Houston, Texas - July 21, 2015 - Hi-Crush Partners LP (NYSE: HCLP), or Hi-Crush, announced today that the Board of Directors of its general partner has declared a cash distribution of $0.475 per unit on all common and subordinated units, or $1.90 on an annualized basis.
"Market conditions resulting from reduced industry sand demand and pricing worsened this quarter with further price reductions and even lower demand," said Laura Fulton, Chief Financial Officer of Hi-Crush. "Our management team, along with the Board of Directors, determined that a reduction to the quarterly cash distribution was prudent as we do not expect a rebound in sand demand or pricing until 2016. We are expecting the remainder of 2015 to be challenging with continued uncertainty in the level of well completion activity, which is a key driver of sand demand. We expect to maintain the distribution at this level for the remainder of 2015."
Hi-Crush paid distributions of $2.40 per unit on all common and subordinated units for 2014 and $0.675 per unit for the first quarter 2015.
"Our decision today to reduce our distribution to the minimum quarterly distribution level was a difficult one, but reflects our updated outlook for 2015 operating and financial performance. With our strong balance sheet, we could pay the distribution at the previous levels," said Robert E. Rasmus, Co-Chief Executive Officer, "however, we believe this is the time to preserve capital and invest in the company. We continue to believe the fundamentals for increased frac sand demand over the long-term are in our favor, but the recovery to previous demand and pricing levels will take longer than previously thought."
The distribution will be paid on August 14, 2015 to all common and subordinated unit holders of record on August 5, 2015.
Hi-Crush also announced that cash capital expenditures in 2015 were $40 million during the first half of the year including some spending carried over from 2014 projects. The remaining capital expenditures for 2015 are expected to range between $10 million and $15 million, principally spending on new distribution facilities.
Distributions to Foreign Investors
The declaration of the distribution is intended to be a qualified notice to nominees under Treasury Regulation Section 1.1446-4(b), with 100% of the Partnership's distributions to foreign investors attributable to income that is effectively connected with a United States trade or business. Accordingly, the Partnership's distributions to foreign investors are subject to federal income tax withholding at the highest effective tax rate.
Hi-Crush is an integrated producer, transporter, marketer and distributor of high-quality monocrystalline sand, a specialized mineral that is used as a "proppant" (frac sand) to enhance the recovery rates of hydrocarbons from oil and natural gas wells. Our reserves, which are located in Wisconsin, consist of "Northern White" sand, a resource that exists predominately in Wisconsin and limited portions of the upper Midwest region of the United States. Hi-Crush owns and operates the largest distribution network in the Marcellus and Utica shales, and has distribution capabilities throughout North America. For more information, visit www.hicrushpartners.com.
Some of the information in this news release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements give our current expectations, and contain projections of results of operations or of financial condition, or forecasts of future events. Words such as "may," "assume," "forecast," "position," "predict," "strategy," "expect," "intend," "plan," "estimate," "anticipate," "could," "believe," "project," "budget," "potential," or "continue," and similar expressions are used to identify forward-looking statements. They can be affected by assumptions used or by known or unknown risks or uncertainties. Consequently, no forward-looking statements can be guaranteed. When considering these forward-looking statements, you should keep in mind the risk factors and other cautionary statements in Hi-Crush's reports filed with the Securities and Exchange Commission ("SEC"), including those described under Item 1A of Hi-Crush's Form 10-K for the year ended December 31, 2014 and any subsequently filed 10-Q. Actual results may vary materially. You are cautioned not to place undue reliance on any forward-looking statements. You should also understand that it is not possible to predict or identify all such factors and should not consider the risk factors in our reports filed with the SEC or the following list to be a complete statement of all potential risks and uncertainties. Factors that could cause our actual results to differ materially from the results contemplated by such forward-looking statements include: the volume of frac sand we are able to sell; the price at which we are able to sell frac sand; the outcome of any pending litigation; changes in the price and availability of natural gas or electricity; changes in prevailing economic conditions; and difficulty collecting receivables. All forward-looking statements are expressly qualified in their entirety by the foregoing cautionary statements. Hi-Crush's forward-looking statements speak only as of the date made and Hi-Crush undertakes no obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.
Source: Hi-Crush Partners LP