Hiland Partners LP Common Units (HLND, Financial) filed Quarterly Report for the period ended 2009-03-31.
Hiland Partners LP is a growth-oriented midstream energy master limited partnership engaged in gathering compressing dehydrating treating processing and marketing natural gas and fractionating or separating natural gas liquids. Hiland also provides air compression and water injection services to an oil and gas exploration and production company for use in its oil and gas secondary recovery operations. The Partnership's operations are primarily located in the Mid-Continent and Rocky Mountain regions of the United States Hiland Partners LP Common Units has a market cap of $39.6 million; its shares were traded at around $6.29 with a P/E ratio of 3.3 and P/S ratio of 0.1.
Average realized natural gas sales prices were $3.68 per MMBtu for the three months ended March 31, 2009 compared to $7.33 per MMBtu for the three months ended March 31, 2008, a decrease of $3.65 per MMBtu, or (49.8%). Average realized NGL sales prices were $0.57 per gallon for the three months ended March 31, 2009 compared to $1.40 per gallon for the three months ended March 31, 2008, a decrease of $0.83 per gallon or (59.3%). The decrease in our average realized natural gas and NGL sales prices was primarily a result of significantly lower index prices for natural gas and posted prices for NGLs during the three months ended March 31, 2009 compared to the three months ended March 31, 2008.
Net cash received from our counterparty on cash flow swap contracts for natural gas sales and natural gas purchase derivative transactions that closed during the three months ended March 31, 2009 totaled $2.2 million compared to $0.2 million for the three months ended March 31, 2008. The $2.2 million gain for the three months ended March 31, 2009 increased averaged realized natural gas prices to $3.68 per MMBtu from $3.42 per MMBtu, an increase of $0.26 per MMBtu. The $0.2 million net gain for the three months ended March 31, 2008 increased averaged realized natural gas prices to $7.33 per MMBtu from $7.31 per MMBtu, an increase of $0.02 per MMBtu. We had no cash flow swap contracts for NGL derivatives during the three months ended March 31, 2009. Cash paid to our counterparty on cash flow swap contracts for NGL derivative transactions that closed during the three months ended March 31, 2008 totaled $2.2 million. The $2.2 million loss for the three months ended March 31, 2008 reduced averaged realized NGL prices to $1.40 per gallon from $1.51 per gallon, a decrease of $0.11 per gallon.
Midstream Segment Margin. Midstream segment margin was $19.9 million for the three months ended March 31, 2009 compared to $21.7 million for the three months ended March 31, 2008, a decrease of $1.7 million, or (8.0%). The decrease is primarily due to unfavorable gross processing spreads and significantly lower average realized natural gas and NGL prices, partially offset by volume growth at the Woodford Shale and Badlands gathering systems and approximately $2.3 million of foregone margin as a result of the nitrogen rejection plant at the Badlands gathering system being taken out of service due to equipment failure during the three months ended March 31, 2008. As a percent of midstream revenues, midstream segment margin was 39.0% for the three months ended March 31, 2009 compared to 24.0% for the three months ended March 31, 2008, an increase of 15.0%. This 15.0% increase is primarily attributable to gains on closed/settled derivative transactions and unrealized non-cash gains on open derivative transactions for the three months ended March 31, 2009 totaling $2.4 million compared to net losses of $2.5 million on closed/settled derivative transactions and unrealized non-cash losses on open derivative transactions for the three months ended March 31, 2008.
Depreciation, Amortization and Accretion. Depreciation, amortization and accretion expense totaled $10.0 million for the three months ended March 31, 2009 compared with $8.9 million for the three months ended March 31, 2008, an increase of $1.0 million, or 11.7 %. This $1.0 million increase was primarily attributable to increased depreciation of $0.4 million on the Woodford Shale gathering system, $0.3 million on the Kinta Area gathering system and $0.2 million on the Badlands gathering system.
The domestic and global recession and resulting drop in demand for natural gas, crude oil and NGL products continues to significantly impact the price for natural gas, crude oil and NGLs. Natural gas prices have continued to decline significantly since the peak NYMEX Henry Hub last day settle price of $13.11/MMBtu in July 2008 to the NYMEX Henry Hub last day settle price of $3.32 in May 2009, a 74.7% decline. WTI crude oil pricing has declined from a peak of $134.62/bbl in July 2008 to $33.87/Bbl in January 2009, a 74.8% decline. NGL basket pricing correlates to WTI crude oil pricing. NGL prices have dropped dramatically since the peak NGL basket pricing of $2.21/gallon in June 2008 to a March 2009 NGL basket pricing of $0.70/gallon, a 68.3% decline. Forward curves for natural gas, crude oil and NGL basket pricing reflect continued reductions in demand for natural gas, crude oil and NGL products. We believe that current natural gas, crude oil and NGL prices will continue to result in reduced drilling activity as producers seek to decrease their level of natural gas and crude oil production. We also believe the decreased drilling activity will persist until the economic environment in the United States improves and increases the demand for natural gas, crude oil and NGLs.
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Hiland Partners LP is a growth-oriented midstream energy master limited partnership engaged in gathering compressing dehydrating treating processing and marketing natural gas and fractionating or separating natural gas liquids. Hiland also provides air compression and water injection services to an oil and gas exploration and production company for use in its oil and gas secondary recovery operations. The Partnership's operations are primarily located in the Mid-Continent and Rocky Mountain regions of the United States Hiland Partners LP Common Units has a market cap of $39.6 million; its shares were traded at around $6.29 with a P/E ratio of 3.3 and P/S ratio of 0.1.
Highlight of Business Operations:
Midstream revenues were $51.1 million for the three months ended March 31, 2009 compared to $90.3 million for the three months ended March 31, 2008, a decrease of $39.1 million, or (43.4%). Of this $39.1 million decrease in midstream revenues, approximately $52.7 million was attributable to significantly lower average realized natural gas and NGL sales prices for all of our gathering systems, partially offset by approximately $13.6 million attributable to revenues from increased natural gas and NGL sales volumes at our Woodford Shale, Badlands and Matli gathering systems for the three months ended March 31, 2009 as compared to the same period in 2008.Average realized natural gas sales prices were $3.68 per MMBtu for the three months ended March 31, 2009 compared to $7.33 per MMBtu for the three months ended March 31, 2008, a decrease of $3.65 per MMBtu, or (49.8%). Average realized NGL sales prices were $0.57 per gallon for the three months ended March 31, 2009 compared to $1.40 per gallon for the three months ended March 31, 2008, a decrease of $0.83 per gallon or (59.3%). The decrease in our average realized natural gas and NGL sales prices was primarily a result of significantly lower index prices for natural gas and posted prices for NGLs during the three months ended March 31, 2009 compared to the three months ended March 31, 2008.
Net cash received from our counterparty on cash flow swap contracts for natural gas sales and natural gas purchase derivative transactions that closed during the three months ended March 31, 2009 totaled $2.2 million compared to $0.2 million for the three months ended March 31, 2008. The $2.2 million gain for the three months ended March 31, 2009 increased averaged realized natural gas prices to $3.68 per MMBtu from $3.42 per MMBtu, an increase of $0.26 per MMBtu. The $0.2 million net gain for the three months ended March 31, 2008 increased averaged realized natural gas prices to $7.33 per MMBtu from $7.31 per MMBtu, an increase of $0.02 per MMBtu. We had no cash flow swap contracts for NGL derivatives during the three months ended March 31, 2009. Cash paid to our counterparty on cash flow swap contracts for NGL derivative transactions that closed during the three months ended March 31, 2008 totaled $2.2 million. The $2.2 million loss for the three months ended March 31, 2008 reduced averaged realized NGL prices to $1.40 per gallon from $1.51 per gallon, a decrease of $0.11 per gallon.
Midstream Segment Margin. Midstream segment margin was $19.9 million for the three months ended March 31, 2009 compared to $21.7 million for the three months ended March 31, 2008, a decrease of $1.7 million, or (8.0%). The decrease is primarily due to unfavorable gross processing spreads and significantly lower average realized natural gas and NGL prices, partially offset by volume growth at the Woodford Shale and Badlands gathering systems and approximately $2.3 million of foregone margin as a result of the nitrogen rejection plant at the Badlands gathering system being taken out of service due to equipment failure during the three months ended March 31, 2008. As a percent of midstream revenues, midstream segment margin was 39.0% for the three months ended March 31, 2009 compared to 24.0% for the three months ended March 31, 2008, an increase of 15.0%. This 15.0% increase is primarily attributable to gains on closed/settled derivative transactions and unrealized non-cash gains on open derivative transactions for the three months ended March 31, 2009 totaling $2.4 million compared to net losses of $2.5 million on closed/settled derivative transactions and unrealized non-cash losses on open derivative transactions for the three months ended March 31, 2008.
Depreciation, Amortization and Accretion. Depreciation, amortization and accretion expense totaled $10.0 million for the three months ended March 31, 2009 compared with $8.9 million for the three months ended March 31, 2008, an increase of $1.0 million, or 11.7 %. This $1.0 million increase was primarily attributable to increased depreciation of $0.4 million on the Woodford Shale gathering system, $0.3 million on the Kinta Area gathering system and $0.2 million on the Badlands gathering system.
The domestic and global recession and resulting drop in demand for natural gas, crude oil and NGL products continues to significantly impact the price for natural gas, crude oil and NGLs. Natural gas prices have continued to decline significantly since the peak NYMEX Henry Hub last day settle price of $13.11/MMBtu in July 2008 to the NYMEX Henry Hub last day settle price of $3.32 in May 2009, a 74.7% decline. WTI crude oil pricing has declined from a peak of $134.62/bbl in July 2008 to $33.87/Bbl in January 2009, a 74.8% decline. NGL basket pricing correlates to WTI crude oil pricing. NGL prices have dropped dramatically since the peak NGL basket pricing of $2.21/gallon in June 2008 to a March 2009 NGL basket pricing of $0.70/gallon, a 68.3% decline. Forward curves for natural gas, crude oil and NGL basket pricing reflect continued reductions in demand for natural gas, crude oil and NGL products. We believe that current natural gas, crude oil and NGL prices will continue to result in reduced drilling activity as producers seek to decrease their level of natural gas and crude oil production. We also believe the decreased drilling activity will persist until the economic environment in the United States improves and increases the demand for natural gas, crude oil and NGLs.
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