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 November 9, 2015 - 6:35 AM EST
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EV Energy Partners Announces Third Quarter 2015 Results; Distribution and Guidance Updates

HOUSTON, Nov. 9, 2015 /PRNewswire/ -- EV Energy Partners, L.P. (NASDAQ: EVEP) today announced results for the third quarter of 2015 and the filing of its Form 10-Q with the Securities and Exchange Commission.  Additionally, EVEP has provided an update on distributions and fourth quarter 2015 guidance.

Third Quarter 2015 Results

Adjusted EBITDAX for the third quarter of 2015 was $43.8 million, a 29 percent decrease from the third quarter of 2014 and an 18 percent decrease from the second quarter of 2015.  Distributable Cash Flow for the third quarter of 2015 was $20.1 million, a 37 percent decrease from the third quarter of 2014 and a 23 percent decrease from the second quarter of 2015.  The decreases in Adjusted EBITDAX and Distributable Cash Flow are primarily due to the sale of our Utica midstream interests, 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 third quarter of 2015 was 9.7 Bcf of natural gas, 212 Mbbls of oil and 526 Mbbls of natural gas liquids, or 153.8 Mmcfe/day.  This represents a 13 percent decrease from third quarter 2014 production of 175.8 Mmcfe/d and a 6 percent decrease from second quarter 2015 production of 162.8 Mmcfe/day. Third quarter production was primarily impacted by adjustments from prior periods, timing of certain well completions and natural decline.

EVEP reported a net loss of $9.8 million, or $(0.20) per basic and diluted weighted average limited partner unit outstanding, for the third quarter of 2015. Included in net loss were the following items:

  • $15.8 million of impairment charges 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;
  • $1.2 million of non-cash gains on commodity derivatives;
  • $2.3 million of non-cash costs contained in general and administrative expenses;
  • $0.5 million of cash due diligence and other transaction costs for the acquisitions completed on October 1st contained in general and administrative expenses; and
  • $1.0 million of dry hole and exploration costs.

For the second quarter of 2015, EVEP reported net income of $164.1 million, or $3.25 per basic and diluted weighted average limited partner unit outstanding, which included the sale of our Utica midstream interests.  For the third quarter of 2014, EVEP reported net income of $42.6 million, or $0.85 per basic and diluted weighted average limited partner unit outstanding.

Distribution Update

As EVEP moves forward into 2016, both the volumes and swap prices of its natural gas and crude oil hedges decline from 2015 levels.  In addition, there has been a prolonged downturn in commodity prices over the past year, including the deterioration in future strip prices for crude oil, natural gas, and natural gas liquids.  Due to these factors, EVEP expects that its distributable cash flow, beginning in 2016, will be below levels necessary to maintain a $0.50 per unit quarterly distribution, absent a significant, near-term rebound in commodity prices.  Management believes it is important to maintain a strong liquidity position during times of low commodity prices until there is more certainty and visibility on the timing and extent of a rebound in commodity prices. Therefore, over the next several months, as the budgeting process for 2016 is completed, EVEP will address its future quarterly distribution levels and policies to align future distributions with projected distributable cash flow. EVEP expects to provide additional information on future quarterly distribution levels by its next distribution announcement date in late January.

"In early October, we closed on our previously announced acquisitions and amended our credit facility, which included an increase in our borrowing base to $625 million.  The acquisitions increase our production and reserves by over 30 percent and leave the Partnership with over $425 million of liquidity, which we believe is very important during this period of depressed commodity prices.  While we expect higher commodity prices over time, our goal is to maintain liquidity and flexibility to manage through the current commodity price environment, including addressing appropriate future quarterly distribution levels through this downturn," commented Mr. Michael Mercer, President and CEO.

Fourth Quarter 2015 Guidance Update

With the closing of the previously announced acquisitions on October 1, updated fourth quarter guidance ranges including the acquisitions are as follows:    

 

($ in millions)



4Q15


Net Production







Natural Gas (Mmcf)



13,140

-

13,680


Crude Oil (Mbbls)



355

-

370


Natural Gas Liquids (Mbbls)



660

-

685


Total Mmcfe



19,230

-

20,010









Average Daily Production (Mmcfe/d)



209

-

218









Net Transportation Margin



$0.2

-

$0.3









Average Price Differential vs NYMEX







Natural Gas ($/Mcf)



$0.39

-

$0.49


Crude Oil ($/Bbl)



$3.00

-

$5.00


NGL (% of NYMEX Crude Oil)



26%


30%









Expenses







Operating Expenses:







LOE and other



$30.0

-

$34.0


Production Taxes (as % of revenue)



4.0%

-

5.0%









General and administrative expense



$5.9

-

$7.4









E&P Capital Expenditures



$10.0

-

$11.0


 

Quarterly Report on Form 10-Q

EVEP's financial statements and related footnotes are available in the third 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 October 29, 2015, EV Energy Partners, L.P. will host an investor conference call on November 9, 2015, at 9 a.m. Eastern Time (8 a.m. Central).  Investors interested in participating in the call may dial 1-888-632-5023 (quote conference ID 672346) 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)

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

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

September 30,


Nine Months Ended

September 30,



2015


2014


2015


2014

Production data:









Oil (Mbbls)


212


270


690


790

Natural gas liquids (Mbbls)


526


593


1,671


1,714

Natural gas (Mmcf)


9,720


11,000


30,326


32,798

Net production (Mmcfe)


14,147


16,172


44,491


47,817

Average sales price per unit: (1)









Oil (Bbl)


$ 41.27


$ 93.73


$ 46.19


95.54

Natural gas liquids (Bbl)


11.93


29.30


14.11


$ 31.00

Natural gas (Mcf)


2.32


3.71


2.38


4.18

Mcfe


2.66


5.16


2.87


5.56

Average unit cost per Mcfe:









Production costs:









Lease operating expenses


$ 1.59


$ 1.64


$ 1.57


$ 1.63

Production taxes


0.10


0.19


0.11


0.20

Total


1.69


1.83


1.68


1.83

Asset retirement obligations accretion expense


0.08


0.08


0.08


0.08

Depreciation, depletion and amortization


1.66


1.59


1.68


1.61

General and administrative expenses


0.61


0.60


0.66


0.73










(1) Prior to $35.9 million and $4.3 million of net hedge gains (losses) on settlements of commodity derivatives for the three months ended September 30, 2015 and September 30, 2014, respectively, and $100.1 million and ($5.5) million for the nine months ended September 30, 2015 and September 30, 2014, respectively.

 

 

Condensed Consolidated Balance Sheets





(In $ thousands, except number of units)





(Unaudited)







September 30, 2015


December 31, 2014

ASSETS





Current assets:





Cash and cash equivalents


$ 39,861


$ 8,255

Accounts receivable:





Oil, natural gas and natural gas liquids revenues


19,488


32,758

Related party


-


1,043

Other


5,019


4,570

Derivative asset


71,406


113,044

Other current assets


1,108


2,000

Assets held for sale


-


315,173

Total current assets


136,882


476,843






Oil and natural gas properties, net of accumulated 





depreciation, depletion and amortization; September 30,





 2015, $926,744; December 31, 2014, $778,679


1,552,097


1,710,925

Other property, net of accumulated depreciation 





and amortization; September 30, 2015, $926; 





December 31, 2014, $898


1,087


1,141

Restricted cash


-


33,768

Long–term derivative asset


15,323


20,647

Other assets


32,839


5,879

Total assets


$ 1,738,228


$ 2,249,203











LIABILITIES AND OWNERS' EQUITY















Current liabilities:





Accounts payable and accrued liabilities:





Third party


$ 45,106


$ 47,878

Related party


2,226


-

Total current liabilities


47,332


47,878






Asset retirement obligations


98,249


103,832

Long–term debt


499,472


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 





September 30, 2015 and December 31, 2014, 





respectively


1,103,771


1,077,826

General partner interest


(11,073)


(11,713)

Total owners' equity


1,092,698


1,066,113

Total liabilities and owners' equity


$ 1,738,228


$ 2,249,203

 

 

Condensed Consolidated Statements of Operations









(In $ thousands, except per unit data)









(Unaudited)











Three Months Ended
September 30,


Nine Months Ended
September 30,






2015


2014


2015


2014

Revenues:









Oil, natural gas and natural gas liquids revenues


$ 37,587


$ 83,440


$ 127,734


$ 265,639

Transportation and marketing–related revenues


734


1,091


2,285


3,591

Total revenues


38,321


84,531


130,019


269,230










Operating costs and expenses: 









Lease operating expenses


22,509


26,579


69,833


78,002

Cost of purchased natural gas


510


813


1,588


2,725

Dry hole and exploration costs


1,034


3,972


1,720


5,943

Production taxes


1,357


3,034


4,708


9,514

Asset retirement obligations accretion expense 


1,134


1,244


3,548


3,634

Depreciation, depletion and amortization


23,485


25,723


74,718


76,961

General and administrative expenses


8,609


9,688


28,968


34,735

Impairment of oil and natural gas properties


15,787


946


122,244


2,267

Gain on sales of oil and natural gas properties


-


-


(531)


(1,484)

Total operating costs and expenses


74,425


71,999


306,796


212,297










Operating (loss) income


(36,104)


12,532


(176,777)


56,933










Other income (expense), net:









Gain (loss) on derivatives, net


37,042


37,548


51,406


(3,264)

Interest expense


(11,043)


(13,676)


(38,279)


(38,193)

Other income, net


206


76


51


456

Total other income (expense), net 


26,205


23,948


13,178


(41,001)










(Loss) income from continuing operations before income taxes


(9,899)


36,480


(163,599)


15,932

Income taxes


61


(157)


684


176

(Loss) income from continuing operations


(9,838)


36,323


(162,915)


16,108

Income from discontinued operations


-


6,297


255,512


11,236

Net (loss) income


($ 9,838)


$ 42,620


$ 92,597


$ 27,344










Basic and diluted earnings per limited partner unit:









(Loss) income from continuing operations


($ 0.20)


$ 0.72


($ 3.29)


$ 0.29

Income from discontinued operations


-


$ 0.13


$ 5.12


$ 0.23

Net (loss) income


($ 0.20)


$ 0.85


$ 1.83


$ 0.52










Weighted average limited partner units outstanding (basic and diluted)


48,871


48,572


48,846


48,561










Distributions declared per unit


$ 0.500


$ 0.774


$ 1.500


$ 2.319










 

 

Condensed Consolidated Statements of Cash Flows





(In $ thousands)





(Unaudited)


Nine Months Ended 
September 30,





2015


2014

Cash flows from operating activities:





Net income


$ 92,597


$ 27,344

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





Income from discontinued operations


(255,512)


(11,236)

Asset retirement obligations accretion expense


3,548


3,634

Depreciation, depletion and amortization


74,718


76,961

Equity–based compensation cost


9,635


15,345

Impairment of oil and natural gas properties


122,244


2,267

Gain on sales of oil and natural gas properties


(531)


(1,484)

(Gain) loss on derivatives, net


(51,406)


3,264

Cash settlements of matured derivative contracts


98,368


(8,170)

Other


288


5,527

Changes in operating assets and liabilities:





Accounts receivable


13,864


(7,077)

Other current assets


894


(833)

Accounts payable and accrued liabilities


10,610


12,360

Other, net


(120)


(733)

Net cash flows provided by operating activities from continuing operations


119,197


117,169

Net cash flows used in operating activities from discontinued operations


(372)


-

Net cash flows provided by operating activities    


118,825


117,169






Cash flows from investing activities:





Additions to oil and natural gas properties 


(58,687)


(73,356)

Deposit on acquisition of oil and natural gas properties


(25,900)


-

Prepaid drilling costs


-


(2,501)

Proceeds from sale of oil and natural gas properties


1,439


7,365

Restricted cash


33,768


-

Other


48


52

Net cash flows used in investing activities from continuing operations


(49,332)


(68,440)

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


572,160


(105,200)

Net cash flows provided by (used in) investing activities


522,828


(173,640)






Cash flows from financing activities:





Repayment of long-term debt borrowings


(561,000)


-

Long-term debt borrowings


30,000


172,000

Loan costs incurred


(3,400)


-

Contributions from general partner


91


154

Distributions paid


(75,738)


(116,172)

Other


-


(5)

Net cash flows (used in) provided by financing activities


(610,047)


55,977






Increase (decrease) in cash and cash equivalents


31,606


(494)

Cash and cash equivalents – beginning of period


8,255


11,698

Cash and cash equivalents – end of period


$ 39,861


$ 11,204






 

Non-GAAP Measures

We define Adjusted EBITDAX as net (loss) income 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, (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, gain on sales of oil and natural gas properties, and loss on sale of investment in unconsolidated affiliates, contained in Other 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 (Loss) Income to Adjusted EBITDAX and Distributable Cash Flow



(In $ thousands)









(Unaudited)











Three Months Ended 
September 30,


Nine Months Ended 
September 30,






2015


2014


2015


2014










Net (loss) income


($ 9,838)


$ 42,620


$ 92,597


$ 27,344










Add:









Income from discontinued operations


-


(6,297)


(255,512)


(11,236)

EBITDAX from discontinued operations


-


8,804


15,941


17,766

Income taxes


(61)


157


(684)


(176)

Interest expense, net


11,032


13,676


38,264


38,192

Cash settlements of matured interest rate swaps


-


878


1,736


2,635

Depreciation, depletion and amortization


23,485


25,723


74,718


76,961

Asset retirement obligations accretion expense


1,134


1,244


3,548


3,634

(Gain) loss on derivatives, net


(37,042)


(37,548)


(51,406)


3,264

Cash settlements of matured derivative contracts


35,891


3,386


98,368


(8,170)

Non-cash equity compensation expense


2,341


4,287


9,635


15,345

Impairment of oil and natural gas properties


15,787


946


122,244


2,267

Non-cash inventory write down expense


-


-


149


53

Dry hole and exploration costs


1,034


3,972


1,720


5,943

Gain on sales of oil and natural gas properties


-


-


(531)


(1,484)

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


-


-


358


-

Adjusted EBITDAX


$ 43,763


$ 61,848


$ 151,145


$ 172,338










Less:









Cash income taxes


-


283


-


282

Cash interest expense, net


10,631


13,069


37,240


36,374

Realized losses on interest rate swaps


-


878


1,736


2,635

Estimated maintenance capital expenditures (1)


13,000


15,440


39,797


45,888

Distributable Cash Flow


$ 20,132


$ 32,178


$ 72,372


$ 87,159










(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 November 9, 2015





 Swap 

 Swap 

Period

Index

 Volume 

 Price 

Natural Gas (Mmmbtus)




4Q 2015

NYMEX

11,362.0

$4.65

2016

NYMEX

39,894.0

$3.57

2017

NYMEX

21,900.0

$3.24





Crude (Mbbls)




4Q 2015

WTI

357.7

$89.61

2016

WTI

366.0

$90.14





Propane (Mbbls)




4Q 2015

Mt Belvieu

119.6

$24.98





Ethane (Mbbls)




2016

Mt Belvieu

0.9

$9.14





Period

Index

 Put Volume 

 Floor Price 

Ethane (Mbbls)




4Q 2015

Mt Belvieu

2.3

$10.50









Interest Rate Swap Agreements

 Notional Amount 

Fixed Rate



 (in $ mill) 


2017


100.0

1.039%

2018 - September 2020


100.0

1.795%

 

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

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/ev-energy-partners-announces-third-quarter-2015-results-distribution-and-guidance-updates-300174647.html

SOURCE EV Energy Partners, L.P.


Source: PR Newswire (November 9, 2015 - 6:35 AM EST)

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