ENID, Okla., Jan. 26 /PRNewswire-FirstCall/ -- The Hiland companies, Hiland Partners, LP (Nasdaq: HLND) (the "Partnership" or "HLND") and Hiland Holdings GP, LP (Nasdaq: HPGP) ("Hiland Holdings" or "HPGP") today updated fiscal year 2009 guidance and announced quarterly distribution declarations.

Updated Fiscal Year 2009 Guidance

The Partnership announced today updated fiscal year 2009 guidance. For 2009, the Partnership is now estimating EBITDA in a range of $38 million to $50 million based on $45.00 to $55.00 per barrel NYMEX crude oil pricing, $5.00 to $6.00 per MMBtu NYMEX natural gas pricing, current estimated forward quotes for natural gas pipeline basis differentials and trailing 12-month average natural gas liquids ("NGLs") pricing correlations to crude oil, with all pricing subject to the Partnership's current commodity hedging portfolio. This range also contemplates reduced drilling activity in the Partnership's service territories. In addition, growth capital expenditures for 2009 are estimated at $15 million to $20 million. Maintenance capital expenditures for 2009 are estimated at $7.0 million to $8.0 million.

"Despite the fact that the Partnership will report record inlet natural gas and NGL sales volumes in the fourth quarter of 2008, the significant drop in commodity prices in the futures markets and the Partnership's corresponding expected cash flow has created a number of challenges," said Joseph L. Griffin, President and Chief Executive Officer of Hiland. "Additionally, the current commodity price environment is negatively impacting upstream capital expenditures and related drilling activity in our service territories beyond our original expectations."

Quarterly Distribution Declarations

Hiland Partners, LP

The Board of Directors of Hiland Partners GP, LLC, the general partner of Hiland Partners, LP, today announced a cash distribution for the fourth quarter of 2008. The declared quarterly distribution on the Partnership's common and subordinated units is $0.45 per unit (an annualized rate of $1.80 per unit, the Partnership's minimum quarterly distribution). This represents a $0.43 decrease over the prior quarter. The distribution will be payable on February 13, 2009 to Unitholders of record on February 5, 2009.

In making its distribution decision, the Partnership's Board of Directors considered the impact of lower commodity prices on cash flow for the fourth quarter of 2008 and on the outlook for future projected cash flow. The Board of Directors also considered future required levels of capital expenditures and the level of the Partnership's outstanding indebtedness under its secured revolving credit facility relative to such projections. If commodity prices do not significantly improve above the expected prices for 2009, the Partnership may be in violation of the maximum consolidated funded debt to EBITDA ratio contained in the Partnership's senior secured revolving credit facility as early as the end of the second quarter of 2009, unless the ratio is amended, the Partnership's debt is restructured or the Partnership receives an infusion of equity capital.

"The Partnership will continue to carefully scrutinize distribution and discretionary capital expenditure decisions given the potential covenant issues related to the Partnership's secured revolving credit facility," continued Griffin.

Hiland Holdings GP, LP

The Board of Directors of Hiland Partners GP Holdings, LLC, the general partner of Hiland Holdings GP, LP, today announced a cash distribution for the fourth quarter of 2008. The declared quarterly distributions on Hiland Holding's units is $0.10 per unit (an annualized rate of $0.40 per unit). This represents a $0.2175 decrease over the prior quarter. The distribution will be payable on February 18, 2009 to Unitholders of record on February 5, 2009.

This release is intended to be a qualified notice under Treasury Regulation Section 1.1446-4(b). Please note that one hundred (100.0%) percent of Hiland's distributions to foreign investors are attributable to income that is effectively connected with a United States trade or business. Accordingly, Hiland's distributions to foreign investors are subject to federal income tax withholding at the highest applicable effective tax rate.

We define EBITDA, a non-GAAP financial measure, as net income plus interest expense, provisions for income taxes and depreciation, amortization and accretion expense. EBITDA is used as a supplemental financial measure by our management and by external users of our financial statements such as investors, commercial banks, research analysts and others to assess: (1) the financial performance of our assets without regard to financial methods, capital structure or historical cost basis; (2) the ability of our assets to generate cash sufficient to pay interest costs and support our indebtedness; (3) our operating performance and return on capital as compared to those of other companies in the midstream energy sector, without regard to financing or structure; and (4) the viability of acquisitions and capital expenditure projects and the overall rates of return on alternative investment opportunities. EBITDA is also a financial measurement that, with certain negotiated adjustments, is reported to our banks and is used as a gauge for compliance with our financial covenants under our credit facility. EBITDA should not be considered as an alternative to net income, operating income, cash flows from operating activities or any other measures of financial performance presented in accordance with GAAP. Our EBITDA may not be comparable to EBITDA of similarly titled measures of other entities, as other entities may not calculate EBITDA in the same manner as we do.

About the Hiland Companies

Hiland Partners, LP is a publicly traded midstream energy partnership engaged in purchasing, gathering, compressing, dehydrating, treating, processing and marketing of natural gas, and fractionating, or separating, and marketing of natural gas liquids, or NGLs. The Partnership also provides air compression and water injection services for use in oil and gas secondary recovery operations. The Partnership's operations are primarily located in the Mid-Continent and Rocky Mountain regions of the United States. Hiland Partners, LP's midstream assets consist of fourteen natural gas gathering systems with approximately 2,087 miles of gathering pipelines, five natural gas processing plants, seven natural gas treating facilities and three NGL fractionation facilities. The Partnership's compression assets consist of two air compression facilities and a water injection plant.

Hiland Holdings GP, LP owns the two percent general partner interest, 2,321,471 common units and 3,060,000 subordinated units in Hiland Partners, LP, and the incentive distribution rights of Hiland Partners, LP.

This press release may include certain statements concerning expectations for the future that are forward-looking statements. Such forward-looking statements are subject to a variety of known and unknown risks, uncertainties, and other factors that are difficult to predict and many of which are beyond management's control. An extensive list of factors that can affect future results are discussed in the Partnership's Annual Report on Form 10-K, the Partnership's Form 10-Q for the period ended September 30, 2008 and other documents filed from time to time with the Securities and Exchange Commission. The Partnership undertakes no obligation to update or revise any forward-looking statements to reflect new information or events.

SOURCE Hiland Partners, LP; Hiland Holdings GP, LP