other publicly traded partnerships within the industry. Distributable Cash Flow, EBIT and Adjusted EBITDA should not be considered an alternative to net income, earnings per unit, operating income, cash flow from operating activities or any other measure of financial performance presented in accordance with GAAP. These non-GAAP measures both exclude some, but not all, items that affect net income and operating income and these measures may vary among other companies. Therefore, Distributable Cash Flow, EBIT and Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, these non-GAAP measures should not be viewed as indicative of the actual amount of cash that we have available for distributions or that we plan to distribute for a given period, nor does it equate to available cash as defined in our partnership agreement.

   
Non-GAAP Reconciliation Schedule  Twelve Months Ending
($ Millions)  December 31, 2011
   
Net income attributable to El Paso Pipeline Partners, L.P.  $475 - $500
     
Add: Interest and debt expense, net 255 - 265
     
EBIT  $725 - $750
     
Add: Depreciation and amortization 165 - 175
     
  Other items (5) - 5
     
Adjusted EBITDA  $895 - $920
     
Less: Cash interest expense, net 250 - 260
     
  Maintenance capital expenditures 105 - 115
     
  Other, net 15 - 20
     
Distributable cash flow  $515 - $545
 
 

Cautionary Statement Regarding Forward-Looking Statements

This release includes forward-looking statements and projections, made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. El Paso Pipeline Partners has made every reasonable effort to ensure that the information and assumptions on which these statements and projections are based are current, reasonable, and complete. However, a variety of factors could cause actual results to differ materially from the projections, anticipated results or other expectations expressed in this release, including, without limitation, the ability to meet our 2011 projections and guidance described in this release; our ability to complete planned asset purchases from El Paso Corporation; volatility in, and access to capital markets, the ability to obtain necessary governmental approvals for proposed pipeline projects and to successfully construct such projects on a timely basis and within estimated costs; operating hazards, natural disasters, weather-related delays, casualty losses and other matters beyond our control; the risks associated with contracting and recontracting of transportation commitments; regulatory uncertainties associated with pipeline rate cases; actions taken by customers, third-party operators, processors and transporters; conditions in geographic regions or markets served by El Paso Pipeline Partners and its affiliates and equity investees or where its operations and affiliates are located; the effects of existing and future laws and governmental regulations; competitive conditions in our industry; changes in the availability and cost of capital; and other factors described in El Paso Pipeline Partners' (and its affiliates') Securities and Exchange Commission filings. While these statements and projections are made in good faith, El Paso Pipeline Partners and its management cannot guarantee that anticipated future results will be achieved. Reference must be made to those filings for additional important factors that may affect actual results. El Paso Pipeline Partners assumes no obligation to publicly update or revise any forward-looking statements made herein or any other forward-looking statements made, whether as a result of new information, future events, or otherwise.

Contact Information

  • Contacts:
    El Paso Pipeline Partners
    Investor-Media Relations
    Bruce Connery
    Vice President
    Office: (713) 420-5855

    Media Relations
    Bill Baerg
    Manager
    Office: (713) 420-2906