-
Exterran Holdings, Exterran Partners and Exterran Corporation
expect strong third-quarter results of operations
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Exterran Holdings, Inc., to be renamed Archrock, Inc., expects to
increase its quarterly dividend 25% sequentially to $0.1875 for the
fourth quarter ending December 31, 2015, to be paid in February 2016
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Archrock, Inc. intends to increase its quarterly dividend at a rate
of 15% per annum through 2017
HOUSTON--(BUSINESS WIRE)--Oct. 26, 2015--
Exterran Holdings, Inc. (NYSE:EXH) and Exterran Partners, L.P.
(NASDAQ:EXLP) announced today certain preliminary third-quarter 2015
financial results. The preliminary results announced by Exterran
Holdings are those generated by the businesses it will retain after
completion of the previously announced separation as well as the
businesses it intends to distribute.
In November 2014, Exterran Holdings announced that it intends to
separate its international contract operations, international
aftermarket services and global fabrication businesses into a
standalone, publicly traded company named Exterran Corporation. Upon
completion of the spin-off, Exterran Holdings, which will continue to
own and operate its contract operations and aftermarket services
businesses in the United States, will be renamed Archrock, Inc., and
Exterran Partners, L.P. will be renamed Archrock Partners, L.P.
Exterran’s and Exterran Partners’ full financial results for the third
quarter 2015 are not yet available and are subject to finalization by
management and review by Exterran’s independent auditors. Set forth
below are certain preliminary estimates of the results of operations
that Exterran Holdings and Exterran Partners expect to report for the
third quarter 2015. Exterran’s and Exterran Partners’ actual results may
differ materially from these preliminary estimates due to the completion
of their financial closing procedures, final adjustments and other
developments that may arise before the financial results for the third
quarter are finalized.
Exterran Holdings expects the following range of financial results for
the businesses to be retained (Archrock) for the three months ended
September 30, 2015 ($ in millions):
|
Exterran Holdings Expected Results for
Businesses to be Retained
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Revenues:
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U.S. Contract Operations
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$191-193
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U.S. Aftermarket Services
|
|
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$56-58
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Total
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$247-251
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Gross Margin Percentage:
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|
|
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U.S. Contract Operations
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|
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58-60%
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U.S. Aftermarket Services
|
|
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19-21%
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|
|
|
|
|
|
|
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2015 Growth Capex Guidance
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|
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$165-175
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2015 Maintenance Capex Guidance
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|
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$70-75
|
|
|
|
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U.S. End of Period Operating HP (in '000s)
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|
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3,575 to 3,585
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Exterran Partners expects the following range of financial results
for the three months ended September 30, 2015 ($ in millions):
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Exterran Partners Expected Results
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Revenues
|
|
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$162-164
|
|
|
|
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Gross Margin Percentage
|
|
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60-61%
|
|
|
|
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Selling, General & Administrative Expenses
|
|
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$20-22
|
|
|
|
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2015 Growth Capex Guidance
|
|
|
$165-175
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2015 Maintenance Capex Guidance
|
|
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$50-55
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|
|
|
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End of Period Operating HP (in '000s)
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|
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3,100 to 3,110
|
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In addition, Exterran Holdings currently expects Archrock, Inc.’s
selling, general and administrative expense to be $33 million to $38
million in the first quarter 2016, the first full quarter for which
post-separation financial statements will be available.
Exterran Holdings also expects that Archrock, Inc. will pay a dividend
of $0.1875 per share in February 2016. This expected dividend would be
25 percent higher than the dividend Exterran Holdings has already
declared to be paid on October 30, 2015. After the separation, Archrock,
Inc. expects to pass through to its shareholders a substantial portion
of the after-tax distributions it receives from its ownership interest
in Archrock Partners. Additionally, Archrock, Inc. intends to target an
annual dividend growth rate of 15 percent through 2017.
The expected February 2016 dividend payment and all future amounts and
payment dates of quarterly cash dividends will be subject to the
determination and approval of the Board of Directors. The decision by
the Board of Directors whether to pay any future dividends and the
amount of any such dividends will be based on, among other things,
Archrock, Inc.’s financial position, results of operations, cash flows,
capital requirements, restrictions under its credit agreements and
requirements of applicable law.
Exterran Holdings’ parent level (excluding Exterran Partners) debt
outstanding was approximately $681 million as of September 30, 2015. In
connection with the spin-off, Exterran Holdings anticipates that
Exterran Corporation initially will borrow under its new credit facility
and transfer an amount of proceeds to Exterran Holdings which, when
taken together with the proceeds from borrowings under the Archrock
credit facility as described below, will enable Exterran Holdings to
repay all of its existing indebtedness.
Archrock, Inc.’s indebtedness under its credit facility upon the closing
of the spin-off is currently expected to be approximately $160 million
after reflecting (1) the impact of the dividend to be paid on October
30, 2015 (2) the reduction in debt for the receipt in October 2015 of
$19.1 million from PDVSA GAS relating to the 2012 sale of Exterran’s
Venezuelan subsidiary’s previously nationalized assets and (3) the
redemption of Exterran Holdings’ $350 million of outstanding 7.25%
Senior Notes due 2018. In the fourth quarter, Archrock, Inc. expects to
incur additional borrowings under its credit facility of approximately
$10 million to $15 million to finance expenses related to the completion
of the spin-off that are not reflected in the above amounts. The amount
of indebtedness of Exterran Partners will not be impacted by the
separation.
At October 23, 2015, subsidiaries of Exterran Corporation were due
approximately $79 million of additional principal payments from the
previously announced sales of nationalized Venezuelan assets. In
connection with the spin-off, Exterran Corporation’s subsidiary will
transfer to an Archrock subsidiary the right to receive an amount equal
to the payments made on those remaining receivables as they are received
from the Venezuelan state-owned oil company. If any additional payments
are received prior to the spin-off, Archrock, Inc.’s expected
indebtedness upon closing of the spin-off would be reduced by a
corresponding amount. Additionally, in connection with the spin-off, a
subsidiary of Exterran Corporation will transfer to a subsidiary of
Archrock the right to receive $25 million upon Exterran Corporation’s
completion of certain qualified unsecured debt or equity issuances and
repayment in full of the term loan portion of Exterran Corporation’s
credit facility after the spin-off. Exterran Corporation will use its
commercially reasonable efforts to complete such a capital raise on or
before the maturity date of its term loan or as soon as practicable
thereafter.
Exterran Holdings expects the following range of financial results for
Exterran Corporation for the three months ended September 30, 2015 ($ in
millions):
|
Exterran Corporation Expected Results
|
|
|
|
|
Revenues:
|
|
|
|
International Contract Operations
|
|
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Approximately $115
|
International Aftermarket Services
|
|
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Approximately $25
|
Product Sales*
|
|
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Approximately $260
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Total
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Approximately $400
|
|
|
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Gross Margin Percentage:
|
|
|
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International Contract Operations
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63-65%
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Aftermarket Services
|
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26-28%
|
Product Sales*
|
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Approximately 13%
|
|
|
|
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Selling, General & Administrative Expenses
|
|
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$53-57
|
Product Sales Bookings*
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Approximately $175
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Product Sales Backlog (at September 30, 2015)*
|
|
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Approximately $515
|
|
|
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2015 Growth Capex Guidance
|
|
|
$95-105
|
2015 Product Sales Capex Guidance
|
|
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Under $10
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2015 Maintenance Capex Guidance
|
|
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$25-30
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2015 Other Capex
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|
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$15-20
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2015 Total Capex Guidance
|
|
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$145-165
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|
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* Includes only third party sales.
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|
|
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|
As of September 30, 2015, on a pro forma basis after giving effect to
the spin-off, Exterran Corporation would have had outstanding
indebtedness of approximately $520 million. In addition, subsequent to
September 30, 2015 and prior to the completion of the spin-off, Exterran
Corporation expects to incur additional borrowings of between $25
million and $30 million to finance expenses related to the completion of
the spin-off.
About Exterran Holdings
Exterran Holdings, Inc. is a global market leader in full-service
natural gas compression and a premier provider of operations,
maintenance, service and equipment for oil and gas production,
processing and transportation applications. Exterran Holdings serves
customers across the energy spectrum – from producers to transporters to
processors to storage owners. Headquartered in Houston, Texas, Exterran
has approximately 10,000 employees and operates in approximately 30
countries. Exterran Holdings owns an equity interest, including all of
the general partner interest, in Exterran Partners, L.P. (NASDAQ: EXLP),
a master limited partnership, the leading provider of natural gas
contract compression services to customers throughout the United States.
For more information, visit www.exterran.com.
Upon completion of the spin-off, Exterran Holdings will be renamed
Archrock, Inc. Archrock will be the leading provider of natural gas
contract compression services to customers throughout the United States.
In addition, Archrock will be a leading supplier of aftermarket services
to customers that own compression equipment in the United States.
Archrock will be headquartered in Houston, Texas, operating in the major
oil and gas producing regions in the United States, with approximately
2,500 employees. Archrock will continue to own an equity interest,
including all of the general partner interest, in Archrock Partners,
L.P. (which Exterran Partners will be renamed upon completion of the
spin-off).
About Exterran Corporation
Exterran Corporation will be a market leader in compression, production
and processing products and services, serving customers throughout the
world engaged in all aspects of the oil and natural gas industry. Its
global product lines will include natural gas compression, process &
treating and production equipment and water treatment solutions. Outside
the United States, Exterran Corporation will be a leading provider of
full-service natural gas contract compression and a supplier of new,
used, OEM and aftermarket parts and services. Exterran Corporation will
be headquartered in Houston, Texas, and will operate in approximately 30
countries with approximately 7,000 employees.
About Exterran Partners
Exterran Partners, L.P., a master limited partnership, is the leading
provider of natural gas contract compression services to customers
throughout the United States. Exterran Holdings, Inc. (NYSE: EXH) owns
an equity interest in Exterran Partners, including all of the general
partner interest. For more information, visit www.exterran.com.
Cautionary Information
While Exterran Holdings is committed to the spin-off, there can be no
assurance that any transaction will ultimately be consummated and there
can be no assurance of the terms or timing of such transaction if it is
consummated. Exterran Holdings may, at any time and for any reason until
the proposed transaction is complete, abandon the separation or modify
or change the terms of the spin-off. Exterran Holdings and Exterran
Partners have provided a range for preliminary estimated financial
results described above because their financial closing procedures for
the third quarter 2015 are not yet complete and will not be publicly
available until November 2015. Exterran actual results may vary
materially from these preliminary estimates. Accordingly, one should not
place undue reliance upon these preliminary financial results.
All statements in this release (and oral statements made regarding the
subjects of this release) other than historical facts are
forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking
statements rely on a number of assumptions concerning future events and
are subject to a number of uncertainties and factors, many of which are
outside Exterran Holdings’ and Exterran Partners’ control, which could
cause actual results to differ materially from such statements.
Forward-looking information includes, but is not limited to: Exterran
Holdings’, Exterran Partners’ and Exterran Corporation’s anticipated
financial and operating results and expectations for the third quarter
2015 and full year 2015; Exterran Holdings’ plan to conduct a separation
of certain of its businesses; the possibility that the proposed
separation will be consummated; the timing of the consummation of the
proposed separation; the expected benefits from the proposed separation;
statements regarding the expected capital structure and indebtedness
levels of Exterran Corporation and Archrock, Inc. (which Exterran
Holdings will be renamed after the spin-off); statements regarding the
amount of expected expenses related to the completion of the separation
and related debt financings; statements regarding the use of proceeds
from Exterran Corporation’s and Archrock, Inc.’s expected indebtedness;
statements regarding future dividend payments by Archrock, Inc.;
statements regarding Archrock Inc.’s targeted annual dividend growth
rate; statements regarding amounts owed by the Venezuelan state-owned
oil company and the transfer of equivalent amounts to an Archrock
subsidiary after the separation; and statements regarding Exterran
Corporation’s transfer of $25 million to an Archrock subsidiary upon
completion of certain debt or equity offerings after the separation.
While Exterran Holdings and Exterran Partners believe that the
assumptions concerning future events are reasonable, they caution that
there are inherent difficulties in predicting certain important factors
that could impact the future performance or results of their business.
Among the factors that could cause results to differ materially from
those indicated by such forward-looking statements are: local, regional,
national and international economic conditions and the impact they may
have on Exterran Holdings, Exterran Partners and Exterran Corporation
and their customers; changes in tax laws that impact master limited
partnerships; conditions in the oil and gas industry, including a
sustained decrease in the level of supply or demand for oil or natural
gas or a sustained decrease in the price of oil or natural gas; delays,
costs and difficulties that could impact the completion and expected
results of the proposed separation transaction; Exterran Holdings’,
Exterran Partners’ and Exterran Corporation’s ability to timely and
cost-effectively execute larger projects; changes in political or
economic conditions in key operating markets, including international
markets; any non-performance by third parties of their contractual
obligations; and changes in safety, health, environmental and other
regulations.
These forward-looking statements are also affected by the risk factors,
forward-looking statements and challenges and uncertainties described in
Exterran Holdings and Exterran Partners’ Annual Reports on Form 10-K for
the year ended December 31, 2014, Exterran Corporation’s Registration
Statement on Form 10 and Exterran Holdings’ and Exterran Partners’
filings with the Securities and Exchange Commission, which are available
at www.exterran.com.
Except as required by law, Exterran Holdings, Exterran Partners and
Exterran Corporation expressly disclaim any intention or obligation to
revise or update any forward-looking statements whether as a result of
new information, future events or otherwise.
This press release shall not constitute an offer to sell or a
solicitation of an offer to buy the senior notes due 2018 or any other
securities.
View source version on businesswire.com: http://www.businesswire.com/news/home/20151026005476/en/
Source: Exterran Holdings, Inc. and Exterran Partners, L.P.
Exterran Holdings, Inc.
Media
Susan Moore, 281-836-7398
or
Investors
David
Oatman, 281-836-7035