UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 10, 2014
 
AMERICAN MIDSTREAM PARTNERS, LP
(Exact name of registrant as specified in its charter)

	

Delaware	 	001-35257	 	27-0855785	
(State or other jurisdiction
of incorporation)	 	(Commission
File Number)	 	(I.R.S. Employer
Identification No.)	
 	 	
1400 16th Street, Suite 310
Denver, Colorado	 	80202	
(Address of principal executive offices)	 	(Zip Code)	

Registrant’s telephone number, including area code: (720) 457-6060
Not applicable
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

		
¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	

		
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	

		
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	

		
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

 
Item 2.02 Results of Operations and Financial Condition

On March 10, 2014, American Midstream Partners, LP issued a press release announcing its financial results for the three months and year ended December 31, 2013. A copy of the press release covering such announcement and certain other matters is attached hereto as Exhibit 99.1.

The information in this report, including the Exhibit attached hereto, shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, or the Exchange Act, except as specifically identified therein as being incorporated by reference.

Item 9.01 Financial Statements and Exhibits
(d) Exhibits.

See “Index to Exhibits” attached to this Current Report on Form 8-K, which is incorporated by reference herein.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	

 	 	 	 	 	

 	 	 	 	 	
 	 	American Midstream Partners, LP	
 	 	
 	 	By: American Midstream GP, LLC,	
 	 	its General Partner	
Date:	 	 	
March 10, 2014	 	By:	 	/s/ Daniel C. Campbell	
 	 	Name:	 	Daniel C. Campbell	
 	 	Title:	 	Senior Vice President and Chief Financial Officer	

Exhibit Index

	

 	 	 	 	 	

 	 	 	 	
Exhibit Number	  	Description	 	
99.1	 	  	American Midstream Partners, LP press release dated	March 10, 2014	

Exhibit 99.1

American Midstream Reports
Fourth Quarter and Full Year 2013 Financial Results

DENVER, CO – March 10, 2014 - American Midstream Partners, LP (NYSE: AMID) ("the Partnership") today reported financial results for the three months and year ended December 31, 2013. The Partnership reported gross margin (a non-GAAP measure) for the fourth quarter of 2013 of $23.6 million , an increase of $11.7 million or 98.3 percent, compared to $11.9 million in the same period in 2012. For the year ended December 31, 2013, the Partnership reported gross margin of $76.6 million , an increase of $27.9 million or 57.3 percent, compared to $48.7 million in the same period in the prior year. The increase in gross margin for the three months and year ended December 31, 2013 was primarily due to higher gross margin in the Partnership's Transmission segment as a result of the April 2013 acquisition of the High Point system in addition to the December 2013 acquisition of Blackwater Midstream Holdings, LLC, a developer and operator of terminal storage facilities ("Blackwater"). High Point and Blackwater were acquired from affiliates of ArcLight Capital Partners, LLC ("ArcLight"), which controls the Partnership's general partner. Accordingly, the acquisitions are accounted for as transactions under common control pursuant to applicable accounting standards, which requires that the Partnership's financial statements be recast to include both acquisitions as of April 15, 2013. The increase in gross margin was also partially attributable to higher gross margin in the Gathering and Processing segment due to improved condensate production. The higher gross margin was partially offset by lower margins associated with the Partnership's percent-of-proceeds and elective processing agreements in the Gathering and Processing segment.

Adjusted EBITDA (a non-GAAP measure) for the three months and year ended December 31, 2013 was $10.5 million and $31.9 million , respectively, compared to $2.9 million and $18.8 million for the same periods in 2012, increases of 262.1 percent and 69.7 percent, respectively. The year-over-year increase in adjusted EBITDA was primarily attributable to the High Point and Blackwater acquisitions described above, partially offset by increases in direct operating expenses and selling, general and administrative expenses associated with the Chatom, High Point and Blackwater acquisitions in 2012 and 2013.

Distributable cash flow ("DCF") (a non-GAAP measure) for the three months and year ended December 31, 2013 was $6.3 million and $16.2 million , respectively, after cash distributions related to the Series A convertible preferred units that were issued in April 2013 to High Point Infrastructure Partners, LLC, an affiliate of ArcLight. DCF for the three months ended December 31, 2013 represents a distribution coverage ratio of 1.17 . The fourth quarter 2013 distribution of $5.4 million , or $0.4525 per common unit, was paid on February 14, 2014 to unitholders of record as of February 7, 2014.

Reconciliations of the non-GAAP measures gross margin, Adjusted EBITDA, and DCF to Net income (loss) attributable to the Partnership, the most directly comparable GAAP measure, are provided in the tables in this press release.

Net loss attributable to the Partnership for the three months and year ended December 31, 2013 was $5.6 million and $34.0 million , respectively, compared to net loss of $6.3 million and $6.5 million for the same periods in 2012. Net loss attributable to the Partnership for the three months ended December 31, 2013, includes a $0.6 million non-cash loss on impairment of assets held for sale in the Terminals segment and a $3.0 million non-cash loss on impairment

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of certain gathering and processing assets.  During the first quarter of 2014, the board of directors of our general partner gave approval to the management team to pursue the sale of the gathering and processing assets. As a result, the assets were written down by $3.0 million in the fourth quarter of 2013. The increase in the net loss for the year ended December 31, 2013 was primarily a result of non-cash asset impairment charges of $17.0 million on certain non-strategic gathering and processing assets in the second quarter and the fourth quarter impairment charges discussed above.
 
BUSINESS HIGHLIGHTS

Blackwater Acquisition

On December 17, 2013, the Partnership completed the acquisition of Blackwater for approximately $60 million. Blackwater operates 1.3 million barrels of storage capacity across four terminal sites located in Westwego, Louisiana; Brunswick, Georgia; Harvey, Louisiana; and Salisbury, Maryland. These terminal sites provide storage services to support various commercial customers, including commodity brokers, refiners, and chemical manufacturers, to store a range of products, including crude oil, bunker fuel, distillates, chemicals and agricultural products.

In conjunction with the acquisition, the Partnership issued 2,568,712 common units representing limited partner interests in the Partnership in a public offering at a price to the public of $22.47 per common unit for net proceeds of $54.9 million.

PVA Acquisition

On January 31, 2014, the Partnership acquired, from Penn Virginia Corporation ("PVA"), a natural gas gathering system and associated facilities located in the Eagle Ford shale in Gonzales and Lavaca Counties, Texas (the "Lavaca System")for approximately $100 million.  In conjunction with the PVA acquisition, the Partnership issued 3,400,000 common units representing limited partner interests in a public offering at a price to the public of $26.75 per common unit for net proceeds of $87.3 million. In addition, the Partnership issued the Partnership's general partner 1,168,225 Series B PIK Units representing series B limited partnership interests in the Partnership. Net proceeds from the public offering and Series B PIK Units were $117.3 million.

EXECUTIVE COMMENTARY

"2013 was a transformational year for American Midstream and we finished the year with strong fourth quarter and full-year financial results,” stated Steve Bergstrom, Executive Chairman, President and Chief Executive Officer.  "Our EBITDA and DCF for the fourth quarter and full year are record results for American Midstream and are directly related to steps we took to strengthen the Partnership for long-term growth.  During 2013, ArcLight completed a strategic investment in our general partner, we added scale and incremental cash flow to the Partnership with the High Point and Blackwater acquisitions, increased distributable cash flow available to common unitholders through the equity restructuring, and increased distributions per unit by nearly 5 percent while also significantly improving distribution coverage.   We also strengthened our management team, implemented meaningful improvements to our existing operations, and improved our leverage ratio.
 
“We recently completed two equity offerings to finance the December acquisition of Blackwater and the January acquisition of Eagle Ford midstream assets from Penn Virginia. These acquisitions diversify our cash flow, provide significant growth opportunities, and increase our fee-based gross margin.  Importantly, in conjunction with the acquisitions we announced our intent to recommend to our Board that we increase our quarterly distributions for both the first quarter and the third quarter 2014.
 
“As we look ahead, we are focused on making 2014 a productive year for the Partnership with the goal of significantly increasing the size and scale of American Midstream, diversifying geographically into some of the rapidly growing basins in the US, and delivering long-term sustainable distribution growth to our unitholders.”

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SEGMENT PERFORMANCE

Gathering and Processing - The Gathering and Processing segment includes natural gas transportation, gathering, treating, processing, fractionation, and selling or delivering natural gas and natural gas liquids ("NGLs") to various markets and pipeline systems.

Segment gross margin for the Gathering and Processing segment was $8.0 million and $36.5 million for the three months and year ended December 31, 2013, respectively, compared to $8.1 million and $35.4 million for the same periods in 2012. The increase in segment gross margin for the year ended December 31, 2013 was primarily due to higher average condensate production as a result of the Chatom system partially offset by lower volumes on one of the offshore pipeline systems, and lower realized gains on commodity derivatives as a result of lower-priced hedges in 2013 compared to 2012.

Natural gas throughput volumes averaged 298.2 million cubic feet per day ("MMcf/d") and 277.2 MMcf/d for the three months and year ended December 31, 2013, respectively, compared to 209.7 MMcf/d and 291.2 MMcf/d for the same periods in 2012. Processed NGLs averaged 49.6 thousand gallons per day ("Mgal/d") and 52.0 Mgal/d for the three months and year ended December 31, 2013, respectively, compared to 38.5 Mgal/d and 49.9 Mgal/d for the same periods in 2012. The full-year decrease in throughput was primarily due to lower volumes on an offshore pipeline system. Processed NGLs increased primarily as a result of higher production on the Chatom system.

Transmission - The Transmission segment transports and delivers natural gas from producing wells, receipt points, or pipeline interconnects to pipeline or end-use markets. Segment gross margin for the Transmission segment was $13.0 million and $32.4 million for the three months and year ended December 31, 2013, respectively, compared to $3.8 million and $13.3 million for the same periods in 2012. The increase in segment gross margin was primarily due to the acquisition of the High Point system.

Total natural gas throughput volumes averaged 743.8 MMcf/d and 644.7 MMcf/d for the three months and year ended December 31, 2013, respectively, compared to 365.2 MMcf/d and 398.5 MMcf/d for the same periods in 2012. The full year increase in throughput volume was primarily due to the additional volumes contributed by the High Point system.

Terminals - The Terminals segment provides above-ground storage services at the Partnership's marine terminals that support various commercial customers, including commodity brokers, refiners and chemical manufacturers to store a range of products, including crude oil, bunker fuel, distillates, chemicals and agricultural products. Segment gross margin for the Terminals segment was $2.7 million and $7.8 million for the three months ended December 31, 2013 and the period from April 15, 2013 through December 31, 2013, respectively.
 
DERIVATIVES

The Partnership enters into derivative agreements to hedge exposure to commodity prices associated with natural gas, NGLs, and crude oil. As of December 31, 2013, approximately 12 percent of the Partnership's exposure to NGL prices and approximately 14 percent of the Partnership's exposure to oil prices are hedged through the end of 2014. Details regarding the Partnership's hedge program are found in its annual report.

BALANCE SHEET

As of December 31, 2013, the Partnership had $0.4 million of cash on hand, and $135.5 million outstanding under its senior secured revolving credit facility with $64.5 million of available borrowing capacity.

CAPITAL EXPENDITURES

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For the three months and year ended December 31, 2013, capital expenditures totaled $4.8 million and $27.6 million , respectively, primarily related to growth capital of $4.1 million and $20.5 million , and maintenance capital expenditures of $0.6 million and $6.1 million , respectively.

2014 ADJUSTED EBITDA, DCF AND GROWTH CAPITAL EXPENDITURE FORECAST

The Partnership's forecast for 2014 adjusted EBITDA and DCF remains in a range of $41 million to $44 million and $21 million to $24 million, respectively, based on its current forecast of operational volumes and prices for crude oil, natural gas, natural gas liquids, and derivative instruments currently outstanding. Growth capital expenditures in 2014, which exclude maintenance capital, are forecasted to be in a range of $55 million to $60 million, of which approximately $30 million is associated with the Lavaca System.

CONFERENCE CALL

The Partnership will host a conference call and webcast to discuss its fourth quarter and year end 2013 financial results on Tuesday, March 11, 2014, at 10:00 a.m. Eastern Time. The call may be accessed live at the investor relations section of the Partnership's website at www.AmericanMidstream.com . The call may also be accessed by dialing 877-703-6103 for domestic users or 857-244-7302 for international users. The passcode for both phone numbers is 29920208.

A replay of the audio webcast will be available shortly after the call on the Partnership's website. A telephonic replay will be available through April 10, 2014, by dialing 888-286-8010 for domestic users or 617-801-6888 for international users. The passcode for both phone numbers is 19348728.

Non-GAAP Financial Measures

This press release and the accompanying tables, include financial measures in accordance with U.S. generally accepted accounting principles, or GAAP, as well as non-GAAP financial measures, including “ Adjusted EBITDA, ” “ Gross Margin, ” and “ Distributable Cash Flow. ” The tables included in this press release include reconciliations of these non-GAAP financial measures to the nearest GAAP financial measures. In addition, an “Explanation of Non-GAAP Financial Measures” is set forth in Appendix A attached to this press release.

About American Midstream Partners, LP.

Denver-based American Midstream Partners is a growth-oriented limited partnership formed to own, operate, develop and acquire a diversified portfolio of midstream energy assets. The Partnership provides midstream services in the Texas, Gulf Coast and Southeast regions of the United States. For more information about American Midstream Partners, visit www.AmericanMidstream.com .

Forward Looking Statements

This press release includes forward-looking statements. These statements relate to, among other things, projections of operational volumetrics and improvements, growth projects, cash flows and capital expenditures. We have used the words "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "predict," "project," "should," "will," "potential," and similar terms and phrases to identify forward-looking statements in this press release. Although we believe the assumptions upon which these forward-looking statements are based are reasonable, any of these assumptions could prove to be inaccurate and the forward-looking statements based on these assumptions could be incorrect. Our operations and future growth involve risks and uncertainties, many of which are outside our control, and any one of which, or a combination of which, could materially affect our results of operations and whether the forward-looking statements ultimately prove to be correct. Actual results and trends in the future may differ materially from those suggested or implied by the forward-looking statements depending on a variety of factors which are described in greater detail in our filings with the SEC. Please see our Risk Factor disclosures included in our Annual Report on Form 10-K for the year ended December 31, 2012, filed on April 16, 2013, and in subsequent filings with the Securities and Exchange Commission. All future written and oral forward-looking statements attributable to us or persons acting

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on our behalf are expressly qualified in their entirety by the previous statements. The forward-looking statements herein speak as of the date of this press release. We undertake no obligation to update any information contained herein or to publicly release the results of any revisions to any forward-looking statements that may be made to reflect events or circumstances that occur, or that we become aware of, after the date of this press release.

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American Midstream Partners, LP and Subsidiaries
Consolidated Balance Sheets
(Audited, in thousands)

	
									
 	 	December 31,	
 	 	2013	 	2012	
Assets	 	 	 	 	
Current assets	 	 	 	 	
Cash and cash equivalents	 	$	393		 	$	576		
Accounts receivable	 	6,822		 	1,958		
Unbilled revenue	 	22,005		 	21,512		
Risk management assets	 	473		 	969		
Other current assets	 	7,497		 	3,226		
Current assets held for sale	 	1,268		 	—		
Total current assets	 	38,458		 	28,241		
Property, plant and equipment, net	 	312,510		 	223,819		
Goodwill	 	16,447		 	—		
Intangible assets, net	 	3,682		 	—		
Other assets, net	 	9,064		 	4,636		
Noncurrent assets held for sale, net	 	1,914		 	—		
Total assets	 	$	382,075		 	$	256,696		
Liabilities and Partners’ Capital	 	 	 	 	
Current liabilities	 	 	 	 	
Accounts payable	 	$	3,261		 	$	5,527		
Accrued gas purchases	 	16,394		 	17,034		
Accrued expenses and other current liabilities	 	15,058		 	9,619		
Current portion of long-term debt	 	2,048		 	—		
Risk management liabilities	 	423		 	—		
Current liabilities held for sale	 	1,106		 	—		
Total current liabilities	 	38,290		 	32,180		
Risk management liabilities	 	101		 	—		
Asset retirement obligation	 	34,636		 	8,319		
Other liabilities	 	191		 	309		
Long-term debt	 	130,735		 	128,285		
Deferred tax liability	 	4,749		 	—		
Noncurrent liabilities held for sale, net	 	95		 	—		
Total liabilities	 	208,797		 	169,093		
Commitments and contingencies	 	 	 	 	
Convertible preferred units	 	 	 	 	
Series A convertible preferred units (5,279 thousand units issued and outstanding as of December 31, 2013)	 	94,811		 	—		
Equity and partners’ capital	 	 	 	 	
General partner interest (185 thousand units issued and outstanding as of December 31, 2013, and December 31, 2012)	 	2,696		 	548		
Limited partner interest (7,414 and 9,165 thousand units issued and outstanding as of December 31, 2013, and December 31, 2012, respectively)	 	71,039		 	79,266		
Accumulated other comprehensive income	 	104		 	351		
Total partners’ capital	 	73,839		 	80,165		
Noncontrolling interest	 	4,628		 	7,438		
Total equity and partners' capital	 	78,467		 	87,603		
Total liabilities, equity and partners' capital	 	$	382,075		 	$	256,696		

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American Midstream Partners, LP and Subsidiaries
Consolidated Statements of Operations
(Audited, in thousands, except for per unit amounts)

	
													
 	 	Year Ended December 31,	
 	 	2013	 	2012	 	2011	
Revenue	 	$	292,626		 	$	194,843		 	$	233,169		
Realized loss on early termination of commodity derivatives	 	—		 	—		 	(2,998	)	
Gain (loss) on commodity derivatives	 	28		 	3,400		 	(2,452	)	
Total revenue	 	292,654		 	198,243		 	227,719		
Operating expenses:	 	 	 	 	 	 	
Purchases of natural gas, NGLs and condensate	 	214,149		 	145,172		 	187,398		
Direct operating expenses	 	29,553		 	16,798		 	11,419		
Selling, general and administrative expenses	 	21,402		 	14,309		 	11,082		
Advisory services agreement termination fee	 	—		 	—		 	2,500		
Equity compensation expense	 	2,094		 	1,783		 	3,357		
Depreciation, amortization and accretion expense	 	29,999		 	21,284		 	20,449		
Total operating expense	 	297,197		 	199,346		 	236,205		
Gain on acquisition of assets	 	—		 	—		 	565		
Gain (loss) on involuntary conversion of property, plant and equipment	 	343		 	(1,021	)	 	—		
Gain on sale of assets, net	 	—		 	123		 	399		
Loss on impairment of property, plant and equipment	 	(18,155	)	 	—		 	—		
Operating loss	 	(22,355	)	 	(2,001	)	 	(7,522	)	
Other expense:	 	 	 	 	 	 	
Interest expense	 	(9,291	)	 	(4,570	)	 	(4,508	)	
Net loss before income tax benefit	 	(31,646	)	 	(6,571	)	 	(12,030	)	
Income tax benefit	 	495		 	—		 	—		
Net loss from continuing operations	 	(31,151	)	 	(6,571	)	 	(12,030	)	
Discontinued operations	 	 	 	 	 	 	
(Loss) income from operations of disposal groups, net of tax	 	(2,255	)	 	319		 	332		
Net loss	 	(33,406	)	 	(6,252	)	 	(11,698	)	
Net income attributable to noncontrolling interests	 	633		 	256		 	—		
Net loss attributable to the Partnership	 	$	(34,039	)	 	$	(6,508	)	 	$	(11,698	)	
 	 	 	 	 	 	 	
General partner's interest in net loss	 	$	(1,405	)	 	$	(129	)	 	$	(233	)	
Limited partners’ interest in net loss	 	$	(32,634	)	 	$	(6,379	)	 	$	(11,465	)	
 	 	 	 	 	 	 	
Limited partners' net loss per common unit:	 	 	 	
Basic and diluted:	 	 	 	 	 	 	
Loss from continuing operations	 	$	(6.76	)	 	$	(0.73	)	 	$	(1.68	)	
(Loss) income from operations of disposal groups	 	(0.24	)	 	0.03		 	0.04		
Net loss	 	$	(7.00	)	 	$	(0.70	)	 	$	(1.64	)	
Weighted average number of common units outstanding:	 	 	 	
Basic and diluted	 	7,981		 	9,113		 	6,997		

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American Midstream Partners, LP and Subsidiaries
Consolidated Statements of Cash Flows
(Audited, in thousands)

												
 	Year Ended December 31,	
 	2013	 	2012	 	2011	
Cash flows from operating activities	 	 	 	 	 	
Net loss	$	(33,406	)	 	$	(6,252	)	 	$	(11,698	)	
Adjustments to reconcile net loss to net cash provided by operating activities:	 	 	 	 	 	
Depreciation, amortization and accretion expense	29,999		 	21,414		 	20,705		
Amortization of deferred financing costs	1,334		 	716		 	1,262		
Amortization of weather derivative premium	662		 	—		 	—		
Unrealized loss (gain) on derivative contracts	1,505		 	(992	)	 	849		
Unit based compensation	2,094		 	1,783		 	1,607		
OPEB plan net periodic cost (benefit)	(73	)	 	(88	)	 	(82	)	
Gain on acquisition of assets	—		 	—		 	(565	)	
(Gain) loss on involuntary conversion of property, plant and equipment	(343	)	 	1,021		 	—		
Loss (gain) on sale of assets	75		 	(128	)	 	(399	)	
Loss on impairment of property, plant and equipment	18,155		 	—		 	—		
Loss on impairment of noncurrent assets held for sale	2,400		 	—		 	—		
Deferred tax benefit	(847	)	 	—		 	—		
Changes in operating assets and liabilities, net of effects of assets acquired and liabilities assumed:	 	 	 	 	 	
Accounts receivable	(790	)	 	(740	)	 	(562	)	
Unbilled revenue	(226	)	 	2,768		 	2,449		
Risk management assets and liabilities	(1,147	)	 	(156	)	 	(670	)	
Other current assets	(1,614	)	 	984		 	(1,800	)	
Other assets, net	(823	)	 	(57	)	 	(54	)	
Accounts payable	(845	)	 	1,197		 	(218	)	
Accrued gas purchases	462		 	(1,711	)	 	(3,991	)	
Accrued expenses and other current liabilities	769		 	(943	)	 	4,410		
Other liabilities	(118	)	 	(468	)	 	(811	)	
Net cash provided by operating activities	17,223		 	18,348		 	10,432		
Cash flows from investing activities	 	 	 	 	 	
Cost of acquisitions, net of cash acquired	—		 	(51,377	)	 	(35,500	)	
Additions to property, plant and equipment	(27,196	)	 	(11,705	)	 	(6,369	)	
Proceeds from disposal of property, plant and equipment	500		 	128		 	125		
Insurance proceeds from involuntary conversion of property, plant and equipment	482		 	527		 	—		
Restricted cash	(2,000	)	 	—		 	—		
Net cash used in investing activities	(28,214	)	 	(62,427	)	 	(41,744	)	
Cash flows from financing activities	 	 	 	 	 	
Proceeds from issuance of common units to public, net of offering costs	54,853		 	—		 	69,085		
Unit holder contributions	13,075		 	13		 	—		
Unit holder distributions	(16,120	)	 	(16,070	)	 	(43,546	)	
Issuance of Series A Convertible Preferred Units	14,393		 	—		 	—		
Unitholder distributions for Blackwater Acquisition	(27,650	)	 	—		 	—		
Acquisition of noncontrolling interest	(752	)	 	—		 	—		
Net distributions to noncontrolling interest owners	(661	)	 	(225	)	 	—		

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LTIP tax netting unit repurchase	(630	)	 	(385	)	 	(215	)	
Deferred debt issuance costs	(2,113	)	 	(1,564	)	 	(2,489	)	
Payments on other debt	(2,640	)	 	—		 	(615	)	
Borrowings on other debt	3,795		 	—		 	—		
Payments on loan to affiliate	(20,000	)	 	—		 	—		
Payments on bank loans	(34,730	)	 	—		 	—		
Borrowings on bank loans	27,546		 	—		 	—		
Payments on long-term debt	(131,571	)	 	(59,230	)	 	(120,670	)	
Borrowings on long-term debt	134,021		 	121,245		 	130,570		
Net cash provided by financing activities	10,816		 	43,784		 	32,120		
Net increase (decrease) in cash and cash equivalents	(175	)	 	(295	)	 	808		
Cash and cash equivalents	 	 	 	 	 	
Beginning of period	576		 	871		 	63		
End of period	$	401		 	$	576		 	$	871		
Supplemental cash flow information	 	 	 	 	 	
Interest payments, net	$	6,416		 	$	3,185		 	$	3,349		
Supplemental non-cash information	 	 	 	 	 	
(Decrease) increase in accrued property, plant and equipment	$	(5,181	)	 	$	6,968		 	$	75		
Receivable for reimbursable construction in progress projects	—		 	141		 	872		
Net assets contributed in the Blackwater Acquisition	22,121		 	—		 	—		
Net assets contributed in exchange for the issuance of Series A convertible preferred units	59,995		 	—		 	—		
Fair value of Series A Units in excess of net assets received	15,612		 	—		 	—		
Accrued and in-kind unitholder distribution for Series A Units	4,811		 	—		 	—		

9

American Midstream Partners, LP and Subsidiaries
Reconciliation of Net (loss) income attributable to the Partnership
to Adjusted EBITDA to Distributable Cash Flow
(Unaudited, in thousands)

	
													
   	 	For the Year Ended December 31,	
 	 	2013	 	2012	 	2011	
Reconciliation of Adjusted EBITDA to Net loss attributable to the Partnership	 	 	 	 	 	 	
Net loss attributable to the Partnership	 	$	(34,039	)	 	$	(6,508	)	 	$	(11,698	)	
Add:	 	 	 	 	 	 	
Depreciation, amortization and accretion expense	29,999		 	21,284		 	20,449		
Interest expense	7,850		 	4,570		 	4,508		
Debt issuance costs	2,113		 	1,564		 	—		
Realized loss on early termination of commodity derivatives	—		 	—		 	2,998		
Realized loss on commodity put purchase costs	—		 	—		 	308		
Unrealized (gain) loss on derivatives, net	1,495		 	(992	)	 	541		
Non-cash equity compensation expense	2,094		 	1,783		 	1,607		
Advisory services agreement termination fee	—		 	—		 	2,500		
Special distribution to holders of LTIP phantom units	—		 	—		 	1,624		
Transaction expenses	3,987		 	—		 	282		
Impairment on property, plant and equipment	18,155		 	—		 	—		
Loss on impairment of noncurrent assets held for sale	2,400		 	—		 	—		
Deduct:	 	 	 	 	 	 	
Income tax benefit	 	847		 	—		 	—		
COMA income	843		 	3,373		 	879		
Straight-line amortization of put costs (a)	119		 	291		 	409		
OPEB plan net periodic benefit (cost)	73		 	88		 	82		
Gain (loss) on acquisition of assets	—		 	—		 	565		
Gain (loss) on involuntary conversion of property, plant and equipment	343		 	(1,021	)	 	—		
Gain (loss) on sale of assets, net	(75	)	 	123		 	399		
Adjusted EBITDA	 	$	31,904		 	$	18,847		 	$	20,785		
Deduct:	 	 	 	 	 	 	
Cash interest expense (b)	 	$	7,295		 	$	3,854		 	$	3,246		
Normalized maintenance capital	 	4,685		 	3,828		 	3,083		
Normalized integrity management (c)	 	—		 	1,007		 	1,500		
Series A Convertible Preferred payment	 	3,696		 	—		 	—		
Distributable Cash Flow	 	$	16,228		 	$	10,158		 	$	12,956		

(a)	Amounts noted represent the straight-line amortization of the cost of commodity put contracts over the life of the contract.	
		
(b)	Excludes amortization of debt issuance costs and mark-to-market adjustments related to interest rate derivatives.	
		
(c)	Amounts noted represent average estimated integrity management costs over the seven-year mandatory testing cycle, net of integrity management costs that are expensed in direct operating expenses.  Following a recent re-evaluation of the integrity management program, management determined that integrity management expenses will continue to be expensed as incurred in direct operating expenses consistent with past practice.  However, beginning with the third quarter of 2013, integrity management expenses are no longer normalized in the calculation of distributable cash flow.	

10

American Midstream Partners, LP and Subsidiaries
Reconciliation of Gross Margin to Net (loss) income attributable to the Partnership
(Unaudited, in thousands)

	
												
 	For the Year ending December 31,	
 	2013	 	2012	 	2011	
Reconciliation of Gross Margin to Net loss attributable to the Partnership	 	 	 	 	 	
Gathering and processing segment gross margin	$	36,464		 	$	35,393		 	$	30,123		
Transmission segment gross margin	32,408		 	13,313		 	13,737		
Terminals segment gross margin (a)	7,751		 	—		 	—		
Total gross margin	76,623		 	48,706		 	43,860		
Plus:	 	 	 	 	 	
Gain (loss) on commodity derivatives	28		 	3,400		 	(5,450	)	
Less:	 	 	 	 	 	
Direct operating expenses (b)	27,473		 	16,798		 	11,419		
Selling, general and administrative expenses	21,402		 	14,309		 	11,082		
Advisory services agreement termination fee	—		 	—		 	2,500		
Transaction expenses	—		 	—		 	—		
Equity compensation expense	2,094		 	1,783		 	3,357		
Depreciation, amortization and accretion expense	29,999		 	21,284		 	20,449		
Gain on acquisition of assets	—		 	—		 	(565	)	
(Gain) loss on involuntary conversion of property, plant and equipment	(343	)	 	1,021		 	—		
Gain on sale of assets	—		 	(123	)	 	(399	)	
Loss on impairment of property, plant and equipment	18,155		 	—		 	—		
Interest expense	9,291		 	4,570		 	4,508		
Other, net (c)	226		 	(965	)	 	(1,911	)	
Income tax benefit	(495	)	 	—		 	—		
Income (loss) from operations of disposal groups, net of tax	2,255		 	(319	)	 	(332	)	
Net income attributable to noncontrolling interest	633		 	256		 	—		
Net loss attributable to the Partnership	$	(34,039	)	 	$	(6,508	)	 	$	(11,698	)	

(a)	Terminals segment amounts are for the period from April 15, 2013 to December 31, 2013.	
		
(b)	Direct operating expenses includes Gathering and Processing segment direct operating expenses of $14.2 million and Transmission segment direct operating expenses of $13.3 million for the year ended December 31, 2013 . Direct operating expenses related to our Terminals segment of $2.1 million are included within the calculation of Terminals segment gross margin.	
		
(c)	Other, net includes realized gain (loss) on commodity derivatives of $1.1 million , $2.4 million and $(1.9) million and COMA income of $0.8 million , $3.4 million and zero for the years ended December 31, 2013, 2012 and 2011 , respectively.	

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American Midstream Partners, LP and Subsidiaries
Segment Operating Data
(Audited, in thousands, except for operating and pricing data)

													
 	 	For the Year Ended
December 31,	
 	 	2013	 	2012	 	2011	
Segment Financial and Operating Data:	 	 	 	 	 	 	
Gathering and Processing segment	 	 	 	 	 	 	
Financial data:	 	 	 	 	 	 	
Revenue	 	$	192,446		 	$	145,714		 	$	160,953		
Realized gain (loss) on early termination of commodity derivatives	 	—		 	—		 	(2,998	)	
Gain (loss) on commodity derivatives, net	 	28		 	3,400		 	(2,452	)	
Total revenue	 	192,474		 	149,114		 	155,503		
Purchases of natural gas, NGLs and condensate	 	156,334		 	108,656		 	134,369		
Direct operating expenses	 	14,214		 	11,767		 	6,199		
Other financial data:	 	 	 	 	 	 	
Segment gross margin	 	$	36,464		 	$	35,393		 	$	30,123		
Operating data:	 	 	 	 	 	 	
Average throughput (MMcf/d)	 	277.2		 	291.2		 	250.9		
Average plant inlet volume (MMcf/d) (a)	 	117.3		 	116.1		 	36.7		
Average gross NGL production (Mgal/d) (a)	 	52.0		 	49.9		 	54.5		
Average gross condensate production (Mgal/d) (a)	 	46.2		 	22.6		 	6.8		
Average realized prices:	 	 	 	 	 	 	
Natural gas ($/MMcf)	 	$	4.03		 	$	2.98		 	$	4.09		
NGLs ($/gal)	 	$	0.90		 	$	1.08		 	$	1.32		
Condensate ($/gal)	 	$	2.29		 	$	2.30		 	$	2.41		
Transmission segment	 	 	 	 	 	 	
Financial data:	 	 	 	 	 	 	
Total revenue	 	$	90,377		 	$	52,529		 	$	66,766		
Purchases of natural gas, NGLs and condensate	 	57,815		 	36,516		 	53,029		
Direct operating expenses	 	13,259		 	5,031		 	5,220		
Other financial data:	 	 	 	 	 	 	
Segment gross margin	 	$	32,408		 	$	13,313		 	$	13,737		
Operating data:	 	 	 	 	 	 	
Average throughput (MMcf/d)	 	644.7		 	398.5		 	381.1		
Average firm transportation - capacity reservation (MMcf/d)	 	640.7		 	703.6		 	702.2		
Average interruptible transportation - throughput (MMcf/d)	 	389.2		 	86.6		 	69.0		
Terminals segment (b)	 	 	 	 	 	 	
Financial data:	 	 	 	 	 	 	
Total revenue	 	$	9,831		 	$	—		 	$	—		
Direct operating expenses	 	2,080		 	—		 	—		
Other financial data:	 	 	 	 	 	 	
Segment gross margin	 	$	7,751		 	$	—		 	$	—		
Operating data:	 	 	 	 	 	 	
Storage utilization	 	96	%	 	—		 	—		
(a)     Excludes volumes and gross production under our elective processing arrangements.
(b)     Terminals segment amounts are for the period from April 15, 2013 to December 31, 2013.

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Appendix A

Note About Non-GAAP Financial Measures
Gross margin, adjusted EBITDA and distributable cash flows are all non-GAAP financial measures. Each has important limitations as an analytical tool because it excludes some, but not all, items that affect the most directly comparable GAAP financial measures. Management compensates for the limitations of these non-GAAP measures as analytical tools by reviewing the comparable GAAP measures, understanding the differences between the measures and incorporating these data points into management’s decision-making process.
You should not consider any of gross margin, adjusted EBITDA or distributable cash flow in isolation or as a substitute for analysis of our results as reported under GAAP. Gross margin, adjusted EBITDA and distributable cash flow may be defined differently by other companies in our industry. Our definitions of these non-GAAP financial measures may not be comparable to similarly titled measures of other companies, thereby diminishing their utility.
We define adjusted EBITDA as net income, plus interest expense, income tax expense, depreciation expense, certain non-cash charges such as non-cash equity compensation, unrealized losses on commodity derivative contracts and selected charges that are unusual or nonrecurring, less interest income, income tax benefit, unrealized gains on commodity derivative contracts, amortization of commodity put purchase costs, and selected gains that are unusual or nonrecurring. The GAAP measure most directly comparable to adjusted EBITDA is net income.

Distributable cash flow is a significant performance metric used by us and by external users of our financial statements, such as investors, commercial banks and research analysts, to compare basic cash flows generated by us to the cash distributions we expect to pay our unitholders. Using this metric, management and external users of our financial statements can quickly compute the coverage ratio of estimated cash flows to planned cash distributions. Distributable cash flow is also an important financial measure for our unitholders since it serves as an indicator of our success in providing a cash return on investment. Specifically, this financial measure may indicate to investors whether we are generating cash flow at a level that can sustain or support an increase in our quarterly distribution rates. Distributable cash flow is also a quantitative standard used throughout the investment community with respect to publicly traded partnerships and limited liability companies because the value of a unit of such an entity is generally determined by the unit's yield (which in turn is based on the amount of cash distributions the entity pays to a unitholder). Distributable cash flow will not reflect changes in working capital balances.
We define distributable cash flow as adjusted EBITDA plus interest income, less cash paid for interest expense, normalized maintenance capital expenditures, and dividends related to the Series A convertible preferred units. The GAAP measure most comparable to distributable cash flow is net income.
Gross margin and segment gross margin are metrics that we use to evaluate our performance. We define segment gross margin in our Gathering and Processing segment as revenue generated from gathering and processing operations, realized gain (loss) on commodity derivatives less COMA less the cost of natural gas, NGLs and condensate purchased. Revenue includes revenue generated from fixed fees associated with the gathering and treating of natural gas and from the sale of natural gas, NGLs and condensate resulting from gathering and processing activities under fixed-margin and percent-of-proceeds arrangements. The cost of natural gas, NGLs and condensate includes volumes of natural gas, NGLs and condensate remitted back to producers pursuant to percent-of-proceeds arrangements and the cost of natural gas purchased for our own account, including pursuant to fixed-margin arrangements.
We define segment gross margin in our Transmission segment as revenue generated from firm and interruptible transportation agreements and fixed-margin arrangements, plus other related fees, less COMA, less the cost of natural gas purchased in connection with fixed-margin arrangements.
We define segment gross margin in our Terminals segment as revenue, less direct operating expenses.
We define gross margin as the sum of our segment gross margin for our Gathering and Processing, Transmission and Terminals segments. The GAAP measure most comparable to gross margin is net income.

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