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Crosstex Energy L.P. Ltd. Partnership In Reports Operating Results (10-K)

February 28, 2012 | About:

Crosstex Energy L.P. Ltd. Partnership In (XTEX) filed Annual Report for the period ended 2011-12-31.

Crosstex Egy Lp has a market cap of $867.2 million; its shares were traded at around $17.2 with and P/S ratio of 0.5. The dividend yield of Crosstex Egy Lp stocks is 7.5%.

Highlight of Business Operations:

We are subject to significant risks due to fluctuations in commodity prices. We are directly exposed to these risks primarily in the gas processing component of our business. For the year ended December 31, 2011 approximately 10.7% of our total gross operating margin was generated under percent of liquids (POL) contracts. Under these contracts we receive a fee in the form of a percentage of the liquids recovered and the producer bears all the cost of the natural gas shrink. Accordingly, our revenues under these contracts are directly impacted by the market price of NGLs.

In the past, the prices of natural gas and NGLs have been extremely volatile and we expect this volatility to continue. For example, prices of natural gas in 2011 were below the market price realized throughout most of 2010 while prices for oil and NGLs were higher than 2010 market prices. Crude oil prices (based on the New York Mercantile Exchange (the "NYMEX") futures daily close prices for the prompt month) in 2011 ranged from a low of $75.67 per Bbl in October 2011 to a high of $113.93 per Bbl in April 2011. Weighted average NGL prices in 2011 (based on the Oil Price Information Service (OPIS) Napoleonville daily average spot liquids prices) ranged from a low of $0.99 per gallon in February 2011 to a high of $1.35 per gallon in May 2011. Natural gas prices (based on Gas Daily Henry Hub closing prices) during 2011 ranged from a high of $4.92 per MMBtu in June 2011 to a low of $2.79 per MMBtu in November 2011.

We have a substantial amount of indebtedness. As of December 31, 2011, we had approximately $713.4 million of indebtedness outstanding primarily comprised of $725.0 million (including $11.6 million of original issue discount) of senior unsecured notes. As of December 31, 2011, there was $85.0 million of borrowing and $69.0 million in outstanding letters of credit, under the bank credit

facility leaving approximately $331.0 million available for future borrowing based on a borrowing capacity of $485.0 million. Based on the January amendment to increase the credit facility borrowing capacity to $635.0 million and borrowings outstanding as of December 31, 2011, the Partnership's available borrowing would be $481.0 million.

We have made commitments to purchase natural gas in production areas based on production-area indices and to sell the natural gas into market areas based on market-area indices, pay the costs to transport the natural gas between the two points and capture the difference between the indices as margin. Changes in the index prices relative to each other (also referred to as basis spread) can significantly affect our margins or even result in losses. For example, we are a party to one contract with a term to 2019 to supply approximately 150,000 MMBtu/day of gas. We buy gas for this contract on several different production-area indices on our NTP and sell the gas into a different market area index. For the year ended December 31, 2011 we have recorded a loss of approximately $13.3 million on this contract, and we currently expect that we will record a loss of approximately $13.0 million to $17.0 million on this contract in 2012. Reduced supplies and narrower basis spreads in recent periods have increased the losses on this contract, and greater losses on this contract could occur in future periods if these conditions persist or become worse. For additional information on this contract, please see "Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsOverview."

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