EV Energy Partners, L.P.
Aug 9, 2016
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EV Energy Partners Announces Second Quarter 2016 Results

HOUSTON, Aug. 09, 2016 (GLOBE NEWSWIRE) -- EV Energy Partners, L.P. (NASDAQ:EVEP) today announced results for the second quarter of 2016 and the filing of its Form 10-Q with the Securities and Exchange Commission

Second Quarter 2016 Results

For the second quarter 2016, EVEP reported a net loss of $29.0 million, or $(0.58) per basic and diluted weighted average limited partner unit outstanding compared to a net loss of $29.0 million, or $(0.58) per basic and diluted weighted average limited partner unit outstanding for the first quarter of 2016.  Included in net loss for the second quarter of 2016 were the following items:

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.  Net income for the second quarter of 2015 included a $246.7 million gain related to the sale of its interest in Utica East Ohio, which was partially offset by $48.3 million of impairment charges.

Production for the second quarter of 2016 was 13.0 Bcf of natural gas, 313 Mbbls of oil and 585 Mbbls of natural gas liquids, or 201.5 million cubic feet equivalent per day (Mmcfe/day). This represents flat production versus the first quarter of 2016 production of 201.4 Mmcfe/day and a 24 percent increase over the second quarter of 2015 production of 162.8 Mmcfe/day.  The increase over the second quarter of 2015 was primarily due to the addition of producing properties acquired on October 1, 2015

Adjusted EBITDAX for the second quarter of 2016 was $26.5 million, a 31 percent increase over the first quarter of 2016 Adjusted EBITDAX of $20.2 million and a 50 percent decrease from the second quarter of 2015 Adjusted EBITDAX of $53.4 million.  EVEP reported Distributable Cash Flow of $5.5 million for the second quarter of 2016, compared to $(1.2) million for the first quarter of 2016 and $26.2 million for the second quarter of 2015.  The increases in Adjusted EBITDAX and Distributable Cash Flow over the first quarter of 2016 were primarily attributable to lower operating expenses and higher realized oil and natural gas liquids prices, partially offset by lower realized natural gas prices.  The decreases in Adjusted EBITDAX and Distributable Cash Flow from the second quarter of 2015 were primarily attributable to lower realized oil and natural gas prices, lower realized hedge gains and the sale of EVEP's interest in Utica East Ohio in the second quarter of 2015, partially offset by the addition of producing properties acquired on October 1, 2015. Adjusted EBITDAX and Distributable Cash Flow are Non-GAAP financial measures and are described in the attached table under "Non-GAAP Measures."

"We continue to focus on reducing leverage and operating costs.  We recently completed our Senior Note repurchase program, increasing our total repurchases for 2016 to $82.7 million of Senior Notes for $35.0 million of cash.  At the end of the second quarter our total debt was $623 million, and we had over $170 million of liquidity between balance sheet cash and available borrowing base capacity," said Michael Mercer, President and CEO.

Special Meeting of Common Unitholders

A special meeting of EVEP's common unitholders has been called by the board of directors to be held at our offices located at 1001 Fannin, Suite 800, Houston, Texas 77002, on August 30, 2016, at 8:00 a.m., local time. At the special meeting, EVEP's common unitholders will be asked to consider and vote upon the following proposals:

The record date for this meeting was July 7, 2016.  Common unitholders as of the record date should have received notice and are entitled to vote.  Additional information may be found in "Definitive Proxy Statement" and "Definitive Additional Proxy Materials" filed July 20, 2016 with the Securities and Exchange Commission at https://www.sec.gov or through the Investor Relations/SEC Filings section of the EVEP website at http://www.evenergypartners.com.

"Your vote is very important.  Our board of directors unanimously recommends a vote "FOR" each of the proposals.  Even if you plan to attend the special meeting, we urge you to authorize your proxy or direct your vote by internet, telephone or mail pursuant to the instructions included on the proxy card," said Nicholas Bobrowski, Vice President and CFO.

Important Additional Information

In connection with the special meeting, EVEP filed a definitive proxy statement with the SEC in connection with the solicitation of proxies (the "Proxy Statement") on July 20, 2016.  EVEP, its general partner, directors and certain of its executive officers will be participants in the solicitation of proxies from the common unitholders in respect of the special meeting.  Common unitholders may obtain information regarding EVEP and its directors and executive officers in EVEP's Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the SEC on February 29, 2016 and the Proxy Statement. EVEP has made available or mailed a copy of the Proxy Statement to common unitholders of record on the record date.  Common unitholders may obtain a free copy of the Proxy Statement and other documents filed with the SEC by EVEP at the SEC's website at http://www.sec.gov or by directing a written request to:  EV Management at 1001 Fannin, Suite 800, Houston, Texas , 77002, Attn: Secretary, or sendmaterial@proxyvote.com. COMMON UNITHOLDERS ARE URGED TO READ THE PROXY STATEMENT AND THE OTHER RELEVANT MATERIALS BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE MATTERS TO BE VOTED ON AT THE ANNUAL MEETING BECAUSE THEY CONTAIN IMPORTANT INFORMATION.

Quarterly Report on Form 10-Q

EVEP's financial statements and related footnotes are available on our second quarter 2016 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

As announced on July 25, 2016, EV Energy Partners, L.P. will host an investor conference call on August 9, 2016, at 9 a.m. Eastern Daylight Time (8 a.m. Central).  Investors interested in participating in the call may dial 1-888-724-9493 (quote conference ID 7843664) 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

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)

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 production amounts 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 EVEP. 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.  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 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 EVEP with the Securities and Exchange Commission.  You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. 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,
   2016   2015   2016   2015 
Production data:        
Oil (Mbbls)    313     237     630     478 
Natural gas liquids (Mbbls)    585      563     1,187     1,145 
Natural gas (Mmcf)    12,951     10,018     25,769     20,606 
Net production (Mmcfe)   18,341   14,818   36,672   30,344 
Average sales price per unit: (1)        
Oil (Bbl) $41.08  $52.84  $35.06  $48.39 
Natural gas liquids (Bbl)  15.89   15.09   14.03    15.10 
Natural gas (Mcf)  1.56   2.27   1.60   2.41 
Mcfe  2.31   2.95   2.18   2.97 
Average unit cost per Mcfe:        
Production costs:        
Lease operating expenses $1.42  $1.61  $1.50  $1.56 
Production taxes  0.09   0.11   0.09   0.11 
Total  1.51   1.72   1.59   1.67 
Depreciation, depletion and amortization  1.73   1.71   1.63   1.69 
General and administrative expenses  0.43   0.54   0.45   0.68 
         
(1) Prior to $19.2 million and $32.8 million of net hedge gains on settlements of commodity derivatives for the three
months ended June 30, 2016 and June 30, 2015, respectively, and $39.0 million and $64.2 million for the six months
ended June 30, 2016 and June 30, 2015, respectively.
         


Condensed Consolidated Balance Sheets     
(In $ thousands, except number of units)     
(Unaudited)     
  June 30, 2016  December 31, 2015 
ASSETS     
      
Current assets:     
Cash and cash equivalents $2,846  $20,415  
Accounts receivable:     
Oil, natural gas and natural gas liquids revenues  31,772   24,285  
Other  1,282   7,137  
Derivative asset  13,940   60,662  
Other current assets  3,193   3,057  
Total current assets  53,033   115,556  
      
Oil and natural gas properties, net of accumulated       
depreciation, depletion and amortization; June 30,     
 2016, $1,031,352; December 31, 2015, $971,499  1,733,698   1,790,455  
Other property, net of accumulated depreciation      
and amortization; June 30, 2016, $986     
December 31, 2015, $970  1,018    1,019  
Long-term derivative asset  665   10,741  
Other assets  4,588   5,831  
Total assets $1,793,002  $1,923,602  
      
      
LIABILITIES AND OWNERS' EQUITY     
      
Current liabilities:     
Accounts payable and accrued liabilities:     
Third party $34,503  $43,135  
Related party  11,684     5,952  
Income taxes    -     11,657  
Derivative liability  3,265     -  
Total current liabilities  49,452   60,744  
      
Asset retirement obligations  176,211   174,003  
Long-term debt  621,652   688,614  
Long-term derivative liability  4,693     -  
Other long-term liabilities  1,332   1,682  
      
Commitments and contingencies     
      
Owners' equity:     
Common unitholders - 49,055,214 units and      
48,871,399 units issued and outstanding as of      
June 30, 2016 and December 31, 2015, respectively  953,788   1,011,509  
General partner interest  (14,126)  (12,950) 
Total owners' equity  939,662   998,559  
Total liabilities and owners' equity $1,793,002  $1,923,602   
      

 

Condensed Consolidated Statements of Operations         
(In $ thousands, except per unit data)          
(Unaudited)         
  Three Months Ended 
June 30,
 Six Months Ended 
June 30,
 
    
   2016   2015   2016   2015  
Revenues:         
Oil, natural gas and natural gas liquids revenues $42,365  $43,722  $80,104  $90,147  
Transportation and marketing-related revenues  466    734   977   1,551  
Total revenues  42,831   44,456   81,081   91,698  
          
Operating costs and expenses:          
Lease operating expenses  26,046   23,800   54,961   47,324  
Cost of purchased natural gas  305   504   641   1,078  
Dry hole and exploration costs  771   272    901   686  
Production taxes  1,704   1,603   3,375   3,351  
Accretion expense on obligations  2,049   1,213   4,089   2,414  
Depreciation, depletion and amortization  31,648   25,337   59,853   51,233  
General and administrative expenses  7,970   7,944   16,348   20,359  
Impairment of oil and natural gas properties  1,997   48,284   2,684   106,457  
Gain on settlement of contract    -     -    (3,185)    -  
Loss (gain) on sales of oil and natural gas properties    -     6      -   (531) 
Total operating costs and expenses   72,490   108,963   139,667   232,371  
          
Operating loss  (29,659)  (64,507)  (58,586)  (140,673) 
          
Other income (expense), net:         
(Loss) gain on derivatives, net  (35,585)  (9,246)  (25,751)  14,364  
Interest expense  (11,844)  (13,101)  (22,665)  (27,236) 
Gain on early extinguishment of debt  47,695     -   47,695     -  
Other income (expense), net   209   41   964   (155) 
Total other income (expense), net   475   (22,306)  243   (13,027) 
           
Loss from continuing operations before income taxes  (29,184)  (86,813)  (58,343)  (153,700) 
Income taxes  191     473   350   623  
Loss from continuing operations  (28,993)  (86,340)  (57,993)  (153,077) 
Income from discontinued operations    -   250,442     -     255,512  
Net (loss) income $(28,993) $164,102  $(57,993) $102,435  
          
Basic and diluted earnings per limited partner unit:         
Loss from continuing operations $(0.58) $(1.74) $(1.16) $(3.08) 
Income from discontinued operations    -  $4.99     -  $5.11  
Net (loss) income $(0.58) $3.25  $(1.16) $2.03  
          
Weighted average limited partner units outstanding (basic and diluted)  49,055   48,871   49,041   48,833  
          
Distributions declared per unit $  -  $0.50  $  -  $1.00  
          

 

Condensed Consolidated Statements of Cash Flows     
(In $ thousands)     
(Unaudited) Six Months Ended 
June 30,
 
   
   2016   2015  
Cash flows from operating activities:     
Net (loss) income $(57,993)  $102,435  
Adjustments to reconcile net (loss) income to net cash flows provided by operating activities:     
Income from discontinued operations     -   (255,512) 
Amortization of volumetric production payment liability  (2,043)    -  
Accretion expense on obligations  4,089   2,414  
Depreciation, depletion and amortization  59,853   51,233  
Equity-based compensation cost  2,964   7,294  
Impairment of oil and natural gas properties  2,684   106,457  
Gain on sales of oil and natural gas properties    -   (531) 
Loss (gain) on derivatives, net  25,751   (14,364) 
Cash settlements of matured derivative contracts  36,506   62,477  
Gain on early extinguishment of debt  (47,695)    -  
Other  1,760   890  
Changes in operating assets and liabilities:     
Accounts receivable  (1,835)  6,350  
Other current assets  (259)  457  
Accounts payable and accrued liabilities  2,510   4,714  
Income taxes  (11,657)  (583) 
Other, net   (201)    -  
Net cash flows provided by operating activities from continuing operations  14,434   73,731  
Net cash flows used in operating activities from discontinued operations    -   (372) 
Net cash flows provided by operating activities  14,434   73,359  
      
Cash flows from investing activities:     
Additions to oil and natural gas properties   (12,988)  (44,854) 
Proceeds from sale of oil and natural gas properties   2,420   774  
Cash settlements from acquired derivative contracts  2,499     -  
Restricted Cash    -     33,768  
Other  33   32  
Net cash flows used in investing activities from continuing operations  (8,036)  (10,280) 
Net cash flows provided by investing activities from discontinued operations    -   572,160  
Net cash flows (used in) provided by investing activities  (8,036)  561,880  
      
Cash flows from financing activities:     
Repayment of long-term debt borrowings   (33,000)  (561,000) 
Long-term debt borrowings  48,000    30,000  
Redemption of Senior Notes due 2019  (34,978)    -  
Loan costs incurred    (121)  (3,277) 
Contributions from general partner    -   91  
Distributions paid  (3,868)  (50,495) 
Net cash flows used in financing activities  (23,967)  (584,681) 
      
(Decrease) increase in cash and cash equivalents  (17,569)  50,558  
Cash and cash equivalents - beginning of period  20,415    8,255  
Cash and cash equivalents - end of period $2,846  $58,813  
      

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, accretion expense on obligations, amortization of volumetric production payment (VPP), loss (gain) on derivatives, net, cash settlements of matured derivative contracts, non-cash equity-based compensation, impairment of oil and natural gas properties,  non-cash inventory write down expense, dry hole and exploration costs, loss (gain) on sales of oil and natural gas properties, gain on settlement of contract, gain on early extinguishment of debt, and loss on sale of investment in unconsolidated affiliates, contained in Other income (expense), 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 quarterly distributions. 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
 
Six Months Ended
   
  Jun 30, 2016 Jun 30, 2015 Mar 31, 2016 Jun 30, 2016 Jun 30, 2015
           
Net (loss) income $(28,993) $164,102  $(29,000) $(57,993) $102,435 
            
Add:          
Income from discontinued operations    -   (250,442)    -     -   (255,512)
EBITDAX from discontinued operations    -   7,644     -     -   15,941 
Income taxes  (191)  (473)  (159 )  (350)  (623)
Interest expense, net  11,840   13,097   10,816    22,655   27,232 
Cash settlements of matured interest rate swaps    -   871     -     -   1,736 
Depreciation, depletion and amortization  31,648   25,337   28,205   59,853   51,233 
Accretion expense on obligations  2,049    1,213   2,040   4,089   2,414 
Amortization of VPP  (1,023)    -   (1,020)  (2,043)    - 
Loss (gain) on derivatives, net  35,585   9,246   (9,834)  25,751    (14,364)
Cash settlements of matured derivative contracts  19,180   31,944   19,825   39,005   62,477 
Non-cash equity-based compensation  1,364   2,342   1,600   2,964   7,294 
Impairment of oil and natural gas properties  1,997   48,284   687   2,684    106,457 
Non-cash inventory write down expense    -     -   123   123   149 
Dry hole and exploration costs  771   272   130   901   686 
Loss (gain) on sales of oil and natural gas properties    -   6     -     -   (531)
Gain on settlement of contract    -     -   (3,185)  (3,185)    - 
Gain on early extinguishment of debt  (47,695)    -     -   (47,695)    - 
Loss on sale of investment in unconsolidated affiliates, contained in Other income (expense), net    -     -     -     -   358 
Adjusted EBITDAX $26,532  $53,443  $20,228  $46,759  $107,382 
           
Less:          
Cash income taxes    -     -     -     -     - 
Cash interest expense, net  9,984   13,031   10,399   20,383   26,608 
Realized losses on interest rate swaps     -   871     -     -   1,736 
Estimated maintenance capital expenditures (1)   11,000   13,382   11,000   22,000   26,797 
Distributable Cash Flow $5,548  $26,159  $(1,171) $4,376  $52,241 
           


 (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.
  
EV Energy Partners, L.P., Houston

Nicholas Bobrowski

713-651-1144

http://www.evenergypartners.com

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Source: EV Energy Partners, L.P.

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