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HOUSTON, TX, May 10, 2010 (MARKETWIRE via COMTEX News Network) -- EV Energy Partners, L.P. (NASDAQ: EVEP) today announced results for the first quarter 2010 and filed its Form 10-Q with the Securities and Exchange Commission.
First Quarter 2010 Results
Adjusted EBITDA for the quarter was $32.2 million, a 3 percent increase over the first quarter of 2009 and a 7 percent decrease versus the fourth quarter of 2009. Distributable Cash Flow for the quarter was $20.1 million, a 19 percent increase over the first quarter of 2009 and a 5 percent decrease versus the fourth quarter of 2009. Adjusted EBITDA and Distributable Cash Flow are described in the attached table under "Non-GAAP Measures."
For the quarter ended March 31, 2010, EVEP produced 4.0 Bcf of natural gas, 126 MBbls of crude oil and 182 MBbls of natural gas liquids, or 5.83 Bcfe. This represents a 3 percent decrease from first quarter 2009 production of 6.01 Bcfe and a 6 percent decrease from the fourth quarter 2009 production of 6.18 Bcfe.
EVEP reported net income of $46.1 million, or $1.68 per basic and diluted weighted average limited partner unit outstanding, for the first quarter of 2010. Included in net income were $32.7 million of non-cash net unrealized gains on commodity and interest rate derivatives and $1.1 million of non-cash costs contained in general and administrative expenses. For the first quarter of 2009, net income was $38.3 million, or $2.23 per basic and diluted weighted average limited partner unit outstanding, which included $26.7 million of non-cash net unrealized gains on commodity and interest rate derivatives and $0.6 million of non-cash costs contained in general and administrative expenses. For the fourth quarter of 2009, net loss was $2.5 million, or $0.19 per basic and diluted weighted average limited partner unit outstanding, which included $17.2 million of non-cash net unrealized gains on commodity and interest rate derivatives and $1.5 million of non-cash costs contained in general and administrative expenses.
The $32.7 million non-cash net unrealized gain on derivatives for the first quarter of 2010 was primarily due to the decrease in future oil and natural gas prices that occurred from January 1, 2010 to March 31, 2010 and the effect of such decreased prices on the mark-to-market valuation of EVEP's outstanding commodity derivatives which extend through August 2014.
On March 31, 2010, EVEP entered into an agreement to sell certain unproved acreage for approximately $4.8 million. The sale is subject to certain conditions, including purchaser due diligence, and is expected to close by June 1, 2010.
John Walker, Chairman and CEO, said, "During the first quarter of 2010 we closed our most recent Appalachian Basin acquisition for approximately $138 million and completed a 3.45 million common unit offering, raising net proceeds of $95 million. We are in the process of integrating the two Appalachian Basin acquisitions we completed during the past six months, which we believe contain significant upside opportunities."
Revised 2010 Guidance
As previously disclosed in its March 31, 2010 press release, EVEP did not acquire all of the estimated proved reserves and production on its Appalachian Basin acquisition due to third party consents on certain properties not received as of the initial closing date. EVEP's prior 2010 guidance issued on March 16, 2010 had included the assumption that all of these assets would be acquired as of the end of the first quarter of 2010. In addition, due to the current natural gas price environment, EVEP is reducing its planned capital expenditures for 2010 by approximately $7 million, or approximately 25 percent, from that contained in its previous guidance. The primary changes in the revised guidance due to the above factors are a slight reduction in production and the reduction in capital expenditures. The revised guidance estimates for the remainder of 2010 are presented in the table below.
2010 Guidance
2nd Qtr 2010 3rd-4th Qtrs 2010
------------------- -------------------
Net Production:
Natural Gas (MMcf) 4,550 - 4,900 9,300 - 10,250
Crude Oil (MBbls) 165 - 190 340 - 390
Natural Gas Liquids (MBbls) 160 - 185 330 - 375
Total Mmcfe 6,500 - 7,150 13,320 - 14,840
Average Daily Production (Mmcfe/d) 71.4 - 78.6 72.4 - 80.7
Average Price Differential vs
NYMEX
Natural Gas (% of NYMEX
natural gas) 96% - 103% 96% - 103%
Crude Oil (% of NYMEX Crude Oil) 90% - 96% 90% - 96%
Natural Gas Liquids (% of NYMEX
Crude Oil) 54% - 60% 54% - 60%
Transportation Margin
($ thous) (a) 325 - 375 650 - 750
Expenses:
Operating Expenses:
LOE and other 11,500 - 12,500 23,000 - 25,000
Production Taxes
(as % of revenue) 4.6% - 5.0% 4.6% - 5.0%
General and administrative
expense ($ thous) (b) 3,700 - 4,300 7,400 - 8,600
Capital Expenditures ($ thous) (c) 4,000 - 6,000 8,000 - 13,000
(a) Represents estimated transportation and marketing-related revenues less
cost of purchased natural gas.
(b) Excludes non-cash general and administrative expense, of which non-cash
unit based compensation is a part.
(c) Represents estimates for drilling and related capital expenditures.
Does not include any amounts for acquisitions of oil and gas
properties.
Quarterly Report on Form 10-Q
EVEP's financial statements and related footnotes are available on our first quarter 2010 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 May 5, 2010, EV Energy Partners, L.P. will host an investor conference call Tuesday, May 11, 2010 at 10 am (Eastern Time). Investors interested in participating in the call may dial (480) 629-9643 and ask for the EV Energy Partners call 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
March 31,
------------------
2010 2009
-------- --------
Production data:
Oil (MBbls) 126 127
Natural gas liquids (MBbls) 182 214
Natural gas (MMcf) 3,985 3,962
-------- --------
Net production (MMcfe) 5,833 6,010
Average sales price per unit (1):
Oil (Bbl) $ 74.46 $ 34.15
Natural gas liquids (Bbl) 45.54 23.95
Natural gas (Mcf) 5.25 4.17
Mcfe 6.62 4.33
Average unit cost per Mcfe:
Production costs:
Lease operating expenses (2) $ 1.96 $ 1.85
Production taxes 0.36 0.24
-------- --------
Total 2.32 2.09
Asset retirement obligations accretion expense 0.09 0.07
Depreciation, depletion and amortization 2.07 2.27
General and administrative expenses 0.81 0.71
(1) Prior to $10.1 and $19.6 million of net commodity derivative gains for
the three months ended March 31, 2010 and March 31, 2009, respectively.
(2) Lease operating expenses contains $0.2 million ($0.04 per mcfe) of
non-cash inventory write downs related to the Appalachian Basin
acquisition closed during the fourth quarter of 2009.
Unaudited Condensed Consolidated Balance Sheets
($ in thousands)
March 31, December 31,
2010 2009
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 19,163 $ 18,806
Accounts receivable:
Oil, natural gas and natural gas liquids
revenues 15,587 14,599
Related party 7,092 2,881
Other 7,494 1,034
Derivative asset 46,954 26,733
Other current assets 3,584 625
----------- -----------
Total current assets 99,874 64,678
Oil and natural gas properties, net of
accumulated depreciation, depletion and
amortization; March 31, 2010, $133,874;
December 31, 2009, $121,970 902,423 771,752
Other property, net of accumulated depreciation
and amortization; March 31, 2010, $346;
December 31, 2009, $319 1,751 742
Long-term derivative asset 79,648 68,549
Other assets 1,847 1,984
----------- -----------
Total assets $ 1,085,543 $ 907,705
=========== ===========
LIABILITIES AND OWNERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 16,311 $ 10,310
Derivative liability 841 1,543
----------- -----------
Total current liabilities 17,152 11,853
Asset retirement obligations 51,822 42,533
Long-term debt 345,000 302,000
Long-term liabilities 567 3,212
Long-term derivative liability 40 676
Commitments and contingencies
Owners' equity
Common unitholders 671,187 548,160
General partner interest (225) (729)
----------- -----------
Total owners' equity 670,962 547,431
----------- -----------
Total liabilities and owners' equity $ 1,085,543 $ 907,705
----------- -----------
Unaudited Condensed Consolidated Statements of Operations
($ in thousands, except per unit data)
Three Months Ended
March 31,
-------------------------
2010 2009
----------- -----------
Revenues:
Oil, natural gas and natural gas liquids
revenues $ 38,596 $ 26,007
Transportation and marketing-related revenues 1,578 3,218
----------- -----------
Total revenues 40,174 29,225
----------- -----------
Operating costs and expenses:
Lease operating expenses 11,432 11,147
Cost of purchased natural gas 1,220 1,476
Production taxes 2,127 1,427
Asset retirement obligations accretion expense 510 444
Depreciation, depletion and amortization 12,084 13,632
General and administrative expenses 4,724 4,253
Loss on sale of oil and natural gas properties 564 -
----------- -----------
Total operating costs and expenses 32,661 32,379
----------- -----------
Operating income (loss) 7,513 (3,154)
Other income (expense), net:
Realized gains on mark-to-market
derivatives, net 7,965 17,723
Unrealized gains on mark-to-market
derivatives, net 32,660 26,668
Interest expense (2,103) (2,876)
Other income, net 141 8
----------- -----------
Total other income, net 38,663 41,523
----------- -----------
Income before income taxes 46,176 38,369
Income taxes (52) (25)
----------- -----------
Net income $ 46,124 $ 38,344
=========== ===========
General partner's interest in net income,
including incentive distribution rights $ 3,212 $ 2,120
----------- -----------
Limited partners' interest in net income $ 42,912 $ 36,224
=========== ===========
Net Income per limited partner unit:
Basic $ 1.68 $ 2.23
Diluted $ 1.68 $ 2.23
Weighted average limited partner units
outstanding:
Basic 25,587 16,214
Diluted 25,615 16,214
Unaudited Condensed Consolidated Statements of Cash Flows
($ in thousands)
Three Months Ended
March 31,
-------------------------
2010 2009
----------- -----------
Cash flows from operating activities:
Net income $ 46,124 $ 38,344
Adjustments to reconcile net income to
net cash flows provided by operating
activities:
Asset retirement obligations accretion
expense 510 444
Depreciation, depletion and amortization 12,084 13,632
Equity-based compensation 1,066 619
Loss on sale of oil and natural gas
properties 564 -
Unrealized gain on derivatives, net (32,660) (26,594)
Amortization of deferred loan costs 137 151
Other (4) -
Changes in operating assets and liabilities:
Accounts receivable (4,746) 6,018
Other current assets 209 234
Accounts payable and accrued liabilities 643 (2,006)
Deferred revenues - (3,208)
Long-term liabilities (733) -
Other, net (39) 18
----------- -----------
Net cash flows provided by operating activities 23,155 27,652
----------- -----------
Cash flows from investing activities:
Acquisition of oil and natural gas properties (137,898) -
Development of oil and natural gas properties (2,411) (5,497)
Proceeds from sale of oil and natural gas
properties 82 -
----------- -----------
Net cash flows used in investing activities (140,227) (5,497)
----------- -----------
Cash flows from financing activities:
Long-term debt borrowings 138,000 -
Repayment of long-term debt borrowings (95,000) (17,000)
Proceeds from equity offering 92,770 -
Offering costs (97) -
Contribution from general partner 1,977 -
Distributions paid (20,221) (13,814)
----------- -----------
Net cash flows provided by (used in) financing
activities 117,429 (30,814)
----------- -----------
Increase (decrease) in cash and cash
equivalents 357 (8,659)
Cash and cash equivalents - beginning of period 18,806 41,628
----------- -----------
Cash and cash equivalents - end of period $ 19,163 $ 32,969
----------- -----------
Non GAAP Measures
We define Adjusted EBITDA as net income plus income taxes, interest expense, net, realized losses on interest rate swaps, depreciation, depletion and amortization, asset retirement obligations accretion expense, non-cash gains on derivatives, non-cash equity compensation expense, amortization of premiums on derivatives and other non-cash expenses. Distributable Cash Flow is defined as Adjusted EBITDA less income taxes, interest expense, net, realized losses on interest rate swaps, amortization of premiums on derivatives 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
March 31,
-------------------------
2010 2009
----------- -----------
Net income $ 46,124 $ 38,344
Add:
Income taxes 52 25
Interest expense, net 2,075 2,801
Realized losses on interest rate swaps 2,158 1,849
Depreciation, depletion and amortization 12,084 13,632
Asset retirement obligation accretion expense 510 444
Non-cash (gains) on derivatives (32,660) (26,594)
Non-cash equity compensation expense 1,066 619
Amortization of premiums on derivatives - 73
Non-cash loss on sale of oil and natural gas
properties 564 -
Non-cash inventory expense from 2009 Appalachian
Basin acquisition included in lease operating
expense 240 -
----------- -----------
Adjusted EBITDA $ 32,213 $ 31,193
=========== ===========
Less:
Income taxes 52 25
Interest expense, net 2,075 2,801
Realized losses on interest rate swaps 2,158 1,849
Amortization of premiums on derivatives - 73
Estimated maintenance capital expenditures (1) 7,875 9,600
----------- -----------
Distributable Cash Flow $ 20,052 $ 16,845
=========== ===========
(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.
CONTACT: EV Energy Partners, L.P., Houston Michael E. Mercer 713-651-1144 http://www.evenergypartners.com
SOURCE: EV Energy Partners, L.P.
http://www.evenergypartners.com
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