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Current MCEP Stock Info

Reports Quarter-Over-Quarter Production Growth of nearly 30% in Q4’14

Mid-Con Energy Partners (ticker: MCEP), a U.S. E&P master limited partnership (MLP), announced its fourth quarter and full-year 2014 results this week. According to the release, production for fourth quarter 2014 averaged 4,011 BOEPD, an increase of 29.5% sequentially and 57.7% year-over-year. Adjusted EBITDA was $17.8 million, 16.7% more than in Q3’14 and 23.6% more than fourth quarter 2013, showing continued growth. The company’s distributable cash flow (DCF) was $13.5 million, up 17.0% sequentially and 9.8% more year-over-year. The company’s distribution coverage was 3.59x and 4.15x pro forma of acquisitions closed during the quarter. Cash distribution for Q4’14 was $0.125 per unit, or $0.50 per unit annualized.

During the fourth quarter of 2014, MCEP issued 5.8 million common units for net proceeds of approximately $96.0 million, which were used to fund a portion of the Eastern Shelf acquisition in the Permian Basin. The $117.6 million acquisition, which closed on November 17, 2014, was for net proved reserves (68% proved developed and 89% oil weighted) estimated at 6.1 MMBOE with average Q2’14 net production of 1,197 BOEPD.

Compared to a group of 12 U.S. E&P MLPs in EnerCom’s MLP Scorecard, MCEP’s dividend coverage ratio of 79.6% is well above the average of -12.4%. The company’s FCF/unit of $6.92 is substantially higher than the group average of $0.05 as well. Entering 2015, the company has approximately $38.2 million in liquidity and plans on spending $13 million on development. In a conference call, management said the available capital is “more than sufficient” to survive the current environment and expects similar expenditure levels in 2016.

Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. The company or companies covered in this note did not review the note prior to publication.

Analyst Commentary

Kevin Smith, Raymond James Equity Research 03.04.2015
Mid-Con Energy Partners turned in a strong quarter as it realized the benefits of its recent Eastern Shelf acquisition. However, the company’s liquidity remains constrained and, combined with a relatively light hedge book, has dictated that Mid-Con is in de-levering mode this year. Post the 76% distribution cut, Mid-Con’s distribution coverage ratio is the highest in our coverage universe. That being said, we anticipate that management will wait for oil and gas prices to improve, reduce its leverage ratio, and boost its hedge book before looking to grow its distribution. We maintain our Market Perform rating.  

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Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable. This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note. This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results. EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services. In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies. As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note. EnerCom, or its principals or employees, may have an economic interest in any of the companies covered in this report or on Oil & Gas 360®. As a result, readers of EnerCom’s reports or Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this report.