Constellation Energy Partners Reports Fourth Quarter and Full Year 2012 Results; Alabama Asset Sale Results in Lower Debt
CEP’s Adjusted EBITDA improves by 18% in the fourth quarter 2012CEP’s Mid-Continent drilling efforts result in net oil production of 396 barrels per day in the fourth quarter 2012, an increase of 45% over the prior quarterCEP reports a 14% increase
Constellation Energy Partners LLC (NYSE MKT: CEP) today reported fourth quarter and full year 2012 results.
The company produced 3,119 MMcfe during the fourth quarter, for average daily net production of 33.9 MMcfe for the quarter and 34.5 MMcfe for the full year 2012. Net oil production for the fourth quarter was 396 barrels per day, which represents an increase of approximately 45% compared to the third quarter of 2012. For the full year 2012, net oil production averaged 329 barrels per day, an increase of approximately 14% compared to the full year 2011. During 2012, approximately 94% of the company’s production was natural gas and 6% of the company’s production was oil.
Revenue totaled $17.3 million for the fourth quarter 2012 and $59.3 million for the full year 2012. Included in total revenue for the full year 2012 is revenue from sales of $40.5 million, of which approximately 71% was from natural gas sales and 29% was from oil sales. During 2011, approximately 82% of the company’s sales revenue was from natural gas sales and 18% was from oil sales. The balance of the company’s full year 2012 total revenue came from hedge settlements ($24.4 million), services provided to third parties ($3.2 million), and losses on mark-to-market activities ($8.7 million), which is a non-cash item.
Operating costs, which include lease operating expenses, production taxes and general and administrative expenses, net of certain non-cash items, averaged $3.38 per Mcfe for the fourth quarter and $3.37 per Mcfe for the full year 2012, which is unchanged compared to full year 2011 operating costs.
I listened. Not a whole lot new. SG&A is still outrageously high. They are still looking for acquisitions, even though they just divested 1/3 of their production. Same pathetic reporting of lumping workovers, recompletions and new drilling into one bucket.
Oil production is up to nearly 396 bbl/d average, though one must account for the 5000 bbl/d that was in storage at the end of last Q (why last Q's oil bpd was so low).
The commentary on PostRock revealed clearly the relationship is not working well.
No doubt that these guys would gain some synergy with a merger with PSTR, but PSTR is in far worse shape and that would kill CEP's upside.
I think these guys have finally hit rock bottom. They have the debt down to a manageable level. I think they might benefit, as Abella was intimating, that a distribution might build some support.
These guys have their debt down to a point where a $.20/unit distribution (a cash draw of less than $5 million annually), might provide them with a currency to make acquisitions of oily PDP properties.
"I think these guys have finally hit rock bottom. "
I have the same feeling (although not expecting anything dramatic going forward). Therefore I am thinking about harvesting tax losses at this point and re-establishing my position with a new lower basis. That will let me defer more taxes from the rest of my portfolio.
Here's a link to a computer generated transcript (lots of errors but you get the gist). I didn't hear anything surprising either good or bad (Q&A was more interesting). They have the liquidity to growth organically now but are also actively looking to purchase assets to grow more quickly to right size the organization. They are optimistic about having a better bank consortium in tune with their goals and expect to announce a new deal early next quarter. They talked a little about Postrock in the Q&A but it was a little difficult to understand (especially in the transcript), but there are evidently more regulatory hurdles to do anything with Postrock because they already own a large chunk (i.e. it would be easier to work with an unassociated third party regulatory wise). Currently, $12.1M cash, $3M available credit, and expect to spend $19-21M in development this year versus $15.8 in 2012. Expect average daily oil production for the year expected to go to 548 barrels / day from average 329 in 2012.