EV Energy Partners Announces Third Quarter 2014 Results and Updated Midstream Guidance

News provided by

EV Energy Partners, L.P.

Nov 10, 2014, 06:30 ET

HOUSTON, Nov. 10, 2014 /PRNewswire/ -- EV Energy Partners, L.P. (NASDAQ: EVEP) announced results for the third quarter 2014 and filed its Form 10-Q with the Securities and Exchange Commission.  EVEP also provided an update on midstream guidance for the remainder of 2014.

Third Quarter 2014 Results

Adjusted EBITDAX for the third quarter of 2014 was $61.9 million, a 15 percent increase over the third quarter of 2013, and a 14 percent increase over the second quarter of 2014.  Distributable Cash Flow for the third quarter of 2014 was $32.2 million, a 24 percent increase over the third quarter of 2013 and a 22 percent increase over the second quarter of 2014.  The quarter over quarter increase in adjusted EBITDAX and distributable cash flow is primarily attributable to an increase in midstream EBITDAX and increased crude oil and natural gas liquids production volumes.  Adjusted EBITDAX and Distributable Cash Flow are Non-GAAP financial measures and are described in the attached table under "Non-GAAP Measures."

Production for the third quarter of 2014 was 11.0 Bcf of natural gas, 270 MBbls of oil and 593 MBbls of natural gas liquids, or 175.8 MMcfe/day.  This represents a 5 percent increase over third quarter 2013 production of 168.0 MMcfe/day and flat to second quarter 2014 production of 174.9 MMcfe/day. 

EVEP reported a net income of $42.6 million, or $0.85 per basic and diluted weighted average limited partner unit outstanding, for the third quarter of 2014.  Included in net income were the following items:

  • $34.2 million of non-cash gains on commodity and interest rate derivatives,
  • $4.3 million of non-cash costs contained in general and administrative expenses,
  • $4.0 million of dry hole and exploration costs, and
  • $0.9 million of non-cash leasehold impairment charges.

For the second quarter of 2014, EVEP reported a net loss of $9.0 million, or $(0.19) per basic and diluted weighted average limited partner unit outstanding.  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.

Mark Houser, President and CEO said, "We made significant progress on several fronts during the quarter.  Our base operations performed very steadily while we continued to delineate some of our acreage positions and continued to see increasing cash flow from our Utica East Ohio investment.  We are pleased to have completed the sales of our interest in Cardinal Gas Services and certain Eagle Ford Shale rights in October for a combined $192 million."

Updated Midstream Guidance

Due to the sale of our interest in the Cardinal Gas Services, LLC, in October 2014, we are adjusting fourth quarter guidance ranges for Utica Shale midstream and overriding royalty interest as follows:

($ in Millions)


EBITDAX                 

  $7  –  $9

Capital Expenditures 

  $11  –  $13

Quarterly Report on Form 10-Q

EVEP's financial statements and related footnotes are available in the third quarter 2014 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 October 28, 2014, EV Energy Partners, L.P. will host an investor conference call on November 10, 2014, at 9 a.m. Eastern Time (8 a.m. Central).  Investors interested in participating in the call may dial 1-888-797-2983 (quote conference ID 6221218) at least 5 minutes prior to the start time, or may listen live over the Internet through the Investor Relations section of the EVEP website at http://ir.evenergypartners.com/events.cfm. 

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

Logo - http://photos.prnewswire.com/prnh/20130415/DA94198LOGO

(code #: EVEP/G)

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 our Utica Shale midstream and overriding royalty investments, future plans, our reserve quantities and the present value of our reserves, estimates of maintenance capital 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 and Eagle Ford assets), 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,


2014

2013

2014

2013

Production data:







Oil (MBbls)

270

279

790

787

Natural gas liquids (MBbls)

593

538

1,714

1,567

Natural gas (MMcf)

11,000

10,555

32,798

31,879

Net production (MMcfe)

16,172

15,453

47,817

46,000

Average sales price per unit: (1)







Oil (Bbl)

$ 93.73

$ 102.15

$ 95.54

$ 96.26

Natural gas liquids (Bbl)

29.30

30.72

31.00

29.98

Natural gas (Mcf)

3.71

3.35

4.18

3.47

Mcfe

5.16

5.20

5.56

5.07

Average unit cost per Mcfe:







Production costs:







Lease operating expenses

$ 1.64

$ 1.69

$ 1.63

$ 1.71

Production taxes

0.19

0.19

0.20

0.19

Total

1.83

1.88

1.83

1.90

Asset retirement obligations accretion expense

0.08

0.08

0.08

0.08

Depreciation, depletion and amortization

1.59

1.81

1.61

1.88

General and administrative expenses

0.60

0.58

0.73

0.67










(1) Prior to $4.3 million and $6.2million of net hedge gains (losses) and settlements on commodity derivatives for the three months ended September 30, 2014 and September 30, 2013, respectively, and ($5.5) million and $24.4 million for the nine months ended September 30, 2014 and September 30, 2013, respectively


 

Condensed Consolidated Balance Sheets

(In $ thousands, except number of units)

(Unaudited)


September 30, 2014

December 31, 2013

ASSETS



Current assets:



Cash and cash equivalents

$ 11,204

$ 11,698

Accounts receivable:



Oil, natural gas and natural gas liquids revenues

43,240

37,661

Related party

5,144

2,873

Other

339

1,111

Derivative asset

32,422

13,543

Other current assets

1,712

6,916

Assets held for sale

71,934

8,012

Total current assets

165,995

81,814





Oil and natural gas properties, net of accumulated 



depreciation, depletion and amortization; September 30,



 2014, $646,507; December 31, 2013, $569,770

1,829,072

1,829,062

Other property, net of accumulated depreciation 



and amortization; September 30, 2014, $878; 



December 31, 2013, $754

1,152

1,259

Long–term derivative asset

11,876

29,088

Investments in unconsolidated affiliates

304,087

254,978

Other assets

6,152

8,782

Total assets

$ 2,318,334

$ 2,204,983










LIABILITIES AND OWNERS' EQUITY








Current liabilities:



Accounts payable and accrued liabilities

$ 60,220

$ 46,876

Derivative liability

110

3,348

Liabilities related to assets held for sale

856

2,155

Total current liabilities

61,186

52,379





Asset retirement obligations

105,151

99,133

Long–term debt

1,152,366

980,297

Other long–term liabilities

1,032

1,241





Commitments and contingencies








Owners' equity:



Common unitholders - 48,572,019 units and 



48,349,080 units issued and outstanding as of 



September 30, 2014 and December 31, 2013, 



respectively

1,011,671

1,083,718

General partner interest

(13,072)

(11,785)

Total owners' equity

998,599

1,071,933

Total liabilities and owners' equity

$ 2,318,334

$ 2,204,983

Condensed Consolidated Statements of Operations

(In $ thousands, except per unit data)

(Unaudited)


Three Months Ended 
September 30,

Nine Months Ended 
September 30,





2014

2013

2014

2013

Revenues:







Oil, natural gas and natural gas liquids revenues

$ 83,440

$ 80,324

$ 265,639

$ 233,325

Transportation and marketing–related revenues

1,091

1,090

3,591

3,393

Total revenues

84,531

81,414

269,230

236,718









Operating costs and expenses: 







Lease operating expenses

26,579

26,185

78,002

78,496

Cost of purchased natural gas

813

792

2,725

2,486

Dry hole and exploration costs

3,972

1,150

5,943

2,469

Production taxes

3,034

2,911

9,514

8,751

Asset retirement obligations accretion expense 

1,244

1,185

3,634

3,744

Depreciation, depletion and amortization

25,723

27,936

76,961

86,439

General and administrative expenses

9,688

8,928

34,735

30,671

Impairment of oil and natural gas properties

946

143

2,267

8,141

Gain on sales of oil and natural gas properties

-

-

(1,484)

-

Total operating costs and expenses

71,999

69,230

212,297

221,197









Operating income

12,532

12,184

56,933

15,521









Other income (expense), net:







Gain (loss) on derivatives, net

37,548

(11,647)

(3,264)

(4,414)

Interest expense

(13,676)

(12,858)

(38,193)

(37,291)

Other (expense) income, net

(2)

(10)

139

232

Total other income (expense), net 

23,870

(24,515)

(41,318)

(41,473)









Income (loss) before income taxes and equity in
income (loss) of unconsolidated affiliates

36,402

(12,331)

15,615

(25,952)

Income taxes

(157)

67

176

(326)

Income (loss) before equity in income (loss) of unconsolidated affiliates

36,245

(12,264)

15,791

(26,278)

Equity in income (loss) of unconsolidated affiliates

6,375

(50)

11,553

237

Net income (loss)

$ 42,620

($ 12,314)

$ 27,344

($ 26,041)









Net income (loss) per limited partner unit:







Basic

$ 0.85

($ 0.29)

$ 0.52

($ 0.63)

Diluted

$ 0.85

($ 0.29)

$ 0.52

($ 0.63)

Weighted average limited partner units outstanding:







Basic

48,572

42,599

48,561

42,578

Diluted

48,572

42,599

48,561

42,578









Distributions declared per unit

$ 0.774

$ 0.770

$ 2.319

$ 2.307

Condensed Consolidated Statements of Cash Flows

(In $ thousands)

(Unaudited)

Nine Months Ended
September 30,




2014

2013

Cash flows from operating activities:



Net income (loss)

$ 27,344

($ 26,041)

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



Asset retirement obligations accretion expense

3,634

3,744

Depreciation, depletion and amortization

76,961

86,439

Equity–based compensation cost

15,345

13,080

Impairment of oil and natural gas properties

2,267

8,141

Gain on sales of oil and natural gas properties

(1,484)

-

Loss on derivatives, net

3,264

4,414

Cash settlements of matured derivative contracts

(8,170)

21,748

Equity in income of unconsolidated affiliates

(11,553)

(237)

Distributions from unconsolidated affiliates

210

171

Other

5,634

2,313

Changes in operating assets and liabilities:



Accounts receivable

(7,077)

(6,430)

Other current assets

(833)

(5,435)

Accounts payable and accrued liabilities

12,360

17,889

Other, net

(733)

(561)

Net cash flows provided by operating activities

117,169

119,235





Cash flows from investing activities:



Final settlement of purchase price of oil and natural gas properties

-

7,998

Additions to oil and natural gas properties 

(73,356)

(75,799)

Prepaid drilling costs

(2,501)

-

Proceeds from sale of oil and natural gas properties

7,365

-

Investments in unconsolidated affiliates

(105,200)

(172,003)

Distributions from unconsolidated affiliates

52

33

Net cash flows used in investing activities

(173,640)

(239,771)





Cash flows from financing activities:



Long-term debt borrowings

172,000

225,000

Contributions from general partner

154

334

Distributions paid

(116,172)

(101,646)

Other

(5)

-

Net cash flows provided by financing activities

55,977

123,688





(Decrease) increase in cash and cash equivalents

(494)

3,152

Cash and cash equivalents – beginning of period

11,698

7,486

Cash and cash equivalents – end of period

$ 11,204

$ 10,638





Non-GAAP Measures

We define Adjusted EBITDAX as net income (loss) plus equity in income of unconsolidated affiliates, EBITDAX of unconsolidated affiliates, income taxes, interest expense, net, cash settlements of matured interest rate swaps, depreciation, depletion and amortization, asset retirement obligations accretion expense, (gain) loss on derivatives, net, cash settlements of matured derivative contracts, non-cash equity compensation expense, impairment of oil and natural gas properties, non-cash inventory write down expense, dry hole and exploration costs, and gain on sales of oil and natural gas properties. 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. We believe these financial measures may 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 (Loss) to Adjusted EBITDAX and Distributable Cash Flow

(In $ thousands)

(Unaudited)


Three Months Ended
September 30,

Nine Months Ended
September 30,





2014

2013

2014

2013









Net income (loss)

$ 42,620

($ 12,314)

$ 27,344

($ 26,041)









Add:







Equity in (income) loss of unconsolidated affiliates

(6,375)

50

(11,553)

(237)

EBITDAX of unconsolidated affiliates 

8,883

773

18,082

1,290

Income taxes

157

(67)

(176)

326

Interest expense, net

13,676

12,858

38,192

37,289

Cash settlements of matured interest rate swaps

878

870

2,635

2,602

Depreciation, depletion and amortization

25,723

27,936

76,961

86,439

Asset retirement obligations accretion expense

1,244

1,185

3,634

3,744

(Gain) loss on derivatives, net

(37,548)

11,647

3,264

4,414

Cash settlements of matured derivative contracts

3,386

5,361

(8,170)

21,748

Non-cash equity compensation expense

4,287

4,297

15,345

13,080

Impairment of oil and natural gas properties

946

143

2,267

8,141

Non-cash inventory write down expense

-

-

53

-

Dry hole and exploration costs

3,972

1,150

5,943

2,469

Gain on sales of oil and natural gas properties

-

-

(1,484)

-

Adjusted EBITDAX

$ 61,848

$ 53,889

$ 172,338

$ 155,264









Less:







Cash income taxes

283

24

282

48

Cash interest expense, net

13,069

12,254

36,374

35,481

Realized losses on interest rate swaps

878

870

2,635

2,602

Estimated maintenance capital expenditures (1)

15,440

14,875

45,888

43,197

Distributable Cash Flow

$ 32,178

$ 25,866

$ 87,159

$ 73,936









(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.

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

SOURCE EV Energy Partners, L.P.

WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?

icon3
440k+
Newsrooms &
Influencers
icon1
9k+
Digital Media
Outlets
icon2
270k+
Journalists
Opted In
GET STARTED