Midcoast Energy Partners, L.P. Announces Business Outlook and 2015 Financial Guidance

HOUSTON, TX--(Marketwired - Dec 4, 2014) - Midcoast Energy Partners, L.P. (NYSE: MEP) ("Midcoast Partners" or "the Partnership") today announced that its 2015 distributable cash flow is expected to increase by approximately 71 percent compared with the Partnership's 2014 distributable cash flow guidance that was updated October 30, 2014.

2015 BUSINESS OUTLOOK HIGHLIGHTS

• Forecasts approximately $50 million in operating and administrative cost reductions in 2015 compared to forecasted 2014 expenses.
• Forecasts adjusted EBITDA at MEP for 2015 between $120 and $135 million; midpoint represents approximate 67 percent increase over forecasted 2014.
• Forecasts distributable cash flow at MEP for 2015 between $80 and $95 million; midpoint represents approximate 71 percent increase over forecasted 2014.
• Forecasts adjusted EBITDA at Midcoast Operating, L.P. ("MOLP") inclusive of other cash items for 2015 between $255 and $280 million.
• MEP anticipates a drop down from its sponsor Enbridge Energy Partners, L.P. (NYSE: EEP) in the second half of 2015.
• Mid-teens compounded annual distribution growth targeted through 2017.

"Since our third quarter earnings call, we have taken aggressive actions to reduce operating and administrative expenses going into 2015 by approximately $50 million, or 15 percent of controllable costs when compared to forecasted 2014 levels. We project these actions will boost our earnings and distributable cash flow outlook in 2015 and provide a more sustainable ongoing cost structure. Complemented by contributions from our organic growth program and anticipated drop down opportunities from EEP, we plan to deliver stronger adjusted EBITDA and distributable cash flow in 2015," said C. Gregory Harper, principal executive officer for the Partnership. 

"The Partnership's distribution coverage should strengthen and leverage metrics improve from cash flow contributions from the pending in-service of our new Beckville natural gas processing plant, the anticipated increase in contractually committed volumes on the Texas Express NGL system and overall growth in our system volumes from anticipated increases in drilling activity and new transactions attracting additional supply to our systems."

"We remain confident in the long-term outlook for the Partnership as we diligently advance efforts to secure, diversify and grow the future earnings and cash flow stream of the Partnership. We are focused on executing on our strategic objectives to grow the business by increasing our scale, expanding our scope, extending our reach, and enhancing our capabilities to deliver sustainable value to our unitholders over the long-term. Executing our operating plan for 2015 should strengthen the Partnership's distribution coverage and support our planned quarterly distribution growth outlook. Backed by the strong sponsor support from EEP and the outlook for prospective drop down opportunities, the Partnership remains committed to delivering mid-teens compounded annual distribution growth through 2017," noted Harper.

MANAGEMENT PRESENTATION OF BUSINESS OUTLOOK AND 2015 FINANCIAL GUIDANCE
Midcoast Partners will host a webcast conference call to discuss its business outlook and present its 2015 financial guidance in a live Internet presentation, commencing at 9:00 a.m. Eastern Time on Friday, December 5, 2014. Interested parties may watch the live webcast at the link provided below. A replay will be available shortly afterward. Presentation slides will also be available on the Partnership's website at the link below.

Webcast Information
Event: Midcoast Energy Partners, L.P. Business Outlook and 2015 Financial Guidance Conference Call 
Date: Friday, December 5, 2014
Time: 9:00 a.m. Eastern Time
Webcast: http://www.midcoastpartners.com under "Events and Presentations" or http://www.media-server.com/m/p/iwab2ze3 

Conference Call Information
Dial-in #'s (Audio only)

North America: 877-703-6103
Outside North America: 857-244-7302
Participant Passcode: 98094575

Replay Information
A webcast replay and MP3 file will be available approximately two hours after the conclusion of the event and a transcript will be posted to the website within approximately 24 hours. 

Audio Replay #'s (available for 7 days after call)

North America: 888-286-8010
Outside North America: 617-801-6888
Replay Passcode: 68825874

NON-GAAP RECONCILIATIONS
The foregoing presentation makes reference to adjusted EBITDA which is used as a supplemental financial measurement to assess liquidity and the ability to generate cash sufficient to pay interest costs and make cash distributions to unitholders. A reconciliation of net cash provided by operating activities to adjusted EBITDA is provided below. The table also references MOLP Adjusted EBITDA, inclusive of other cash items, representing total cash flow generated by MOLP.

The following reconciliations are as of September 30, 2014. Information needed to complete reconciliations for future periods is unavailable.

		Three months ended				Nine months ended
(Unaudited; $ in millions)		September 30, 2014				September 30, 2014
Net cash provided by operating activities		$	(64.3	)		$	112.0
Changes in operating assets and liabilities, net of cash acquired			100.1				6.7
Income tax expense			0.9				2.7
Interest expense			3.6				9.7
Option premium amortization			(2.2	)			(4.0	)
Other			2.4				2.5
Adjusted EBITDA attributable to EEP retained interest			(20.1	)			(75.6	)
Adjusted EBITDA attributable to MEP		$	20.4			$	54.0
Adjusted EBITDA attributable to EEP retained interest			20.1				75.6
Other			1.2				3.3
Adjusted EBITDA attributable to MOLP		$	41.7			$	132.9
G&A Abatement			6.3				18.8
Texas Express distributions in excess of equity earnings			0.3				4.8
MOLP adjusted EBITDA, inclusive of other cash items1		$	48.3				156.5

1		Not inclusive of public partnership expenses attributable to MEP.

About Midcoast Energy Partners, L.P.
Midcoast Energy Partners, L.P. (NYSE: MEP), is a limited partnership formed by EEP to serve as EEP's primary vehicle for owning and growing its natural gas and natural gas liquids (NGLs) midstream business in the United States. Our assets consist of a 51.6 percent controlling interest in Midcoast Operating, L.P., a Texas limited partnership that owns a network of natural gas and NGL gathering and transportation systems, natural gas processing and treating facilities and NGL fractionation facilities primarily located in Texas and Oklahoma. Midcoast Operating also owns and operates natural gas, condensate and NGL logistics and marketing assets that primarily support its gathering, processing and transportation business. Through our ownership of Midcoast Operating's general partner, we control, manage and operate these systems.

EEP owns 100 percent of Midcoast Holdings, LLC, the general partner of Midcoast Partners and holds an approximate 54 percent interest in Midcoast Partners. EEP owns and operates a diversified portfolio of crude oil and, through Midcoast Partners, natural gas transportation systems in the United States. Its principal crude oil system is the largest pipeline transporter of growing oil production from western Canada and the North Dakota Bakken formation. EEP is recognized by Forbes as one of the 100 Most Trustworthy Companies in America.

Forward Looking Statements
This presentation includes forward-looking statements, which are statements that frequently use words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "forecast," "intend," "may," "plan," "position," "projection," "should," "strategy," "opportunity", "target," "will" and similar words. Although we believe that such forward-looking statements are reasonable based on currently available information, such statements involve risks, uncertainties and assumptions and are not guarantees of performance. Future actions, conditions or events and future results of operations may differ materially from those expressed in these forward-looking statements. Many of the factors that will determine these results are beyond the ability of Midcoast Energy Partners, L.P. (the "Partnership") to control or predict. The Partnership's forward looking statements are subject to risks and uncertainties pertaining to operating performance, regulatory parameters, project approval and support, weather, economic conditions, interest rates and commodity prices, including but not limited to the following specific factors that could cause actual results to differ from those in the forward-looking statements: (1) changes in the demand for or the supply of, forecast data for, and price trends related to natural gas, natural gas liquids and crude oil; (2) the Partnership's ability to successfully complete and finance expansion projects; (3) the effects of competition, in particular, by other pipeline and gathering systems, as well as other processing and treating plants; (4) shut-downs or cutbacks at the Partnership's facilities or refineries, petrochemical plants, utilities or other businesses for which the Partnership transports products or to whom the Partnership sells products; (5) hazards and operating risks that may not be covered fully by insurance; (6) changes in or challenges to the Partnership's rates; and (7) changes in laws or regulations to which the Partnership is subject, including compliance with environmental and operational safety regulations that may increase costs of system integrity testing and maintenance; (8) cost overruns and delays on construction projects resulting from numerous factors.

Forward-looking statements regarding "drop-down" opportunities are further qualified by the fact that Enbridge Energy Partners, L.P. is under no obligation to offer to sell us additional interests in Midcoast Operating, L.P., and we are under no obligation to buy any such additional interests. As a result, we do not know when or if any such additional interests will be purchased.

Except to the extent required by law, we assume no obligation to publically update or revise any forward looking statements, whether as a result of new information, future events or otherwise. In addition to the risks listed above, other risks include those detailed from time to time in the Partnership's Securities and Exchange Commission, or SEC, reports, including, without limitation, in the Partnership's Annual Report on Form 10-K for December 31, 2013 and any subsequently filed Quarterly Report on Form 10-Q or Current Report on Form 8-K, which filings are available to the public at the SEC's website (www.sec.gov).