Constellation Energy Partners Reports Third Quarter 2013 Results

  Constellation Energy Partners Reports Third Quarter 2013 Results

  *CEP’s year-to-date Adjusted EBITDA up 20% when compared to the same nine
    month period of 2012
  *CEP’s revenue from oil production on pace with the company’s 2013 forecast
    at 50% of total revenue from sales for the year-to-date
  *CEP expects to allocate up to $2 million of its 2013 capital budget to
    South Texas and Louisiana projects during the remainder of 2013

Business Wire

HOUSTON -- November 14, 2013

Constellation Energy Partners LLC (NYSE MKT: CEP) today reported results from
operations for the third quarter 2013.

The company produced 335 MBOE during the third quarter for average net
production of 3,642 BOE per day for the quarter. Net oil production for the
third quarter, which accounted for approximately 19% of the company’s total
production during the quarter, was 690 barrels per day. For the year-to-date
ending Sep. 30, 2013, the company produced 978 MBOE for average net production
of 3,583 BOE per day. Net oil production for the year-to-date was 564 barrels
per day, which is an increase of approximately 84% versus the same nine month
period of 2012.

Revenue of $12.1 million for the third quarter 2013 includes revenue from
sales of $11.8 million, of which approximately 54% was from oil sales and 46%
was from natural gas sales. The balance of the company’s third quarter 2013
revenue came from hedge settlements ($3.9 million), services provided to third
parties ($0.8 million), and losses on mark-to-market activities ($4.3
million), which is a non-cash item. For the year-to-date, revenue from sales
and hedge settlements totaled $41.5 million, which is approximately 6% higher
than the same nine month period of 2012.

Operating costs, which include lease operating expenses, production taxes and
general and administrative expenses, net of certain non-cash items, averaged
$26.01 per BOE for the third quarter 2013. For the year-to-date, excluding
employee severance charges in the first and second quarters of 2013, operating
costs averaged $25.15 per BOE, which is a decline of approximately 1% compared
to the same nine month period of 2012.

Adjusted EBITDA for the third quarter 2013 was $7.4 million. For the
year-to-date, Adjusted EBITDA was $17.4 million, which is a 20% improvement
when compared to the same nine month period of 2012.

On a GAAP basis, the company recorded a net loss of $3.3 million for the third
quarter 2013 and a net loss of $15.5 million for the year-to-date.

During the third quarter the company completed 20 net wells using $6.2 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 59
net wells and recompletions with capital spending of $12.7 million. The
company finished the third quarter 2013 with 20 net wells and recompletions in
progress.

“The focus of our drilling in the third quarter was on oil potential in our
Mid-Continent asset base,” said Stephen R. Brunner, President and Chief
Executive Officer of Constellation Energy Partners. “Looking ahead, we expect
to maintain this focus while at the same time taking advantage of new
opportunities available to us as a result of the Sanchez Transaction in South
Texas and Louisiana, where we anticipate spending up to $2 million of our
capital budget in the fourth quarter of this year.”

Reserve-Based Credit Facility

The company completed the third quarter 2013 with $50.7 million in debt
outstanding under its reserve-based credit facility, leaving the company with
$4.3 million in borrowing capacity under the facility. The company had $3.7
million in cash and cash equivalents as of Sep. 30, 2013.

Financial Outlook for 2013

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 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.

For the remainder of 2013, the company has hedged approximately 1.7 Bcfe of
its natural gas production at an effective NYMEX fixed price of $6.18 per Mcfe
with Mid-Continent basis hedges on 1.2 Bcfe of this amount at an average
differential of $0.39 per Mcfe. The company also has hedges in place on
approximately 65 MBbl of its oil production at a fixed price of $99.93 per
barrel.

Conference Call Information

The company will host a conference call at 8:30 a.m. (CST) on Friday, Nov. 15,
2013 to discuss third 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. (CST). 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 (800) 395-7443 or (203) 369-3271 (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.

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;
(gain) loss from equity investment; unit-based compensation programs; (gain)
loss from mark-to-market activities; and gain (loss) on discontinued
operations.

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 Sep. 30,           Nine Months Ended Sep. 30,
                   2013               2012               2013               2012
Net Production
in MBOE and
MMcfe:
Total
production           335                337                978                1,029
(MBOE)
Average daily
production           3,642              3,662              3,583              3,757
(BOE/day)
                                                                                           
Total
production           2,011              2,022              5,870              6,177
(MMcfe)
Average daily
production           21,853             21,978             21,502             22,544
(Mcfe/day)
                                                                                           
Average Net
Sales Price
per BOE and
Mcfe:
BOE Net
realized
price,             $48.21         (a) $39.01         (a) $43.74         (a) $39.46         (a)
including
hedges
BOE Net
realized
price,             $36.46         (b) $20.50         (b) $31.75         (b) $20.39         (b)
excluding
hedges
                                                                                           
Mcfe Net
realized
price,             $8.03          (a) $6.50          (a) $7.29          (a) $6.58          (a)
including
hedges
Mcfe Net
realized
price,             $6.08          (b) $3.42          (b) $5.29          (b) $3.40          (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          20                 7                  46                 28
Completed
Net                  -                  7                  13                 34
Recompletions
Developmental        -                  -                  -                  -
Dry Holes
Net Wells and
Net                  20                 55                 20                 55
Recompletions
in Progress
                                                                                           
                                                                                           
Constellation
Energy
Partners LLC
Condensed
Consolidated
Statements of
Operations
                                                                       
                   Three Months Ended Sep. 30,           Nine Months Ended Sep. 30,
                   2013               2012               2013               2012
                   ($ in thousands)                      ($ in thousands)
                                                                                           
Oil and gas        $ 16,476           $ 13,435           $ 43,903           $ 41,543
sales
Gain/(Loss)
from                (4,345     )      (10,158    )      (11,284    )      (8,453     )
mark-to-market
activities
Total revenues       12,131             3,277              32,619             33,090
                                                                                           
Operating
expenses:
Lease
operating            5,191              4,869              13,332             14,727
expenses
Cost of sales        323                287                1,122              923
Production           731                374                1,840              1,141
taxes
General and          3,015              4,014              11,156             11,555
administrative
(Gain)/Loss on       31                 -                  8                  -
sale of assets
Depreciation,
depletion and        5,491              2,373              15,056             7,078
amortization
Asset                -                  -                  -                  107
impairments
Accretion           163              116              409              345        
expense
Total
operating            14,945             12,033             42,923             35,876
expenses
                                                                                           
Other
expenses:
Interest
(income)             420                1,534              2,636              4,590
expense, net
Other (income)       23                 (21        )       (149       )       (114       )
expense
                                                                         
Total expenses       15,388             13,546             45,410             40,352
                                                                                           
Income (loss)
from                 (3,257     )       (10,269    )       (12,791    )       (7,262     )
continuing
operations
Gain/(Loss)
from                -                (894       )      (2,686     )      (3,026     )
discontinued
operations
Net income         $ (3,257     )     $ (11,163    )     $ (15,477    )     $ (10,288    )
(loss)
                                                                                           
Adjusted           $ 7,412           $ 4,410           $ 17,430          $ 14,474     
EBITDA
                                                                                           
EPU - Basic          ($0.12     )       ($0.46     )       ($0.62     )       ($0.43     )
EPU - Basic
Units                26,888,303         24,169,012         24,840,502         24,171,669
Outstanding
                                                                                           
EPU - Diluted        ($0.12     )       ($0.46     )       ($0.62     )       ($0.43     )
EPU - Diluted
Units                26,888,303         24,169,012         24,840,502         24,171,669
Outstanding
                                                                                           
                                                                                           
Constellation Energy Partners LLC
Condensed Consolidated Balance Sheets
                                     
                   Sep. 30,           Dec. 31,
                   2013               2012
                   ($ in thousands)
                                                                                           
Current assets     $ 24,123           $ 26,848
Current assets
from                 -                  1,886
discontinued
operations
Oil and
natural gas
properties,
net of
accumulated
depreciation,
depletion and        149,994            120,122
amortization
Other assets         9,378              11,793
Long-term
assets from         -                67,373     
discontinued
operations
Total assets       $ 183,495         $ 228,022    
                                                                                           
Current
liabilities,
including          $ 9,767            $ 59,595
short-term
debt
Current
liabilities
from                 -                  1,578
discontinued
operations
Long-term debt       50,700             34,000
Other
long-term            11,278             8,891
liabilities
Other
long-term
liabilities         -                7,692      
from
discontinued
operations
Total                71,745             111,756
liabilities
                                                                                           
Common
members'             111,750            116,266
equity
Accumulated
other               -                -          
comprehensive
income
Total members'      111,750          116,266    
equity
Total
liabilities        $ 183,495         $ 228,022    
and members'
equity
                                                                                           
                                                                                           
Constellation Energy Partners LLC
Reconciliation of Net Income (Loss) to
Adjusted EBITDA
                                                                       
                   Three Months Ended Sep. 30,           Nine Months Ended Sep. 30,
                   2013               2012               2013               2012
                   ($ in thousands)                      ($ in thousands)
                                                                                           
Reconciliation
of Net Income
(Loss) to
Adjusted
EBITDA:
Net income         $ (3,257     )     $ (11,163    )     $ (15,477    )     $ (10,288    )
(loss)
Add:
Interest
(income)             420                1,534              2,636              4,590
expense, net
Depreciation,
depletion and        5,491              2,373              15,056             7,078
amortization
Asset                -                  -                  -                  107
impairments
Accretion            163                116                409                345
expense
(Gain)/Loss on       31                 -                  8                  -
sale of assets
Unit-based
compensation         219                498                828                1,163
programs
(Gain)/Loss
from                 4,345              10,158             11,284             8,453
mark-to-market
activities
(Gain)/Loss
from                -                894              2,686            3,026      
discontinued
operations
Adjusted           $ 7,412           $ 4,410           $ 17,430          $ 14,474     
EBITDA (1)
                                                                                           
                                                                       
                   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                 (2,346     )       4,897              6,939              (1,705     )
mark-to-market
activities
(Gain)/Loss
from                -                1,331            2,686            2,132      
discontinued
operations
Adjusted           $ 4,711           $ 5,469           $ 10,018          $ 10,064     
EBITDA (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:

-- interest (income) expense, net.

-- depreciation, depletion and amortization;

-- write-off of deferred financing fees;

-- asset impairments;

-- accretion expense;

-- (gain) loss on sale of assets;

-- (gain) loss from equity investment;

-- unit-based compensation programs;

-- (gain) loss from mark-to-market activities; and

-- gain (loss) on discontinued operations.

Contact:

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