EV Energy Partners Announces Third Quarter 2013 Results

PR Newswire

HOUSTON, Nov. 12, 2013 /PRNewswire/ -- EV Energy Partners, L.P., (EVEP) today announced results for the third quarter 2013 and filed its Form 10-Q with the Securities and Exchange Commission. 

Adjusted EBITDAX for the quarter was $53.9 million, a 2 percent increase over the second quarter of 2013 and a 20 percent decrease from the third quarter of 2012.  Distributable Cash Flow for the quarter was $25.9 million, a 1 percent decrease from the second quarter of 2013 and a 27 percent decrease from the third quarter of 2012.  The decreases in Adjusted EBITDAX and Distributable Cash Flow as compared to the third quarter of 2012, which are described in the attached table under "Non-GAAP Measures," are primarily attributable to the decreases in realized gains in commodity derivatives, partially offset by an increase in the sales price per unit of natural gas and crude oil.

Production for the third quarter of 2013 was 10.6 Bcf of natural gas, 279 MBbls of crude oil and 538 MBbls of natural gas liquids, or 168.0 Mmcfe/day.  This represents a 3 percent decrease from the second quarter 2013 production of 172.3 Mmcfe/day and a 3 percent increase over third quarter 2012 production of 163.1 Mmcfe/day.

For the third quarter of 2013, EVEP reported a net loss of $12.3 million, or $(0.29) per basic and diluted weighted average limited partner unit outstanding.  Included in net loss were:

  • $16.5 million of unrealized losses on commodity and interest rate derivatives,
  • $0.5 million of non-cash realized losses related to terminated interest rate swaps,
  • $1.2 million of dry hole and exploration costs,
  • $4.3 million of non-cash costs contained in general and administrative expenses, and
  • $0.1 million of non-cash leasehold impairment charges.

For the second quarter of 2013, EVEP reported net income of $32.9 million, or $0.74 per basic and diluted weighted average limited partner unit outstanding.  For the third quarter of 2012, EVEP reported a net loss of $50.0 million, or $(1.15) per basic and diluted weighted average limited partner unit outstanding, respectively.

In October, the borrowing base under the credit facility was increased to $730.0 million.

Mark Houser, President and CEO, said, "During the third quarter, the first 200,000 mcf per day of processing capacity and 45,000 barrels per day of fractionation capacity came on line as planned at the UEO facilities, with processing throughput currently at or near capacity.  We have closed our first Utica acreage sale and redeployed those proceeds in our recent Barnett Shale acquisition.  We have also significantly enhanced our liquidity and flexibility through our recent common unit offering."

Quarterly Report on Form 10-Q

EVEP's financial statements and related footnotes are available on our third quarter 2013 Form 10-Q, which was filed today and is available through the Investor Relations/SEC Filings section of the EVEP website at http://www.evenergypartners.com.

Conference Call

As announced on November 5, 2013, EV Energy Partners, L.P. will host an investor conference call Tuesday, November 12, 2013 at 11 a.m. ET.  Investors interested in participating in the call may dial (888) 549-7880 (quote conference ID 4649444) at least five minutes prior to the start time, or may listen live over the Internet through the Investor Relations section of the EVEP website at http://www.evenergypartners.com.

EV Energy Partners, L.P. is a master limited partnership engaged in acquiring, producing and developing oil and gas properties. More information about EVEP is available at http://www.evenergypartners.com.

(code #: EVEP/G)

(Logo: http://photos.prnewswire.com/prnh/20130415/DA94198LOGO)

This press release may include statements that are not historical facts which are "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements include information about the sale of our Utica Shale assets, our midstream investments, future plans and other statements which include words such as "anticipates," "plans," "projects," "expects," "intends," "believes," "should," and similar expressions of forward-looking information. Forward-looking statements are inherently uncertain and necessarily involve risks that may affect the business prospects and performance of EV Energy Partners, L.P. Actual results may differ materially from those contained in the press release. Such risks and uncertainties include, but are not limited to, changes in commodity prices, changes in reserve estimates, requirements and actions of purchasers of properties (including the Utica Shale), changes in the metrics and procedures used to value midstream assets, exploration and development activities in the Utica Shale and elsewhere, the availability and cost of financing, the returns on our capital investments and acquisition strategies, the availability of sufficient cash flow to pay distributions and execute our business plan and general economic conditions. Additional information on risks and uncertainties that could affect our business prospects and performance are provided in the most recent reports of EV Energy Partners with the Securities and Exchange Commission. All forward-looking statements included in this press release are expressly qualified in their entirety by the foregoing cautionary statements.

Any forward-looking statement speaks only as of the date on which such statement is made and EVEP undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.

 

Operating Statistics




Three Months Ended

September 30,


Nine Months Ended

September 30,



2013


2012


2013


2012

Production data:









Oil (MBbls)


279


266


787


832

Natural gas liquids (MBbls)


538


440


1,567


1,266

Natural gas (MMcf)


10,555


10,772


31,879


31,757

Net production (MMcfe)


15,453


15,008


46,000


44,349

Average sales price per unit: (1)









Oil (Bbl)


$ 102.15


$ 89.83


$ 96.26


$ 93.64

Natural gas liquids (Bbl)


30.72


32.07


29.98


37.63

Natural gas (Mcf)


3.35


2.76


3.47


2.57

Mcfe


5.20


4.51


5.07


4.68

Average unit cost per Mcfe:









Production costs:









Lease operating expenses (2)


$ 1.69


$ 1.65


$ 1.71


$ 1.76

Production taxes


0.19


0.17


0.19


0.19

Total


1.88


1.82


1.90


1.95

Asset retirement obligations accretion expense


0.08


0.09


0.08


0.08

Depreciation, depletion and amortization


1.81


1.88


1.88


1.83

General and administrative expenses


0.58


0.69


0.67


0.73


(1) Prior to $6.2 million and $32.3 million of net hedge gains and settlements on commodity derivatives for the three months ended September 30, 2013 and September 30, 2012, respectively, and $24.4 million and $94.5 million for the nine months ended September 30, 2013 and September 30, 2012, respectively.

(2) Lease operating expenses for the nine months ended September 30, 2012 contains $1.7 million ($0.04 per Mcfe) of non-cash charges related to oil in tanks purchased in connection with 2011 acquisitions.

 

Condensed Consolidated Balance Sheets

(In $ thousands, except number of units)

(Unaudited)



September 30, 2013


December 31, 2012

ASSETS





Current assets:





Cash and cash equivalents


$ 10,638


$ 7,486

Accounts receivable:





Oil, natural gas and natural gas liquids revenues


38,278


34,909

Related party


7,562


1,422

Other


214


11,263

Derivative asset


22,807


40,771

Other current assets


7,185


1,750

Total current assets


86,684


97,601






Oil and natural gas properties, net of accumulated 





depreciation, depletion and amortization; September 30,





 2013, $475,543; December 31, 2012, $389,206


1,853,014


1,875,890

Other property, net of accumulated depreciation 





and amortization; September 30, 2013, $714; 





December 31, 2012, $598


1,266


1,325

Long–term derivative asset


37,680


45,839

Investments in unconsolidated affiliates


206,581


34,545

Other assets


8,465


10,214

Total assets


$ 2,193,690


$ 2,065,414











LIABILITIES AND OWNERS' EQUITY










Current liabilities:





Accounts payable and accrued liabilities


$ 60,745


$ 40,171

Derivative liability


39


-

Total current liabilities


60,784


40,171






Asset retirement obligations


99,307


102,707

Long–term debt


1,084,276


859,218

Other long–term liabilities


1,589


3,494






Commitments and contingencies










Owners' equity:





Common unitholders - 42,599,080 units and 





42,320,707 units issued and outstanding as of 





September 30, 2013 and December 31, 2012, 





respectively


962,017


1,072,175

General partner interest


(14,283)


(12,351)

Total owners' equity


947,734


1,059,824

Total liabilities and owners' equity


$ 2,193,690


$ 2,065,414

 

Condensed Consolidated Statements of Operations

(In $ thousands, except per unit data)

(Unaudited)


Three Months Ended

September 30,


Nine Months Ended

September 30,




2013


2012


2013


2012

Revenues:








Oil, natural gas and natural gas liquids revenues

$ 80,324


$ 67,747


$ 233,325


$ 207,341

Transportation and marketing–related revenues

1,090


954


3,393


2,643

Total revenues

81,414


68,701


236,718


209,984









Operating costs and expenses: 








Lease operating expenses

26,185


24,821


78,496


78,271

Cost of purchased natural gas

792


662


2,486


1,808

Dry hole and exploration costs

1,150


1,809


2,469


5,664

Production taxes

2,911


2,587


8,751


8,394

Asset retirement obligations accretion expense 

1,185


1,335


3,744


3,763

Depreciation, depletion and amortization

27,936


28,141


86,439


81,127

General and administrative expenses

8,928


10,296


30,671


32,562

Impairment of oil and natural gas properties

143


853


8,141


17,752

Total operating costs and expenses

69,230


70,504


221,197


229,341









Operating income (loss) 

12,184


(1,803)


15,521


(19,357)









Other (expense) income, net:








Realized gains on derivatives, net

4,878


29,835


20,098


88,628

Unrealized (losses) on derivatives, net

(16,525)


(65,870)


(24,512)


(38,672)

Interest expense

(12,858)


(12,808)


(37,291)


(36,487)

Other (expense) income, net

(10)


408


232


382

Total other (expense) income, net 

(24,515)


(48,435)


(41,473)


13,851









Loss before income taxes and equity in (losses) income of unconsolidated affiliates

(12,331)


(50,238)


(25,952)


(5,506)

Income taxes

67


193


(326)


(904)

Loss before equity in (losses) income of unconsolidated affiliates

(12,264)


(50,045)


(26,278)


(6,410)

Equity in (losses) income of unconsolidated affiliates

(50)


26


237


(60)

Net loss

($ 12,314)


($ 50,019)


($ 26,041)


($ 6,470)









Net loss per limited partner unit:








Basic

($ 0.29)


($ 1.15)


($ 0.63)


($ 0.15)

Diluted

($ 0.29)


($ 1.15)


($ 0.63)


($ 0.15)

Weighted average limited partner units outstanding:








Basic

42,599


42,452


42,578


41,784

Diluted

42,599


42,452


42,578


41,784









Distributions declared per unit

$ 0.770


$ 0.766


$ 2.307


$ 2.295

 

Condensed Consolidated Statements of Cash Flows





(In $ thousands)





(Unaudited)


Nine Months Ended

September 30,





2013


2012

Cash flows from operating activities:





Net loss


($ 26,041)


($ 6,470)

Adjustments to reconcile net loss to net cash flows provided by operating activities:





Asset retirement obligations accretion expense


3,744


3,763

Depreciation, depletion and amortization


86,439


81,127

Equity–based compensation cost


13,080


12,390

Impairment of oil and natural gas properties


8,141


17,752

Non-cash derivative activity


26,162


39,395

Equity in (income) losses of unconsolidated affiliates


(237)


60

Distributions from unconsolidated affiliates


171


-

Other


2,313


4,698

Changes in operating assets and liabilities:





Accounts receivable


(6,430)


3,138

Other current assets


(5,435)


656

Accounts payable and accrued liabilities


17,889


20,479

Other, net


(561)


(1,955)

Net cash flows provided by operating activities


119,235


175,033






Cash flows from investing activities:





Acquisitions of oil and natural gas properties


-


(118,925)

Final settlement of purchase price of oil and natural gas properties


7,998


-

Additions to oil and natural gas properties 


(75,799)


(100,392)

Proceeds from sale of oil and natural gas properties


-


5,522

Investments in unconsolidated affiliates


(172,003)


(18,998)

Distributions from unconsolidated affiliates


33


-

Settlements from acquired derivatives


-


4,166

Net cash flows used in investing activities


(239,771)


(228,627)






Cash flows from financing activities:





Long-term debt borrowings


225,000


120,000

Repayment of long-term debt borrowings


-


(460,000)

Proceeds from debt offering


-


206,000

Loan costs incurred


-


(4,152)

Proceeds from public equity offering


-


262,833

Offering costs


-


(304)

Contributions from general partner


334


5,714

Distributions paid


(101,646)


(95,845)

Net cash flows provided by financing activities


123,688


34,246






Increase (decrease) in cash and cash equivalents


3,152


(19,348)

Cash and cash equivalents – beginning of period


7,486


30,312

Cash and cash equivalents – end of period


$ 10,638


$ 10,964

Non-GAAP Measures

We define Adjusted EBITDAX as net loss plus equity in losses (income) from unconsolidated affiliates, EBITDAX from unconsolidated affiliates, income taxes, interest expense, net, realized losses on interest rate swaps, depreciation, depletion and amortization, asset retirement obligations accretion expense, non-cash realized losses on derivatives, unrealized losses on derivatives, non-cash equity compensation expense, impairment of oil and natural gas properties, non-cash inventory write down expense, and dry hole and exploration costs. Distributable Cash Flow is defined as Adjusted EBITDAX less cash income taxes, cash interest expense, net, realized losses on interest rate swaps, and estimated maintenance capital expenditures.

Adjusted EBITDAX and Distributable Cash Flow are used by our management to provide additional information and statistics relative to the performance of our business, including (prior to the creation of any reserves) the cash available to pay distributions to our unitholders. These financial measures indicate to investors whether or not we are generating cash flow at a level that can sustain or support an increase in our quarterly distribution rates. Adjusted EBITDAX and Distributable Cash Flow are also quantitative standards used throughout the investment community with respect to performance of publicly-traded partnerships. Adjusted EBITDAX and Distributable Cash Flow should not be considered as alternatives to net income, operating income, cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDAX and Distributable Cash Flow exclude some, but not all, items that affect net income and operating income and these measures may vary among companies. Therefore, our Adjusted EBITDAX and Distributable Cash Flow may not be comparable to similarly titled measures of other companies.

Reconciliation of Net Income to Adjusted EBITDAX and Distributable Cash Flow



(In $ thousands)









(Unaudited)











Three Months Ended

September 30,


Nine Months Ended

September 30,






2013


2012


2013


2012










Net loss


($ 12,314)


($ 50,019)


($ 26,041)


($ 6,470)










Add:









Equity in losses (income) from unconsolidated affiliates

50


(26)


(237)


60

EBITDAX from unconsolidated affiliates


773


-


1,290


-

Income taxes


(67)


(193)


326


904

Interest expense, net


12,858


12,802


37,289


36,469

Realized losses on interest rate swaps


870


1,013


2,602


3,172

Depreciation, depletion and amortization


27,936


28,141


86,439


81,127

Asset retirement obligations accretion expense


1,185


1,335


3,744


3,763

Non-cash realized losses on derivatives


483


1,413


1,651


2,717

Unrealized losses on derivatives


16,525


65,870


24,512


38,672

Non-cash equity compensation expense


4,297


4,294


13,080


12,390

Impairment of oil and natural gas properties


143


853


8,141


17,752

Non-cash inventory write down expense


-


-


-


1,729

Dry hole and exploration costs


1,150


1,809


2,469


5,664

Adjusted EBITDAX


$ 53,889


$ 67,292


$ 155,265


$ 197,949










Less:









Cash income taxes


24


37


48


164

Cash interest expense, net


12,254


12,200


35,481


34,691

Realized losses on interest rate swaps


870


1,013


2,602


3,172

Estimated maintenance capital expenditures (1)


14,875


18,760


43,197


55,436

Distributable Cash Flow


$ 25,866


$ 35,282


$ 73,937


$ 104,486


(1) Estimated maintenance capital expenditures are those expenditures estimated to be necessary to maintain the production levels of our oil and gas properties over the long term and the operating capacity of our other assets over the long term.

 

Hedge Summary Table (as of September 30, 2013)





Period

Index

Swap Volume

Swap Price

Natural Gas


 (Mmmbtu/Mbbls) 


Nov - Dec 2013

NYMEX

11,183

$3.69

2014

NYMEX

9,261

$3.90

EV Energy Partners, L.P., Houston
Michael E. Mercer
713-651-1144
http://www.evenergypartners.com

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