- Exterran Holdings, Exterran Partners
and Exterran Corporation expect strong third-quarter results of
operations
- Exterran Holdings, Inc., to be
renamed Archrock, Inc., expects to increase its quarterly dividend
25% sequentially to $0.1875 for the fourth quarter ending December
31, 2015, to be paid in February 2016
- Archrock, Inc. intends to increase
its quarterly dividend at a rate of 15% per annum through
2017
Exterran Holdings, Inc. (NYSE:EXH) and Exterran Partners, L.P.
(NASDAQ:EXLP) announced today certain preliminary third-quarter
2015 financial results. The preliminary results announced by
Exterran Holdings are those generated by the businesses it will
retain after completion of the previously announced separation as
well as the businesses it intends to distribute.
In November 2014, Exterran Holdings announced that it intends to
separate its international contract operations, international
aftermarket services and global fabrication businesses into a
standalone, publicly traded company named Exterran Corporation.
Upon completion of the spin-off, Exterran Holdings, which will
continue to own and operate its contract operations and aftermarket
services businesses in the United States, will be renamed Archrock,
Inc., and Exterran Partners, L.P. will be renamed Archrock
Partners, L.P.
Exterran’s and Exterran Partners’ full financial results for the
third quarter 2015 are not yet available and are subject to
finalization by management and review by Exterran’s independent
auditors. Set forth below are certain preliminary estimates of the
results of operations that Exterran Holdings and Exterran Partners
expect to report for the third quarter 2015. Exterran’s and
Exterran Partners’ actual results may differ materially from these
preliminary estimates due to the completion of their financial
closing procedures, final adjustments and other developments that
may arise before the financial results for the third quarter are
finalized.
Exterran Holdings expects the following range of financial
results for the businesses to be retained (Archrock) for the three
months ended September 30, 2015 ($ in millions):
Exterran Holdings
Expected Results for Businesses to be Retained
Revenues: U.S. Contract Operations $191-193
U.S. Aftermarket Services
$56-58
Total $247-251 Gross Margin Percentage: U.S. Contract
Operations 58-60% U.S. Aftermarket Services 19-21%
2015 Growth Capex Guidance $165-175 2015 Maintenance Capex Guidance
$70-75 U.S. End of Period Operating HP (in '000s) 3,575 to
3,585
Exterran Partners expects the following
range of financial results for the three months ended September 30,
2015 ($ in millions):
Exterran Partners
Expected Results
Revenues $162-164 Gross Margin Percentage 60-61%
Selling, General & Administrative Expenses $20-22
2015 Growth Capex Guidance $165-175 2015 Maintenance Capex Guidance
$50-55 End of Period Operating HP (in '000s) 3,100 to 3,110
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
Approximately $115 International Aftermarket Services Approximately
$25 Product Sales*
Approximately
$260
Total Approximately $400 Gross Margin Percentage:
International Contract Operations 63-65% Aftermarket Services
26-28% Product Sales* Approximately 13% Selling, General
& Administrative Expenses $53-57 Product Sales Bookings*
Approximately $175 Product Sales Backlog (at September 30, 2015)*
Approximately $515 2015 Growth Capex Guidance $95-105 2015
Product Sales Capex Guidance Under $10 2015 Maintenance Capex
Guidance $25-30 2015 Other Capex
$15-20
2015 Total Capex Guidance $145-165 * Includes only third
party sales.
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.
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version on businesswire.com: http://www.businesswire.com/news/home/20151026005476/en/
Exterran Holdings, Inc.MediaSusan Moore,
281-836-7398orInvestorsDavid Oatman, 281-836-7035
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