HOUSTON, TX — (Marketwire) — 08/09/12 — EV Energy Partners, L.P. (NASDAQ: EVEP) today announced results for the second quarter 2012 and filed its Form 10-Q with the Securities and Exchange Commission.
Adjusted EBITDAX for the quarter was $66.1 million, a 20 percent increase over the second quarter of 2011 and a 3 percent increase versus the first quarter of 2012. Distributable Cash Flow for the quarter was $34.5 million, a 4 percent increase over the second quarter of 2011 and flat versus the first quarter of 2012. The increases over the second quarter of 2011 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 2011.
Production for the second quarter of 2012 was 10.7 Bcf of natural gas, 282 MBbls of oil and 403 MBbls of natural gas liquids, or 14.8 Bcfe. This represents a 47 percent increase from second quarter 2011 production of 10.1 Bcfe, primarily due to acquisitions completed during 2011, and a 2 percent increase from the first quarter 2012 production of 14.5 Bcfe.
For the second quarter of 2012, EVEP reported net income of $15.0 million, or $0.35 and $0.34 per basic and diluted weighted average limited partner unit outstanding, respectively. Included in net income were $15.5 million of unrealized gains on commodity and interest rate derivatives, $0.7 million of non-cash realized losses related to derivatives acquired in a December 2010 acquisition that settled during the quarter, a $0.5 million non-cash charge to lease operating expense related to oil in tanks purchased in connection with 2011 acquisitions, $1.7 million of dry hole and exploration costs, a $16.3 million impairment charge, $0.4 million of non-cash deferred income taxes and $3.8 million of non-cash costs contained in general and administrative expenses. Also contained in general and administrative expenses were $0.6 million of acquisition related due diligence, transaction and transition costs.
The $16.3 million impairment charge was primarily to write down certain oil and natural gas properties to their fair value due to the effects of declining natural gas prices on expected future net cash flows.
The $15.5 million unrealized gain on derivatives for the second quarter of 2012 was due to the decrease in future oil and natural gas liquids prices, partially offset by the increase in future natural gas prices that occurred from March 31, 2012 to June 30, 2012 and the effect of such price changes on the mark-to-market valuation of EVEP–s outstanding commodity derivatives which extend through December 2015.
For the second quarter of 2011, EVEP reported net income of $39.2 million, or $1.03 per basic and diluted weighted average limited partner unit outstanding. Included in net income were $17.4 million of unrealized gains on commodity and interest rate derivatives and $1.7 million of non-cash costs contained in general and administrative expenses. General and administrative expenses also included $0.2 million of acquisition related due diligence and transaction costs. Also included in net income was a $5.1 million impairment charge primarily related to non-core assets sold during the quarter and a $3.3 million non-cash realized gain on derivatives related to term extensions on certain interest rate swaps and to derivatives acquired in conjunction with a 2010 property acquisition. For the first quarter of 2012, EVEP reported net income of $28.6 million, or $0.69 per basic and diluted weighted average limited partner unit outstanding. Included in net income were $11.7 million of unrealized gains on commodity and interest rate derivatives, $0.6 million of non-cash realized losses related to derivatives acquired in a December 2010 acquisition that settled during the quarter, a $1.2 million non-cash charge to lease operating expense related to oil in tanks purchased in connection with 2011 acquisitions, $2.2 million of dry hole and exploration costs, a $0.6 million impairment charge primarily related to non-core assets sold during the quarter, $0.6 million of non-cash deferred income taxes and $4.3 million of non-cash costs contained in general and administrative expenses. Also contained in general and administrative expenses were $1.8 million of costs associated with the annual vesting of phantom units during the first quarter and $0.2 million of acquisition related due diligence and transaction costs.
Mark Houser, President and CEO, said, “For the second quarter, we achieved good results from our existing base business, which we would expect to continue for the second half of the year. We launched our Utica Shale monetization process at the end of the second quarter and are moving forward as planned. In addition, we have drilled and completed three operated wells in which EVEP owns a working interest. The Frank 2H well in the oil window in Stark County was brought on line and flowed at an initial unassisted rate of 515 BOE per day with a very high liquids content. Approximately forty percent of the equivalent production is light crude oil and forty percent is NGL–s. We expect production to increase once standard artificial lift equipment is installed and the well is tied in to sales. The Habrun well in the oil window in Stark County and the Cairns well in the wet gas window in Carroll County are still in the dissipation period.”
EVEP–s financial statements and related footnotes are available on our second quarter 2012 Form 10-Q, which was filed today and is available through the Investor Relations/SEC Filings section of the EVEP web site at .
As announced on July 31, 2012, EV Energy Partners, L.P. will host an investor conference call at 10 a.m. EDT Friday, Aug. 10, 2012. Investors interested in participating in the call may dial (480) 629-9867 (conference ID 4557221) 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 .
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 at .
(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 the 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.
We define Adjusted EBITDAX as net 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 realized losses on commodity derivatives, unrealized (gains) losses on derivatives, non-cash equity compensation, impairments of oil and natural gas properties, write down of oil inventory, and dry hole and exploration costs. Distributable Cash Flow is defined as Adjusted EBITDAX less cash 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.
EV Energy Partners, L.P., Houston
Michael E. Mercer
713-651-1144