HOUSTON, TX -- 11/09/09 --
EV Energy Partners, L.P. (NASDAQ: EVEP) today
announced results for the third quarter 2009 and filed its Form 10-Q with
the Securities and Exchange Commission.
Third Quarter 2009 Results
Adjusted EBITDA for the quarter was $33.6 million, a 22% increase over the
third quarter of 2008 and a 2% increase versus the second quarter of 2009.
Distributable Cash Flow for the quarter was $19.5 million, a 39% increase
over the third quarter of 2008 and an 8% increase versus the second quarter
of 2009. Adjusted EBITDA and Distributable Cash Flow are described in the
attached table under "Non-GAAP Measures."
EVEP reported a net loss of $2.8 million, or ($0.23) per basic and diluted
weighted average unit outstanding, for the third quarter of 2009. Included
in net income were $16.6 million of non-cash net unrealized losses on
commodity and interest rate derivatives and $0.9 million of non-cash equity
compensation expense contained in general and administrative expenses. For
the third quarter of 2008, net income was $204.1 million, or $13.02 per
basic and diluted weighted average unit outstanding, which included $188.8
million of non-cash net unrealized gains on commodity derivatives and
($0.1) million of non-cash equity compensation expense contained in general
and administrative expenses. For the second quarter of 2009, net loss was
$31.6 million, or ($1.93) per basic and diluted weighted average unit
outstanding, which included $44.5 million of non-cash net unrealized losses
on commodity and interest rate derivatives and $0.7 million of non-cash
equity compensation expense contained in general and administrative
expenses.
The $16.6 million non-cash net unrealized losses on derivatives for the
third quarter of 2009 was primarily due to the increase in future gas
prices at September 30, 2009 as compared to those at June 30, 2009 and the
effect of such price changes on EVEP's commodity price hedges which extend
through August 2014.
For the quarter ended September 30, 2009, EVEP produced 4.3 Bcf of natural
gas, 132 MBbls of crude oil and 180 MBbls of natural gas liquids, or 6.1
Bcfe. Third quarter 2009 production of 6.1 Bcfe represents a 30% increase
over third quarter 2008 production of 4.7 Bcfe, primarily due to
acquisitions made during 2008 and the third quarter of 2009. Third quarter
2009 production was 4% higher than second quarter 2009 production of 5.9
Bcfe, primarily due to acquisitions completed during the quarter.
John Walker, Chairman and CEO, stated about the quarter, "We are very
pleased with our third quarter results. We successfully completed two
Austin Chalk add-on acquisitions, announced an Appalachian Basin
acquisition that we expect to close later this month, and successfully
completed a 3.2 million common unit offering. In addition, our borrowing
base was recently reaffirmed at $465 million. This year we have reduced
our debt by $185 million, significantly increasing our liquidity and
providing capacity for potential future acquisition financing."
Additional Commodity Hedge Positions
EVEP uses oil and natural gas commodity contracts to hedge a significant
portion of its anticipated oil and natural gas production against the risk
of commodity price volatility. Since the second quarter earnings press
release dated August 10, 2009, EVEP has added the following commodity price
hedge positions to its portfolio. A complete schedule of EVEP's updated
commodity price hedge positions is included at the end of this release,
including the hedges detailed below.
Swap Swap
Volume Price
--------------- ---------------
(Mmmbtu/Mbbls)
Natural Gas
Houston Ship Channel
Sept - Dec 2009 74 $ 4.09
2010 193 $ 5.45
Crude Oil
NYMEX
2013 146.0 $ 80.39
Jan - Aug 2014 194.4 $ 82.28
Quarterly Report on Form 10-Q
EVEP's financial statements and related footnotes are available on our
third quarter 2009 Form 10-Q, which was filed today and is available
through the Investor Relations/SEC Filings section of the EVEP web site at
http://www.evenergypartners.com.
Conference Call
As announced on November 3, 2009, EV Energy Partners, L.P. will host an
investor conference call Monday, November 9, 2009 at 10:30am (Eastern
Time). Investors interested in participating in the call may dial
480-629-9866 and ask for conference ID 4181671 at least 5 minutes prior to
the start time, or may listen live over the internet through the Investor
Relations section of the EVEP web site 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 on the internet at
http://www.evenergypartners.com.
(code #: EVEP/G)
This press release may include "forward-looking statements" as defined by
the Securities and Exchange Commission. All statements, other than
statements of historical facts, included in this press release that address
activities, events or developments that the partnership expects, believes
or anticipates will or may occur in the future are forward-looking
statements. These statements are based on certain assumptions made by EVEP
based on its experience and perception of historical trends, current
conditions, expected future developments and other factors it believes are
appropriate in the circumstances. Such statements are subject to a number
of assumptions, risks and uncertainties, many of which are beyond the
control of EVEP, which may cause our actual results to differ materially
from those implied or expressed by the forward-looking statements. These
include risks relating to financial performance and results, availability
of sufficient cash flow to pay distributions and execute our business plan,
prices and demand for natural gas and oil, our ability to replace reserves
and efficiently develop our current reserves and other important factors
that could cause actual results to differ materially from those projected
as described in the EVEP's reports filed with the Securities and Exchange
Commission.
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 Nine Months Ended
September 30, September 30,
--------------------- ---------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Production data:
Oil (MBbls) 132 111 386 301
Natural gas liquids (MBbls) 180 127 580 386
Natural gas (MMcf) 4,251 3,285 12,230 10,305
---------- ---------- ---------- ----------
Net production (MMcfe) 6,123 4,710 18,026 14,423
Average sales price per unit
(1):
Oil (Bbl) $ 64.04 $ 115.55 $ 50.95 $ 111.40
Natural gas liquids (Bbl) 32.35 68.41 27.84 65.63
Natural gas (Mcf) 3.28 9.80 3.56 9.37
Mcfe 4.61 11.39 4.40 10.77
Average unit cost per Mcfe:
Production costs:
Lease operating expenses $ 1.70 $ 2.51 $ 1.72 $ 2.12
Production taxes 0.25 0.55 0.23 0.50
---------- ---------- ---------- ----------
Total 1.95 3.06 1.95 2.62
Depreciation, depletion and
amortization 2.11 1.66 2.18 1.68
General and administrative
expense 0.74 0.60 0.71 0.68
(1) Prior to $20.6 and $(9.5) million of net realized commodity price
hedge gains (losses) for the three months ended September 30, 2009 and
September 30, 2008, respectively, and prior to $61.4 and ($23.9) million
of net realized commodity price hedge gains (losses) for the nine months
ended September 30, 2009 and September 30, 2008 respectively.
Unaudited Condensed Consolidated Balance Sheets
(in $ thousands)
September 30, 2009 December 31, 2008
------------------ ------------------
ASSETS
Current assets:
Cash and cash equivalents $ 25,365 $ 41,628
Accounts receivable:
Oil, natural gas and natural gas
liquids revenues 10,265 17,588
Related party 6,134 1,463
Other 1,270 3,278
Derivative asset 34,638 50,121
Prepaid expenses and other current
assets 312 1,037
------------------ ------------------
Total current assets 77,984 115,115
Oil and natural gas properties, net
of accumulated depreciation,
depletion and amortization;
September 30, 2009, $109,234;
December 31, 2008, $69,958 753,214 765,243
Other property, net of accumulated
depreciation and amortization;
September 30, 2009, $311; December
31, 2008, $284 152 180
Long-term derivative asset 76,127 96,720
Other assets 4,612 2,737
------------------ ------------------
Total assets $ 912,089 $ 979,995
================== ==================
LIABILITIES AND OWNERS' EQUITY
Current liabilities:
Accounts payable and accrued
liabilities $ 11,461 $ 14,063
Deferred revenues - 4,120
Derivative liability 375 2,115
------------------ ------------------
Total current liabilities 11,836 20,298
Asset retirement obligations 36,411 33,787
Long-term debt 292,000 467,000
Long-term derivative liability 68 -
Other Long-term liabilities 1,866 1,426
Commitments and contingencies
Owners' equity 569,908 457,484
------------------ ------------------
Total liabilities and owners' equity $ 912,089 $ 979,995
================== ==================
Unaudited Condensed Consolidated Statements of Operations
(in $ thousands, except per unit data)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Revenues:
Oil, natural gas and natural
gas liquids revenues $ 28,198 $ 53,672 $ 79,361 $ 155,336
Gain on derivatives, net - 563 - 1,225
Transportation and
marketing-related revenues 1,351 3,169 6,401 9,649
--------- --------- --------- ---------
Total revenues 29,549 57,404 85,762 166,210
--------- --------- --------- ---------
Operating costs and expenses:
Lease operating expenses 10,421 11,828 31,075 30,542
Cost of purchased natural gas 980 2,451 3,431 7,866
Production taxes 1,500 2,593 4,143 7,221
Asset retirement obligations
accretion expense 494 381 1,508 987
Depreciation, depletion and
amortization 12,935 7,832 39,304 24,187
General and administrative
expenses 4,519 2,843 12,870 9,867
--------- --------- --------- ---------
Total operating costs and
expenses 30,849 27,928 92,331 80,670
--------- --------- --------- ---------
Operating (loss) income (1,300) 29,476 (6,569) 85,540
Other (expense) income, net:
Realized gains (losses) on
mark-to-market derivatives,
net 18,441 (10,389) 55,201 (24,767)
Unrealized (losses) gains on
mark-to-market derivatives,
net (16,572) 188,773 (34,404) 29,686
Interest expense (3,065) (3,736) (9,909) (10,563)
Other (expense) income, net (273) 90 (317) 252
--------- --------- --------- ---------
Total other (expense) income,
net (1,469) 174,738 10,571 (5,392)
--------- --------- --------- ---------
(Loss) income before income
taxes (2,769) 204,214 4,002 80,148
Income taxes (64) (75) (121) (205)
--------- --------- --------- ---------
Net (loss) income $ (2,833) $ 204,139 $ 3,881 $ 79,943
========= ========= ========= =========
General partner's interest in
net (loss) income, including
incentive distribution rights $ 1,916 $ 5,419 $ 5,099 $ 4,588
========= ========= ========= =========
Limited partners' interest in
net (loss) income $ (4,749) $ 198,720 $ (1,218) $ 75,355
========= ========= ========= =========
Net (loss) income per limited
partner unit (basic and
diluted) $ (0.23) $ 13.02 $ (0.07) $ 5.00
Weighted average limited
partner units outstanding:
Common units (basic and
diluted) 17,190 12,168 14,715 11,976
Subordinated units (basic and
diluted) 3,100 3,100 3,100 3,100
Performance Units 100 - 44 -
Unaudited Condensed Consolidated Statements of Cash Flows
(in $ thousands)
Nine Months Ended Nine Months Ended
September 30, 2009 September 30, 2008
------------------- -------------------
Cash flows from operating
activities:
Net income $ 3,881 $ 79,943
Adjustments to reconcile net
income to net cash flows
provided by operating
activities:
Asset retirement obligations
accretion expense 1,508 987
Depreciation, depletion and
amortization 39,304 24,187
Equity-based compensation cost 2,197 1,208
Amortization of deferred loan
costs 662 220
Unrealized losses (gains) on
derivatives, net 34,404 (30,911)
Other, net 350 -
Changes in operating assets and
liabilities:
Accounts receivable 6,096 (12,061)
Prepaid expenses and other
current assets 327 236
Other assets (1) (7)
Accounts payable and accrued
liabilities (358) 4,115
Deferred revenues (4,120) 3,710
Other 35 -
------------------- -------------------
Net cash flows provided by
operating activities 84,285 71,627
------------------- -------------------
Cash flows from investing
activities:
Acquisitions of oil and natural
gas properties (16,807) (182,123)
Deposit on acquisition of oil and
natural gas properties (2,500) -
Development of oil and natural
gas properties (11,506) (24,314)
------------------- -------------------
Net cash flows used in investing
activities (30,813) (206,437)
------------------- -------------------
Cash flows from financing
activities:
Debt borrowings - 197,000
Repayment of debt borrowings (175,000) -
Deferred loan costs (36) (1,227)
Proceeds from private equity
offerings, net of underwriters
discounts 149,038 -
Offering costs (435) -
Contributions from general
partner 1,641 -
Distributions to partners (44,943) (31,602)
Distributions related to
acquisitions (13,918)
------------------- -------------------
Net cash flows (used in) provided
by financing activities (69,735) 150,253
------------------- -------------------
(Decrease) increase in cash and
cash equivalents (16,263) 15,443
Cash and cash equivalents -
beginning of period 41,628 10,220
------------------- -------------------
Cash and cash equivalents - end
of period $ 25,365 $ 25,663
=================== ===================
Non GAAP Measures
We define Adjusted EBITDA as net income (loss) plus income tax provision,
interest expense, net, realized (gains) losses on interest rate swaps,
depreciation, depletion and amortization, asset retirement obligation
accretion expense, non-cash (gains) losses on derivatives, amortization of
upfront premiums paid to enter into commodity price hedge agreements and
non-cash equity compensation expense. Distributable Cash Flow is defined
as Adjusted EBITDA less income tax provision, interest expense, net,
realized (gains) losses on interest rate swaps, amortization of upfront
premiums paid to enter into commodity price hedge agreements and estimated
maintenance capital expenditures.
Adjusted EBITDA and Distributable Cash Flow are used by our management to
provide additional information and metrics 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 EBITDA and Distributable Cash Flow are also
quantitative standards used throughout the investment community with
respect to performance of publicly-traded partnerships. Adjusted EBITDA
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 EBITDA and Distributable Cash Flow exclude some, but not
all, items that effect net income and operating income and these measures
may vary among companies. Therefore, our Adjusted EBITDA and Distributable
Cash Flow may not be comparable to similarly titled measures of other
companies.
Reconciliation of Net Income to Adjusted EBITDA and Distributable Cash Flow
(in $ thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- ---------- ---------
Net (loss) income ($ 2,833) $ 204,139 $ 3,881 $ 79,943
Add:
Income taxes 64 75 121 205
Interest expense, net 3,056 3,645 9,784 10,321
Realized losses on interest
rate swaps 2,177 857 6,151 857
Depreciation, depletion and
amortization 12,935 7,832 39,304 24,187
Asset retirement obligation
accretion expense 494 381 1,508 987
Non-cash losses (gains) on
commodity derivatives 16,572 (189,336) 34,404 (30,911)
Amortization of premiums on
derivatives 209 - 399 -
Non-cash equity compensation
expense 897 (53) 2,197 1,208
--------- --------- ---------- ---------
Adjusted EBITDA $ 33,571 $ 27,540 $ 97,749 $ 86,797
Less:
Income taxes 64 75 121 205
Interest expense, net 3,056 3,645 9,784 10,321
Realized losses on interest
rate swaps 2,177 857 6,151 857
Amortization of premiums on
derivatives 209 - 399 -
Estimated maintenance capital
expenditures (1) 8,572 8,950 27,012 27,405
--------- --------- ---------- ---------
Distributable Cash Flow $ 19,493 $ 14,013 $ 54,282 $ 48,009
(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 11/09/2009)
Swap Swap Collar Collar Collar Put Put
Volume Price Volume Floor Ceiling Volume Strike
---------- ------- --------- ------- ------- ------ ------
(Mmmbtu/ (Mmmbtu/ (Mmmbtu/
Mbbls) Mbbls) Mbbls)
Natural Gas
4Q 2009
NYMEX 828 $ 8.05 92 $ 7.50 $ 8.80
NYMEX 368 $ 7.75 $ 9.15
NYMEX 184 $ 8.00 $ 10.55
NYMEX 460 $ 4.00
Dominion
Appalachia 589 $ 9.03
El Paso Permian 322 $ 7.80
Houston Ship
Channel 659 $ 7.29
MichCon
Citygate 460 $ 8.27
2010
NYMEX 5,950 $ 8.00 548 $ 7.50 $ 10.00
Dominion
Appalachia 2,044 $ 8.65
El Paso Permian 913 $ 7.68
Houston Ship
Channel 553 $ 5.78 1,278 $ 7.25 $ 9.55
MichCon
Citygate 1,825 $ 8.34
2011
NYMEX 5,585 $ 8.18
Dominion
Appalachia 913 $ 8.69 1,095 $ 9.00 $ 12.15
El Paso Permian 913 $ 9.30
Houston Ship
Channel 1,278 $ 8.25 $ 11.65
MichCon
Citygate 1,643 $ 8.70 $ 11.85
2012
NYMEX 5,527 $ 8.63
Dominion
Appalachia 1,830 $ 8.95 $ 11.45
El Paso Permian 732 $ 9.21
Houston Ship
Channel 1,098 $ 8.25 $ 11.10
MichCon
Citygate 1,647 $ 8.75 $ 11.05
2013
NYMEX 3,285 $ 7.23
El Paso Permian 1,095 $ 6.77
El Paso San
Juan 1,095 $ 6.66
Jan - Aug 2014
NYMEX 1,215 $ 7.06
Crude Oil
(NYMEX)
4Q 2009 162.7 $ 93.25 11.5 $ 62.00 $ 73.90
2010 688.0 $ 89.81
2011 219.0 $103.66 401.5 $110.00 $166.45
2012 205.0 $104.05 366.0 $110.00 $170.85
2013 511.0 $ 78.64
Jan - July 2014 106.0 $ 84.60
Jan - Aug 2014 194.4 $ 82.28
Interest Rate
Swap
Agreements:
Notional Fixed Floating
Amount Rate Rate
(in $ mill)
October 2009 -
July 2012 $ 200 4.163% 1mo LIBOR
October 2009 -
Sept 2012 $ 40 2.145% 1mo LIBOR
EV Energy Partners, L.P., Houston
Michael E. Mercer
713-651-1144
http://www.evenergypartners.com
