EV Energy Partners Announces Second Quarter 2015 Results

Aug 10, 2015, 08:10 ET from EV Energy Partners, L.P.

HOUSTON, Aug. 10, 2015 /PRNewswire/ -- EV Energy Partners, L.P. (NASDAQ: EVEP) today announced results for the second quarter of 2015 and the filing of its Form 10-Q with the Securities and Exchange Commission. Additionally, EVEP provided an update on its commodity hedge positions.

Second Quarter 2015 Results

Adjusted EBITDAX for the second quarter of 2015 was $53.4 million, a 2 percent decrease from the second quarter of 2014 and 1 percent decrease from the first quarter of 2015.  Distributable Cash Flow for the second quarter of 2015 was $26.2 million, a 1 percent decrease from the second quarter of 2014 and flat versus the first quarter of 2015.  The decreases in Adjusted EBITDAX and Distributable Cash Flow are primarily due to lower production and lower realized commodity prices, partially offset by decreased operating costs and expenses.  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 second quarter of 2015 was 10.0 Bcf of natural gas, 237 MBbls of oil and 563 MBbls of natural gas liquids, or 162.8 MMcfe/day. This represents a 7 percent decrease from second quarter 2014 production of 174.9 MMcfe/d and a 6 percent decrease from first quarter 2015 production of 172.5 MMcfe/day.

EVEP reported net income of $164.1 million, or $3.25 per basic and diluted weighted average limited partner unit outstanding, for the second quarter of 2015. Included in net income were the following items:

  • $250.4 million in income from discontinued operations, which includes $246.7 million of gain related to the sale of our interests in Utica East Ohio (UEO);
  • $48.3 million of impairment charges related to the write down of certain oil and natural gas properties primarily due to a change in the development plans for acreage in the Utica Shale;
  • $41.2 million of non-cash losses on commodity and interest rate derivatives;
  • $2.3 million of non-cash costs contained in general and administrative expenses; and
  • $0.3 million of dry hole and exploration costs.

For the first quarter of 2015, EVEP reported a net loss of $61.7 million, or $(1.25) per basic and diluted weighted average limited partner unit outstanding.  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.

"With the closing of the UEO sale, we have significantly increased our liquidity, with no bank debt outstanding and almost $60 million in cash.  We believe EVEP is in a strong position to be able to acquire long-life producing properties in a low commodity price environment without having to rely on the sale of equity," said Michael Mercer, President and CEO.

Hedging Update

Subsequent to June 30, 2015, EVEP entered into additional natural gas derivative contracts for 2016 and 2017.

Period

Index

Swap Volume

Swap Price

(Mmmbtus)

2016

NYMEX

14,640

$3.183

2017

NYMEX

14,600

$3.314

Additional details regarding EVEP's current commodity hedge positions can be found in the Hedge Summary table at the end of this press release.

UEO Sale and Borrowing Base

On June 10, 2015, EVEP closed on the sale of its 21 percent membership interest in UEO for $572.2 million, after expenses. Net proceeds were used to repay all amounts outstanding under its revolving credit facility with the remainder held in cash for future activities.  As a result of the sale, EVEP's borrowing base was reduced from $650 million to $500 million with the next redetermination scheduled for October 2015.  Availability under the facility may be used to fund future activities, including acquisitions of oil and natural gas properties.

Quarterly Report on Form 10-Q

EVEP's financial statements and related footnotes are available in the second quarter 2015 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 and Webcast

As announced on July 30, 2015, EV Energy Partners, L.P. will host an investor conference call on August 10, 2015, at 9 a.m. Eastern Time (8 a.m. Central).  Investors interested in participating in the call may dial 1-888-820-9415 (quote conference ID 7069521) 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

About EV Energy Partners, L.P.

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.

(code #: EVEP/G)

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Forward Looking Statements

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, 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, exploration and development activities, 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 June 30,

Six Months Ended June 30,

2015

2014

2015

2014

Production data:

Oil (MBbls)

237

255

478

520

Natural gas liquids (MBbls)

563

571

1,145

1,121

Natural gas (MMcf)

10,018

10,962

20,606

21,798

Net production (MMcfe)

14,818

15,920

30,344

31,645

Average sales price per unit: (1)

Oil (Bbl)

$ 52.84

$ 98.84

$ 48.39

$ 96.48

Natural gas liquids (Bbl)

15.09

30.36

15.10

31.89

Natural gas (Mcf)

2.27

4.16

2.41

4.42

Mcfe

2.95

5.54

2.97

5.76

Average unit cost per Mcfe:

Production costs:

Lease operating expenses

$ 1.61

$ 1.64

$ 1.56

$ 1.63

Production taxes

0.11

0.19

0.11

0.20

Total

1.72

1.83

1.67

1.83

Asset retirement obligations accretion expense

0.08

0.08

0.08

0.08

Depreciation, depletion and amortization

1.71

1.57

1.69

1.62

General and administrative expenses

0.54

0.80

0.68

0.79

(1) Prior to $32.8 million and ($4.5) million of net hedge gains (losses) on settlements of commodity derivatives for the three months ended June 30, 2015 and June 30, 2014, respectively and $64.2 million and ($9.8) million for the six months ended June 30, 2015 and June 30, 2014, respectively.

 

Condensed Consolidated Balance Sheets

(In $ thousands, except number of units)

(Unaudited)

June 30, 2015

December 31, 2014

ASSETS

Current assets:

Cash and cash equivalents

$ 58,813

$ 8,255

Accounts receivable:

Oil, natural gas and natural gas liquids revenues

28,425

32,758

Related party

-

1,043

Other

3,596

4,570

Derivative asset

72,683

113,044

Other current assets

1,549

2,000

Assets held for sale

-

315,173

Total current assets

165,066

476,843

Oil and natural gas properties, net of accumulated 

depreciation, depletion and amortization; June 30,

 2015, $888,073; December 31, 2014, $778,679

1,589,324

1,710,925

Other property, net of accumulated depreciation 

and amortization; June 30, 2015, $917; 

December 31, 2014, $898

1,104

1,141

Restricted cash

-

33,768

Long–term derivative asset

12,895

20,647

Other assets

7,161

5,879

Total assets

$ 1,775,550

$ 2,249,203

LIABILITIES AND OWNERS' EQUITY

Current liabilities:

Accounts payable and accrued liabilities:

Third party

$ 37,190

$ 47,878

Related party

7,344

-

Total current liabilities

44,534

47,878

Asset retirement obligations

105,657

103,832

Long–term debt

499,444

1,030,391

Other long–term liabilities

477

989

Commitments and contingencies

Owners' equity:

Common unitholders - 48,871,399 units and 

48,572,019 units issued and outstanding as of 

June 30, 2015 and December 31, 2014, 

respectively

1,135,862

1,077,826

General partner interest

(10,424)

(11,713)

Total owners' equity

1,125,438

1,066,113

Total liabilities and owners' equity

$ 1,775,550

$ 2,249,203

 

Condensed Consolidated Statements of Operations

(In $ thousands, except per unit data)

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2015

2014

2015

2014

Revenues:

Oil, natural gas and natural gas liquids revenues

$ 43,722

$ 88,125

$ 90,147

$ 182,199

Transportation and marketing–related revenues

734

1,235

1,551

2,500

Total revenues

44,456

89,360

91,698

184,699

Operating costs and expenses: 

Lease operating expenses

23,800

26,028

47,324

51,423

Cost of purchased natural gas

504

942

1,078

1,912

Dry hole and exploration costs

272

1,653

686

1,971

Production taxes

1,603

2,957

3,351

6,480

Asset retirement obligations accretion expense 

1,213

1,203

2,414

2,390

Depreciation, depletion and amortization

25,337

25,026

51,233

51,238

General and administrative expenses

7,944

12,749

20,359

25,047

Impairment of oil and natural gas properties

48,284

1,069

106,457

1,321

Loss (gain) on sale of oil and natural gas properties

6

-

(531)

(1,484)

Total operating costs and expenses

108,963

71,627

232,371

140,298

Operating (loss) income

(64,507)

17,733

(140,673)

44,401

Other (expense) income, net:

(Loss) gain on derivatives, net

(9,246)

(17,817)

14,364

(40,812)

Interest expense

(13,101)

(12,445)

(27,236)

(24,517)

Other income (expense), net

41

206

(155)

380

Total other expense, net 

(22,306)

(30,056)

(13,027)

(64,949)

Loss from continuing operations before income taxes

(86,813)

(12,323)

(153,700)

(20,548)

Income taxes

473

78

623

333

Loss from continuing operations

(86,340)

(12,245)

(153,077)

(20,215)

Income from discontinued operations

250,442

3,222

255,512

4,939

Net income (loss)

$ 164,102

($ 9,023)

$ 102,435

($ 15,276)

Basic and diluted earnings per limited partner unit:

Loss from continuing operations

($ 1.74)

($ 0.26)

($ 3.08)

($ 0.43)

Income from discontinued operations

$ 4.99

$ 0.07

$ 5.11

$ 0.10

Net income (loss)

$ 3.25

($ 0.19)

$ 2.03

($ 0.33)

Weighted average limited partner units outstanding (basic and diluted)

48,871

48,572

48,833

48,555

Distributions declared per unit

$ 0.500

$ 0.773

$ 1.000

$ 1.545

 

Condensed Consolidated Statements of Cash Flows

(In $ thousands)

(Unaudited)

Six Months Ended June 30,

2015

2014

Cash flows from operating activities:

Net income (loss)

$ 102,435

($ 15,276)

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

Income from discontinued operations

(255,512)

(4,939)

Asset retirement obligations accretion expense

2,414

2,390

Depreciation, depletion and amortization

51,233

51,238

Equity–based compensation cost

7,294

11,058

Impairment of oil and natural gas properties

106,457

1,321

Gain on sales of oil and natural gas properties

(531)

(1,484)

(Gain) loss on derivatives, net

(14,364)

40,812

Cash settlements of matured derivative contracts

62,477

(11,555)

Other

890

1,271

Changes in operating assets and liabilities:

Accounts receivable

6,350

(12,978)

Other current assets

457

(813)

Accounts payable and accrued liabilities

4,714

2,478

Other, net

(583)

(243)

Net cash flows provided by operating activities from continuing operations

73,731

63,280

Net cash flows used in operating activities from discontinued operations

(372)

-

Net cash flows provided by operating activities    

73,359

63,280

Cash flows from investing activities:

Additions to oil and natural gas properties 

(44,854)

(44,865)

Prepaid drilling costs

-

(2,346)

Proceeds from sale of oil and natural gas properties

774

7,315

Restricted cash

33,768

-

Other

32

34

Net cash flows used in investing activities from continuing operations

(10,280)

(39,862)

Net cash flows provided by (used in) investing activities from discontinued operations

572,160

(83,188)

Net cash flows provided by (used in) investing activities

561,880

(123,050)

Cash flows from financing activities:

Repayment of long-term debt borrowings

(561,000)

-

Long-term debt borrowings

30,000

144,000

Loan costs incurred

(3,277)

-

Contributions from general partner

91

154

Distributions paid

(50,495)

(77,412)

Other

-

(5)

Net cash flows (used in) provided by financing activities

(584,681)

66,737

Increase in cash and cash equivalents

50,558

6,967

Cash and cash equivalents – beginning of period

8,255

11,698

Cash and cash equivalents – end of period

$ 58,813

$ 18,665

Non-GAAP Measures

We define Adjusted EBITDAX as net income (loss) plus income from discontinued operations, EBITDAX from discontinued operations, 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, loss (gain) on sale of oil and natural gas properties, and loss on sale of investment in unconsolidated affiliates, contained in Other (expense) income, net. 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 June 30,

Six Months Ended June 30,

2015

2014

2015

2014

Net income (loss)

$ 164,102

($ 9,023)

$ 102,435

($ 15,276)

Add:

Income from discontinued operations

(250,442)

(3,222)

(255,512)

(4,939)

EBITDAX from discontinued operations

7,644

5,446

15,941

8,960

Income taxes

(473)

(78)

(623)

(333)

Interest expense, net

13,097

12,445

27,232

24,517

Cash settlements of matured interest rate swaps

871

880

1,736

1,757

Depreciation, depletion and amortization

25,337

25,026

51,233

51,238

Asset retirement obligations accretion expense

1,213

1,203

2,414

2,390

Loss (gain) on derivatives, net

9,246

17,817

(14,364)

40,812

Cash settlements of matured derivative contracts

31,944

(5,397)

62,477

(11,555)

Non-cash equity compensation expense

2,342

6,555

7,294

11,058

Impairment of oil and natural gas properties

48,284

1,069

106,457

1,321

Non-cash inventory write down expense

-

(0)

149

53

Dry hole and exploration costs

272

1,653

686

1,971

Loss (gain) on sale of oil and natural gas properties

6

-

(531)

(1,484)

Loss on sale of investment in unconsolidated affiliates, contained in Other (expense) income, net

-

-

358

-

Adjusted EBITDAX

$ 53,443

$ 54,373

$ 107,382

$ 110,490

Less:

Cash income taxes

-

(27)

-

1

Cash interest expense, net

13,031

11,839

26,608

23,306

Realized losses on interest rate swaps

871

880

1,736

1,757

Estimated maintenance capital expenditures (1)

13,382

15,272

26,797

30,448

Distributable Cash Flow

$ 26,159

$ 26,409

$ 52,241

$ 54,978

(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 as of August 10, 2015

 Swap 

 Swap 

Period

Index

 Volume 

 Price 

Natural Gas (Mmmbtus)

3Q-4Q 2015

NYMEX

19,964.0

$4.857

2016

NYMEX

32,940.0

$3.673

2017

NYMEX

14,600.0

$3.314

Crude (Mbbls)

3Q-4Q 2015

WTI

644.0

$90.275

2016

WTI

366.0

$90.135

Propane (Mbbls)

3Q-4Q 2015

Mt Belvieu

239.2

$24.982

Note: Includes hedges added since June 30, 2015 as discussed earlier in this press release.

EV Energy Partners, L.P., Houston Nicholas Bobrowski 713-651-1144 http://www.evenergypartners.com

 

SOURCE EV Energy Partners, L.P.



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