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# Breitburn Energy Partners LP Message Board

• upn42 upn42 Nov 25, 2011 8:04 PM Flag

## 2012 gross sales \$520,413,014

Assume \$80 for unhedged daily oil production of 1906 barrels(\$152,480 per day) + 272 Bls NGL at 45\$ per bl (12,240 per day) +\$759,116 hedged oil gives you \$923,836 per day for oil.Assume 4.00 gas with 31,457,000 cf un hedged gives you \$125,828 per day for un hedged .The hedged gas gives you 386,309 per day for a grand total of 1,435,973 per day x 365 = 520,413,014 ( ok add 1,435,973 leap year for a total of 521,848,987) Part 2 xp's to follow

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• moneyonomic..., thanks for pointing out this thread as a good example of the complexity involved.

It sounds like the accounting education needed to sift through all the numbers is a way beyond most mb readers.

Thanks for your guidance on these points. It is very much appreciated.

• no problem, glad I could provide useful information. budgets in E&Ps are very complex and in good companies done ground up by calcualting at the field or lease level the expected volume decline, mulitipling new production by new prices, taking next years capital and adding new production curve by new prices, then deducting operating costs per unit for the old production and new production curves, then adding in expected overhead, lease rentals, etc, etc ,etc then taking the new asset base and decline curves and caluclating dda, arriving at net numbers then extrpolating these numbers out for years two thru 10 each year declining volumes and curving in new capital and volumes, etc, etc

In my early career I managed budgeting for a \$1 b a year revenue area, then later managed long term budgeting/strategic planning for a \$7 billion year revenue division before moving into acquisitions and divestitures (M&A) in the final few years of my career

• Hi Money-I agree it is more complex than my model is set up to handle.I guess what got me off track is the fact that to calculate DCF all that I had to do was subtract interest and mait cap ex from ADJ Ebitda.I seem to remember that the target for BBEP ADJ. Editda was around 210mm and the interest about 36mm and with "mait cap ex at ahout 45mm for the year the DCF was in the neighborhood of 129MM and dist pd about 102mm gives you about 1.26 for a coverage ratio.The 11-30-11 Jeffries presentation estimated 1.25 coverage for 2011.As Chegar indicated the preliminary est for 2012 is 1.2 and my calculations came in at 1.12x .Thanks for the reply.Sorry I can't be of more help to you because you have enriched my understanding of MLP's.

• upn also when adding in new production from growth capital cannot add in 100% must add in only a proportion becasue new production comes on line at different times so at best may want to use some average new production not total

• upn

what you need to do is to reduce the 2011 numbers for 2012 "average" annual decline rate of around 5% to 6% (say 2.5% to 3% average): then add in new production/revenue from new production from growth/maint capital (note: not all maint capital will arrest total deline as some maint capital is for surface facilities, some is for leashold payments and not all maint capital arrests all decline rate)

• Hi Money Glad your're to help.My thoughts base on Q3 CC are that they plan on spending 80mm cap ex in 2011.(believe the mait cap ex for 2011 about 45mm).Are you saying the 90 mm I allowed for Cap ex in 2012 needs to be increased for mait Cap ex.If so I hope they have about 50 mm more in Revenue that I missed .TIA

• upn they can grow 2011 numbers below into 2012 but remember maint and some growth capital is just to replace decline rate. without using decline rate in your projections you will always be too high. (I excl. commodity and derivative numbers from 2011)

\$000 for 2011 annualized

432,468------O&G Sales

4,555------Other revenue

437,023------Total Rev

-176,309-----Operating costs

-53,745------G&A

206,968------EBITDA

-43,267------Interest expense

-116,868-----DDA

46,833------Oper Income

3.37-------EBITDA per unit

0.76------Oper inc per unit

• Thanks Money-Thats an excellent explanation. Much better than I was able to find in the WF primer.My calculations for Q4 & 2012 are then correct(theoretically) as I have estimated an additional 10mm in 2012 cap ex to account for the increase in production from 18,300 Boe to 23,300 Boe.The extrapolation is asymmetrical due to the fact that the production % of gas is going to be 60% and 40% Ngl & oil.I will print your answer for my own educational benefit. Thanks again

• upn maintenance capital is generally part of total capital program, but is applied pro forma in calculating dcf. the most conservative of the E&P mlps which is vnr also proforma adjusts dcf by growth capital in addition to an adjustment for maintenance capital even though both are capitalized as an asset and depreciated/depleted over life of reserves for fiaancial purposes. For tax purposes the intangible part of both maintenance and growth capital is partially expensed in the year of expenditure which is one of the items that creates a temporary deferred tax item on the balance sheet. probably tmi

• i talked to IR and was told they prefer to let others calculate actual results

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