Constellation Energy Partners Reports Second Quarter 2013 Results

  Constellation Energy Partners Reports Second Quarter 2013 Results

  *CEP reports year-to-date oil production of 500 barrels per day, a 54%
    improvement over the same period of 2012
  *CEP drilling efforts continue to target oil potential in the company’s
    Mid-Continent asset base
  *CEP’s acquisition of Texas and Louisiana assets expected to contribute to
    financial results beginning in the third quarter of 2013

Business Wire

HOUSTON -- August 14, 2013

Constellation Energy Partners LLC (NYSE MKT: CEP) today reported second
quarter 2013 results from continuing operations, which exclude results for the
Robinson’s Bend Field assets divested by the company in a transaction that
closed in Feb. 2013.

The company produced 308 MBOE during the second quarter for average net
production of 3,386 BOE per day for the quarter. Net oil production for the
second quarter, which accounted for approximately 14% of the company’s total
production during the quarter, was 469 barrels per day. For the year-to-date
ending June 30, 2013, the company produced 643 MBOE for average net production
of 3,553 BOE per day. Net oil production for the year-to-date was 500 barrels
per day, which is an increase of approximately 54% versus the same six month
period of 2012.

Revenue of $15.4 million for the second quarter 2013 includes revenue from
sales of $9.3 million, of which approximately 43% was from oil sales and 57%
was from natural gas sales. The balance of the company’s second quarter 2013
revenue came from hedge settlements ($3.1 million), services provided to third
parties ($0.7 million), and gains on mark-to-market activities ($2.3 million),
which is a non-cash item. For the year-to-date, revenue from sales and hedge
settlements totaled $25.8 million, which is approximately 3% lower than the
same six month period of 2012.

Operating costs, which include lease operating expenses, production taxes and
general and administrative expenses, net of certain non-cash items and an
employee severance charge of approximately $0.2 million, averaged $25.50 per
BOE for the second quarter 2013. Including the employee severance charge,
operating costs were $26.15 per BOE. For the year-to-date, operating costs
excluding the employee severance charge averaged $24.71 per BOE, which is a
decline of approximately 2% versus operating costs for the same six month
period of 2012.

Adjusted EBITDA for the second quarter 2013, excluding the employee severance
charge, was $4.9 million. Including the employee severance charge, Adjusted
EBITDA was $4.7 million. For the year-to-date, Adjusted EBITDA including the
employee severance charge was $10.0 million as compared to $10.1 million for
the same six month period of 2012.

On a GAAP basis, the company recorded net income of $1.1 million for the
second quarter 2013 and a net loss of $12.2 million for the year-to-date.

During the second quarter the company completed 22 net wells and recompletions
using $4.0 million in cash flow from operations. Drilling activities in 2013
continue to focus on oil potential in the company’s existing asset base as
well as capital efficient recompletions. For the year-to-date, the company has
completed 39 net wells and recompletions with capital spending of $6.4
million. The company finished the second quarter 2013 with five net wells and
recompletions in progress.

“Our operating results for the first six months of the year are in-line with
our forecast,” said Stephen R. Brunner, President and Chief Executive Officer
of Constellation Energy Partners. “Our focus on Mid-Continent oil
opportunities continues to show progress as we look to accelerate the
deployment of budgeted capital the remainder of this year.”

Reserve-Based Credit Facility

The company completed the second quarter 2013 with $34.0 million in debt
outstanding under its reserve-based credit facility, leaving the company with
$21.0 million in borrowing capacity under the facility. The company had $9.5
million in cash and cash equivalents as of June 30, 2013.

After the acquisition of producing assets in Texas and Louisiana from Sanchez
Energy Partners I, LP (“SEP I”) in a transaction that closed on Aug. 9, 2013,
the company has $50.7 million in debt outstanding under its reserve-based
credit facility, which leaves the company with $4.3 million in borrowing
capacity under the facility. Immediately after the transaction closing, the
company had $5.8 million in cash and cash equivalents.

Financial Outlook for 2013

The company also announced that it has revised its financial outlook for 2013
to take into account the addition of the Texas and Louisiana assets acquired
from SEP I.

The company continues to forecast capital spending of between $19.0 million
and $21.0 million in 2013. Of this amount, $21.0 million is maintenance
capital.

Net production is now forecast to range between 1,400 MBOE and 1,567 MBOE for
2013, with operating costs forecast to range between $32.5 million and 35.3
million for the year.

Commenting on the company’s financial outlook, Brunner noted: “We’ve
undertaken considerable effort to transform the company in 2013 through the
sale of our Robinson’s Bend Field assets, refinancing of our reserve-based
credit facility, and the transaction announced last week which gives us a new
business development relationship with the Sanchez companies. We expect these
initiatives will show positive results in the second half of this year and
create value for our unit holders for many years to come.”

Hedging Update

In July 2013, CEP executed additional hedges that cover approximately 69 MBbl
of its oil production in 2013 and 2014.

For the remainder of 2013, the company has hedged approximately 3.4 Bcfe of
its natural gas production at an effective NYMEX fixed price of $6.17 per Mcfe
with Mid-Continent basis hedges on 2.5 Bcfe of this amount at an average
differential of $0.39 per Mcfe. The company also has hedges in place on
approximately 91 MBbl of its oil production at a fixed price of $97.88 per
barrel.

Conference Call Information

The company will host a conference call at 8:30 a.m. (CDT) on Thursday, Aug.
15, 2013 to discuss second quarter 2013 results.

To participate in the conference call, analysts, investors, media and the
public in the U.S. may dial (800) 857-0653 shortly before 8:30 a.m. (CDT). The
international phone number is (773) 799-3268. The conference password is
PARTNERS.

A replay will be available beginning approximately one hour after the end of
the call by dialing (866) 416-8278 or (203) 369-0726 (international). A live
audio webcast of the conference call, presentation slides and the earnings
release will be available on Constellation Energy Partners’ Web site
(www.constellationenergypartners.com) under the Investor Relations page. The
call will also be recorded and archived on the site.

About the Company

Constellation Energy Partners LLC is a limited liability company focused on
the acquisition, development and production of oil and natural gas properties,
as well as related midstream assets.

SEC Filings

The company intends to file its second quarter 2013 Form 10-Q on or about
August 14, 2013.

Non-GAAP Measures

We present Adjusted EBITDA in addition to our reported net income (loss) in
accordance with GAAP. Adjusted EBITDA is a non-GAAP financial measure that is
defined as net income (loss) adjusted by interest (income) expense, net;
depreciation, depletion and amortization; write-off of deferred financing
fees; asset impairments; accretion expense; (gain) loss on sale of assets;
exploration costs; (gain) loss from equity investment; unit-based compensation
programs; (gain) loss from mark-to-market activities; and unrealized (gain)
loss on derivatives/hedge ineffectiveness.

Adjusted EBITDA is used as a quantitative standard by our management and by
external users of our financial statements such as investors, research
analysts and others to assess the financial performance of our assets without
regard to financing methods, capital structure or historical cost basis; the
ability of our assets to generate cash sufficient to pay interest costs and
support our indebtedness; and our operating performance and return on capital
as compared to those of other companies in our industry, without regard to
financing or capital structure. Adjusted EBITDA is not intended to represent
cash flows for the period, nor is it presented as a substitute for net income,
operating income, cash flows from operating activities or any other measure of
financial performance or liquidity presented in accordance with GAAP.

Forward-Looking Statements

We make statements in this news release that are considered forward-looking
statements within the meaning of the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended. These forward-looking
statements are largely based on our expectations, which reflect estimates and
assumptions made by our management. These estimates and assumptions reflect
our best judgment based on currently known market conditions and other
factors. Although we believe such estimates and assumptions to be reasonable,
they are inherently uncertain and involve a number of risks and uncertainties
that are beyond our control. In addition, management's assumptions about
future events may prove to be inaccurate. Management cautions all readers that
the forward-looking statements contained in this news release are not
guarantees of future performance, and we cannot assure you that such
statements will be realized or the forward-looking events and circumstances
will occur. Actual results may differ materially from those anticipated or
implied in the forward-looking statements due to factors listed in the "Risk
Factors" section in our SEC filings and elsewhere in those filings. All
forward-looking statements speak only as of the date of this news release. We
do not intend to publicly update or revise any forward-looking statements as a
result of new information, future events or otherwise. These cautionary
statements qualify all forward-looking statements attributable to us or
persons acting on our behalf.


Constellation Energy Partners LLC
Operating Statistics
                                                                 
                   Three Months Ended June           Six Months Ended June 30,
                   30,
                   2013           2012             2013           2012
Net Production
in MBOE and
MMcfe:
Total
production           308              339              643              692
(MBOE)
Average daily
production           3,386            3,720            3,553            3,800
(BOE/day)
                                                                                 
Total
production           1,849            2,033            3,859            4,155
(MMcfe)
Average daily
production           20,315           22,341           21,322           22,830
(Mcfe/day)
                                                                                 
Average Net
Sales Price
per BOE and
Mcfe:
BOE Net
realized
price,             $41.10     (a)   $40.90     (a)   $41.41     (a)   $39.72     (a)
including
hedges
BOE Net
realized
price,             $31.11     (b)   $19.21     (b)   $29.31     (b)   $20.36     (b)
excluding
hedges
                                                                                 
Mcfe Net
realized
price,             $6.85      (a)   $6.81      (a)   $6.90      (a)   $6.61      (a)
including
hedges
Mcfe Net
realized
price,             $5.18            $3.20      (b)   $4.88            $3.39      (b)
excluding
hedges
                                                                                 
(a) Excludes
impact of
mark-to-market
gains (losses)
and net cost
of sales.
(b) Excludes
all hedges,
the impact of
mark-to-market
gains (losses)
and net cost
of sales.
                                                                                 
Net Wells
Drilled and          14               16               26               21
Completed
Net                  8                17               13               27
Recompletions
Developmental        -                -                -                -
Dry Holes
Net Wells and
Net                  5                24               5                24
Recompletions
in Progress
                                                                                 
Total Capital
Spending ($ in     $ 3,966          $ 4,085          $ 6,449          $ 6,807
thousands)

                                                                  
Constellation Energy Partners LLC
Condensed Consolidated Statements of Operations

                                                                     
                     Three Months Ended June 30,         Six Months Ended June 30,
                     2013             2012               2013             2012
                     ($ in thousands)                    ($ in thousands)
                                                                          
Oil and gas          $ 13,042         $ 14,096           $ 27,427         $ 28,108
sales
Gain/(Loss)
from                  2,346          (4,897     )      (6,939     )    1,705      
mark-to-market
activities
Total revenues         15,388           9,199              20,488           29,813
                                                                          
Operating
expenses:
Lease
operating              3,905            4,687              8,141            9,858
expenses
Cost of sales          379              251                799              636
Production             622              365                1,109            767
taxes
General and            3,737            3,705              8,141            7,541
administrative
(Gain)/Loss on         (17        )     (4         )       (23        )     -
sale of assets
Depreciation,
depletion and          4,767            2,318              9,565            4,705
amortization
Asset                  -                -                  -                107
impairments
Accretion             123            115              246            229        
expense
Total
operating              13,516           11,437             27,978           23,843
expenses
                                                                          
Other
expenses:
Interest
(income)               864              1,437              2,216            3,056
expense, net
Other (income)         (104       )     4                  (172       )     (93        )
expense
                                                                       
Total expenses         14,276           12,878             30,022           26,806
                                                                          
Income (loss)
from                   1,112            (3,679     )       (9,534     )     3,007
continuing
operations
Discontinued          -              (1,331     )      (2,686     )    (2,132     )
operations
Net income           $ 1,112         $ (5,010     )     $ (12,220    )   $ 875        
(loss)
                                                                          
Adjusted             $ 4,711         $ 5,469           $ 10,018        $ 10,064     
EBITDA
                                                                          
EPU - Basic          $0.05              ($0.21     )       ($0.51     )   $0.04
EPU - Basic
Units                  23,829,650       24,159,301         23,799,631       24,173,012
Outstanding
                                                                          
EPU - Diluted        $0.05              ($0.21     )       ($0.51     )   $0.04
EPU - Diluted
Units                  24,205,102       24,159,301         23,799,631       24,232,246
Outstanding

                                                              
Constellation Energy Partners LLC
Condensed Consolidated Balance Sheets
                                                                    
                                                     June 30,        Dec. 31,
                                                     2013            2012
                                                     ($ in thousands)
                                                                     
Current assets                                       $ 29,281        $ 26,848
Current assets from discontinued operations            -               1,886
Oil and natural gas properties, net of
accumulated
depreciation, depletion and amortization               116,892         120,122
Other assets                                           12,094          11,793
Long-term assets from discontinued operations         -              67,373
Total assets                                         $ 158,267       $ 228,022
                                                                     
Current liabilities, including short-term debt       $ 9,783         $ 59,595
Current liabilities from discontinued                  -               1,578
operations
Long-term debt                                         34,000          34,000
Other long-term liabilities                            10,014          8,891
Other long-term liabilities from discontinued         -              7,692
operations
Total liabilities                                      53,797          111,756
                                                                     
Common members' equity                                 104,470         116,266
Accumulated other comprehensive income                -              -
Total members' equity                                 104,470        116,266
Total liabilities and members' equity                $ 158,267       $ 228,022


Constellation Energy Partners LLC
Reconciliation of Net Income (Loss) to
Adjusted EBITDA
                                                          
                     Three Months Ended June 30,     Six Months Ended June 30,
                     2013           2012           2013          2012
                     ($ in thousands)                ($ in thousands)
                                                                    
Reconciliation
of Net Income
(Loss) to
Adjusted EBITDA:
Net income           $  1,112         $ (5,010 )     $  (12,220 )   $ 875
(loss)
Add:
Interest
(income)                864             1,437           2,216         3,056
expense, net
Depreciation,
depletion and           4,767           2,318           9,565         4,705
amortization
Asset                   -               -               -             107
impairments
Accretion               123             115             246           229
expense
(Gain)/Loss on          (17     )       (4     )        (23     )     -
sale of assets
Unit-based
compensation            208             385             609           665
programs
(Gain)/Loss from
mark-to-market          (2,346  )       4,897           6,939         (1,705 )
activities
Discontinued           -             1,331         2,686       2,132  
operations
Adjusted EBITDA      $  4,711        $ 5,469       $  10,018     $ 10,064 
(1)
                                                                    
                                   
                     Three Months Ended Mar. 31,
                     2013             2012
                     ($ in thousands)
                                                                    
Reconciliation
of Net Income
(Loss) to
Adjusted EBITDA:
Net income           $  (13,332 )     $ 5,885
(loss)
Add:
Interest
(income)                1,352           1,619
expense, net
Depreciation,
depletion and           4,798           2,387
amortization
Asset                   -               107
impairments
Accretion               123             114
expense
(Gain)/Loss on          (6      )       4
sale of assets
Exploration             -               -
costs
Unit-based
compensation            401             280
programs
(Gain)/Loss from
mark-to-market          9,285           (6,602 )
activities
Discontinued           2,686         801    
operations
Adjusted EBITDA      $  5,307        $ 4,595  
(1)


(1) Our Adjusted EBITDA should not be considered as an alternative to net
income, operating income, cash flows from operating activities or any other
measure of financial performance or liquidity presented in accordance with
GAAP. Our Adjusted EBITDA excludes some, but not all, items that affect net
income and operating income and these measures may vary among other companies.
Therefore, our Adjusted EBITDA may not be comparable to similarly titled
measures of other companies.

We define Adjusted EBITDA as net income (loss) plus:
-- depreciation, depletion and amortization;
-- write-off of deferred financing fees;
-- asset impairments;
-- (gain) loss on sale of assets;
-- accretion expense;
-- exploration costs;
-- (gain) loss from equity investment;
-- unit-based compensation programs;
-- (gain) loss from mark-to-market activities;
-- gains (losses) on discontinued operations;
-- unrealized (gain) loss on derivatives/hedge ineffectiveness; and
-- interest (income) expense, net.

Contact:

Constellation Energy Partners LLC
Investor Contact:
Charles C. Ward, (877) 847-0009
or
General Inquiries: (877) 847-0008
www.constellationenergypartners.com