Azure Midstream Partners LP (NYSE:AZUR) Teases Investors


Azure Midstream Partners LP (NYSE: AZUR)’s CEO Chip Berthelot took the opportunity at the company’s recent earnings call to provide a glimpse of what investors can expect from the management in the future. He talked about righting the balance sheet, cost-cutting and other strategic alternatives. Now Azure has moved closer to those goals.

The company has announced entering into some debt agreements. One of those agreements effectively pushes back certain covenant defaults until late next month. In other words, Azure has successfully negotiated for more time to settle some of its outstanding debts and that adds to the efforts to repair the balance sheet.

Azure Midstream Prt NYSE: AZUR) didn’t delve into details about its waiver agreements, but it also pointed out that the amendment to its credit agreements has capped its borrowing capacity. The company’s borrowing capacity has been brought down to $173.7 million.

Cost-reduction measures

As part of the efforts to eliminate some costs and improve the bottom-line, Azure decided to monetize its processing facility and gathering pipeline in East Texas to Align Midstream Partners, which is a company based in Dallas. The transaction yielded $44.9 million in cash for Azure.

CEO Berthelot said that the sale of the processing plant and pipeline in East Texas enabled Azure to eliminate $41 million of debt from its balance sheet. On top of that, he said that the transaction will boost Azure’s annual EBITDA run rate by about $1.5 million.

The reason the sale of the assets is expected to boost EBITDA is that will help lower some of Azure’s fixed costs.

2Q2016 earnings – Azure Midstream Partners LP (NYSE: AZUR)

In 2Q2016, Azure Midstream Partners LP (NYSE: AZUR) posted a net loss of $8.4 million, which widened from a net loss of $1.7 million in the comparable period last year. During the quarter, gross margin for gathering was $6.9 million and gross margin for processing was $15.2 million. Processing and gathering volumes for 2Q were 246 MMcf/d and 62 MMcf/d, respectively.

If you compare the gas gathering and processing for the last period and year-ago period, you notice a decline. Gathering and processing volumes for the year-ago quarter were 338 MMcf/d and 185 MMcf/d.


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