EV Energy Partners, L.P.
EV Energy Partners, LP (Form: 8-K, Received: 08/09/2017 16:12:35)

 

 

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):    August 9, 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))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company   ¨    

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   ¨

 

 

 

 

 

 

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 August 9, 2017, the Partnership issued a press release announcing its second quarter 2017 results.  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 August 9, 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: August 9, 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 August 9, 2017

 

 

 

 

 

 

 

Exhibit 99.1

 

EV Energy Partners Announces Second Quarter 2017 Results

 

HOUSTON, August 9, 2017 (Globe Newswire) -- EV Energy Partners, L.P. (NASDAQ: EVEP) today announced results for the second quarter of 2017 and the filing of its Form 10-Q with the Securities and Exchange Commission.

 

Second Quarter 2017 Results

 

For the second quarter of 2017, EVEP reported a net loss of $25.2 million, or $(0.50) per basic and diluted weighted average limited partner unit outstanding, compared to a net loss of $50.8 million, or $(1.01) per basic and diluted weighted average limited partner unit outstanding, for the first quarter of 2017. Included in the second quarter of 2017 net loss were the following items:

 

· $18.4 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,

· $6.9 million of non-cash gains on commodity and interest rate derivatives, and

· $1.0 million of non-cash costs contained in general and administrative expenses.

 

For the second quarter of 2016, EVEP reported a net loss of $29.0 million, or $(0.58) per basic and diluted weighted average limited partner unit outstanding.

 

Production for the second quarter of 2017 was 10.2 Bcf of natural gas, 372 Mbbls of oil and 528 Mbbls of natural gas liquids, or 171.9 million cubic feet equivalent per day (Mmcfe/day). This represents a 15 percent decrease from the second quarter of 2016 production of 201.5 Mmcfe/d and is flat to the first quarter of 2017 production of 171.6 Mmcfe/day. The decrease from the second quarter of 2016 was primarily due to significantly lower drilling activity in 2016 and the divestiture of producing properties completed on December 1, 2016, partially offset by the addition of Karnes County, TX, producing properties acquired on January 31, 2017.

 

Adjusted EBITDAX for the second quarter of 2017 was $21.6 million, a 19 percent decrease from the second quarter of 2016 and a 2 percent decrease from the first quarter of 2017. Distributable Cash Flow for the second quarter of 2017 was $3.4 million, a 38 percent decrease from the second quarter of 2016 and a 13 percent decrease from the first quarter of 2017. The decreases in Adjusted EBITDAX and Distributable Cash Flow from the second quarter of 2016 were primarily attributable to realized hedge losses compared to prior year period hedge gains and decreased natural gas and natural gas liquids production, partially offset by higher realized oil, natural gas and natural gas liquids prices and increased oil production. The decreases in Adjusted EBITDAX and Distributable Cash Flow from the first quarter of 2017 were primarily attributable to lower realized oil and natural gas liquids prices and higher lease operating and cash general and administrative expenses, partially offset by lower realized hedge losses. Adjusted EBITDAX and Distributable Cash Flow are Non-GAAP financial measures and are described in the attached table under “Non-GAAP Measures.”

 

Credit Facility and Liquidity Update

 

As of August 7, 2017, EVEP had total debt of $597 million, which included $254 million outstanding under the credit facility and $343 million in outstanding Senior Notes due 2019. The current borrowing base under the credit facility is $375 million. Liquidity from borrowing base capacity and cash on hand is currently over $120 million. EVEP’s next semi-annual borrowing base redetermination is scheduled for October 2017. For more information regarding EVEP’s debt and liquidity, please review EVEP’s Quarterly Report on Form 10-Q filed today with the Securities and Exchange Commission.

 

“Second quarter results were in-line with guidance. There are two rigs running on our Karnes County, TX properties (5.8 percent interest), one rig running in the Barnett (31 percent interest) and one rig running in the Austin Chalk (15 to 25 percent interest). While wells are currently being turned inline, the full production impact is not expected to be realized until the fourth quarter. Given current commodity pricing and our previously provided guidance, we expect to fully fund our 2017 capital budget out of cash flow from operations," said Michael Mercer, President and CEO.

 

Quarterly Report on Form 10-Q

 

EVEP’s financial statements and related footnotes are available in the second quarter 2017 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 20, 2017, EV Energy Partners, L.P. will host an investor conference call on August 9, 2017, at 9 a.m. Eastern Time (8 a.m. Central). Investors interested in participating in the call may dial 1-877-723-9521 (quote conference ID 1160639) 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, liquidity, 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 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 June 30,     Six Months Ended  June 30,
    2017     2016     2017     2016
Production data:                              
Oil (Mbbls)     372       313       707       630
Natural gas liquids (Mbbls)     528       585       1,039       1,187
Natural gas (Mmcf)     10,241       12,951       20,607       25,769
Net production (Mmcfe)     15,640       18,341       31,087       36,672
Average sales price per unit: (1)                              
Oil (Bbl)   $ 44.06     $ 41.08     $ 45.48     $ 35.06
Natural gas liquids (Bbl)     18.26       15.89       19.57       14.03
Natural gas (Mcf)     2.87       1.56       2.87       1.60
Mcfe     3.54       2.31       3.59       2.18
Average unit cost per Mcfe:                              
Production costs:                              
Lease operating expenses   $ 1.68     $ 1.42     $ 1.61     $ 1.50
Production taxes     0.16       0.09       0.17       0.09
Total     1.84       1.51       1.78       1.59
Depreciation, depletion and amortization     1.38       1.73       1.56       1.63
General and administrative expenses     0.45       0.43       0.44       0.45
                               

 

(1) Prior to $0.4 million of net hedge losses and $19.2 million of net hedge gains on settlements of commodity derivatives for the three months ended June 30, 2017 and 2016, respectively, and $2.9 million of net hedge losses and $39.0 million of net hedge gains on settlements of commodity derivatives for the six months ended June 30, 2017 and 2016, respectively. 

 

 

 

 

Condensed Consolidated Balance Sheets

(In $ thousands, except number of units)

(Unaudited)

 

    June 30, 2017     December 31, 2016  
ASSETS                
                 
Current assets:                
Cash and cash equivalents   $ 3,552     $ 5,557  
Accounts receivable:                
Oil, natural gas and natural gas liquids revenues     44,762       39,629  
Related party     7,152       745  
Other     1,046       2,451  
Derivative asset     1,993       201  
Other current assets     3,295       3,718  
Total current assets     61,800       52,301  
                 
Oil and natural gas properties, net of accumulated                
depreciation, depletion and amortization; June 30, 2017,
$1,140,993; December 31, 2016, $1,051,600
    1,422,425       1,497,211  
Other property, net of accumulated depreciation                
and amortization; June 30, 2017, $1,024;
December 31, 2016, $1,002
    984       996  
Restricted cash     -       52,076  
Other assets     4,134       4,186  
Total assets   $ 1,489,343     $ 1,606,770  
                 
LIABILITIES AND OWNERS’ EQUITY                
                 
Current liabilities:                
Accounts payable and accrued liabilities:                
Third party   $ 39,709     $ 31,700  
Related party     -       5,797  
Derivative liability     754       21,679  
Total current liabilities     40,463       59,176  
                 
Asset retirement obligations     159,641       180,241  
Long–term debt, net     603,245       606,948  
Long–term derivative liability     3       955  
Other long–term liabilities     1,372       1,043  
                 
Commitments and contingencies                
                 
Owners’ equity:                
Common unitholders - 49,368,869 units and                
49,055,214 units issued and outstanding as of
June 30, 2017 and December 31, 2016, respectively
    703,846       776,158  
General partner interest     (19,227 )     (17,751  
Total owners' equity     684,619       758,407  
Total liabilities and owners' equity   $ 1,489,343     $ 1,606,770  

  

 

 

 

Condensed Consolidated Statements of Operations

(In $ thousands, except per unit data)

(Unaudited)

  

    Three Months Ended    
June 30,
    Six Months Ended      
June 30,
 
    2017     2016     2017     2016  
Revenues:                                
Oil, natural gas and natural gas liquids revenues   $ 55,404     $ 42,365     $ 111,723     $ 80,104  
Transportation and marketing–related revenues     648       466       1,316       977  
Total revenues     56,052       42,831       113,039       81,081  
                                 
Operating costs and expenses:                                
Lease operating expenses     26,235       26,046       50,174       54,961  
Cost of purchased natural gas     460       305       940       641  
Dry hole and exploration costs     75       771       55       901  
Production taxes     2,496       1,704       5,255       3,375  
Accretion expense on obligations     1,870       2,049       3,869       4,089  
Depreciation, depletion and amortization     21,531       31,648       48,511       59,853  
General and administrative expenses     7,023       7,970       13,719       16,348  
Impairment of oil and natural gas properties     18,397       1,997       67,984       2,684  
Gain on settlement of contract     -       -       -       (3,185 )
Gain on sales of oil and natural gas properties     (9 )     -       (35 )     -  
Total operating costs and expenses     78,078       72,490       190,472       139,667  
                                 
Operating loss     (22,026 )     (29,659 )     (77,433 )     (58,586 )
                                 
Other income (expense), net:                                
Gain (loss) on derivatives, net     6,511       (35,585 )     20,740       (25,751 )
Interest expense     (10,435 )     (11,844 )     (20,409 )     (22,665 )
Gain on early extinguishment of debt     -       47,695       -       47,695  
Other income, net     723       209       1,081       964  
Total other income (expense), net     (3,201 )     475       1,412       243  
                                 
Loss before income taxes     (25,227 )     (29,184 )     (76,021 )     (58,343 )
Income taxes     66       191       29       350  
Net loss   $ (25,161 )   $ (28,993 )   $ (75,992 )   $ (57,993 )
                                 
Basic and diluted earnings per limited partner unit:                                
Net loss   $ (0.50 )   $ (0.58 )   $ (1.51 )   $ (1.16 )
                                 
Weighted average limited partner units outstanding (basic and diluted)     49,369       49,055       49,345       49,041  

 

 

 

 

Condensed Consolidated Statements of Cash Flows

(In $ thousands)

(Unaudited)

 

    Six Months Ended  
June 30,
 
    2017     2016  
Cash flows from operating activities:                
Net loss   $ (75,992 )   $ (57,993 )
Adjustments to reconcile net loss to net cash flows provided by operating activities:                
Amortization of volumetric production payment liability     -       (2,043 )
Accretion expense on obligations     3,869       4,089  
Depreciation, depletion and amortization     48,511       59,853  
Equity–based compensation cost     2,204       2,964  
Impairment of oil and natural gas properties     67,984       2,684  
Gain on sales of oil and natural gas properties     (35 )     -  
(Gain) loss on derivatives, net     (20,740 )     25,751  
Cash settlements of matured derivative contracts     (2,929 )     36,506  
Gain on early extinguishment of debt     -       (47,695 )
Other     523       1,760  
Changes in operating assets and liabilities:                
Accounts receivable     (7,859 )     (1,835 )
Other current assets     847       (259 )
Accounts payable and accrued liabilities     (5,967 )     2,510  
Income taxes     -       (11,657 )
Other, net     (217 )     (201 )
Net cash flows provided by operating activities     10,199       14,434  
                 
Cash flows from investing activities:                
Acquisition of oil and natural gas properties     (58,651 )     -  
Additions to oil and natural gas properties     (3,635 )     (12,988 )
Proceeds from sale of oil and natural gas properties     1,989       2,420  
Cash settlements from acquired derivative contracts     -       2,499  
Restricted cash     52,076       -  
Other     17       33  
Net cash flows used in investing activities     (8,204 )     (8,036 )
                 
Cash flows from financing activities:                
Repayment of long-term debt borrowings     (21,000 )     (33,000 )
Long-term debt borrowings     17,000       48,000  
Redemption of Senior Notes due 2019     -       (34,978 )
Loan costs incurred     -       (121 )
Distributions paid     -       (3,868 )
Net cash flows used in financing activities     (4,000 )     (23,967 )
                 
Decrease in cash and cash equivalents     (2,005 )     (17,569 )
Cash and cash equivalents – beginning of period     5,557       20,415  
Cash and cash equivalents – end of period   $ 3,552     $ 2,846  

  

Non-GAAP Measures

 

We define Adjusted EBITDAX as net loss plus income taxes, interest expense, net, depreciation, depletion and amortization, accretion expense on obligations, amortization of volumetric production payment (VPP), (gain) loss on derivatives, net, cash settlements of matured commodity derivative contracts, non-cash equity-based compensation, impairment of oil and natural gas properties, non-cash oil inventory adjustment, dry hole and exploration costs, (gain) loss on settlement of contract, (gain) loss on sales of oil and natural gas properties, (gain) loss on early extinguishment of debt, and other income, net. Distributable Cash Flow is defined as Adjusted EBITDAX less 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 to Adjusted EBITDAX and Distributable Cash Flow

(In $ thousands)

(Unaudited) 

 

    Three Months Ended     Six Months Ended  
    Jun 30, 2017     Jun 30, 2016     Mar 31, 2017     Jun 30, 2017     Jun 30, 2016  
                               
Net loss   $ (25,161 )   $ (28,993 )   $ (50,831 )   $ (75,992 )   $ (57,993 )
                                         
Add:                                        
Income taxes     (66 )     (191 )     37       (29 )     (350 )
Interest expense, net     10,435       11,840       9,974       20,409       22,655  
Depreciation, depletion and amortization     21,531       31,648       26,980       48,511       59,853  
Accretion expense on obligations     1,870       2,049       1,999       3,869       4,089  
Amortization of VPP     -       (1,023 )     -       -       (2,043 )
(Gain) loss on derivatives, net     (6,511 )     35,585       (14,229 )     (20,740 )     25,751  
Cash settlements of matured commodity derivative contracts     (404 )     19,180       (2,454 )     (2,858 )     39,005  
Non-cash equity-based compensation     1,019       1,364       1,185       2,204       2,964  
Impairment of oil and natural gas properties     18,397       1,997       49,587       67,984       2,684  
Non-cash oil inventory adjustment     424       -       -       424       123  
Dry hole and exploration costs     75       771       (20 )     55       901  
Gain on settlement of contract     -       -       -       -       (3,185 )
Gain on early extinguishment of debt     -       (47,695 )     -       -       (47,695 )
Other income, net     (9 )     -       (223 )     (232 )     -  
Adjusted EBITDAX   $ 21,600     $ 26,532     $ 22,005     $ 43,605     $ 46,759  
                                         
Less:                                        
Cash interest expense, net     9,647       9,984       9,500       19,147       20,383  
Realized losses on interest rate swaps     9       -       63       72       -  
Estimated maintenance capital expenditures (1)     8,500       11,000       8,500       17,000       22,000  
Distributable Cash Flow   $ 3,444     $ 5,548     $ 3,942     $ 7,386     $ 4,376  

 

(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)                                
Jul - Dec 2017 NYMEX   16,560     $3.07     5,520     $2.75     $3.27
Jan - Mar 2018 NYMEX   4,500     $3.46                  
                                 
Crude (Mbbls)                                
Jul - Dec 2017 WTI   184     $ 52.85                  
                                 
Ethane (Mbbls)                                
Jul - Dec 2017 Mt Belvieu   257.6     $ 11.66                  
                                 
Propane (Mbbls)                                
Jul - Dec 2017 Mt Belvieu   128.8     $25.10                  

  

    Notional Amount     Fixed Rate  
Interest Rate Swap Agreements      ($ mill)          
Jul - 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