EV Energy Partners Announces Fourth Quarter and Full Year 2013 Results, Year-end Proved Reserves, 2014 Guidance and Updated Hedge Positions

HOUSTON, March 3, 2014 /PRNewswire/ -- EV Energy Partners, L.P. (NASDAQ: EVEP) today announced results for the fourth quarter and full year 2013 and the filing of its Form 10-K with the Securities and Exchange Commission.  In addition, EVEP announced its 2013 year-end proved reserves, 2014 guidance and an update of its commodity hedge positions.

2013 Highlights

• Overall operating results were in line with expectations
• Attractive proved reserve growth and reserve replacement rates and replacement costs
  • Proved reserves increased 32 percent
  • Price neutral reserve replacement cost of $1.01/Mcfe
• Significant Utica midstream investment with initial start-up of operations
  • 400 MMcf/day of processing and 45,000 Bbls/day of fractionation capacity now online
  • Start-up of additional 400 MMcf/day of processing and 90,000 Bbls/day of fractionation capacity expected in the second and third quarters of 2014
• Completion of initial Utica acreage sales

Full Year 2013 Results

Adjusted EBITDAX and Distributable Cash Flow for 2013 of $209.0 million and $100.6 million, decreased 22 percent and 29 percent, respectively, versus 2012.  The decreases in Adjusted EBITDAX and Distributable Cash Flow as compared to year-end 2012, which are described in the attached table under "Non-GAAP Measures," are primarily attributable to the decrease in cash settlements on commodity derivatives, partially offset by an increase in the sales price per unit of natural gas.

Production for 2013 was 42.7 Bcf of natural gas, 1,027 MBbls of oil and 2,146 MBbls of natural gas liquids, or 169.0 million cubic feet equivalent per day (MMcfe/day).  This represents a 3 percent increase over year-end 2012 production of 163.4 MMcfe/day, primarily due to 2013 drilling activity and acquisitions completed during the fourth quarter of 2013.

For 2013, EVEP reported a net loss of $76.2 million, or $(1.76) per basic and diluted weighted average limited partner unit outstanding.  Included in net loss were the following items:

• $85.3 million of impairment charges primarily related to the write-down of certain oil and natural gas properties due to the effects of commodity prices on expected future net cash flows,
• $47.3 million of non-cash losses on commodity and interest rate derivatives,
• $41.3 million gain on the sale of oil and natural gas properties,
• $17.5 million of non-cash costs contained in general and administrative expenses, and
• $2.4 million of dry hole and exploration costs.

For 2012, EVEP reported a net loss of $16.3 million, or $(0.38) per basic and diluted weighted average limited partner unit outstanding. 

Fourth Quarter 2013 Results

Adjusted EBITDAX for the fourth quarter of 2013 was $53.7 million, a 23 percent decrease from the fourth quarter of 2012, primarily attributable the decrease in cash settlements on commodity derivatives, and flat compared to the third quarter of 2013.  Distributable Cash Flow for the fourth quarter of 2013 was $26.7 million, a 30 percent decrease from the fourth quarter of 2012 and a 3 percent increase over the third quarter of 2013.

Production for the fourth quarter of 2013 was 10.8 Bcf of natural gas, 240 MBbls of oil and 580 MBbls of natural gas liquids, or 170.5 MMcfe/day. This represents a 3 percent increase over fourth quarter 2012 production of 166.3 MMcfe/d and a 2 percent increase over third quarter 2013 production of 168.0 MMcfe/day.  The increases in production are primarily due to 2013 drilling activity and acquisitions completed during the fourth quarter of 2013, partially offset by the effect of fourth quarter 2013 weather. 

EVEP reported a net loss of $50.2 million, or $(1.06) per basic and diluted weighted average limited partner unit outstanding, for the fourth quarter of 2013. Included in net loss were the following items:

• $77.2 million of impairment charges primarily related to the write-down of Permian Basin oil and natural gas properties due to the effects of commodity prices on expected future net cash flows,
• $41.3 million gain on the sale of oil and natural gas properties,
• $21.2 million of non-cash losses on commodity and interest rate derivatives, and
• $4.4 million of non-cash costs contained in general and administrative expenses.

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.  For the fourth quarter of 2012, EVEP reported a net loss of $9.9 million, or $(0.23) per basic and diluted weighted average limited partner unit outstanding.

Year-end 2013 Estimated Net Proved Reserves

EVEP's year-end 2013 estimated net proved reserves were 1,192 Bcfe, a 32 percent increase over year-end 2012 estimated net proved reserves.  Approximately 69 percent of these reserves were natural gas, 25 percent were natural gas liquids and 6 percent were oil.  In addition, 68 percent were categorized as proved developed.

At December 31, 2013, the present value of future net pre-tax cash flows discounted at 10 percent was $1,049 million and the standardized measure of estimated net proved reserves was $1,040 million. Standardized measure includes future obligations under the Texas gross margin tax, but it does not include future federal income tax expenses because EVEP is a partnership and is not subject to federal income taxes. The prices used in determining estimated net proved reserves at December 31, 2013 were $96.78 per Bbl of oil and $3.67 per MMBtu of natural gas as compared to $94.71 per Bbl of oil and $2.76 per MMBtu of natural gas at December 31, 2012. 

The reserve replacement rate for 2013 was 565 percent at a cost of $0.48 per Mcfe. As detailed above, the prices used in determining year-end 2013 estimated proved reserves were higher than those used at year-end 2012. Without these positive price revision effects, the reserve replacement rate would have been 268 percent at a cost of $1.01 per Mcfe including acquisitions, and 156 percent at a cost of $1.06 per Mcfe excluding acquisitions.

"For 2013, we are very pleased with our operational performance, even with some small short term oil and gas production and midstream throughput disruptions due to the cold weather this winter. We had strong growth in proved reserves through our capital programs, and we continue to see potential growth opportunities in the Barnett Shale and the Eagle Ford Shale within our existing assets.  We also are pleased with the evolution of the Utica Shale and our participation in both upstream and midstream activities.  We expect significant  growth in our Utica midstream cash flow as these facilities continue to come on line," said Mark Houser, President and CEO.

Annual Report on Form 10-K and Unitholders' Schedule K-1

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

Also available for download on our website after March 7, 2014 will be unitholders' Schedule K-1's for the tax year 2013.  For any questions regarding their Schedule K-1, unitholders are invited to call the Tax Package Support helpline at 1-800-973-7551.

Conference Call

As announced on February 20, 2014, EV Energy Partners, L.P. will host an investor conference call on March 3, 2014, at 9 a.m. Eastern Standard Time (8 a.m. Central).  Investors interested in participating in the call may dial (877) 941-8609 (quote conference ID 4670286) 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://www.evenergypartners.com. 

As previously announced, Mark Houser, President and CEO, and Michael Mercer, Senior Vice President and CFO, will be presenting at the Raymond James 35^th Annual Institutional Investor Conference in Orlando, Florida today, March 3, 2014 at 2:15 p.m. Eastern Standard Time. The presentation slides will be available on our website in the Investor Relations section under Presentation & Event Schedule.

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 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, 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), 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.

 

 

Non GAAP Measures

We define Adjusted EBITDAX as net loss plus equity in loss (income) from unconsolidated affiliates, EBITDAX from unconsolidated affiliates, income taxes, interest expense, net, cash settlements of matured interest rate swaps, depreciation, depletion and amortization, asset retirement obligations accretion expense, loss (gain) 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.

 

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

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SOURCE EV Energy Partners, L.P.

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