EV Energy Partners Announces First Quarter 2014 Results and Utica Midstream Expansion PR Newswire HOUSTON, May 12, 2014 HOUSTON, May 12, 2014 /PRNewswire/ -- EV Energy Partners, L.P. (NASDAQ: EVEP) today announced results for the first quarter of 2014 and the filing of its Form 10-Q with the Securities and Exchange Commission. In addition, EVEP announced an expansion of the Utica East Ohio ("UEO") midstream services complex in Ohio and provided an update of EVEP's commodity hedge positions, which includes additional crude oil hedges entered into in March 2014, as presented at the end of this release. Utica Midstream Expansion UEO announced plans to increase its nameplate processing capacity to 1.0 billion cubic feet per day (Bcf/d), up from its current nameplate capacity of 800 million cubic feet per day (MMcf/d). UEO is a joint venture owned 49 percentby Access Midstream Partners, L.P., 30 percentby M3 Midstream LLC and 21 percentby EVEP. Additional capacity is needed to meet new commitments from existing customers Chesapeake Energy Corporation, Total Gas & Power North America, EnerVest, Ltd., and new customer, American Energy - Utica, LLC, an affiliate of American Energy Partners, LP. UEO also willagree to provide gathering, compression and dehydration services for American Energy - Utica. The new long-term agreement between UEO and American Energy - Utica includes a 145,000-acre area of mutual interest, installation of 50 miles of gathering pipeline and compression services. Plans for the UEO expansion include the construction of a second processing train at the Leesville, Ohio, facility and extension of an existing high-pressure pipeline from UEO's Harrison Hub to Cardinal Gas Services' (CGS) Archer Compression Facility in Harrison County. Additional services also areplanned at Harrison Hub, including downstream liquids interconnects and expanded propane and butane storage. First Quarter 2014 Results Adjusted EBITDAX for the first quarter of 2014 was $56.1 million, a 15 percent increase over the first quarter of 2013, and a 4 percent increase over the fourth quarter of 2013. Distributable Cash Flow for the first quarter of 2014 was $28.6 million, a 31 percent increase over the first quarter of 2013 and a 7 percent increase over the fourth quarter of 2013. The increases in Adjusted EBITDAX and Distributable Cash Flow, which are described in the attached table under "Non-GAAP Measures," are primarily due to increased production and increased EBITDAX from midstream investments. Production for the first quarter of 2014 was 10.8 Bcf of natural gas, 265 MBbls of oil and 550 MBbls of natural gas liquids, or 174.7 MMcfe/day. This represents a 6 percent increase over first quarter 2013 production of 165.2 MMcfe/d and a 2 percent increase over fourth quarter 2013 production of 170.5 MMcfe/day. The increases in production are primarily due to drilling activity and acquisitions completed during the fourth quarter of 2013. EVEP reported a net loss of $6.3 million, or $(0.14) per basic and diluted weighted average limited partner unit outstanding, for the first quarter of 2014. Included in net loss were the following items: o$16.8 million of non-cash losses on commodity and interest rate derivatives, o$4.5 million of non-cash costs contained in general and administrative expenses, o$2.3 million of payroll tax related cash costs contained in general and administrative expenses associated with the annual vesting of phantom units during the first quarter which will not be incurred during the second through fourth quarters, o$1.5 million gain on the sale of oil and natural gas properties, and o$0.3 million of dry hole and exploration costs. For the fourth quarter of 2013, EVEP reported a net loss of $50.2 million, or $(1.06) per basic and diluted weighted average limited partner unit outstanding. For the first quarter of 2013, EVEP reported a net loss of $46.6 million, or $(1.08) per basic and diluted weighted average limited partner unit outstanding. "We are very pleased with our operational performance and results for the first quarter of 2014, as well as the continued ramp-up in our Utica midstream operations and planned future expansion at the UEO midstream services complex," said Mark Houser, President and CEO. Quarterly Report on Form 10-Q EVEP's financial statements and related footnotes are available in the first quarter 2014 Form 10-Q, which was filed today and is available through the Investor Relations/SEC Filings section of the EVEP website at http://www.evenergypartners.com. Conference Call As announced on May 5, 2014, EV Energy Partners, L.P. will host an investor conference call on May 12, 2014, at 9 a.m. Eastern Time (8 a.m. Central). Investors interested in participating in the call may dial 1-877-941-6009 (quote conference ID 4682361) at least 5 minutes prior to the start time, or may listen live over the Internet through the Investor Relations section of the EVEP website at http://ir.evenergypartners.com/events.cfm. EV Energy Partners, L.P. is a master limited partnership engaged in acquiring, producing and developing oil and natural gas properties. More information about EVEP is available on the Internet at http://www.evenergypartners.com. (code #: EVEP/G) This press release may include statements that are not historical facts which are "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements include information about the sale of our Utica Shale assets, our midstream investments and expansion plans, future plans, our reserve quantities and the present value of our reserves, estimates of maintenance capital and other statements which include words such as "anticipates," "plans," "projects," "expects," "intends," "believes," "should," and similar expressions of forward-looking information. Forward-looking statements are inherently uncertain and necessarily involve risks that may affect the business prospects and performance of EV Energy Partners, L.P. Actual results may differ materially from those contained in the press release. Such risks and uncertainties include, but are not limited to, changes in commodity prices, changes in reserve estimates, requirements and actions of purchasers of properties (including the Utica Shale), changes in the metrics and procedures used to value midstream assets, exploration and development activities in the Utica Shale and elsewhere, the availability and cost of financing, the returns on our capital investments and acquisition strategies, the availability of sufficient cash flow to pay distributions and execute our business plan and general economic conditions. Additional information on risks and uncertainties that could affect our business prospects and performance are provided in the most recent reports of EV Energy Partners with the Securities and Exchange Commission. All forward-looking statements included in this press release are expressly qualified in their entirety by the foregoing cautionary statements. 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, 2014 2013 Production data: Oil (MBbls) 265 263 Natural gas liquids (MBbls) 550 503 Natural gas (MMcf) 10,836 10,267 Net production (MMcfe) 15,725 14,864 Average sales price per unit: (1) Oil (Bbl) $ 94.21 $ 93.47 Natural gas liquids (Bbl) 33.49 30.38 Natural gas (Mcf) 4.68 3.20 Mcfe 5.98 4.89 Average unit cost per Mcfe: Production costs: Lease operating expenses $ 1.61 $ 1.76 Production taxes 0.22 0.20 Total 1.83 1.96 Asset retirement obligations accretion expense 0.08 0.09 Depreciation, depletion and amortization 1.67 2.07 General and administrative expenses 0.78 0.85 (1) Prior to ($5.3) million and $12.3 million of net hedge (losses) gains and settlements on commodity derivatives for the three months ended March 31, 2014 and March 31, 2013, respectively. Condensed Consolidated Balance Sheets (In $ thousands, except number of units) (Unaudited) March 31, 2014 December 31, 2013 ASSETS Current assets: Cash and cash equivalents $ 9,515 $ 11,698 Accounts receivable: Oil, natural gas and natural gas liquids 48,350 37,661 revenues Related party 8,166 2,873 Other 193 1,111 Derivative asset 5,640 13,543 Other current assets 5,789 6,916 Assets held for sale - 8,012 Total current assets 77,653 81,814 Oil and natural gas properties, net of accumulated depreciation, depletion and amortization; March 31, 2014, $595,947; December 31, 2013, 1,825,432 1,829,062 $569,770 Other property, net of accumulated depreciation and amortization; March 31, 2014, $796; December 31, 2013, $754 1,223 1,259 Long–term derivative asset 23,822 29,088 Investments in unconsolidated affiliates 301,221 254,978 Other assets 7,319 8,782 Total assets $ 2,236,670 $ 2,204,983 LIABILITIES AND OWNERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 49,679 $ 46,876 Derivative liability 7,016 3,348 Liabilities related to assets held for - 2,155 sale Total current liabilities 56,695 52,379 Asset retirement obligations 101,061 99,133 Long–term debt 1,046,319 980,297 Other long–term liabilities 959 1,241 Commitments and contingencies Owners' equity: Common unitholders - 48,572,019 units and 48,349,080 units issued and outstanding as of March 31, 2014 and December 31, 2013, respectively 1,044,066 1,083,718 General partner interest (12,430) (11,785) Total owners' equity 1,031,636 1,071,933 Total liabilities and owners' equity $ 2,236,670 $ 2,204,983 Condensed Consolidated Statements of Operations (In $ thousands, except per unit data) (Unaudited) Three Months Ended March 31, 2014 2013 Revenues: Oil, natural gas and natural gas liquids revenues $ 94,074 $ 72,669 Transportation and marketing–related revenues 1,265 1,033 Total revenues 95,339 73,702 Operating costs and expenses: Lease operating expenses 25,395 26,094 Cost of purchased natural gas 970 743 Dry hole and exploration costs 318 417 Production taxes 3,523 2,916 Asset retirement obligations accretion expense 1,187 1,354 Depreciation, depletion and amortization 26,212 30,833 General and administrative expenses 12,298 12,622 Impairment of oil and natural gas properties 252 5,169 Gain on sales of oil and natural gas properties (1,484) - Total operating costs and expenses 68,671 80,148 Operating income (loss) 26,668 (6,446) Other (expense) income, net: Loss on derivatives, net (22,995) (27,514) Interest expense (12,072) (12,829) Other income, net 54 187 Total other expense, net (35,013) (40,156) Loss before income taxes and equity in (8,345) (46,602) income of unconsolidated affiliates Income taxes 255 (177) Loss before equity in income of unconsolidated (8,090) (46,779) affiliates Equity in income of unconsolidated affiliates 1,837 198 Net loss ($ 6,253) ($ 46,581) Net loss per limited partner unit: Basic ($ 0.14) ($ 1.08) Diluted ($ 0.14) ($ 1.08) Weighted average limited partner units outstanding: Basic 48,537 42,556 Diluted 48,537 42,556 Distributions declared per unit $ 0.772 $ 0.768 Condensed Consolidated Statements of Cash Flows (In $ thousands) (Unaudited) Three Months Ended March 31, 2014 2013 Cash flows from operating activities: Net loss ($ 6,253) ($ 46,581) Adjustments to reconcile net loss to net cash flows provided by operating activities: Asset retirement obligations accretion expense 1,187 1,354 Depreciation, depletion and amortization 26,212 30,833 Equity–based compensation cost 4,503 4,485 Impairment of oil and natural gas properties 252 5,169 Gain on sales of oil and natural gas properties (1,484) - Loss on derivatives, net 22,995 27,514 Cash settlements of matured derivative contracts (6,158) 11,439 Equity in income of unconsolidated affiliates (1,837) (198) Distributions from unconsolidated affiliates - 48 Other 176 644 Changes in operating assets and liabilities: Accounts receivable (15,064) (4,527) Other current assets (931) (27) Accounts payable and accrued liabilities 9,154 11,351 Other, net (120) (119) Net cash flows provided by operating activities 32,632 41,385 Cash flows from investing activities: Final settlement of purchase price of oil and - 7,998 natural gas properties Additions to oil and natural gas properties (23,145) (21,136) Prepaid drilling costs (2,032) - Proceeds from sale of oil and natural gas properties 7,315 - Investments in unconsolidated affiliates (44,424) (68,345) Distributions from unconsolidated affiliates 18 23 Net cash flows used in investing activities (62,268) (81,460) Cash flows from financing activities: Long-term debt borrowings 66,000 85,000 Contributions from general partner 154 334 Distributions paid (38,696) (33,838) Other (5) - Net cash flows provided by financing activities 27,453 51,496 (Decrease) increase in cash and cash equivalents (2,183) 11,421 Cash and cash equivalents – beginning of period 11,698 7,486 Cash and cash equivalents – end of period $ 9,515 $ 18,907 Non-GAAP Measures We define Adjusted EBITDAX as net loss plus equity in income from unconsolidated affiliates, EBITDAX from unconsolidated affiliates, income taxes, interest expense, net, cash settlements of matured interest rate swaps, depreciation, depletion and amortization, asset retirement obligations accretion expense, loss on derivatives, net, cash settlements of matured derivative contracts, non-cash equity compensation expense, impairment of oil and natural gas properties, non-cash inventory write down expense, dry hole and exploration costs, and gain on sales of oil and natural gas properties. Distributable Cash Flow is defined as Adjusted EBITDAX less cash income taxes, 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. We believe these financial measures may 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 Loss to Adjusted EBITDAX and Distributable Cash Flow (In $ thousands) (Unaudited) Three Months Ended March 31, 2014 2013 Net loss ($ 6,253) ($ 46,581) Add: Equity in income from unconsolidated affiliates (1,837) (198) EBITDAX from unconsolidated affiliates 3,634 302 Income taxes (255) 177 Interest expense, net 12,072 12,828 Cash settlements of matured interest rate swaps 877 865 Depreciation, depletion and amortization 26,212 30,833 Asset retirement obligations accretion expense 1,187 1,354 Loss on derivatives, net 22,995 27,514 Cash settlements of matured derivative contracts (6,158) 11,439 Non-cash equity compensation expense 4,503 4,485 Impairment of oil and natural gas properties 252 5,169 Non-cash inventory write down expense 54 - Dry hole and exploration costs 318 417 Gain on sales of oil and natural gas properties (1,484) - Adjusted EBITDAX $ 56,116 $ 48,604 Less: Cash income taxes 27 44 Cash interest expense, net 11,467 12,226 Realized losses on interest rate swaps 877 865 Estimated maintenance capital expenditures (1) 15,176 13,581 Distributable Cash Flow $ 28,570 $ 21,888 (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. Summary of New Hedge Positions (since February 28, 2014) Period Index Swap Volume Swap Price Crude (MmmBtus/Mbbls) 2015 WTI 365.0 $88.48 Hedge Summary Table (as of May 9, 2014) Swap Swap Period Index Volume Price Natural Gas (MmmBtus/Mbbls) 2Q 2014 NYMEX 9,900.8 $4.72 3Q 2014 NYMEX 10,009.6 $4.70 4Q 2014 NYMEX 10,009.6 $4.66 2015 NYMEX 36,317.5 $4.94 2016 NYMEX 10,980.0 $4.17 Crude 2Q 2014 WTI 382.2 $89.78 3Q 2014 WTI 380.3 $91.50 4Q 2014 WTI 377.2 $93.73 2015 WTI 1,095.0 $89.56 Interest Rate Swap Agreements Notional Amount Fixed Rate (in $ mill) April 2014 - July 2015 110.0 3.315% EV Energy Partners, L.P., Houston Michael E. Mercer 713-651-1144 http://www.evenergypartners.com Logo - http://photos.prnewswire.com/prnh/20130415/DA94198LOGO SOURCE EV Energy Partners, L.P. Website: http://www.evenergypartners.com
EV Energy Partners Announces First Quarter 2014 Results and Utica Midstream Expansion
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