Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT OF MATERIAL EVENTS OR CORPORATE CHANGES - EP Energy LLC | a12-27302_18k.htm |
| EX-99.1 - EX-99.1 - EP Energy LLC | a12-27302_1ex99d1.htm |
Exhibit 99.2
EP ENERGY LLC
Financial and Operational Reporting Package
Third Quarter 2012
Table of Contents
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Page |
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Notes to Investors |
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1 |
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Operating Results |
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Financial Highlights |
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2 |
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Statements of Income |
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3 |
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Average Daily Volumes, Realized Prices and Adjusted Cash Operating Costs Per-Unit |
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4 |
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Derivative Schedule |
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5 |
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Non-GAAP Reconciliations |
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Combined Earnings |
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6 |
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Adjusted EBITDAX |
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7 |
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Cash Operating Costs and Adjusted Cash Operating Costs |
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8 |
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Glossary |
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9 |
NOTES TO INVESTORS
Cautionary Statement
This Financial and Operational Reporting Package (“Package”) includes summarized financial and other information about EP Energy LLC (“EP Energy” or the “Company”). The information in this Package is intended to provide highlights and should not be used as a substitute for financial information which is stated within the EP Energy financial statements filed with the SEC as an exhibit to our Current Report on Form 8-K dated November 16, 2012. Readers should refer to these EP Energy financial statements. In addition, the glossary contains certain definitions of measures used in this Package and in other presentations we provide. These definitions may not be the same as definitions used by other companies. This Package may contain information that is based on estimates. The Company has made every reasonable effort to ensure that the information and assumptions on which these estimates are based are current, reasonable, and complete. Factors that could cause actual results to differ materially from the estimates in this Package are changes in unaudited and/or unreviewed financial information and the effects of any changes in accounting rules and guidance, as well as other factors discussed in EP Energy’s financial statements. The financial data and statistics in this Package for Third Quarter 2012 reflect the operating results of EP Energy through September 30, 2012. Independent auditors have not audited any of the financials and operating statements. The Company assumes no obligation to publicly update or revise any information contained herein as a result of new information, future events, or otherwise.
Certain of the production information in this Package includes the production attributable to EP Energy’s 48.8 percent interest in Four Star Oil & Gas Company (“Four Star”). EP Energy’s Supplemental Oil and Gas disclosures, which are included in EP Energy’s prospectus dated October 22, 2012 (the “Prospectus”), which forms a part of the Company’s Registration Statement on Form S-4 (Registration No. 333-183815), reflect its proportionate share of the proved reserves of Four Star separate from its consolidated proved reserves. In addition, the proved reserves attributable to its proportionate share of Four Star represent estimates prepared by EP Energy and not those of Four Star. The Prospectus is available at epenergy.com.
Non-GAAP Financial Measures
The SEC’s Regulation G applies to any public disclosure or release of material information that includes a non-GAAP financial measure. In the event of such a disclosure or release, Regulation G requires (i) the presentation of the most directly comparable financial measure calculated and presented in accordance with GAAP and (ii) a reconciliation of the differences between the non-GAAP financial measure presented and the most directly comparable financial measure calculated and presented in accordance with GAAP. The required presentations and reconciliations are included in the body of this Package.
EP Energy believes that the non-GAAP financial measures described in the glossary are useful to investors because these measurements are used by many companies in the industry as a measure of operating and financial performance and are commonly employed by financial analysts and others to evaluate the operating and financial performance of the Company and to compare it with the performance of other companies within the industry. These non-GAAP financial measures may not be comparable to similarly titled measures used by other companies and should not be used as a substitute for net income (loss), operating cash flows or other measures of financial performance presented in accordance with GAAP.
EP ENERGY LLC
FINANCIAL HIGHLIGHTS
(unaudited)
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2012 |
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2011 |
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Year-to-Date |
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Q1 |
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Q2(1) |
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Q3 |
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Q1 |
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Q2 |
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Q3 |
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Q4 |
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2012(1) |
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2011 |
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Net income (loss) ($ in millions) |
|
15 |
|
13 |
|
(196 |
) |
(18 |
) |
170 |
|
61 |
|
49 |
|
(168 |
) |
213 |
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Adjusted EBITDAX ($ in millions) |
|
343 |
|
312 |
|
354 |
|
317 |
|
343 |
|
350 |
|
381 |
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1,009 |
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1,010 |
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Average Cash Operating Costs ($/Mcfe) |
|
1.74 |
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4.19 |
|
2.23 |
|
1.85 |
|
1.75 |
|
1.82 |
|
1.76 |
|
2.72 |
|
1.80 |
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Adjusted Cash Operating Costs ($/Mcfe) |
|
1.70 |
|
1.62 |
|
1.76 |
|
1.69 |
|
1.67 |
|
1.75 |
|
1.69 |
|
1.69 |
|
1.70 |
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Depreciation, depletion and amortization rate ($/Mcfe) |
|
2.59 |
|
1.98 |
|
1.43 |
|
1.96 |
|
2.11 |
|
2.22 |
|
2.32 |
|
2.00 |
|
2.10 |
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Equivalent Sales Volumes (MMcfe/d)(2) |
|
908 |
|
905 |
|
865 |
|
821 |
|
823 |
|
827 |
|
880 |
|
892 |
|
823 |
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|
|
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Oil and Condensate Sales Volumes (MBbls/d)(2) |
|
23.4 |
|
23.6 |
|
28.1 |
|
14.1 |
|
15.6 |
|
17.2 |
|
22.3 |
|
25.1 |
|
15.7 |
|
(1) Represents non-GAAP combined earnings for periods before and after the acquisition of EP Energy. See reconciliation of combined earnings on page 6.
(2) Includes our proportionate share of Four Star production volumes.
EP ENERGY LLC
STATEMENTS OF INCOME
($ in millions)
(unaudited)
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2012 |
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2011 |
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Year-to-Date |
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|
|
|
Q1 |
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Q2(1) |
|
Q3 |
|
Q1 |
|
Q2 |
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Q3 |
|
Q4 |
|
2012(1) |
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2011 |
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Operating revenues |
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Oil and condensate |
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$ |
209 |
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$ |
190 |
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$ |
230 |
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$ |
103 |
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$ |
133 |
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$ |
131 |
|
$ |
185 |
|
$ |
629 |
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$ |
367 |
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Natural gas |
|
182 |
|
141 |
|
162 |
|
240 |
|
257 |
|
256 |
|
220 |
|
485 |
|
753 |
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NGL |
|
17 |
|
17 |
|
18 |
|
15 |
|
13 |
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15 |
|
14 |
|
52 |
|
43 |
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Financial derivatives |
|
76 |
|
346 |
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(181 |
) |
(108 |
) |
132 |
|
251 |
|
10 |
|
241 |
|
275 |
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Total operating revenues |
|
484 |
|
694 |
|
229 |
|
250 |
|
535 |
|
653 |
|
429 |
|
1,407 |
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1,438 |
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Operating expenses |
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|
|
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|
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|
|
|
|
|
|
|
| |||||||||
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Transportation costs |
|
25 |
|
34 |
|
29 |
|
20 |
|
18 |
|
20 |
|
27 |
|
88 |
|
58 |
| |||||||||
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Lease operating expense |
|
62 |
|
55 |
|
55 |
|
51 |
|
49 |
|
61 |
|
57 |
|
172 |
|
161 |
| |||||||||
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General and administrative expenses |
|
44 |
|
240 |
|
85 |
|
50 |
|
48 |
|
46 |
|
56 |
|
369 |
|
144 |
| |||||||||
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Depreciation, depletion and amortization |
|
201 |
|
152 |
|
107 |
|
134 |
|
146 |
|
157 |
|
175 |
|
460 |
|
437 |
| |||||||||
|
Impairments and ceiling test charges (2) |
|
62 |
|
1 |
|
— |
|
— |
|
— |
|
158 |
|
— |
|
63 |
|
158 |
| |||||||||
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Exploration expense (2) |
|
— |
|
6 |
|
21 |
|
— |
|
— |
|
— |
|
— |
|
27 |
|
— |
| |||||||||
|
Taxes other than income |
|
28 |
|
29 |
|
27 |
|
25 |
|
24 |
|
21 |
|
21 |
|
84 |
|
70 |
| |||||||||
|
Total operating expenses |
|
422 |
|
517 |
|
324 |
|
280 |
|
285 |
|
463 |
|
336 |
|
1,263 |
|
1,028 |
| |||||||||
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
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Operating income (loss) |
|
62 |
|
177 |
|
(95 |
) |
(30 |
) |
250 |
|
190 |
|
93 |
|
144 |
|
410 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
(Loss) earnings from unconsolidated affiliates |
|
(3 |
) |
(3 |
) |
(2 |
) |
(2 |
) |
1 |
|
(3 |
) |
(3 |
) |
(8 |
) |
(4 |
) | |||||||||
|
Other income (expense) |
|
1 |
|
(3 |
) |
— |
|
1 |
|
(1 |
) |
(4 |
) |
2 |
|
(2 |
) |
(4 |
) | |||||||||
|
Loss on extinguishment of debt |
|
— |
|
— |
|
(14 |
) |
— |
|
— |
|
— |
|
— |
|
(14 |
) |
— |
| |||||||||
|
Interest expense |
|
(4 |
) |
(63 |
) |
(84 |
) |
(3 |
) |
(3 |
) |
(4 |
) |
(2 |
) |
(151 |
) |
(10 |
) | |||||||||
|
Income before income taxes |
|
56 |
|
108 |
|
(195 |
) |
(34 |
) |
247 |
|
179 |
|
90 |
|
(31 |
) |
392 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
Income tax expense (benefit) |
|
41 |
|
95 |
|
1 |
|
(16 |
) |
77 |
|
118 |
|
41 |
|
137 |
|
179 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
Net income (loss) |
|
$ |
15 |
|
$ |
13 |
|
$ |
(196 |
) |
$ |
(18 |
) |
$ |
170 |
|
$ |
61 |
|
$ |
49 |
|
$ |
(168 |
) |
$ |
213 |
|
(1) Represents non-GAAP combined earnings for periods before and after the acquisition of EP Energy. See reconciliation of combined earnings on page 6.
(2) Reflects the use of the successful efforts method of accounting for oil and gas properties following the acquisition of EP Energy and the use of the full cost method of accounting prior to the acquisition.
EP ENERGY LLC
AVERAGE DAILY VOLUMES, REALIZED PRICES AND COSTS PER UNIT
|
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2012 |
|
2011 |
|
Year-to-Date |
| |||||||||||||||||||||
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
2012 |
|
2011 |
| |||||||||
|
Oil and Condensate Sales Volumes (MBbls/d) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
Central |
|
8.9 |
|
8.3 |
|
8.6 |
|
8.7 |
|
8.6 |
|
8.8 |
|
8.0 |
|
8.6 |
|
8.7 |
| |||||||||
|
Eagle Ford |
|
9.8 |
|
10.9 |
|
15.7 |
|
2.0 |
|
2.5 |
|
5.3 |
|
8.8 |
|
12.1 |
|
3.3 |
| |||||||||
|
Southern |
|
2.9 |
|
2.7 |
|
2.1 |
|
2.3 |
|
2.2 |
|
2.1 |
|
2.8 |
|
2.6 |
|
2.2 |
| |||||||||
|
Brazil |
|
1.0 |
|
1.0 |
|
1.0 |
|
0.2 |
|
1.5 |
|
0.2 |
|
1.9 |
|
1.0 |
|
0.7 |
| |||||||||
|
Total Consolidated |
|
22.6 |
|
22.9 |
|
27.4 |
|
13.2 |
|
14.8 |
|
16.4 |
|
21.5 |
|
24.3 |
|
14.9 |
| |||||||||
|
Unconsolidated Affiliate (Four Star) |
|
0.8 |
|
0.7 |
|
0.7 |
|
0.9 |
|
0.8 |
|
0.8 |
|
0.8 |
|
0.8 |
|
0.8 |
| |||||||||
|
Total Combined |
|
23.4 |
|
23.6 |
|
28.1 |
|
14.1 |
|
15.6 |
|
17.2 |
|
22.3 |
|
25.1 |
|
15.7 |
| |||||||||
|
Natural Gas Sales Volumes (MMcf/d) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
Central |
|
549 |
|
547 |
|
505 |
|
509 |
|
526 |
|
516 |
|
548 |
|
534 |
|
517 |
| |||||||||
|
Eagle Ford |
|
16 |
|
19 |
|
25 |
|
4 |
|
5 |
|
12 |
|
13 |
|
20 |
|
7 |
| |||||||||
|
Southern |
|
93 |
|
88 |
|
57 |
|
117 |
|
98 |
|
94 |
|
87 |
|
79 |
|
103 |
| |||||||||
|
Brazil |
|
30 |
|
29 |
|
26 |
|
29 |
|
28 |
|
30 |
|
27 |
|
28 |
|
29 |
| |||||||||
|
Total Consolidated |
|
688 |
|
683 |
|
613 |
|
659 |
|
657 |
|
652 |
|
675 |
|
661 |
|
656 |
| |||||||||
|
Unconsolidated Affiliate (Four Star) |
|
43 |
|
43 |
|
41 |
|
47 |
|
47 |
|
45 |
|
45 |
|
43 |
|
46 |
| |||||||||
|
Total Combined |
|
731 |
|
726 |
|
654 |
|
706 |
|
704 |
|
697 |
|
720 |
|
704 |
|
702 |
| |||||||||
|
NGL Sales Volumes (MBbls/d) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
Central |
|
0.7 |
|
0.6 |
|
0.5 |
|
0.1 |
|
0.1 |
|
0.1 |
|
— |
|
0.6 |
|
0.1 |
| |||||||||
|
Eagle Ford |
|
1.5 |
|
2.2 |
|
3.2 |
|
0.4 |
|
0.3 |
|
0.6 |
|
0.9 |
|
2.3 |
|
0.5 |
| |||||||||
|
Southern |
|
2.4 |
|
2.0 |
|
2.0 |
|
2.8 |
|
2.3 |
|
2.2 |
|
2.0 |
|
2.2 |
|
2.4 |
| |||||||||
|
Total Consolidated |
|
4.6 |
|
4.8 |
|
5.7 |
|
3.3 |
|
2.7 |
|
2.9 |
|
2.9 |
|
5.1 |
|
3.0 |
| |||||||||
|
Unconsolidated Affiliate (Four Star) |
|
1.4 |
|
1.3 |
|
1.3 |
|
1.7 |
|
1.4 |
|
1.5 |
|
1.5 |
|
1.3 |
|
1.5 |
| |||||||||
|
Total Combined |
|
6.0 |
|
6.1 |
|
7.0 |
|
5.0 |
|
4.1 |
|
4.4 |
|
4.4 |
|
6.4 |
|
4.5 |
| |||||||||
|
Equivalent Sales Volumes (MMcfe/d) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
Central |
|
606 |
|
601 |
|
560 |
|
561 |
|
578 |
|
569 |
|
596 |
|
589 |
|
569 |
| |||||||||
|
Eagle Ford |
|
84 |
|
98 |
|
138 |
|
19 |
|
22 |
|
48 |
|
71 |
|
107 |
|
29 |
| |||||||||
|
Southern |
|
125 |
|
116 |
|
81 |
|
147 |
|
125 |
|
119 |
|
116 |
|
107 |
|
131 |
| |||||||||
|
Brazil |
|
36 |
|
35 |
|
32 |
|
31 |
|
37 |
|
31 |
|
38 |
|
34 |
|
33 |
| |||||||||
|
Total Consolidated |
|
851 |
|
850 |
|
811 |
|
758 |
|
762 |
|
767 |
|
821 |
|
837 |
|
762 |
| |||||||||
|
Unconsolidated Affiliate (Four Star) |
|
57 |
|
55 |
|
54 |
|
63 |
|
61 |
|
60 |
|
59 |
|
55 |
|
61 |
| |||||||||
|
Total Combined |
|
908 |
|
905 |
|
865 |
|
821 |
|
823 |
|
827 |
|
880 |
|
892 |
|
823 |
| |||||||||
|
Consolidated average realized prices |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
Oil and condensate price on physical sales ($/Bbl) |
|
$ |
101.81 |
|
$ |
90.92 |
|
$ |
91.21 |
|
$ |
86.27 |
|
$ |
98.46 |
|
$ |
86.73 |
|
$ |
93.24 |
|
$ |
94.39 |
|
$ |
90.50 |
|
|
Oil and condensate, including financial derivative cash settlements ($/Bbl) (1) |
|
$ |
100.16 |
|
$ |
95.70 |
|
$ |
98.42 |
|
$ |
85.69 |
|
$ |
91.30 |
|
$ |
88.95 |
|
$ |
93.23 |
|
$ |
98.11 |
|
$ |
88.77 |
|
|
Natural gas price on physical sales ($/Mcf) |
|
$ |
2.90 |
|
$ |
2.28 |
|
$ |
2.87 |
|
$ |
4.06 |
|
$ |
4.29 |
|
$ |
4.27 |
|
$ |
3.54 |
|
$ |
2.68 |
|
$ |
4.21 |
|
|
Natural gas, including financial derivative cash settlements ($/Mcf) (1)(2) |
|
$ |
4.27 |
|
$ |
4.12 |
|
$ |
4.37 |
|
$ |
5.44 |
|
$ |
5.44 |
|
$ |
5.60 |
|
$ |
5.29 |
|
$ |
4.25 |
|
$ |
5.49 |
|
|
NGL price on physical sales ($/Bbl) |
|
$ |
40.96 |
|
$ |
38.87 |
|
$ |
34.57 |
|
$ |
50.37 |
|
$ |
54.85 |
|
$ |
56.03 |
|
$ |
53.23 |
|
$ |
37.88 |
|
$ |
53.59 |
|
|
Consolidated average transportation costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
Oil and condensate ($/Bbl) |
|
$ |
1.11 |
|
$ |
0.72 |
|
$ |
2.61 |
|
$ |
0.06 |
|
$ |
0.06 |
|
$ |
0.07 |
|
$ |
0.05 |
|
$ |
1.75 |
|
$ |
0.06 |
|
|
Natural gas ($/Mcf) |
|
$ |
0.33 |
|
$ |
0.44 |
|
$ |
0.36 |
|
$ |
0.31 |
|
$ |
0.28 |
|
$ |
0.32 |
|
$ |
0.40 |
|
$ |
0.38 |
|
$ |
0.30 |
|
|
NGL ($/Bbl) |
|
$ |
5.47 |
|
$ |
7.62 |
|
$ |
4.96 |
|
$ |
5.01 |
|
$ |
4.73 |
|
$ |
3.04 |
|
$ |
2.47 |
|
$ |
5.97 |
|
$ |
4.28 |
|
|
Consolidated average cash operating costs and adjusted cash operating costs ($/Mcfe) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
Lease operating expenses |
|
$ |
0.81 |
|
$ |
0.70 |
|
$ |
0.74 |
|
$ |
0.74 |
|
$ |
0.71 |
|
$ |
0.87 |
|
$ |
0.74 |
|
$ |
0.75 |
|
$ |
0.77 |
|
|
Production taxes |
|
0.32 |
|
0.33 |
|
0.34 |
|
0.32 |
|
0.31 |
|
0.27 |
|
0.24 |
|
0.33 |
|
0.30 |
| |||||||||
|
General and administrative expenses |
|
0.57 |
|
3.11 |
|
1.13 |
|
0.74 |
|
0.69 |
|
0.65 |
|
0.75 |
|
1.61 |
|
0.69 |
| |||||||||
|
Taxes other than production and income taxes |
|
0.04 |
|
0.05 |
|
0.02 |
|
0.05 |
|
0.04 |
|
0.03 |
|
0.03 |
|
0.03 |
|
0.04 |
| |||||||||
|
Total cash operating costs |
|
$ |
1.74 |
|
$ |
4.19 |
|
$ |
2.23 |
|
$ |
1.85 |
|
$ |
1.75 |
|
$ |
1.82 |
|
$ |
1.76 |
|
$ |
2.72 |
|
$ |
1.80 |
|
|
Transition/restructuring costs and non-cash equity based compensation expense (3) |
|
(0.04 |
) |
(2.57 |
) |
(0.47 |
) |
(0.16 |
) |
(0.08 |
) |
(0.07 |
) |
(0.07 |
) |
(1.03 |
) |
(0.10 |
) | |||||||||
|
Total adjusted cash operating costs |
|
$ |
1.70 |
|
$ |
1.62 |
|
$ |
1.76 |
|
$ |
1.69 |
|
$ |
1.67 |
|
$ |
1.75 |
|
$ |
1.69 |
|
$ |
1.69 |
|
$ |
1.70 |
|
|
Consolidated depreciation, depletion and amortization ($/Mcfe) |
|
$ |
2.59 |
|
$ |
1.98 |
|
$ |
1.43 |
|
$ |
1.96 |
|
$ |
2.11 |
|
$ |
2.22 |
|
$ |
2.32 |
|
$ |
2.00 |
|
$ |
2.10 |
|
(1) Amounts in the first, second and third quarter of 2012 include approximately $86 million, $116 million and $84 million for cash settlements related to natural gas contracts and approximately $(4) million, $10 million and $18 million for cash settlements related to crude oil contracts. Amounts in the first, second, third and fourth quarters of 2011 include approximately $82 million, $68 million, $80 million and $108 million for cash settlements related to natural gas contracts and approximately $(1) million, $(9) million, $3 million and less than $(1) million in the first, second, third and fourth quarters for cash settlements related to crude oil contracts.
(2) Cash proceeds on settlements do not reflect approximately $6 million for each period presented of cash option premiums paid in 2009 and 2010 for financial derivatives settled in each quarter of 2011.
(3) A detail of these expenses is included in the reconciliation of Adjusted EBITDAX on page 7.
EP ENERGY LLC
HEDGE POSITION AS OF SEPTEMBER 30, 2012
|
|
|
2012 |
|
2013 |
|
2014 |
|
2015 |
| ||||||||||||
|
Natural Gas |
|
Notional |
|
Average |
|
Notional |
|
Average |
|
Notional |
|
Average |
|
Notional |
|
Average |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Fixed Price |
|
51.4 |
|
$ |
4.47 |
|
152.4 |
|
$ |
3.55 |
|
74.3 |
|
$ |
3.97 |
|
23.7 |
|
$ |
4.16 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
2012 |
|
2013 |
|
2014 |
|
2015 |
| ||||||||||||
|
Crude Oil |
|
Notional |
|
Average |
|
Notional |
|
Average |
|
Notional |
|
Average |
|
Notional |
|
Average |
| ||||
|
Economic |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Fixed Price |
|
0.83 |
|
$ |
105.12 |
|
8.95 |
|
$ |
103.52 |
|
8.76 |
|
$ |
98.64 |
|
5.50 |
|
$ |
95.42 |
|
|
Collars - Ceiling |
|
0.37 |
|
$ |
95.00 |
|
— |
|
— |
|
1.10 |
|
$ |
100.00 |
|
1.10 |
|
$ |
100.00 |
| |
|
Three-Way Collars - Ceiling |
|
1.45 |
|
$ |
114.16 |
|
5.85 |
|
$ |
106.20 |
|
2.92 |
|
$ |
103.76 |
|
— |
|
— |
| |
|
Three-Way Collars - Floor(1) |
|
1.45 |
|
$ |
92.54 |
|
5.85 |
|
$ |
92.58 |
|
2.92 |
|
$ |
95.00 |
|
— |
|
— |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
Avg Ceiling |
|
2.64 |
|
$ |
108.66 |
|
14.80 |
|
$ |
104.58 |
|
12.78 |
|
$ |
99.93 |
|
6.60 |
|
$ |
96.18 |
|
|
Avg Floor |
|
2.28 |
|
$ |
97.12 |
|
14.80 |
|
$ |
99.20 |
|
11.68 |
|
$ |
97.73 |
|
5.50 |
|
$ |
95.42 |
|
Note: US Domestic positions are as of September 30, 2012 (Contract Months: October 2012 - Forward).
(1) If market prices settle at or below $67.54, $71.25 and $75.00 for the years 2012, 2013 and 2014, respectively, our three way collars-floors effectively “lock-in” a cash settlement of the market price plus $25.00 per Bbl, $21.33 per Bbl and $20.00 per Bbl for 2012, 2013 and 2014, respectively.
EP ENERGY LLC
RECONCILIATION OF COMBINED EARNINGS
($ in millions)
(unaudited)
|
|
|
Q2 2012 |
|
YTD 2012 |
| ||||||||||||||
|
|
|
Successor |
|
Predecessor |
|
|
|
Successor |
|
Predecessor |
|
|
| ||||||
|
|
|
Quarter |
|
April 1 to May |
|
Combined(1) |
|
March 23 |
|
January 1 to |
|
Combined(1) |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Operating revenues |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Oil and condensate |
|
$ |
77 |
|
$ |
113 |
|
$ |
190 |
|
$ |
307 |
|
$ |
322 |
|
$ |
629 |
|
|
Natural gas |
|
61 |
|
80 |
|
141 |
|
223 |
|
262 |
|
485 |
| ||||||
|
NGL |
|
5 |
|
12 |
|
17 |
|
23 |
|
29 |
|
52 |
| ||||||
|
Financial derivatives |
|
57 |
|
289 |
|
346 |
|
(124 |
) |
365 |
|
241 |
| ||||||
|
Total operating revenues |
|
200 |
|
494 |
|
694 |
|
429 |
|
978 |
|
1,407 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Transportation costs |
|
14 |
|
20 |
|
34 |
|
43 |
|
45 |
|
88 |
| ||||||
|
Lease operating expense |
|
21 |
|
34 |
|
55 |
|
76 |
|
96 |
|
172 |
| ||||||
|
General and administrative expenses |
|
209 |
|
31 |
|
240 |
|
294 |
|
75 |
|
369 |
| ||||||
|
Depreciation, depletion and amortization |
|
34 |
|
118 |
|
152 |
|
141 |
|
319 |
|
460 |
| ||||||
|
Impairments and ceiling test charges (2) |
|
1 |
|
— |
|
1 |
|
1 |
|
62 |
|
63 |
| ||||||
|
Exploration expense (2) |
|
6 |
|
— |
|
6 |
|
27 |
|
— |
|
27 |
| ||||||
|
Taxes other than income |
|
12 |
|
17 |
|
29 |
|
39 |
|
45 |
|
84 |
| ||||||
|
Total operating expenses |
|
297 |
|
220 |
|
517 |
|
621 |
|
642 |
|
1,263 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Operating (loss) income |
|
(97 |
) |
274 |
|
177 |
|
(192 |
) |
336 |
|
144 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Loss from unconsolidated affiliates |
|
(1 |
) |
(2 |
) |
(3 |
) |
(3 |
) |
(5 |
) |
(8 |
) | ||||||
|
Other income (expense) |
|
1 |
|
(4 |
) |
(3 |
) |
1 |
|
(3 |
) |
(2 |
) | ||||||
|
Loss on extinguishment of debt |
|
— |
|
— |
|
— |
|
(14 |
) |
— |
|
(14 |
) | ||||||
|
Interest expense |
|
(53 |
) |
(10 |
) |
(63 |
) |
(137 |
) |
(14 |
) |
(151 |
) | ||||||
|
(Loss) income before income taxes |
|
(150 |
) |
258 |
|
108 |
|
(345 |
) |
314 |
|
(31 |
) | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Income tax expense |
|
— |
|
95 |
|
95 |
|
1 |
|
136 |
|
137 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
|
Net (loss) income |
|
$ |
(150 |
) |
$ |
163 |
|
$ |
13 |
|
$ |
(346 |
) |
$ |
178 |
|
$ |
(168 |
) |
(1) Represents non-GAAP combined earnings for periods before and after the acquisition of EP Energy.
(2) Reflects the use of the successful efforts method of accounting for oil and gas properties following the acquisition of EP Energy and the use of the full cost method of accounting prior to the acquisition.
EP ENERGY LLC
RECONCILIATION OF ADJUSTED EBITDAX
($ in millions)
(unaudited)
|
|
|
2012 |
|
2011 |
|
Year-to-Date |
| |||||||||||||||||||||
|
|
|
Q1 |
|
Q2(1) |
|
Q3 |
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
2012(1) |
|
2011 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
Net (loss) income |
|
$ |
15 |
|
$ |
13 |
|
$ |
(196 |
) |
$ |
(18 |
) |
$ |
170 |
|
$ |
61 |
|
$ |
49 |
|
$ |
(168 |
) |
$ |
213 |
|
|
Depreciation, depletion and amortization |
|
201 |
|
152 |
|
107 |
|
134 |
|
146 |
|
157 |
|
175 |
|
460 |
|
437 |
| |||||||||
|
Income tax expense (benefit) |
|
41 |
|
95 |
|
1 |
|
(16 |
) |
77 |
|
118 |
|
41 |
|
137 |
|
179 |
| |||||||||
|
Interest expense, net of capitalized interest |
|
4 |
|
63 |
|
84 |
|
3 |
|
3 |
|
4 |
|
2 |
|
151 |
|
10 |
| |||||||||
|
Reported EBITDA |
|
261 |
|
323 |
|
(4 |
) |
103 |
|
396 |
|
340 |
|
267 |
|
580 |
|
839 |
| |||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
|
Mark to market (gains) losses on financial derivatives |
|
(76 |
) |
(346 |
) |
181 |
|
109 |
|
(132 |
) |
(251 |
) |
(10 |
) |
(241 |
) |
(274 |
) | |||||||||
|
Cash settlement proceeds from financial derivatives |
|
82 |
|
126 |
|
102 |
|
81 |
|
59 |
|
83 |
|
108 |
|
310 |
|
223 |
| |||||||||
|
Impairments and ceiling test charges |
|
62 |
|
1 |
|
— |
|
— |
|
— |
|
158 |
|
— |
|
63 |
|
158 |
| |||||||||
|
Dividends from unconsolidated affiliates |
|
8 |
|
— |
|
2 |
|
11 |
|
15 |
|
12 |
|
8 |
|
10 |
|
38 |
| |||||||||
|
Loss (income) from unconsolidated affiliates |
|
3 |
|
3 |
|
2 |
|
2 |
|
(1 |
) |
3 |
|
3 |
|
8 |
|
4 |
| |||||||||
|
Non-cash equity-based compensation expense |
|
3 |
|
13 |
|
5 |
|
5 |
|
6 |
|
5 |
|
5 |
|
21 |
|
16 |
| |||||||||
|
Transition and restructuring costs |
|
— |
|
183 |
|
25 |
|
6 |
|
— |
|
— |
|
— |
|
208 |
|
6 |
| |||||||||
|
Loss on extinguishment of debt |
|
— |
|
— |
|
14 |
|
— |
|
— |
|
— |
|
— |
|
14 |
|
— |
| |||||||||
|
Advisory fee |
|
— |
|
3 |
|
6 |
|
— |
|
— |
|
— |
|
— |
|
9 |
|
— |
| |||||||||
|
Exploration expense |
|
— |
|
6 |
|
21 |
|
— |
|
— |
|
— |
|
— |
|
27 |
|
— |
| |||||||||
|
Adjusted EBITDAX (2) |
|
$ |
343 |
|
$ |
312 |
|
$ |
354 |
|
$ |
317 |
|
$ |
343 |
|
$ |
350 |
|
$ |
381 |
|
$ |
1,009 |
|
$ |
1,010 |
|
(1) Represents non-GAAP combined earnings for periods before and after the acquisition of EP Energy.
(2) Amounts in the first, second and third quarters of 2012 include approximately $18 million, $13 million and $3 million of net EBITDA related to business divestitures. Amounts in the first, second, third and fourth quarters of 2011 include approximately $45 million, $43 million, $29 million and $19 million of net EBITDA related to business divestitures.
EP ENERGY LLC
RECONCILIATION OF CASH OPERATING COSTS AND ADJUSTED CASH OPERATING COSTS
(unaudited)
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
Nine Months Ended |
| ||||||||||||||||||||
|
|
|
Total |
|
Per-Unit |
|
Total |
|
Per-Unit |
|
Total |
|
Per-Unit |
|
Total |
|
Per-Unit |
|
Total |
|
Per-Unit |
| ||||||||||
|
|
|
($ MM) |
|
($/Mcfe) |
|
($ MM) |
|
($/Mcfe) |
|
($ MM) |
|
($/Mcfe) |
|
($ MM) |
|
($/Mcfe) |
|
($ MM) |
|
($/Mcfe) |
| ||||||||||
|
2012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
Total operating expenses |
|
$ |
422 |
|
$ |
5.45 |
|
$ |
517 |
|
$ |
6.69 |
|
$ |
324 |
|
$ |
4.34 |
|
|
|
|
|
$ |
1,263 |
|
$ |
5.50 |
| ||
|
Depreciation, depletion and amortization |
|
(201 |
) |
(2.59 |
) |
(152 |
) |
(1.98 |
) |
(107 |
) |
(1.43 |
) |
|
|
|
|
(460 |
) |
(2.00 |
) | ||||||||||
|
Transportation costs |
|
(25 |
) |
(0.32 |
) |
(34 |
) |
(0.43 |
) |
(29 |
) |
(0.40 |
) |
|
|
|
|
(88 |
) |
(0.38 |
) | ||||||||||
|
Exploration expense |
|
— |
|
— |
|
(6 |
) |
(0.08 |
) |
(21 |
) |
(0.28 |
) |
|
|
|
|
(27 |
) |
(0.12 |
) | ||||||||||
|
Ceiling test charges and Impairments |
|
(62 |
) |
(0.80 |
) |
(1 |
) |
(0.01 |
) |
— |
|
— |
|
|
|
|
|
(63 |
) |
(0.28 |
) | ||||||||||
|
Total cash operating costs and per-unit cash costs(1) |
|
$ |
134 |
|
$ |
1.74 |
|
$ |
324 |
|
$ |
4.19 |
|
$ |
167 |
|
$ |
2.23 |
|
|
|
|
|
$ |
625 |
|
$ |
2.72 |
| ||
|
Transition/restructuring costs and non-cash equity based compensation expense (2) |
|
(3 |
) |
(0.04 |
) |
(199 |
) |
(2.57 |
) |
(36 |
) |
(0.47 |
) |
|
|
|
|
(238 |
) |
(1.03 |
) | ||||||||||
|
Total adjusted cash operating costs and per-unit adjusted cash costs(1) |
|
$ |
131 |
|
$ |
1.70 |
|
$ |
125 |
|
$ |
1.62 |
|
$ |
131 |
|
$ |
1.76 |
|
|
|
$ |
— |
|
$ |
387 |
|
$ |
1.69 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
Total equivalent volumes (MMcfe) (1) |
|
|
|
77,465 |
|
|
|
77,353 |
|
|
|
74,620 |
|
|
|
|
|
|
|
229,438 |
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
2011 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
Total operating expenses |
|
$ |
280 |
|
$ |
4.11 |
|
$ |
285 |
|
$ |
4.12 |
|
$ |
463 |
|
$ |
6.56 |
|
$ |
336 |
|
$ |
4.45 |
|
$ |
1,028 |
|
$ |
4.94 |
|
|
Depreciation, depletion and amortization |
|
(134 |
) |
(1.96 |
) |
(146 |
) |
(2.11 |
) |
(157 |
) |
(2.22 |
) |
(175 |
) |
(2.32 |
) |
(437 |
) |
(2.10 |
) | ||||||||||
|
Transportation costs |
|
(20 |
) |
(0.30 |
) |
(18 |
) |
(0.26 |
) |
(20 |
) |
(0.28 |
) |
(27 |
) |
(0.37 |
) |
(58 |
) |
(0.28 |
) | ||||||||||
|
Ceiling test charges and Impairments |
|
— |
|
— |
|
— |
|
— |
|
(158 |
) |
(2.24 |
) |
— |
|
— |
|
(158 |
) |
(0.76 |
) | ||||||||||
|
Total cash operating costs and per-unit cash costs(1) |
|
$ |
126 |
|
$ |
1.85 |
|
$ |
121 |
|
$ |
1.75 |
|
$ |
128 |
|
$ |
1.82 |
|
$ |
134 |
|
$ |
1.76 |
|
$ |
375 |
|
$ |
1.80 |
|
|
Transition/restructuring charges and non-cash equity based compensation expense (2) |
|
(11 |
) |
(0.16 |
) |
(6 |
) |
(0.08 |
) |
(5 |
) |
(0.07 |
) |
(5 |
) |
(0.07 |
) |
(22 |
) |
(0.10 |
) | ||||||||||
|
Total adjusted cash operating costs and per-unit adjusted cash costs(1) |
|
$ |
115 |
|
$ |
1.69 |
|
$ |
115 |
|
$ |
1.67 |
|
$ |
123 |
|
$ |
1.75 |
|
$ |
129 |
|
$ |
1.69 |
|
$ |
353 |
|
$ |
1.70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||
|
Total equivalent volumes (MMcfe) (1) |
|
|
|
68,187 |
|
|
|
69,356 |
|
|
|
70,598 |
|
|
|
75,555 |
|
|
|
208,141 |
| ||||||||||
(1) Excludes volumes and costs associated with equity investment in Four Star
(2) Total amount in Q2 2012 includes $183 million for transition and restructuring costs associated with the acquisition of EP Energy, other transition/restructuring costs included are legal, severance, management fees and IT charges.
GLOSSARY
This contains a glossary of terms used in this Package as well as those used in other investor presentations and press releases. They are for reference only and may not be comparable to similarly titled measures used at other companies.
NON-GAAP FINANCIAL MEASURES
Historical financial results for the periods before and after the Acquisition on May 24, 2012, have been presented combined and have included a reconciliation to present them separately for the predecessor and successor in accordance with GAAP presentation. We believe that reflecting this combined information, while non-GAAP, facilitates the most meaningful comparison and understanding of our operating performance in 2012 over the same period in the prior year.
Reported EBITDA and Adjusted EBITDAX
Reported EBITDA is defined as net income plus interest and debt expense, income taxes and depreciation, depletion and amortization. Adjusted EBITDAX is defined as Reported EBITDA, adjusted as applicable in the relevant period, for the net change in the fair value of derivatives (mark to market effects, net of cash settlements and premiums related to these derivatives), ceiling test charges or other impairments, adjustments to reflect cash distributions of the earnings from our unconsolidated affiliates, non-cash equity based compensation expenses, transition and restructuring costs we expect not to recur, advisory fees paid to our sponsors, exploration expenses and loss on extinguishment of debt.
We believe that the presentation of Reported EBITDA and Adjusted EBITDAX is important to provide management and investors with (i) additional information to evaluate our ability to service debt adjusting for items required or permitted in calculating covenant compliance under our debt agreements, (ii) an important supplemental indicator of the operational performance of our business, (iii) an additional criterion for evaluating our performance relative to our peers, (iv) additional information to measure our liquidity (before cash capital requirements and working capital needs) (v) and supplemental information to investors about certain material non-cash and/or other items that may not continue at the same level in the future.
Reported EBITDA and Adjusted EBITDAX have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of our results as reported under U.S. GAAP or as an alternative to net income, operating income, net cash provided by operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. For example, our presentation of Reported EBITDA and Adjusted EBITDAX may not be comparable to similarly titled measures used by other companies in our industry. Furthermore, our presentation of Reported EBITDA and Adjusted EBITDAX should not be construed as an inference that our future results will be unaffected by the items noted above or what we believe to be other unusual or non-recurring items or that in the future we may not incur expenses that are the same as or similar to some of the adjustments in this presentation.
Cash Operating Costs and Adjusted Cash Operating Costs
We monitor cash operating costs required to produce our oil and natural gas production volumes. Cash operating costs is a non-GAAP measure calculated on a per Mcfe produced basis and includes total operating expenses less depreciation, depletion and amortization expense, ceiling test and other impairment charges, exploration expense, and transportation costs and costs of products. Adjusted cash operating costs reflects cash operating costs adjusted for non-recurring transition and restructuring costs, advisory fees paid to our sponsors and non-cash equity based compensation expense. We believe cash operating costs and adjusted cash operating costs per unit are valuable measures to provide management and investors reflecting operating performance and efficiency; however, these measures may not be comparable to similarly titled measures used by other companies and are subject to several of the same limitations as analytical tools as noted in the paragraphs above.
Per-unit lease operating expenses
We use per-unit lease operating expenses as a non-GAAP measure calculated on a per Mcfe basis equal to lease operating expenses divided by total equivalent production. The sum of lease operating expenses and production taxes equals production costs. The sum of cost of products, transportation costs, production costs, DD&A, G&A, ceiling test and other impairment charges and other operating expenses equals total operating expenses. It is a valuable measure of operating performance and efficiency.