Niska Gas Storage Partners LLC Announces Results for Fourth Fiscal Quarter
and Full Year Ended March 31, 2010


    


    
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<p><span class="xn-location">HOUSTON</span>, <span class="xn-chron">June 22</span> /CNW/ -- Niska Gas Storage Partners LLC (NYSE:   NKA) reported today Adjusted EBITDA for its fourth fiscal quarter ended <span class="xn-chron">March 31, 2010</span> of <span class="xn-money">$78.8 million</span>, compared to <span class="xn-money">$49.0 million</span> for the fourth fiscal quarter of 2009.  For the full year ended <span class="xn-chron">March 31, 2010</span>, Niska's Adjusted EBITDA was <span class="xn-money">$223.8 million</span>, an increase of <span class="xn-money">$61.7 million</span>, or 38%, over Adjusted EBITDA of <span class="xn-money">$162.2 million</span> for the fiscal year ended <span class="xn-chron">March 31, 2009</span>.  Adjusted EBITDA, a non-GAAP financial measure, is defined below under "Non-GAAP Financial Measure," and a reconciliation of Adjusted EBITDA to its most comparable GAAP-based measure appears in the financial tables later in this release.</p>
<p/>
<p>Net earnings for Niska's fourth fiscal quarter ended <span class="xn-chron">March 31, 2010</span> were <span class="xn-money">$50.0 million</span>, compared to <span class="xn-money">$8.0 million</span> in the fourth fiscal quarter ended <span class="xn-chron">March 31, 2009</span>.  For the full fiscal year ended <span class="xn-chron">March 31, 2010</span>, Niska earned <span class="xn-money">$53.2 million</span> compared to <span class="xn-money">$108.8 million</span> earned in fiscal 2009.  The reduced full-year earnings are primarily attributable to one-time deferred tax charges of <span class="xn-money">$45.1 million</span> related to Canadian tax elections.  Taxes paid in both years were only <span class="xn-money">$0.3 million</span>.</p>
<p/>
<p>"We are extremely pleased with our results for the fourth quarter and full fiscal year," said <span class="xn-person">Dave Pope</span>, President and CEO of Niska.  "Our complimentary revenue strategies allowed us to effectively optimize our storage capacity and maximize revenues on top of the stable base of our long-term firm storage contracts.  We continued to add cost-effective capacity that will enable us to further serve the expanding demand for natural gas storage in <span class="xn-location">North America</span>.  Our fiscal 2010 results benefited from some exceptional market opportunities that occurred during the year.  In the fiscal year ending <span class="xn-chron">March 31, 2011</span>, without assuming the kinds of extra market opportunities for fiscal 2011 that we saw in fiscal 2010, we expect to generate Adjusted EBITDA of approximately <span class="xn-money">$204 million</span>.  As of <span class="xn-chron">June 15, 2010</span>, about 2.5 months into the year, approximately 72% of the revenues projected in our prospectus for fiscal 2011 are secured with existing transactions."</p>
<p/>
<p>Revenues for the fourth quarter of fiscal 2010 were <span class="xn-money">$120.8 million</span> compared to revenues of <span class="xn-money">$40.6 million</span> in the fourth quarter of fiscal 2009.  Higher revenues in the fourth quarter of fiscal 2010, compared to the prior year reflected stronger winter prices in early 2010 that led to the sale of most of Niska's optimization inventory during the three months ended <span class="xn-chron">March 31, 2010</span>, compared to the quarter ended <span class="xn-chron">March 31, 2009</span>, when significant natural gas inventories were carried into the next fiscal year.</p>
<p/>
<p>Revenues for the full fiscal year ended <span class="xn-chron">March 31, 2010</span> were <span class="xn-money">$270.5 million</span> compared to <span class="xn-money">$252.2 million</span> for the full year ended <span class="xn-chron">March 31, 2009</span>.  Niska's total revenues increased due to growth in our operated capacity and continued strength in natural gas storage markets.  Per-mcf realized revenues increased for optimization as well as for both long-term and short-term firm contracting in fiscal 2010.</p>
<p/>
<p>Operating costs for the quarter ended <span class="xn-chron">March 31, 2010</span> were <span class="xn-money">$9.8 million</span> compared to <span class="xn-money">$10.9 million</span> in the prior year quarter.  Operating costs for the full fiscal year ended <span class="xn-chron">March 31, 2010</span> were <span class="xn-money">$38.2 million</span>, compared to <span class="xn-money">$45.4 million</span> in fiscal 2009.  Expenses were reduced in each 2010 period compared to the respective period in fiscal 2009 principally as a result of lower fuel and electricity costs.  General and Administrative costs were <span class="xn-money">$15.1 million</span> in the quarter ended <span class="xn-chron">March 31, 2010</span> compared to <span class="xn-money">$3.8 million</span> in the quarter ended <span class="xn-chron">March 31, 2009</span>.  For the full fiscal year 2010, General and Administrative costs were <span class="xn-money">$36.6 million</span> compared to <span class="xn-money">$24.2 million</span> in fiscal 2009. These increases reflect significantly higher professional fees associated with preparing for Niska's senior notes offering and initial public offering completed in March, 2010 and May, 2010, respectively, as well as hiring additional staff to deal with the requirements of being a public company and higher incentive compensation accruals.</p>
<p/>
<p>Expansion capital expenditures were <span class="xn-money">$20.1 million</span> for the fiscal fourth quarter of 2010 and <span class="xn-money">$66.9 million</span> for the full year ended <span class="xn-chron">March 31, 2010</span>.  Over the past three years Niska has added 41 billion cubic feet ("Bcf") of working gas capacity at its owned facilities.</p>
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    Upcoming Events

    
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<p>Niska is continuing to expand organically at its existing facilities, planning to add approximately 15 Bcf of capacity in fiscal 2011.  Niska expects to fund these expansions using its existing revolving credit facilities as well as cash on hand.</p>
<p/>
<p>Niska will host a conference call with members of executive management on <span class="xn-chron">Wednesday, June 23, 2010</span>, at <span class="xn-chron">11:30 a.m. Eastern Time</span>. Interested parties may access the call via our website at <a href="http://www.niskapartners.com">www.niskapartners.com</a>, or participate in the call by dialing 800-573-4754 and entering passcode 61839575. A replay will be archived and available at this link or by dialing 888-286-8010 and entering passcode 27242383.</p>
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    About Niska

    
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<p>Niska is the largest independent owner and operator of natural gas storage in <span class="xn-location">North America</span>, with strategically located assets in key natural gas producing and consuming regions. Niska owns and operates three facilities, including the AECO Hub(TM) in Alberta, <span class="xn-location">Canada</span>; Wild Goose in Northern California; and Salt Plains in Oklahoma. Niska also contracts gas storage capacity on the Natural Gas Pipeline Company of America system. In total, Niska owns or contracts approximately 185.5 Bcf of gas storage capacity.</p>
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    Forward Looking Statements

    
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<p>This press release includes "forward-looking statements" - that is, statements related to future, not past, events. Forward-looking statements are based on current expectations and include any statement that does not directly relate to a current or historical fact.  In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as "anticipate," "believe," "intend," "expect," "plan," "will" or other similar words. These forward-looking statements involve certain risks and uncertainties that ultimately may not prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. For further discussion of risks and uncertainties, you should refer to Niska's SEC filings. Niska undertakes no obligation and does not intend to update these forward-looking statements to reflect events or circumstances occurring after this press release. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. All forward-looking statements are qualified in their entirety by this cautionary statement.</p>
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    Non-GAAP Financial Measure

    
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<p>Niska uses and discloses the financial measure "Adjusted EBITDA" in this press release.  Niska defines Adjusted EBITDA as net earnings before interest, income taxes, depreciation and amortization, unrealized risk management gains and losses, foreign exchange gains and losses, unrealized inventory impairment write-downs, gains and losses on asset dispositions, asset impairments and other income.  Niska's Adjusted EBITDA is not a presentation made in accordance with Generally Accepted Accounting Principles in the <span class="xn-location">United States</span> ("GAAP").  Niska's management utilizes Adjusted EBITDA as a key performance measure in order to assess:</p>
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    --  The financial performance of our assets, operations and return on
        capital without regard to financing methods, capital structure or
        historical cost basis;
    --  The ability of our assets to generate cash sufficient to pay interest
        on our indebtedness and make distributions to our equity holders;
    --  Repeatable operating performance that is not distorted by
non-recurring
        items or market volatility; and
    --  The viability of acquisitions and capital expenditure projects.

    
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<p>The GAAP measure most directly comparable to Adjusted EBITDA is net earnings. For a reconciliation of Adjusted EBITDA to net earnings, please see the schedule provided in the attached pages.</p>
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<p> </p>
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                         NISKA GAS STORAGE PARTNERS LLC
                       CONSOLIDATED STATEMENTS OF EARNINGS
                                  (in thousands)
    
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<p> </p>
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                                        Three Months Ended
                                            March 31,
                                            ---------
                                        2010            2009
                                        ----            ----
     REVENUES                              (unaudited)
     Short-term contract             $18,436         $19,265
     Long-term contact                27,996          24,835
     Optimization, net                74,396          (3,533)
                                      ------          ------
        Total revenue                120,828          40,567
                                     -------          ------
    
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<p> </p>
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     EXPENSES (INCOME)
     Operating expenses                9,765          10,922
     General and
      administrative                  15,108           3,770
     Depreciation and
      amortization                    10,171          11,317
     Impairment of goodwill                -          21,962
     Impairment of assets                650           2,106
     Loss (gain) on sale of
      assets                               -            (745)
     Interest expense                 17,979           9,988
     Foreign exchange gains            1,033          (9,884)
     Other income                          9         (20,452)
                                         ---         -------
     Total expenses                   54,715          28,984
                                      ------          ------
    
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<p> </p>
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     EARNINGS BEFORE INCOME
      TAXES                           66,113          11,583
                                      ------          ------
    
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<p> </p>
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     Income taxes (benefit)
     Current                           1,132              (6)
     Deferred                         14,960           3,546
                                      ------           -----
        Total                         16,092           3,540
                                      ------           -----
    
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<p> </p>
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     NET EARNINGS                    $50,021          $8,043
                                     =======          ======



    
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<p> </p>
<p> </p>
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                                           Year Ended
                                           March 31,
                                           ---------
                                        2010          2009
                                        ----          ----
     REVENUES
     Short-term contract             $58,375       $52,040
     Long-term contact              $109,795      $110,730
     Optimization, net              $102,335       $89,411
                                    --------       -------
        Total revenue                270,505       252,181
                                     -------       -------
    
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<p> </p>
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     EXPENSES (INCOME)
     Operating expenses               38,153        45,412
     General and
      administrative                  36,640        24,182
     Depreciation and
      amortization                    43,062        54,750
     Impairment of goodwill                -        21,962
     Impairment of assets                650         2,106
     Loss (gain) on sale of
      assets                               -           (11)
     Interest expense                 38,119        53,486
     Foreign exchange gains           (7,189)      (25,843)
     Other income                        (79)      (20,812)
                                         ---       -------
     Total expenses                  149,356       155,232
                                     -------       -------
    
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<p> </p>
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     EARNINGS BEFORE INCOME
      TAXES                          121,149        96,949
                                     -------        ------
    
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<p> </p>
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     Income taxes (benefit)
     Current                           1,344           314
     Deferred                         66,596       (12,185)
                                      ------       -------
        Total                         67,940       (11,871)
                                      ------       -------
    
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<p> </p>
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     NET EARNINGS                    $53,209      $108,820
                                     =======      ========







    
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<p> </p>
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                              NISKA GAS STORAGE PARTNERS LLC
                    SELECTED FINANCIAL DATA AND NON-GAAP RECONCILIATIONS
                          (in thousands, except capacity amounts)
    
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<p> </p>
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                                                      Three Months Ended
                                                           March 31,
                                                           ---------
                                                        2010          2009
                                                        ----          ----
     Reconciliation of Net Earnings to
      Adjusted EBITDA:                                    (unaudited)
     Net earnings                                    $50,021        $8,043
     Add (deduct)
        Interest expense                              17,979         9,988
        Income tax expense (benefit)                  16,092         3,540
        Depreciation and amortization                 10,171        11,317
        Unrealized risk management losses/
         (gains)                                     (20,549)       10,970
        Foreign exchange losses (gains)                1,033        (9,884)
        Impairment of assets                             650        24,068
        Other income, including loss/
         (gain) on sale of assets                          9       (21,197)
        Unrealized inventory impairment
         write-down                                    3,400        12,184
     Adjusted EBITDA                                 $78,806       $49,029
                                                     =======       =======
    
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<p> </p>
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     Revenue:
     Short-term contract                              18,436        19,265
     Long-term contract                               27,996        24,835
     Proprietary optimization:
        Realized optimization                         57,247        19,621
        Unrealized risk management gains
         (losses)                                     20,549       (10,970)
        Write-down of inventory                       (3,400)      (12,184)
           Total                                     120,828        40,567
                                                     =======        ======
    
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<p> </p>
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     Capital additions:
        Maintenance expenditures                          64           431
        Expansion and cost reduction
         expenditures                                 20,051            64
           Total                                      20,115           495
                                                      ======           ===
    
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<p> </p>
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     Selected Balance Sheet data (at
      period end):
        Cash and cash equivalents                   $131,559       $25,760
    
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<p> </p>
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        Borrowings under revolving credit
         facility                                          -        65,000
        Total debt (including current
         portion) excluding revolving credit
         facility                                    800,000       596,956
        Partners' equity                             929,786       977,374
    
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<p> </p>
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     Operating data:
        Effective working gas capacity (Bcf)           185.5         163.7
        Capacity added during the period                   -             -
        Storage capacity (Bcf) utilized by:
           Short-term contract                           N/A           N/A
           Long-term contract                            N/A           N/A
           Proprietary optimization                      N/A           N/A
              Total                                      N/A           N/A
    
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<p> </p>
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        Fees/Margins ($mcf)
           Short-term contract                           N/A           N/A
           Long-term contract                            N/A           N/A
           Realized optimization                         N/A           N/A



    
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<p> </p>
<p> </p>
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                                                          Year Ended
                                                           March 31,
                                                           ---------
                                                       2010          2009
                                                       ----          ----
     Reconciliation of Net Earnings to
      Adjusted EBITDA:
     Net earnings                                   $53,209      $108,820
     Add (deduct)
        Interest expense                             38,119        53,486
        Income tax expense (benefit)                 67,940       (11,871)
        Depreciation and amortization                43,062        54,750
        Unrealized risk management losses/
         (gains)                                     24,701       (82,787)
        Foreign exchange losses (gains)              (7,189)      (25,843)
        Impairment of assets                            650        24,068
        Other income, including loss/
         (gain) on sale of assets                       (79)      (20,823)
        Unrealized inventory impairment
         write-down                                   3,400        62,305
     Adjusted EBITDA                               $223,813      $162,105
                                                   ========      ========
    
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<p> </p>
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     Revenue:
     Short-term contract                             58,375        52,040
     Long-term contract                             109,795       110,730
     Proprietary optimization:
        Realized optimization                       130,436        68,929
        Unrealized risk management gains
         (losses)                                   (24,701)       82,787
        Write-down of inventory                      (3,400)      (62,305)
           Total                                    270,505       252,181
                                                    =======       =======
    
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<p> </p>
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     Capital additions:
        Maintenance expenditures                        902         1,406
        Expansion and cost reduction
         expenditures                                66,852        17,556
           Total                                     67,754        18,962
                                                     ======        ======
    
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<p> </p>
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     Selected Balance Sheet data (at
      period end):
        Cash and cash equivalents                  $131,559        25,760
    
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<p> </p>
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        Borrowings under revolving credit
         facility                                         -        65,000
        Total debt (including current
         portion) excluding revolving credit
         facility                                   800,000       596,956
        Partners' equity                            929,786       977,374
    
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<p> </p>
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     Operating data:
        Effective working gas capacity (Bcf)          185.5         163.7
        Capacity added during the period               21.8           8.4
        Storage capacity (Bcf) utilized by:
           Short-term contract                         36.8          32.9
           Long-term contract                         103.9         106.3
           Proprietary optimization                    44.8          24.5
              Total                                   185.5         163.7
                                                      =====         =====
    
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<p> </p>
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        Fees/Margins ($mcf)
           Short-term contract                        $1.59         $1.58
           Long-term contract                         $1.06         $1.04
           Realized optimization                      $2.91         $2.81






    

For further information: For further information: Paul Amirault, for Niska Gas Storage Partners LLC, +1-403-513-8600 Web Site: http://www.niskapartners.com

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