Southcross Energy Partners, L.P. (NYSE:SXE) today announced third quarter 2016 financial and operating results.

Southcross’ net loss was $32.6 million for the quarter ended September 30, 2016, compared to $9.7 million for the same period in the prior year and $7.4 million for the quarter ended June 30, 2016. Net loss for the third quarter was higher than the prior quarter loss due primarily to higher depreciation and amortization expense and lower gain on sale of assets.

Adjusted EBITDA (as defined below) was $14.8 million for the quarter ended September 30, 2016, compared to $23.6 million for the same period in the prior year and $15.6 million for the quarter ended June 30, 2016. Adjusted EBITDA for the third quarter was below the prior quarter due to lower processed gas volumes, partially offset by lower expenses.

Processed gas volumes during the quarter averaged 299 MMcf/d, a decrease of 32% compared to 441 MMcf/d for the same period in the prior year and a decrease of 6% compared to 319 MMcf/d for the quarter ended June 30, 2016. The sequential quarter volumetric decline primarily represents a producer that reduced volumes below the minimum volume commitment level. Any deficiency payments associated with this volumetric shortfall will be determined at the end of the year.

Southcross implemented several key initiatives during the quarter that are expected to reduce operating expenses and lower future capital expenditure requirements. These initiatives include the planned shut-down and sale of two of its older and less efficient processing facilities and the reconfiguration of assets at the Lone Star processing facility to reduce electricity costs. In 2017, Southcross expects to realize $2 million in annual cost savings and $6 million in reduced annual capital expenditure requirements. Southcross also expects to receive $12 million in proceeds in 2017 related to these activities, which includes insurance recoveries and the sale of emissions credits. These represent the initial steps of a comprehensive cost savings program that has been approved by Southcross’ Board of Directors and will be realized throughout 2017.

Capital Expenditures

For the quarter ended September 30, 2016, growth capital expenditures were $3.9 million and were related primarily to work to enhance system efficiency and capability. Growth capital expenditures for the nine months ended September 30, 2016 were $13.3 million. Southcross expects that growth capital expenditures for full year 2016 will be less than $30 million.

Capital and Liquidity

As of September 30, 2016, Southcross had total outstanding debt of $561 million including $123 million under its revolving credit facility as compared to total outstanding debt of $570 million as of June 30, 2016. The reduction in debt on a sequential quarter basis is due to the use of free cash flow from the business to pay down the revolver as well as the mandatory term loan amortization payment.

As of September 30, 2016, we were not in compliance with the consolidated total leverage ratio of our Financial Covenants absent an equity cure of $17.0 million. We believe that we will have the ability to fund this equity cure through the Equity Cure Contribution Agreement. Management is pursuing multiple alternatives to enhance the Partnership’s liquidity, including negotiation of amendments to certain covenants and terms contained in our Revolving Credit Agreement, which may include modifications to our existing Financial Covenants.

Distributable Cash Flow

Distributable cash flow (as defined below) for the quarter ended September 30, 2016 was $5.8 million, compared to $12.7 million for the same period in the prior year and $6.7 million for the quarter ended June 30, 2016.

Conference Call Information

Southcross will hold a conference call on Tuesday, November 8, 2016, at 10:00 a.m. Central Time (11:00 a.m. Eastern Time) to discuss its third quarter 2016 financial and operating results. The call can be accessed live over the telephone by dialing (877) 705-6003 or, for international callers, (201) 493-6725. The replay of the call will be available shortly after the call and can be accessed by dialing (877) 870-5176 or, for international callers, (858) 384-5517. The passcode for the replay is 13645847. The replay of the call will be available for approximately two weeks following the call.

Interested parties may also listen to a simultaneous webcast of the call on Southcross’ website at www.southcrossenergy.com under the “Investors” section. A replay of the webcast will also be available for approximately two weeks following the call.

About Southcross Energy Partners, L.P.

Southcross Energy Partners, L.P. is a master limited partnership that provides natural gas gathering, processing, treating, compression and transportation services and NGL fractionation and transportation services. It also sources, purchases, transports and sells natural gas and NGLs. Its assets are located in South Texas, Mississippi and Alabama and include four gas processing plants, two fractionation plants and approximately 3,100 miles of pipeline. The South Texas assets are located in or near the Eagle Ford Shale region. Southcross is headquartered in Dallas, Texas. Visit www.southcrossenergy.com for more information.

About Southcross Holdings LP

Southcross Holdings LP, through its subsidiary Southcross Holdings Borrower LP, owns 100% of Southcross Energy Partners GP, LLC, the general partner of Southcross, as well as a portion of Southcross’ common units, and all of Southcross’ subordinated units and Class B convertible units. Holdings also owns natural gas gathering and treating assets as well as NGL pipelines and fractionation facilities in South Texas.