NEDERLAND, Texas, May 5, 2017 /PRNewswire/ -- OCI Partners LP, a Delaware limited partnership (the "Partnership"), announced its results for the three months ended March 31, 2017. The Partnership owns and operates an integrated methanol and ammonia production facility that is strategically located on the Texas Gulf Coast near Beaumont.

Summary of Financial Results for the Three Months Ended March 31, 2017

  • Revenues increased 33% to $93 million compared to $70 million for the same period in 2016
  • EBITDA increased 122% to $40 million compared to $18 million for the same period in 2016
  • Net income increased to $14 million compared to a net loss of ($6) million for the same period in 2016
  • EBITDA and net income margins were 43% and 15% respectively, compared to 26% and (9)%, respectively, during the same period in 2016

Termination of Exchange Offer from OCI N.V.

On April 17, 2017, OCI N.V. (Euronext: OCI) ("OCI") terminated negotiations with the conflicts committee of the board of directors of the Partnership regarding OCI's previously announced offer to acquire all publicly held common units of the Partnership in exchange for OCI shares. OCI currently owns 79.88% of issued and outstanding common units of the Partnership.

Key Management Change

On May 1, 2017, Mr. Frank Bakker resigned as President, Chief Executive Officer and director of the general partner of the Partnership, effective May 12th, to pursue other opportunities. On May 4, 2017, Mr. Ahmed El-Hoshy, Chief Executive Officer of OCI N.V. in the Americas ("OCI Americas") and a director of the general partner of the Partnership since July 2016, was appointed as President and Chief Executive Officer of the general partner of the Partnership effective May 12th.

Unplanned Shutdown

On April 27, both the methanol and ammonia plants tripped and upon restart a leak was discovered in one of the waste heat boilers that needed to be repaired. The ammonia plant was restarted on May 2, but the methanol plant is still down for repairs. The Partnership has decided to take the opportunity to carry out several other repairs, including the reformer roof, that are expected to significantly improve the operating reliability of both plants, and potentially increase methanol production capacity marginally above nameplate. During the improvements to the methanol plant, the ammonia plant will only be able to run at up to 70% of nameplate capacity, depending on availability of over-the-fence hydrogen. The Partnership estimates the total down time for the methanol plant repairs will last approximately 16 days from the unplanned shutdown on April 27, 2017.

Distributions

Based on the results of the three months ended March 31, 2017, the Board of Directors of the general partner of the Partnership has approved a cash distribution of $0.23 per common unit or approximately $20.0 million in the aggregate. The cash distribution will be paid on June 5, 2017 to unitholders of record at the close of business on May 19, 2017. The amount of any subsequent quarterly cash distributions will vary depending on our future earnings as well as our cash requirements for working capital, capital expenditures, debt service and other contractual obligations, and reserves for future operating or capital needs.

Run-Rate Quarterly Distribution Guidance

Partnership distributions, including the distribution of $0.23 being declared with respect to the three months ended March 31, 2017, remain largely consistent with our prior run-rate guidance, where the run-rate distribution amount is primarily affected each quarter for changes in average realized prices of methanol, ammonia and natural gas.

Our distribution with respect to the three months ended March 31, 2017 reflects an average realized methanol price of $353 per metric ton, an average realized ammonia price of $247 per metric ton, and an average natural gas price of $3.15 per MMBtu.

To assist investors in making the linkage between these prices and potential future distributions, we provide below a sensitivity analysis:

  • A $0.50 per MMBtu change in natural gas prices results in an approximately $0.23 impact on annual distributions
  • A $10 per metric ton change in methanol prices results in an approximately $0.10 impact on annual distributions
  • A $10 per metric ton change in ammonia prices results in an approximately $0.04 impact on annual distributions

We intend to continue making distributions consistent with our run-rate guidance, but there can be no assurance we will be able to do so. In addition to the impact of commodity prices, our distributions are subject to fluctuations in capacity utilization, working capital, capital expenditures, debt service and other contractual obligations, reserves for future operating or capital needs and other factors, including overall business, regulatory and financial considerations that may affect the availability of cash to distribute. Please see "Forward-Looking Statements" below."

Statement from incoming President and Chief Executive Officer – Ahmed El-Hoshy

"During the quarter, our ammonia and methanol production units experienced 4 and 3 days of unplanned downtime, generating capacity utilization rates of 102% and 96%, respectively.

Our underlying markets turned significantly more positive in the first quarter of 2017, with robust price increases for both methanol and ammonia. US weighted average methanol contract prices improved rapidly during the quarter, reaching $491 per metric ton in March, up from $370 per metric ton at the end of 2016. Ammonia prices (Tampa cfr) reached a multi-year low of $210 per metric ton in November 2016, but improved throughout the first quarter to $330 per metric ton in March.

We saw a subsequent increase in realized prices, which contributed to a significantly improved operational performance in the first quarter. Our average realized methanol price was $353 per metric ton in the first quarter, an increase of 87% from $189 per metric ton in the same quarter last year and 37% from $257 per metric ton in the fourth quarter of 2016. Our average realized ammonia price was $247 per metric ton in the first quarter, down 16% from $295 per metric ton in the first quarter of 2016, but up 24% from $199 per metric ton in the fourth quarter of 2016. Finally, our natural gas price averaged $3.15 per MMBtu during the quarter, up from $2.13 per MMBtu during the first quarter of 2016, offsetting some of the benefits of the higher pricing.

Looking forward, methanol spot prices declined towards the end of March and into the second quarter, largely due to the return of supply from various methanol plants following turnarounds, and reduced MTO operating rates in China. The US weighted average methanol contract price followed spot prices and declined to $440 per metric ton in April and to $399 per metric ton for May. This is likely to lead to lower realized methanol prices in the second quarter compared to the first, but current price levels are higher than those achieved in 2016 and continue to generate healthy returns for our operations. Global demand is expected to remain underpinned by the MTO sector, which is generally benefiting from improved economics and additional MTO capacity starting up.

Ammonia markets remained firm into the second quarter of 2017, reflecting tight US and global supply. The Tampa CFR ammonia contract price increased from $330 per metric ton in March to $340 per metric ton in April, and came back to $330 per metric ton for May, on average above the level of the first quarter."
















Volume Weighted Average Price of

Volume Weighted Average Price of


Methanol and Ammonia

Natural Gas


($ per metric ton)

($ per MMBtu)


For Three-Months Ended March 31, 

For Three-Months Ended March 31, 


2017


2016


2017


2016


Ammonia

247


295


3.15


2.13


Methanol

353


189




















Production

Capacity Utilization


(in '000 tons)

Rate %


For Three-Months Ended March 31, 

For Three-Months Ended March 31, 


2017


2016


2017


2016


Ammonia

83


88


102%


107%


Methanol

216


225


96%


99%


 

Non-GAAP Financial Measure

EBITDA is defined as net income (loss) plus (i) interest expense and other financing costs, (ii) depreciation expense and (iii) income tax expense. EBITDA is used as a supplemental financial measure by management and by external users of our unaudited financial statements, such as investors and commercial banks, to assess:

  • the financial performance of our assets without regard to financing methods,
    capital structure or historical cost basis; and
  • our operating performance and return on invested capital compared to those of other
    publicly traded partnerships, without regard to financing methods and capital structure

EBITDA should not be considered as an alternative to net income, operating income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. EBITDA may have material limitations as a performance measure because it excludes items that are necessary elements of our costs and operations. In addition, EBITDA presented by other companies may not be comparable to our presentation because each company may define EBITDA differently.

EBITDA margin is defined as EBITDA divided by revenues. EBITDA margin is used as a supplemental financial measure by the Partnership's management in its analysis of our operating performance.

The table below reconciles EBITDA to net income, its most directly comparable financial measure calculated and presented in accordance with GAAP, for the three months ended March 31, 2017 (dollars in thousands).

 



Quarter Ended March 31,



2017


2016








Net income (loss)


$

13,744



-6,054

Add:







Interest expense 



5,547



8,792

Interest expense – related party



4,530



51

Income tax expense 



466



80

Depreciation expense



15,244



15,378








EBITDA


$

39,531



18,247








 

Conference Call with Management

The Partnership will hold a conference call on May 8, 2017, at 10:00 a.m. ET, during which the Partnership's senior management will review the Partnership's financial results for the first quarter ended March 31, 2017 and provide an update on corporate developments. Callers may listen to the live presentation, which will be followed by a question and answer segment, by dialing (816) 287-5664 and entering the conference code 18236977. A replay of the conference call will be made available until May 22, 2017 and the replay can be accessed by dialing (855) 859-2056 or (404) 537-3406 and entering the same conference code 18236977.

About OCI Partners LP

The Partnership has filed its Annual Report on Form 10-K for the year ended December 31, 2016, with the Securities and Exchange Commission. A copy of the Annual Report on Form 10-K is available to be viewed or downloaded at www.ocipartnerslp.com by selecting "SEC Filings" on the "Financial Reporting" sub-tab found under the "Investor and Media Relations" tab, as well as on the SEC's website at www.sec.gov. Interested investors may obtain a hard copy of the Annual Report on Form 10-K, including the Partnership's financial statements, free of charge by selecting "Annual Report" on the "Financial Reporting" sub-tab found under the "Investor and Media Relations" tab.

OCI Partners LP (NYSE: OCIP) owns and operates an integrated methanol and ammonia production facility that is strategically located on the Texas Gulf Coast near Beaumont. The Partnership is headquartered in Nederland, Texas and currently has a methanol production design capacity of 912,500 metric tons per year and an ammonia production design capacity of 331,000 metric tons per year.

Notice to Foreign Investors

This release is intended to be a qualified notice to nominees as provided for under Treasury Regulation Section 1.1446-4(b)(4) and (d). Please note that 100% of the Partnership's distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, all of the Partnership's distributions to foreign investors are subject to federal income tax withholding at the highest applicable effective tax rate. Nominees, and not the Partnership, are treated as the withholding agents responsible for withholding on the distributions received by them on behalf of foreign investors.

Forward-Looking Statements

This press release contains forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include the words "believe," "expect," "anticipate," "intend," "estimate" and other expressions that are predictions of or indicate future events and trends and that do not relate to historical matters identify forward-looking statements.  These forward-looking statements involve certain risks and uncertainties, including, among others, the following:  our business plans may change as the methanol and ammonia industry and markets warrant; the demand and sales prices for methanol, ammonia and their derivatives may decrease due to market, governmental and other factors; we may be unable to obtain economically priced natural gas and other feedstocks; we may be unable to successfully implement our business strategies, including the completion of significant capital programs; the occurrence of shutdowns (either temporary or permanent) or restarts of existing methanol and ammonia facilities (including our own facility); the timing and length of planned and unplanned downtime; and the occurrence of operating hazards from accidents, fire, severe weather, floods or other natural disasters. For more information concerning factors that could cause actual results to differ materially from those conveyed in the forward-looking statements, please refer to the "Risk Factors" section of the Partnership's most recently filed Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed thereafter. The Partnership undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances or otherwise, unless required by law.

Contacts:
Hans Zayed
Director of Investor Relations
Phone: +1 917-817-5159
hans.zayed@oci.nl

SOURCE OCI Partners LP


Source: OCI Partners LP