SOURCE: EV Energy Partners, L.P.

EV Energy Partners, L.P.

August 10, 2009 17:06 ET

EV Energy Partners Announces Second Quarter 2009 Results and Additional Commodity Price Hedges

HOUSTON, TX--(Marketwire - August 10, 2009) - EV Energy Partners, L.P. (NASDAQ: EVEP) today announced results for the second quarter 2009 and filed its Form 10-Q with the Securities and Exchange Commission. EVEP has also recently entered into additional commodity price hedge agreements as described below.

Second Quarter 2009 Results

Adjusted EBITDA for the quarter was $33.1 million, an 8% increase over the second quarter of 2008 and a 6% increase versus the first quarter of 2009. Distributable Cash Flow for the quarter was $18.0 million, a 2% decrease over the second quarter of 2008 and a 7% increase versus the first quarter of 2009. Adjusted EBITDA and Distributable Cash Flow are described in the attached table under "Non-GAAP Measures."

EVEP reported a net loss of $31.6 million, or ($1.93) per basic and diluted weighted average unit outstanding, for the second quarter of 2009. Included in net income were $44.5 million of non-cash net unrealized losses on commodity and interest rate derivatives and $0.7 million of non-cash costs contained in general and administrative expenses. For the second quarter of 2008, net loss was $99.5 million, or ($6.58) per basic and diluted weighted average unit outstanding, which included $118.1 million of non-cash net unrealized losses on commodity derivatives and $0.8 million of non-cash costs contained in general and administrative expenses. For the first quarter of 2009, net income was $38.3 million, or $2.23 per basic and diluted weighted average unit outstanding, which included $26.7 million of non-cash net unrealized gains on commodity and interest rate derivatives.

The $44.5 million non-cash net unrealized losses on derivatives for the second quarter of 2009 was primarily due to the significant increase in future oil prices at June 30, 2009 as compared to those at March 31, 2009, partially offset by the decline in natural gas prices as of such dates, and the effect of such price changes on EVEP's commodity price hedges.

For the quarter ended June 30, 2009, EVEP produced 4.0 Bcf of natural gas, 127 MBbls of crude oil and 186 MBbls of natural gas liquids, or 5.9 Bcfe. Second quarter 2009 production of 5.9 Bcfe represents a 23% increase over second quarter 2008 production of 4.8 Bcfe, primarily due to acquisitions made during 2008. Production slightly declined from first quarter 2009 production of 6.0 Bcfe.

Additional Commodity Hedge Positions

EVEP uses oil and natural gas commodity contracts to hedge a significant portion of its anticipated oil and natural gas production against the risk of commodity price volatility. In addition to hedges entered into in conjunction with the previously announced Austin Chalk add-on acquisition, EVEP has added the following commodity price hedges to its portfolio since July 1, 2009. A complete schedule of EVEP's updated commodity price hedge positions is included at the end of this release, including the hedges detailed below.

                    Swap        Swap
                   Volume       Price
                 ----------   ----------
               (Mmmbtu/Mbbls)
Natural Gas
NYMEX
2010                    365   $     6.41
2011                    365   $     6.41
2012                    293   $     6.88
2013                  1,825   $     7.02
Jan - Aug 2014        1,215   $     7.06

Crude Oil
NYMEX
2010                   58.4   $    78.70
2011                   43.8   $    80.80
2012                   36.6   $    82.35
2013                  182.5   $    83.38
Jan - July 2014       106.0   $    84.60

Quarterly Report on Form 10-Q

EVEP's financial statements and related footnotes are available on our second quarter 2009 Form 10-Q, which was filed today and is available through the Investor Relations/SEC Filings section of the EVEP web site at http://www.evenergypartners.com.

Conference Call

As announced on August 5, 2009, EV Energy Partners, L.P. will host an investor conference call Tuesday, August 11, 2009 at 9:00am (Eastern Time). Investors interested in participating in the call may dial (480) 629-9692 and ask for conference ID 4135815 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 http://www.evenergypartners.com.

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 on the internet at http://www.evenergypartners.com.

(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.

Operating Statistics
                                       Three Months Ended Six Months Ended
                                            June 30,          June 30,
                                        ----------------- -----------------
                                          2009     2008     2009     2008
                                        -------- -------- -------- --------
Production data:
Oil (MBbls)                                  127       97      254      190
Natural gas liquids (MBbls)                  186      135      400      259
Natural gas (MMcf)                         4,017    3,403    7,980    7,020
                                        -------- -------- -------- --------
Net production (MMcfe)                     5,893    4,797   11,903    9,712
Average sales price per unit (1):
Oil (Bbl)                               $  54.16 $ 121.72 $  44.15 $ 108.97
Natural gas liquids (Bbl)                  27.95    67.57    25.81    64.26
Natural gas (Mcf)                           3.26    10.63     3.71     9.16
Mcfe                                        4.27    11.91     4.30    10.47

Average unit cost per Mcfe:
Production costs:
Lease operating expenses                $   1.61 $   1.99 $   1.74 $   1.93
Production taxes                            0.21     0.54     0.22     0.48
                                        -------- -------- -------- --------
Total                                       1.82     2.53     1.96     2.41
Depreciation, depletion and amortization    2.16     1.63     2.22     1.68
General and administrative expenses         0.69     0.74     0.70     0.72


(1) Prior to $21.2 and $(12.2) million of net hedge gains (losses) for the
    three months ended June 30, 2009 and June 30, 2008, respectively, and
    prior to $40.7 and ($14.4)  million of net realized hedge gains
    (losses) for the six months ended June 30, 2009 and June 30, 2008,
    respectively.




Unaudited Condensed Consolidated Balance Sheets
(in $ thousands)
                                                    June 30,   December 31,
                                                      2009         2008
                                                  ------------ ------------
                             ASSETS
Current assets:
Cash and cash equivalents                         $     24,040 $     41,628
Accounts receivable:
   Oil, natural gas and natural gas liquids
    revenues                                            10,687       17,588
   Related party                                         3,331        1,463
   Other                                                 1,253        3,278
Derivative asset                                        45,140       50,121
Prepaid expenses and other current assets                  734        1,037
                                                  ------------ ------------
Total current assets                                    85,185      115,115
Oil and natural gas properties, net of
 accumulated depreciation, depletion and
 amortization; June 30, 2009, $96,308; December
 31, 2008, $69,958                                     745,684      765,243
Other property, net of accumulated depreciation
 and amortization; June 30, 2009, $302; December
 31, 2008, $284                                            161          180
Long-term derivative asset                              82,244       96,720
Other assets                                             3,431        2,737
                                                  ------------ ------------
Total assets                                      $    916,705 $    979,995
                                                  ============ ============

                  LIABILITIES AND OWNERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities          $      9,610 $     14,063
Deferred revenues                                            -        4,120
Derivative liability                                       490        2,115
                                                  ------------ ------------
Total current liabilities                               10,100       20,298

Asset retirement obligations                            35,210       33,787
Long-term debt                                         352,000      467,000
Other long-term liabilities                              1,016        1,426

Commitments and contingencies

Owners’ equity                                         518,379      457,484
                                                  ------------ ------------
Total liabilities and owners' equity              $    916,705 $    979,995
                                                  ============ ============




Unaudited Condensed Consolidated Statements of Operations
(in $ thousands, except per unit data)


                              Three Months Ended       Six Months Ended
                                   June 30,                 June 30,
                            ----------------------  ----------------------
                               2009        2008        2009        2008
                            ----------  ----------  ----------  ----------
Revenues:
Oil, natural gas and
 natural gas liquids
 revenues                   $   25,156  $   57,136  $   51,163  $  101,664
Gain on derivatives, net             -         604           -         662
Transportation and
 marketing-related revenues      1,832       3,309       5,050       6,480
                            ----------  ----------  ----------  ----------
Total revenues                  26,988      61,049      56,213     108,806
                            ----------  ----------  ----------  ----------
Operating costs and
 expenses:
Lease operating expenses         9,507       9,552      20,654      18,714
Cost of purchased natural
 gas                               975       2,803       2,451       5,415
Production taxes                 1,216       2,606       2,643       4,628
Asset retirement
 obligations accretion
 expense                           570         308       1,014         606
Depreciation, depletion and
 amortization                   12,737       7,811      26,369      16,355
General and administrative
 expenses                        4,098       3,571       8,351       7,024
                            ----------  ----------  ----------  ----------
Total operating costs and
 expenses                       29,103      26,651      61,482      52,742
                            ----------  ----------  ----------  ----------
Operating (loss) income         (2,115)     34,398      (5,269)     56,064
Other (expense) income,
 net:
Realized gains (losses) on
 mark-to-market
 derivatives, net               19,037     (12,155)     36,760     (14,378)
Unrealized losses on
 mark-to-market
 derivatives, net              (44,500)   (118,734)    (17,832)   (159,087)
Interest expense                (3,968)     (3,069)     (6,844)     (6,827)
Other (expense) income, net        (52)         94         (44)        162
                            ----------  ----------  ----------  ----------
Total other (expense)
 income, net                   (29,483)   (133,864)     12,040    (180,130)
                            ----------  ----------  ----------  ----------
(Loss) income before income
 taxes                         (31,598)    (99,466)      6,771    (124,066)
Income taxes                       (32)        (58)        (57)       (130)
                            ----------  ----------  ----------  ----------
Net (loss) income           $  (31,630) $  (99,524) $    6,714  $ (124,196)
                            ==========  ==========  ==========  ==========
General partner's interest
 in net (loss) income,
 including incentive
 distribution rights        $    1,063  $     (981) $    3,183  $     (831)
                            ==========  ==========  ==========  ==========
Limited partners' interest
 in net (loss) income       $  (32,693) $  (98,543) $    3,531  $ (123,365)
                            ==========  ==========  ==========  ==========

Net (loss) income per
 limited partner unit
 (basic and diluted)        $    (1.93) $    (6.58) $     0.21  $    (8.24)
                            ==========  ==========  ==========  ==========

Weighted average limited
 partner units outstanding:
Basic and Diluted               16,926      14,982      16,572      14,979




Unaudited Condensed Consolidated Statements of Cash Flows
(in $ thousands)
                                                  Six Months   Six Months
                                                     Ended        Ended
                                                    June 30,     June 30,
                                                      2009         2008
                                                  -----------  -----------
Cash flows from operating activities:
Net income (loss)                                 $     6,714  $  (124,196)
Adjustments to reconcile net income (loss) to net
 cash flows provided by operating activities:
Asset retirement obligations accretion expense          1,014          606
Depreciation, depletion and amortization               26,369       16,355
Equity-based compensation cost                          1,300        1,261
Amortization of deferred loan costs                       526          144
Unrealized losses on derivatives, net                  17,832      158,425
Other, net                                                148            -
Changes in operating assets and liabilities:
   Accounts receivable                                  7,057      (19,099)
   Prepaid expenses and other current assets              114          300
   Other Assets                                            (1)          (5)
   Accounts payable and accrued liabilities            (1,796)       3,183
   Deferred revenues                                   (4,120)       1,395
   Other                                                   35            -
                                                  -----------  -----------
Net cash flows provided by operating activities        55,192       38,369
                                                  -----------  -----------

Cash flows from investing activities:
Acquisitions of oil and natural gas properties              -      (17,491)
Deposit on acquisition of oil and natural gas
 properties                                            (1,218)           -
Development of oil and natural gas properties          (8,983)     (13,597)
                                                  -----------  -----------
Net cash flows used in investing activities           (10,201)     (31,088)
                                                  ===========  ===========
Cash flows from financing activities:
Debt borrowings                                             -       17,000
Repayment of debt borrowings                         (115,000)           -
Deferred loan costs                                         -         (125)
Proceeds from public equity offering, net of
 underwriters' discount                                78,649            -
Offering costs                                           (219)           -
Contribution from general partner                       1,641            -
Distributions paid to partners                        (27,650)     (19,869)
                                                  -----------  -----------
Net cash flows used in financing activities           (62,579)      (2,994)
                                                  -----------  -----------

(Decrease) increase in cash and cash equivalents      (17,588)       4,287
Cash and cash equivalents - beginning of period        41,628       10,220
                                                  -----------  -----------
Cash and cash equivalents - end of period         $    24,040  $    14,507
                                                  ===========  ===========

Non GAAP Measures

We define Adjusted EBITDA as net income (loss) plus income tax provision, interest expense, net, realized (gains) losses on interest rate swaps, depreciation, depletion and amortization, asset retirement obligation accretion expense, non-cash (gains) losses on derivatives, amortization of upfront premiums paid to enter into commodity price hedge agreements and non-cash equity compensation. Distributable Cash Flow is defined as Adjusted EBITDA less income tax provision, interest expense, net, realized (gains) losses on interest rate swaps, amortization of upfront premiums paid to enter into commodity price hedge agreements and estimated maintenance capital expenditures.

Adjusted EBITDA and Distributable Cash Flow are used by our management to provide additional information and metrics 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 EBITDA and Distributable Cash Flow are also quantitative standards used throughout the investment community with respect to performance of publicly-traded partnerships. Adjusted EBITDA 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 EBITDA and Distributable Cash Flow exclude some, but not all, items that effect net income and operating income and these measures may vary among companies. Therefore, our Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other companies.

Reconciliation of Net Income to Adjusted EBITDA and Distributable Cash Flow
(in $ thousands)


                              Three Months Ended       Six Months Ended
                                   June 30,                June 30,
                            ----------------------  -----------------------
                               2009        2008        2009        2008
                            ----------  ----------  ----------- ----------
Net (loss) income           $  (31,630) $  (99,524) $     6,714 $ (124,196)
Add:
Income taxes                        32          58           57        130
Interest expense, net            3,927       2,989        6,728      6,678
Realized losses on interest
 rate swaps                      2,125           -        3,974          -
Depreciation, depletion and
 amortization                   12,737       7,811       26,369     16,355
Asset retirement obligation
 accretion expense                 570         308        1,014        606
Non-cash losses on
 derivatives                    44,500     118,131       17,832    158,425
Amortization of premiums on
 derivatives                       116           -          190          -
Non-cash equity
 compensation expense              681         786        1,300      1,261
                            ----------  ----------  ----------- ----------
Adjusted EBITDA             $   33,058  $   30,559  $    64,178 $   59,259
Less:
Income taxes                        32          58           57        130
Interest expense, net            3,927       2,989        6,728      6,678
Realized losses on interest
 rate swaps                      2,125           -        3,974          -
Amortization of premiums on
 derivatives                       116           -          190          -
Estimated maintenance
 capital expenditures (1)        8,840       9,115       18,440     18,455
                            ----------  ----------  ----------- ----------
Distributable Cash Flow     $   18,018  $   18,397  $    34,789 $   33,996


(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.




Hedge Summary Table (includes hedges added through 08/10/2009)


                    Swap     Swap    Collar   Collar  Collar   Put    Put
                    Volume  Price    Volume   Floor   Ceiling Volume Strike
                    ------ -------  --------- ------- ------- ------ ------
                   (Mmmbtu/         (Mmmbtu/                        (Mmmbtu
                    Mbbls)           Mbbls)                         /Mbbls)

Natural Gas
2H 2009
NYMEX                1,656 $  8.05        184 $  7.50 $  8.80
NYMEX                                     736 $  7.75 $  9.15
NYMEX                                     368 $  8.00 $ 10.55
NYMEX                                                            920 $ 4.00
Dominion Appalachia  1,178 $  9.03
El Paso Permian        644 $  7.80
Houston Ship
 Channel             1,243 $  7.60
MichCon Citygate       920 $  8.27
2010
NYMEX                5,950 $  8.00        548 $  7.50 $ 10.00
Dominion Appalachia  2,044 $  8.65
El Paso Permian        913 $  7.68
Houston Ship
 Channel               360 $  5.96      1,278 $  7.25 $  9.55
MichCon Citygate     1,825 $  8.34
2011
NYMEX                5,585 $  8.19
Dominion Appalachia    913 $  8.69      1,095 $  9.00 $ 12.15
El Paso Permian        913 $  9.30
Houston Ship
 Channel                                1,278 $  8.25 $ 11.65
MichCon Citygate                        1,643 $  8.70 $ 11.85
2012
NYMEX                5,527 $  8.63
Dominion Appalachia                     1,830 $  8.95 $ 11.45
El Paso Permian        732 $  9.21
Houston Ship
 Channel                                1,098 $  8.25 $ 11.10
MichCon Citygate                        1,647 $  8.75 $ 11.05
2013
NYMEX                3,285 $  7.23
El Paso Permian      1,095 $  6.77
El Paso San Juan     1,095 $  6.66
Jan - Aug 2014
NYMEX                1,215 $  7.06
Crude Oil
 (NYMEX)
2H 2009              327.6 $ 93.10       23.0 $ 62.00 $ 73.90
2010                 688.0 $ 89.80
2011                 219.0 $103.66      401.5 $110.00 $166.45
2012                 205.0 $104.05      366.0 $110.00 $170.85
2013                 365.0 $ 77.94
Jan - July 2014      106.0 $ 84.60

Interest Rate Swap Agreements:
                   Notional   Fixed Floating
                    Amount    Rate    Rate
                  (in $ mill)
July 2009 -
 July 2012          $  200   4.163% 1mo LIBOR
July 2009 -
 Sept 2012          $   40   2.145% 1mo LIBOR

Contact Information