Crestwood Equity Partners LP (NYSE: CEQP) (“Crestwood”) announced today that Chesapeake Energy (NYSE: CHK) (“Chesapeake”), a customer in the Powder River Basin and northeast Marcellus, has filed for protection under Chapter 11 of the U.S. bankruptcy code. Crestwood has been preparing for this event over the past few months and is well-positioned to maintain full operations to Chesapeake throughout bankruptcy proceedings. Crestwood’s gathering and processing systems are integral to Chesapeake’s operations in the Powder River Basin, as a substantial amount of its revenues are derived from the sale of natural gas and natural gas liquids (NGLs) produced from acreage dedicated to Crestwood, which is the most economic path to market.
Chesapeake is current on all outstanding invoices payable to Crestwood and additional cash flow protection is in place via letters of credit. In the Powder River Basin, Crestwood’s midstream assets are supported by a 358,000 acreage dedication by Chesapeake and a 30,000 acreage dedication by Panther Energy, as well as dedications by other producers in the basin. The Bucking Horse processing facility and the Jackalope gas gathering system are supported by a 20-year fixed fee gathering and processing agreement with Chesapeake that was restructured in the first quarter 2017 and reflects competitive market terms in-line with other midstream operators in the basin. Crestwood provides a critical service to Chesapeake with over 320 wells connected to the Jackalope system.
Following today’s announcement, Crestwood does not anticipate any changes to its ability to achieve the revised 2020 cash flow forecast and financial metrics provided on May 5, 2020.
Non-GAAP Financial Measures
Adjusted EBITDA and distributable cash flow are non-GAAP financial measures. The accompanying schedules of this news release provide reconciliations of these non-GAAP financial measures to their most directly comparable financial measures calculated and presented in accordance with GAAP. Our non-GAAP financial measures should not be considered as alternatives to GAAP measures such as net income or operating income or any other GAAP measure of liquidity or financial performance.
This news release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Section 21E of the Securities and Exchange Act of 1934. The words “expects,” “believes,” anticipates,” “plans,” “will,” “shall,” “estimates,” and similar expressions identify forward-looking statements, which are generally not historical in nature. Forward-looking statements are subject to risks and uncertainties and are based on the beliefs and assumptions of management, based on information currently available to them. Although Crestwood believes that these forward-looking statements are based on reasonable assumptions, it can give no assurance that any such forward-looking statements will materialize. Important factors that could cause actual results to differ materially from those expressed in or implied from these forward-looking statements include the risks and uncertainties described in Crestwood’s reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K and its subsequent reports, which are available through the SEC’s EDGAR system at www.sec.gov and on our website. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management’s view only as of the date made, and Crestwood assumes no obligation to update these forward-looking statements.
About Crestwood Equity Partners LP
Houston, Texas, based Crestwood Equity Partners LP (NYSE: CEQP) is a master limited partnership that owns and operates midstream businesses in multiple shale resource plays across the United States. Crestwood is engaged in the gathering, processing, treating, compression, storage and transportation of natural gas; storage, transportation, terminalling, and marketing of NGLs; gathering, storage, terminalling and marketing of crude oil; and gathering and disposal of produced water. Visit Crestwood Equity Partners LP at www.crestwoodlp.com, and to learn more about Crestwood’s sustainability efforts, please visit https://esg.crestwoodlp.com.