Attached files
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| 8-K - Harvest Oil & Gas Corp. | v222121_8k.htm |
EV Energy Partners Announces First Quarter 2011 Results and Updated Guidance and Commodity Hedge Positions
HOUSTON, TX — May 9, 2011 — (MARKETWIRE) — EV Energy Partners, L.P. (Nasdaq:EVEP) today announced results for the first quarter 2011 and filed its Form 10-Q with the Securities and Exchange Commission. In addition, EVEP announced updated guidance for the second through fourth quarters of 2011 and provided a summary of new commodity price hedge positions.
First Quarter 2011 Results
Adjusted EBITDAX for the quarter was $50.6 million, a 57 percent increase over the first quarter of 2010 and a 22 percent increase versus the fourth quarter of 2010. Distributable Cash Flow for the quarter was $31.6 million, a 56 percent increase over the first quarter of 2010 and an 18 percent increase versus the fourth quarter of 2010. The increases in Adjusted EBITDAX and Distributable Cash Flow, which are described in the attached table under “Non-GAAP Measures,” are primarily due to acquisitions completed during 2010.
For the quarter ended March 31, 2011, EVEP produced 7.0 Bcf of natural gas, 208 MBbls of crude oil and 270 MBbls of natural gas liquids, or 9.9 Bcfe. This represents a 69 percent increase from first quarter 2010 production of 5.8 Bcfe and a 19 percent increase from the fourth quarter 2010 production of 8.3 Bcfe, primarily due to acquisitions completed during 2010.
EVEP reported a net loss of $34.0 million, or ($1.14) per basic and diluted weighted average limited partner unit outstanding, for the first quarter of 2011. Included in net loss were $54.6 million of non-cash net unrealized losses on commodity and interest rate derivatives and $2.1 million of non-cash costs contained in general and administrative expenses. General and administrative expenses also included $0.3 million of acquisition-related due diligence and other related transaction costs and $1.0 million of costs related to the annual vesting of phantom units during the first quarter of 2011. Also included in net loss was a $1.6 million impairment charge relating to a recent divestiture of non-core oil and natural gas properties. For the first quarter of 2010, net income was $46.1 million, or $1.68 per basic and diluted weighted average limited partner unit outstanding, which included $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 fourth quarter of 2010, net loss was $14.5 million, or ($0.55) per basic and diluted weighted average limited partner unit outstanding, which included $31.6 million of non-cash net unrealized losses on commodity and interest rate derivatives and $1.6 million of non-cash costs contained in general and administrative expenses. Also contained in general and administrative expenses for the fourth quarter were approximately $0.4 million of due diligence and other transaction costs related to our acquisitions completed during the quarter.
The $54.6 million non-cash net unrealized loss on derivatives for the first quarter of 2011 was primarily due to the increase in future commodity prices that occurred from January 1, 2011 to March 31, 2011 and the effect of such increased prices on the mark-to-market valuation of EVEP’s outstanding commodity derivatives which now extend through December 2015.
John Walker, Chairman and CEO, said, "During the first quarter of 2011 we raised $442 million in net proceeds through a common unit offering and our inaugural senior notes offering, which was met with strong demand and upsized to $300 million. The proceeds from these offerings were used to repay debt incurred under our revolving credit facility to fund our December 2010 Barnett Shale acquisition. In addition, during April we entered into a $1 billion, five year Second Amended and Restated Credit Agreement under which we currently have over $400 million of liquidity. These financings put EVEP in a position of strength to continue to execute on its strategy of growth through accretive acquisitions."
Updated 2011 Guidance
The following table presents updated guidance for the second through fourth quarters of 2011, which includes a slight reduction in production estimates. In addition, lease operating expenses and natural gas and NGL price differentials have been revised to account for the treatment of certain gathering, transportation and processing expenses associated with the Barnett Shale acquisition which were presented as a product price reduction under the previous guidance rather than as lease operating expense.
|
2nd Qtr 2011
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3rd Qtr 2011
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4th Qtr 2011
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||||||||||
|
Net Production:
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||||||||||||
|
Natural Gas (MMcf)
|
6,875
|
-
|
7,525
|
7,200
|
-
|
8,000
|
7,475
|
-
|
8,275
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|||
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Crude Oil (MBbls)
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215
|
-
|
245
|
220
|
-
|
250
|
215
|
-
|
245
|
|||
|
Natural Gas Liquids (MBbls)
|
270
|
-
|
300
|
280
|
-
|
320
|
285
|
-
|
330
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|||
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Total Mmcfe
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9,785
|
-
|
10,795
|
10,200
|
-
|
11,420
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10,475
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-
|
11,725
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|||
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Average Daily Production (Mmcfe/d)
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107.5
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-
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118.6
|
110.9
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-
|
124.1
|
113.9
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-
|
127.4
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|||
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Average Price Differential vs NYMEX
|
||||||||||||
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Natural Gas (% of NYMEX Natural Gas)
|
95%
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-
|
99%
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94%
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-
|
98%
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94%
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-
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98%
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|||
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Crude Oil (% of NYMEX Crude Oil)
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93%
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-
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97%
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93%
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-
|
97%
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93%
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-
|
97%
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|||
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Natural Gas Liquids (% of NYMEX Crude Oil)
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45%
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-
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51%
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45%
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-
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51%
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45%
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-
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51%
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|||
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Transportation Margin ($ thous) (a)
|
350
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-
|
400
|
350
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-
|
400
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350
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-
|
400
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|||
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Expenses:
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||||||||||||
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Operating Expenses:
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||||||||||||
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LOE and other ($ thous)
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17,100
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-
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18,900
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17,600
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-
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19,400
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17,800
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-
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19,600
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|||
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Production Taxes (as % of revenue)
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4.4%
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-
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4.8%
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4.4%
|
-
|
4.8%
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4.4%
|
-
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4.8%
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|||
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General and administrative expense ($ thous) (b)
|
4,500
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-
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5,500
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4,500
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-
|
5,500
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4,500
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-
|
5,500
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|||
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Capital Expenditures ($ thous) (c)
|
17,000
|
-
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21,000
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23,000
|
-
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29,000
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12,000
|
-
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16,000
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|||
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(a)
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Represents estimated transportation and marketing-related revenues less cost of purchased natural gas.
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(b)
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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.
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(c)
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Represents estimates for drilling and related capital expenditures. Does not include any amounts for acquisitions of oil and gas properties.
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New Commodity Price Hedge Positions
Since the end of the first quarter 2011, EVEP has entered into the following additional natural gas hedge positions.
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Swap
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Swap
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Period
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Index
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Volume
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Price
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(Mmmbtu
/Mbbls)
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Natural Gas
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Sept 14 - Dec 14
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NYMEX
|
610 | $ | 5.74 | ||||||
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2014
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NYMEX
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5,475 | $ | 5.73 | ||||||
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2015
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NYMEX
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7,300 | $ | 6.09 | ||||||
Quarterly Report on Form 10-Q
EVEP’s financial statements and related footnotes are available on our first quarter 2011 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 4, 2011, EV Energy Partners, L.P. will host an investor conference call Tuesday, May 10, 2011 at 9 a.m. (Eastern Time). Investors interested in participating in the call may dial (480) 629-9821 (quote conference ID 4439591) 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 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,
|
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|
2011
|
2010
|
|||||||
|
Production data:
|
||||||||
|
Oil (MBbls)
|
208 | 126 | ||||||
|
Natural gas liquids (MBbls)
|
270 | 182 | ||||||
|
Natural gas (MMcf)
|
7,004 | 3,985 | ||||||
|
Net production (MMcfe)
|
9,871 | 5,833 | ||||||
|
Average sales price per unit: (1)
|
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Oil (Bbl)
|
$ | 89.88 | $ | 74.46 | ||||
|
Natural gas liquids (Bbl)
|
48.06 | 45.54 | ||||||
|
Natural gas (Mcf)
|
3.99 | 5.25 | ||||||
|
Mcfe
|
6.04 | 6.62 | ||||||
|
Average unit cost per Mcfe:
|
||||||||
|
Production costs:
|
||||||||
|
Lease operating expenses (2)
|
$ | 1.76 | $ | 1.96 | ||||
|
Production taxes
|
0.27 | 0.36 | ||||||
|
Total
|
2.03 | 2.32 | ||||||
|
Asset retirement obligations accretion expense
|
0.10 | 0.09 | ||||||
|
Depreciation, depletion and amortization
|
1.78 | 2.07 | ||||||
|
General and administrative expenses
|
0.87 | 0.81 | ||||||
(1) Prior to $17.2 and $10.1 million of net commodity hedge gains for the three months ended March 31, 2011 and March 31, 2010, respectively.
(2) Lease operating expenses for the three months ended March 31, 2010 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.
Condensed Consolidated Balance Sheets (Unaudited)
(In $ thousands, except number of units)
|
March 31, 2011
|
December 31, 2010
|
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|
ASSETS
|
||||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$ | 29,485 | $ | 23,127 | ||||
|
Accounts receivable:
|
||||||||
|
Oil, natural gas and natural gas liquids revenues
|
33,249 | 27,742 | ||||||
|
Related party
|
3,032 | - | ||||||
|
Other
|
3,500 | 441 | ||||||
|
Derivative asset
|
40,091 | 55,100 | ||||||
|
Other current assets
|
1,329 | 1,158 | ||||||
|
Total current assets
|
110,686 | 107,568 | ||||||
|
Oil and natural gas properties, net of accumulated depreciation, depletion and amortization; March 31, 2011, $193,892; December 31, 2010, $176,897
|
1,318,780 | 1,324,240 | ||||||
|
Other property, net of accumulated depreciation and amortization; March 31, 2011, $500; December 31, 2010, $465
|
1,531 | 1,567 | ||||||
|
Long-term derivative asset
|
29,922 | 51,497 | ||||||
|
Other assets
|
2,380 | 1,885 | ||||||
|
Total assets
|
$ | 1,463,299 | $ | 1,486,757 | ||||
|
LIABILITIES AND OWNERS’ EQUITY
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable and accrued liabilities
|
||||||||
|
Third party
|
$ | 24,873 | $ | 20,678 | ||||
|
Related party
|
- | 182 | ||||||
|
Derivative liability
|
3,337 | 1,943 | ||||||
|
Total current liabilities
|
28,210 | 22,803 | ||||||
|
Asset retirement obligations
|
68,997 | 67,175 | ||||||
|
Long-term debt
|
480,018 | 619,000 | ||||||
|
Long-term liabilities
|
463 | 3,048 | ||||||
|
Long-term derivative liability
|
17,357 | 784 | ||||||
|
Commitments and contingencies
|
||||||||
|
Owners’ equity:
|
||||||||
|
Common unitholders - 34,173,650 units and 30,510,313 units issued and outstanding as of March 31, 2011 and December 31, 2010, respectively
|
874,281 | 779,327 | ||||||
|
General partner interest
|
(6,027 | ) | (5,380 | ) | ||||
|
Total owners' equity
|
868,254 | 773,947 | ||||||
|
Total liabilities and owners' equity
|
$ | 1,463,299 | $ | 1,486,757 | ||||
Condensed Consolidated Statements of Operations (Unaudited)
(In $ thousands, except per unit data)
|
Three Months Ended
March 31,
|
||||||||
|
2011
|
2010
|
|||||||
|
Revenues:
|
||||||||
|
Oil, natural gas and natural gas liquids revenues
|
$ | 59,621 | $ | 38,596 | ||||
|
Transportation and marketing–related revenues
|
1,401 | 1,578 | ||||||
|
Total revenues
|
61,022 | 40,174 | ||||||
|
Operating costs and expenses:
|
||||||||
|
Lease operating expenses
|
17,362 | 11,432 | ||||||
|
Cost of purchased natural gas
|
1,050 | 1,220 | ||||||
|
Dry hole and exploration costs
|
403 | - | ||||||
|
Production taxes
|
2,651 | 2,127 | ||||||
|
Asset retirement obligations accretion expense
|
966 | 510 | ||||||
|
Depreciation, depletion and amortization
|
17,564 | 12,084 | ||||||
|
General and administrative expenses
|
8,593 | 4,724 | ||||||
|
Impairment of oil and natural gas properties
|
1,588 | - | ||||||
|
Loss on sale of oil and natural gas properties
|
- | 564 | ||||||
|
Total operating costs and expenses
|
50,177 | 32,661 | ||||||
|
Operating income
|
10,845 | 7,513 | ||||||
|
Other (expense) income, net:
|
||||||||
|
Realized gains on derivatives, net
|
15,038 | 7,965 | ||||||
|
Unrealized (losses) gains on derivatives, net
|
(54,551 | ) | 32,660 | |||||
|
Interest expense
|
(5,159 | ) | (2,103 | ) | ||||
|
Other (expense) income, net
|
(80 | ) | 141 | |||||
|
Total other (expense) income, net
|
(44,752 | ) | 38,663 | |||||
|
(Loss) income before income taxes
|
(33,907 | ) | 46,176 | |||||
|
Income taxes
|
(82 | ) | (52 | ) | ||||
|
Net (loss) income
|
$ | (33,989 | ) | $ | 46,124 | |||
|
General partner’s interest in net (loss) income, including
|
||||||||
|
incentive distribution rights
|
$ | 2,254 | $ | 3,212 | ||||
|
Limited partners’ interest in net (loss) income
|
$ | (36,243 | ) | $ | 42,912 | |||
|
Net (loss) income per limited partner unit:
|
||||||||
|
Basic
|
$ | (1.14 | ) | $ | 1.68 | |||
|
Diluted
|
$ | (1.14 | ) | $ | 1.68 | |||
|
Weighted average limited partner units outstanding:
|
||||||||
|
Basic
|
31,696 | 25,587 | ||||||
|
Diluted
|
31,696 | 25,615 | ||||||
|
Distributions declared per unit
|
$ | 0.760 | $ | 0.756 | ||||
Condensed Consolidated Statements of Cash Flows (Unaudited)
(In $ thousands)
|
Three Months Ended
March 31,
|
||||||||
|
2011
|
2010
|
|||||||
|
Cash flows from operating activities:
|
||||||||
|
Net (loss) income
|
$ | (33,989 | ) | $ | 46,124 | |||
|
Adjustments to reconcile net (loss) income to net cash flows
|
||||||||
|
provided by operating activities:
|
||||||||
|
Dry hole costs
|
2 | - | ||||||
|
Asset retirement obligations accretion expense
|
966 | 510 | ||||||
|
Depreciation, depletion and amortization
|
17,564 | 12,084 | ||||||
|
Equity-based compensation cost
|
2,137 | 1,066 | ||||||
|
Impairment of oil and natural gas properties
|
1,588 | - | ||||||
|
Loss on sale of oil and natural gas properties
|
- | 564 | ||||||
|
Unrealized loss (gain) on derivatives, net
|
54,551 | (32,660 | ) | |||||
|
Amortization of discount on long-term debt
|
18 | - | ||||||
|
Amortization of deferred loan costs
|
201 | 137 | ||||||
|
Other
|
54 | (4 | ) | |||||
|
Changes in operating assets and liabilities:
|
||||||||
|
Accounts receivable
|
(8,738 | ) | (4,746 | ) | ||||
|
Other current assets
|
(171 | ) | 209 | |||||
|
Accounts payable and accrued liabilities
|
1,857 | 643 | ||||||
|
Long-term liabilities
|
- | (733 | ) | |||||
|
Other, net
|
(154 | ) | (39 | ) | ||||
|
Net cash flows provided by operating activities
|
35,886 | 23,155 | ||||||
|
Cash flows from investing activities:
|
||||||||
|
Acquisition of oil and natural gas properties
|
- | (137,898 | ) | |||||
|
Development of oil and natural gas properties
|
(13,407 | ) | (2,411 | ) | ||||
|
Proceeds from sale of oil and natural gas properties
|
- | 82 | ||||||
|
Net cash flows used in investing activities
|
(13,407 | ) | (140,227 | ) | ||||
|
Cash flows from financing activities:
|
||||||||
|
Long-term debt borrowings
|
- | 138,000 | ||||||
|
Repayments of long-term debt borrowings
|
(431,500 | ) | (95,000 | ) | ||||
|
Proceeds from debt offering
|
292,500 | - | ||||||
|
Loan costs incurred
|
(695 | ) | - | |||||
|
Proceeds from equity offering
|
147,108 | 92,770 | ||||||
|
Offering costs
|
(248 | ) | (97 | ) | ||||
|
Contributions from general partner
|
3,191 | 1,977 | ||||||
|
Distributions paid
|
(26,477 | ) | (20,221 | ) | ||||
|
Net cash flows (used in) provided by financing activities
|
(16,121 | ) | 117,429 | |||||
|
Increase in cash and cash equivalents
|
6,358 | 357 | ||||||
|
Cash and cash equivalents – beginning of period
|
23,127 | 18,806 | ||||||
|
Cash and cash equivalents – end of period
|
$ | 29,485 | $ | 19,163 | ||||
Non-GAAP Measures
We define Adjusted EBITDAX as net (loss) income plus income tax provision, interest expense, net, realized losses on interest rate swaps, depreciation, depletion and amortization, asset retirement obligation accretion expense, non-cash losses (gains) on derivatives, net, non-cash equity compensation, impairment of oil and natural gas properties, loss on sale of oil and natural gas properties, write down of crude oil inventory, and dry hole and exploration costs. Distributable Cash Flow is defined as Adjusted EBITDAX less income tax provision, 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. 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 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 to Adjusted EBITDAX and Distributable Cash Flow
(In $ thousands)
|
Three Months Ended
March 31,
|
||||||||
|
2011
|
2010
|
|||||||
|
Net (loss) income
|
$ | (33,989 | ) | $ | 46,124 | |||
|
Add:
|
||||||||
|
Income taxes
|
82 | 52 | ||||||
|
Interest expense, net
|
5,154 | 2,075 | ||||||
|
Realized losses on interest rate swaps
|
2,139 | 2,158 | ||||||
|
Depreciation, depletion and amortization
|
17,564 | 12,084 | ||||||
|
Asset retirement obligation accretion expense
|
966 | 510 | ||||||
|
Non-cash losses (gains) on derivatives, net
|
54,551 | (32,660 | ) | |||||
|
Non-cash equity compensation expense
|
2,137 | 1,066 | ||||||
|
Impairment of oil and natural gas properties
|
1,588 | - | ||||||
|
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 | ||||||
|
Dry hole and exploration costs
|
403 | - | ||||||
|
Adjusted EBITDAX
|
50,595 | 32,213 | ||||||
|
Less:
|
||||||||
|
Income taxes
|
82 | 52 | ||||||
|
Cash interest expense, net
|
4,935 | 1,938 | ||||||
|
Realized losses on interest rate swaps
|
2,139 | 2,158 | ||||||
|
Estimated maintenance capital expenditures (1)
|
11,846 | 7,875 | ||||||
|
Distributable Cash Flow
|
$ | 31,593 | $ | 20,190 | ||||
(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.
SOURCE: EV Energy Partners, L.P.
EV Energy Partners, L.P., Houston
Michael E. Mercer, 713-651-1144
http://www.evenergypartners.com