EV Energy Partners, L.P.
EV Energy Partners, LP (Form: 8-K, Received: 03/02/2017 16:03:11)

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported):    March 2, 2017 (March 1, 2017)

 

EV Energy Partners, L.P.

(Exact name of registrant as specified in charter)

 

Delaware

(State of Incorporation)

001-33024

(Commission File No.)

20-4745690

(I.R.S. Employer Identification No.)

 

1001 Fannin, Suite 800, Houston, Texas

(Address of Principal Executive Offices)

77002

(Zip Code)

 

Registrant’s telephone number, including area code: (713) 651-1144

 

 

 

(former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

Item 7.01 Regulation FD Disclosure.

 

The following information is being furnished pursuant to Item 7.01 “Regulation FD Disclosure.” This information shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

 

On March 1, 2017, the Partnership issued a press release announcing its fourth quarter and full year 2016 results, additional commodity hedges, year-end proved reserves, and 2017 guidance.  A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference.

 

Item 9.01 Financial Statements and Exhibits. (Information furnished in this Item 9.01 is furnished pursuant to Item 7.01.)

 

  (d) Exhibits.

 

  99.1 News Release of EV Energy Partners, L.P. dated March 1, 2017

 

 

 

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  EV Energy Partners, L.P.
     
Dated: March 2, 2017 By: /s/ NICHOLAS BOBROWSKI
    Nicholas Bobrowski  
   

Vice President and Chief Financial Officer of EV

Management LLC, general partner of EV Energy GP, L.P.,

general partner of EV Energy Partners, L.P.  

 

 

 

 

 

 

EXHIBIT INDEX

 

Exhibit No.   Description
     
99.1   News Release of EV Energy Partners, L.P. dated March 1, 2017

 

 

 

 

 

 

Exhibit 99.1

 

EV Energy Partners Announces Fourth Quarter and Full Year 2016 Results, Additional Commodity Hedges, Year-end Proved Reserves and 2017 Guidance

 

HOUSTON, March 1, 2017 (GLOBE NEWSWIRE) -- EV Energy Partners, L.P. (NASDAQ: EVEP) today announced results for the fourth quarter and full year 2016 and the filing of its Form 10-K with the Securities and Exchange Commission. In addition, EVEP announced its 2016 year-end proved reserves and 2017 guidance.

 

Highlights

 

· Overall operating results for the year in line with 2016 guidance

· Completed divestment of certain gas-weighted assets in the Barnett Shale for $52.1 million on December 1, 2016 (before post-closing purchase price adjustments)

· Completed $58.7 million asset purchase on January 31, 2017 (before post-closing purchase price adjustments) in the Eagle Ford and Austin Chalk in Karnes County, TX using proceeds from the Barnett Shale divestiture through a like-kind exchange transaction and $6.6 million of borrowings under the credit facility

· Repurchased $82.7 million of outstanding Senior Secured Notes due April 2019 for $35 million

· Increased capital spending budget to $30 to $45 million for 2017 from $10.7 million in 2016

· Maintained significant liquidity, which is currently over $175 million, between borrowing base capacity and cash on hand

 

Fourth Quarter 2016 Results

 

For the fourth quarter 2016, EVEP reported a net loss of $165.7 million, or $(3.31) per basic and diluted weighted average limited partner unit outstanding compared to a net loss of $19.2 million, or $(0.38) per basic and diluted weighted average limited partner unit outstanding for the third quarter of 2016. Included in net loss were the following items:

 

· $127.9 million of impairment charges primarily 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 and the disposition of oil and natural gas properties,

· $27.5 million of non-cash losses on commodity and interest rate derivatives, and

· $1.8 million of non-cash costs contained in general and administrative expenses.

 

For the fourth quarter of 2015, EVEP reported a net loss of $71.3 million, or $(1.43) per basic and diluted weighted average limited partner unit outstanding.

 

Production for the fourth quarter of 2016 was 11 Bcf of natural gas, 278 Mbbls of oil and 547 Mbbls of natural gas liquids, or 173.6 million cubic feet equivalent per day (Mmcfe/day). This represents a 17 percent decrease from fourth quarter 2015 production of 209.8 Mmcfe/d and an 11 percent decrease from third quarter 2016 production of 195.3 Mmcfe/day. The decreases were primarily due to reduced drilling activity and the divestitures completed on December 1, 2016.

 

Adjusted EBITDAX for the fourth quarter of 2016 was $28.5 million, a 46 percent decrease from the fourth quarter of 2015 and a 10 percent increase over the third quarter of 2016. Distributable Cash Flow for the fourth quarter of 2016 was $7.9 million, a 70 percent decrease from the fourth quarter of 2015 and a 24 percent increase over the third quarter of 2016. The decreases in Adjusted EBITDAX and Distributable Cash Flow from the fourth quarter of 2015 were attributable to lower realized hedge gains and lower production, partially offset by higher realized oil, natural gas and natural gas liquids prices. The increases in Adjusted EBITDAX and Distributable Cash Flow over the third quarter of 2016 were primarily due to higher realized oil, natural gas and natural gas liquids prices and lower operating expenses, partially offset by lower production. Adjusted EBITDAX and Distributable Cash Flow are Non-GAAP financial measures and are described in the attached table under “Non-GAAP Measures.”

 

Full Year 2016 Results

 

For 2016, EVEP reported a net loss of $242.9 million, or $(4.85) per basic and diluted weighted average limited partner unit outstanding as compared to net income of $21.3 million, or $0.41 per basic and diluted weighted average limited partner unit outstanding for 2015. Included in net loss were the following items:

 

· $131.3 million of impairment charges primarily 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 and the disposition of oil and natural gas properties,
· $93.8 million of non-cash losses on commodity and interest rate derivatives,
· $47.7 million of gain on early extinguishment of debt related to repurchases of Senior Notes at a discount to par,
· $6.6 million of non-cash costs contained in general and administrative expenses,
· $3.2 of gain on settlement of contract, and
· $0.7 million of dry hole and exploration costs.

 

 

 

 

 

Production for 2016 was 49.3 Bcf of natural gas, 1.2 Mmbbls of oil and 2.3 Mmbbls of natural gas liquids, or 192.9 Mmcfe/day, which is a 10 percent increase over 2015 production of 174.8 Mmcfe/day. The increase over 2015 production was primarily due to the addition of producing properties acquired on October 1, 2015.

 

Adjusted EBITDAX and Distributable Cash Flow for 2016 of $101.3 million and $18.7 million decreased 50 percent and 81 percent, respectively, versus 2015. The decreases in Adjusted EBITDAX and Distributable Cash Flow as compared to 2015 are primarily due to lower realized hedge gains and lower realized oil and natural gas prices, partially offset by the addition of producing properties acquired on October 1, 2015, lower operating expenses and higher realized natural gas liquids prices.

 

"In 2016, our overall results were in line with guidance, we continued to reduce operating costs through the hard work of our asset teams, and we reduced debt by $83 million. In December, we sold some of our Barnett Shale natural gas assets, and in January, redeployed the proceeds in an oil-weighted Karnes County acquisition that we believe has significantly more drilling opportunities at attractive rates of return in the current commodity price environment. In 2017, we plan to increase our capital spending, while remaining focused on our cost structure and maintaining sufficient liquidity," said Michael Mercer, President and CEO.

 

 

Additional Commodity Hedges

 

EVEP entered into the following additional commodity hedges in 2016 subsequent to its press release on November 9, 2016. EVEP's current hedge position, including these new hedges, is presented at the end of this press release under Total Current Hedge Position.

 

        Swap     Swap  
Period   Index   Volume     Price  
Natural Gas (Mmmbtus)                    
Jan - Mar 2018   NYMEX     4,500     $ 3.46  
                     
Ethane (Mbbls)                    
2017   Mt Belvieu     511.0     $ 11.66  
                     
Propane (Mbbls)                    
2017   Mt Belvieu     255.5     $ 25.10  

 

Year-end 2016 Estimated Net Proved Reserves

 

EVEP’s year-end 2016 estimated net proved reserves were 851 Bcfe. Approximately 68 percent were natural gas, 23 percent were natural gas liquids and 9 percent were crude oil. In addition, 90 percent were categorized as proved developed. Year-end 2016 estimated net proved reserves decreased by 22 percent or 246 Bcfe from year-end 2015 estimated net proved reserves due to reduced commodity pricing, asset divestitures, and volumes produced and sold during 2016. The prices used in determining estimated net proved reserves at December 31, 2016 were $42.75 per Bbl of oil and $2.48 per Mmbtu of natural gas as compared to $50.28 per Bbl of oil and $2.59 per Mmbtu of natural gas at December 31, 2015.

 

At December 31, 2016, the present value of future net pre-tax cash flows discounted at 10 percent (“PV 10”) was $373.6 million (a non-GAAP measure) and the standardized measure of estimated net proved reserves was $371.1 million. Standardized measure is the present value of estimated future net revenues to be generated from the production of proved reserves, determined in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”), without giving effect to non–property related expenses such as certain general and administrative expenses, debt service and future federal income tax expenses or to depreciation, depletion and amortization and discounted using an annual discount rate of 10 percent. Our standardized measure includes approximately $2.5 million of present value of future obligations under the Texas gross margin tax, but it does not include future federal income tax expenses because we are a partnership and are not subject to federal income taxes. We have included PV 10 because we believe it is a measure frequently utilized by investors.

 

EVEP’s year-end 2016 estimated net proved reserves and standardized measure are net of the recently announced divestiture of 74 Bcf of proved natural gas properties in the Barnett Shale on December 1, 2016 and prior to the acquisition of estimated net proved reserves of 35 Bcfe of Eagle Ford and Austin Chalk oil and natural gas properties in Karnes County, TX which closed on January 31, 2017.

 

 

 

 

    Estimated Net Proved Reserves  
    Crude Oil
(MMBbls)
    Natural Gas
(Bcf)
    NGL's
(MMBbls)
    Natural Gas
Equivalents
(Bcfe)
    PV 10
($mm)
 
Barnett Shale     0.4       239.1       21.0       367.8     $ 128.6  
San Juan Basin     1.1       94.9       7.1       144.0       46.3  
Appalachia Basin     7.2       91.7       0.3       136.4       98.4  
Michigan     -       74.7       0.4       77.8       29.1  
Central Texas     2.4       20.5       2.4       49.1       44.0  
Monroe Field     -       27.9       -       27.9       (1.2 )
Mid-Continent area     1.1       18.9       0.4       27.8       18.9  
Permian Basin     0.4       7.6       1.8       20.4       9.5  
Total     12.6       575.3       33.4       851.2       373.6  

 

For comparative purposes, utilizing NYMEX forward closing prices for oil and natural gas on December 30, 2016 (the last trading day of 2016), total NYMEX strip-based proved reserves at December 31, 2016 were 1,277 Bcfe (69 percent proved developed), with a PV 10 of $790 million, an increase of 426 Bcfe over SEC reserves and $416 million over SEC PV 10. Also at these prices, our January 2017 Karnes County, TX acquisition had strip-based proved reserves of 38 Bcfe (21 percent proved developed), with a PV 10 of $87 million. NYMEX strip-based proved reserves are calculated based on the SEC proved reserves estimation methodology, but applying NYMEX strip prices rather than SEC prices. We believe that the PV 10 of NYMEX strip-based reserves is useful to investors to illustrate the potential value of proved reserves that are economically recoverable in the current commodity price environment rather than SEC prices. Neither the PV 10 of our SEC reserves, the PV 10 of our NYMEX strip-based reserves nor the standardized measure represents an estimate of fair market value of our oil and natural gas properties.

 

 

2017 Guidance

 

($ in millions)   Full Year 2017  
Net Production              
Natural Gas (Mmcf)   40,720   -   45,005  
Crude Oil (Mbbls)   1,325   -   1,465  
Natural Gas Liquids (Mbbls)   2,055   -   2,270  
Total Mmcfe   61,000   -   67,415  
               
Average Daily Production (Mmcfe/d)   167   -   185  
               
Net Transportation Margin (a)   $0.5   -   $1.0  
               
Average Price Differential vs NYMEX              
Natural Gas ($/Mcf)   ($0.37)   -   ($0.25)  
Crude Oil ($/Bbl)   ($5.40)   -   ($3.90)  
NGL (% of NYMEX Crude Oil)   34%   -   38%  
               
Expenses              
Operating Expenses:              
LOE and other   $98.1   -   $108.5  
Production Taxes (as % of revenue)   4.2%   -   5.2%  
        -      
General and administrative expense (b)   $22.0   -   $26.0  
               
Capital Expenditures (c)   $30.0   -   $45.0  

 

(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, also excludes any amounts for future acquisition related due diligence and transaction costs.
(c) Represents estimates for drilling and related capital expenditures. Does not include any amounts for acquisitions of oil and gas properties.

 

 

 

 

 

Annual Report on Form 10-K and Unitholders’ Schedule K-1

 

EVEP’s financial statements and related footnotes are available on our 2016 Form 10-K, which was filed today and is available through the Investor Relations/SEC Filings section of the EVEP website at http://www.evenergypartners.com.

 

Also available for download on our website by March 6, 2016 will be unitholders’ Schedule K-1’s for the tax year 2016. For any questions regarding their Schedule K-1, unitholders are invited to call the Tax Package Support helpline at 1-800-973-7551.

 

Conference Call

 

As announced on January 31, 2016, EV Energy Partners, L.P. will host an investor conference call on March 1, 2016, at 9 a.m. Eastern Standard Time (8 a.m. Central). Investors interested in participating in the call may dial 1-888-245-0988 (quote conference ID 9028703) 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 natural 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, the information under the heading “2017 Guidance” 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 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 EVEP with the SEC. 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
December 31,
    Twelve Months Ended
December 31,
 
    2016     2015     2016     2015  
Production data:                                
Oil (Mbbls)     278       351       1,216       1,041  
Natural gas liquids (Mbbls)     547       655       2,331       2,326  
Natural gas (Mmcf)     11,029       13,266       49,333       43,592  
Net production (Mmcfe)     15,975       19,301       70,612       63,792  
Average sales price per unit: (1)                                
Oil (Bbl)   $ 45.42     $ 38.69     $ 38.78     $ 43.67  
Natural gas liquids (Bbl)     19.33       13.86       15.32       14.04  
Natural gas (Mcf)     2.60       1.86       2.02       2.23  
Mcfe     3.25       2.45       2.59       2.74  
Average unit cost per Mcfe:                                
Production costs:                                
Lease operating expenses   $ 1.43     $ 1.54     $ 1.46     $ 1.56  
Production taxes     0.12       0.11       0.10       0.11  
Total     1.55       1.65       1.56       1.67  
Depreciation, depletion and amortization     1.73       1.62       1.69       1.66  
General and administrative expenses     0.55       0.52       0.48       0.62  

 

 

(1) Prior to $8.8 million and $44.9 million of net hedge gains on settlements of commodity derivatives for the three months ended December 30, 2016 and 2015, respectively, and $57.9 million and $143.3 million for the twelve months ended December 31, 2016 and 2015, respectively.

 

 

 

 

 

Consolidated Balance Sheets
(In $ thousands, except number of units)

 

    December 31, 2016     December 31, 2015  
ASSETS                
                 
Current assets:                
Cash and cash equivalents   $ 5,557     $ 20,415  
Accounts receivable:                
Oil, natural gas and natural gas liquids revenues     39,629       24,285  
Related party     745       -  
Other     2,451       7,137  
Derivative asset     201       60,662  
Other current assets     3,718       3,057  
Total current assets     52,301       115,556  
                 
Oil and natural gas properties, net of accumulated                
depreciation, depletion and amortization; December 31,                
 2016, $1,051,600; December 31, 2015, $971,499     1,497,211       1,790,455  
Other property, net of accumulated depreciation                
and amortization; December 31, 2016, $1,002;                
December 31, 2015, $970     996       1,019  
Restricted cash     52,076       -  
Long–term derivative asset     -       10,741  
Other assets     4,186       5,831  
Total assets   $ 1,606,770     $ 1,923,602  
                 
                 
LIABILITIES AND OWNERS’ EQUITY                
                 
Current liabilities:                
Accounts payable and accrued liabilities:                
Third party   $ 31,700     $ 43,135  
Related party     5,797       5,952  
Derivative liability     21,679       -  
Income taxes     -       11,657  
Total current liabilities     59,176       60,744  
                 
Asset retirement obligations     180,241       174,003  
Long–term debt, net     606,948       688,614  
Long–term derivative liability     955       -  
Other long–term liabilities     1,043       1,682  
                 
Commitments and contingencies                
                 
Owners’ equity:                
Common unitholders - 49,055,214 units and                
48,871,399 units issued and outstanding as of                
December 31, 2016 and 2015, respectively     776,158       1,011,509  
General partner interest     (17,751 )     (12,950 )
Total owners' equity     758,407       998,559  
Total liabilities and owners' equity   $ 1,606,770     $ 1,923,602  

 

 

 

 

 

Consolidated Statements of Operations
(In $ thousands, except per unit data)

 

   

Three Months Ended

December 31,

   

Twelve Months Ended

December 31,

 
    2016     2015     2016     2015  
Revenues:                        
Oil, natural gas and natural gas liquids revenues   $ 51,842     $ 47,354     $ 182,696     $ 175,088  
Transportation and marketing–related revenues     599       598       2,198       2,883  
Total revenues     52,441       47,952       184,894       177,971  
                                 
Operating costs and expenses:                                
Lease operating expenses     22,839       29,793       103,371       99,626  
Cost of purchased natural gas     421       400       1,497       1,988  
Dry hole and exploration costs     (544 )     1,975       651       3,695  
Production taxes     1,885       2,076       7,386       6,784  
Accretion expense on obligations     2,079       2,050       8,225       5,598  
Depreciation, depletion and amortization     27,679       31,251       119,171       105,969  
General and administrative expenses     8,775       10,026       33,637       38,994  
Impairment of oil and natural gas properties     127,889       14,423       131,260       136,667  
Impairment of goodwill     -       65,924       -       65,924  
Loss (gain) on settlement of contract     -       1,210       (3,185 )     1,210  
Gain on sales of oil and natural gas properties     (69 )     (20 )     (69 )     (551 )
Total operating costs and expenses     190,954       159,108       401,944       465,904  
                                 
Operating loss     (138,513 )     (111,156 )     (217,050 )     (287,933 )
                                 
Other income (expense), net:                                
Gain (loss) on derivatives, net     (18,758 )     26,739       (35,950 )     78,145  
Interest expense     (9,933 )     (12,057 )     (42,487 )     (50,336 )
Gain on early extinguishment of debt     -       24,024       47,695       24,024  
Other income, net     936       27       2,522       78  
Total other income (expense), net     (27,755 )     38,733       (28,220 )     51,911  
                                 
Income (loss) from continuing operations before income taxes     (166,268 )     (72,423 )     (245,270 )     (236,022 )
Income taxes     596       1,159       2,375       1,843  
Income (loss) from continuing operations     (165,672 )     (71,264 )     (242,895 )     (234,179 )
Income from discontinued operations     -       -       -       255,512  
Net income (loss)   $ (165,672 )   $ (71,264 )   $ (242,895 )   $ 21,333  
                                 
Earnings per limited partner unit (basic and diluted):                                
Income (loss) from continuing operations   $ (3.31 )   $ (1.43 )   $ (4.85 )   $ (4.72 )
Income from discontinued operations     -       -       -       5.13  
Net income (loss)   $ (3.31 )   $ (1.43 )   $ (4.85 )   $ 0.41  
                                 
Weighted average limited partner units outstanding (basic and diluted)     49,055       48,871       49,048       48,853  
                                 
Distributions declared per common unit   $ -     $ 0.075     $ -     $ 1.575  

 

 

 

 

Consolidated Statements of Cash Flows
(In $ thousands)

 

   

Twelve Months Ended

December 31,

 
    2016     2015  
Cash flows from operating activities:                
Net income (loss)   $ (242,895 )   $ 21,333  
Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:                
Income from discontinued operations     -       (255,512 )
Amortization of volumetric production payment liability     (4,108 )     (1,196 )
Accretion expense on obligations     8,225       5,598  
Depreciation, depletion and amortization     119,171       105,969  
Equity–based compensation cost     6,611       12,001  
Impairment of oil and natural gas properties     131,260       136,667  
Impairment of goodwill     -       65,924  
Gain on sales of oil and natural gas properties     (69 )     (551 )
Loss (gain) on derivatives, net     35,950       (78,145 )
Cash settlements of matured derivative contracts     54,884       140,657  
Gain on early extinguishment of debt     (47,695 )     (24,024 )
Deferred taxes     (404 )     (13,285 )
Other     2,523       4,487  
Changes in operating assets and liabilities:                
Accounts receivable     (11,403 )     14,850  
Other current assets     (361 )     511  
Accounts payable and accrued liabilities     (5,862 )     (4,067 )
Income taxes     (11,657 )     10,683  
Other, net     (295 )     (245 )
Net cash flows provided by operating activities from continuing operations     33,875       141,655  
Net cash flows used in operating activities from discontinued operations     -       (372 )
Net cash flows provided by operating activities     33,875       141,283  
                 
Cash flows from investing activities:                
Acquisitions of oil and natural gas properties, net of cash acquired     -       (250,357 )
Additions to oil and natural gas properties     (15,258 )     (67,923 )
Proceeds from sales of oil and natural gas properties     54,509       1,457  
Restricted cash     (52,076 )     33,768  
Cash settlements from acquired derivative contracts     3,003       2,615  
Other     56       73  
Net cash flows used in investing activities from continuing operations     (9,766 )     (280,367 )
Net cash flows provided by investing activities from discontinued operations     -       572,160  
Net cash flows (used in) provided by investing activities     (9,766 )     291,793  
                 
Cash flows from financing activities:                
Long-term debt borrowings     57,000       295,000  
Repayments of long-term debt borrowings     (57,000 )     (561,000 )
Redemption of 8% Senior Notes due 2019     (34,978 )     (49,954 )
Loan costs paid     (121 )     (4,074 )
Contributions from general partner     -       91  
Distributions paid     (3,868 )     (100,979 )
Net cash flows used in financing activities     (38,967 )     (420,916 )
                 
(Decrease) increase in cash and cash equivalents     (14,858 )     12,160  
Cash and cash equivalents – beginning of period     20,415       8,255  
Cash and cash equivalents – end of period   $ 5,557     $ 20,415  

 

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, 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, impairment of goodwill, non-cash inventory write down expense, dry hole and exploration costs, gain on sales of oil and natural gas properties, loss (gain) on settlement of contract, gain on early extinguishment of debt, and (gain) loss on sale of investment, 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 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 Income (Loss) to Adjusted EBITDAX and Distributable Cash Flow
(In $ thousands)

 

 

    Three Months Ended     Twelve Months Ended  
    Dec 31, 2016     Dec 31, 2015     Sep 30, 2016     Dec 31, 2016     Dec 31, 2015  
                               
Net income (loss)   $ (165,672 )   $ (71,264 )   $ (19,230 )   $ (242,895 )   $ 21,333  
                                         
Add:                                        
Income from discontinued operations     -       -       -       -       (255,512 )
EBITDAX from discontinued operations     -       -       -       -       15,941  
Income taxes     (596 )     (1,159 )     (1,429 )     (2,375 )     (1,843 )
Interest expense, net     9,932       12,050       9,889       42,476       50,314  
Cash settlements of matured interest rate swaps     -       -       -       -       1,736  
Depreciation, depletion and amortization     27,679       31,251       31,639       119,171       105,969  
Accretion expense on obligations     2,079       2,050       2,057       8,225       5,598  
Amortization of VPP     (1,038 )     (1,196 )     (1,027 )     (4,108 )     (1,196 )
Loss (gain) on derivatives, net     18,758       (26,739 )     (8,559 )     35,950       (78,145 )
Cash settlements of matured derivative contracts     8,765       44,904       10,117       57,887       143,272  
Non-cash equity-based compensation     1,758       2,366       1,889       6,611       12,001  
Impairment of oil and natural gas properties     127,889       14,423       687       131,260       136,667  
Impairment of goodwill     -       65,924       -       -       65,924  
Non-cash inventory write down expense     (422 )     973       -       (299 )     1,122  
Dry hole and exploration costs     (544 )     1,975       294       651       3,695  
Gain on sales of oil and natural gas properties     (69 )     (20 )     -       (69 )     (551 )
Loss (gain) on settlement of contract     -       1,210       -       (3,185 )     1,210  
Gain on early extinguishment of debt     -       (24,024 )     -       (47,695 )     (24,024 )
(Gain) loss on sale of investment, contained in Other income, net     -       -       (309 )     (309 )     358  
Adjusted EBITDAX   $ 28,519     $ 52,724     $ 26,018     $ 101,296     $ 203,869  
                                         
Less:                                        
Cash income taxes     -       441       (933 )     (933 )     441  
Cash interest expense, net     9,609       11,264       9,566       39,558       48,504  
Realized losses on interest rate swaps     -       -       -       -       1,736  
Estimated maintenance capital expenditures (1)     11,000       14,875       11,000       44,000       54,672  
Distributable Cash Flow   $ 7,910     $ 26,144     $ 6,385     $ 18,671     $ 98,516  

 

 

(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.

 

 

 

 

Total Current Hedge Position

 

        Swap     Swap     Collar     Collar     Collar  
Period   Index   Volume     Price     Volume     Floor     Ceiling  
Natural Gas (Mmmbtus)                                            
2017   NYMEX     32,850     $ 3.07       10,950     $ 2.75     $ 3.27  
Jan - Mar 2018   NYMEX     4,500     $ 3.46                          
                                             
Crude (Mbbls)                                            
2017   WTI     365     $ 52.85                          
                                             
Ethane (Mbbls)                                            
2017   Mt Belvieu     511.0     $ 11.66                          
                                             
Propane (Mbbls)                                            
2017   Mt Belvieu     255.5     $ 25.10                          

 

      Notional
Amount
    Fixed Rate              
Interest Rate Swap Agreements       ($ mill)                          
Jan 2017 - Dec 2017       100       1.039 %                  
Jan 2018 - Sep 2020         100       1.795 %                        

 

 

EV Energy Partners, L.P., Houston

Nicholas Bobrowski

713-651-1144

http://www.evenergypartners.com