EV Energy Partners Announces First Quarter 2017 Results and Borrowing Base Reduction

HOUSTON, May 10, 2017 (GLOBE NEWSWIRE) -- EV Energy Partners, L.P. (NASDAQ:EVEP) today announced results for the first quarter of 2017 and the filing of its Form 10-Q with the Securities and Exchange Commission.  In addition, EVEP announced its borrowing base has been reduced from $450 million to $375 million during its semi-annual borrowing base review.

First Quarter 2017 Results

For the first quarter of 2017, EVEP reported a net loss of $50.8 million, or $ (1.01) per basic and diluted weighted average limited partner unit outstanding compared to a net loss of $165.7 million, or $(3.31) per basic and diluted weighted average limited partner unit outstanding for the fourth quarter of 2016. Included in net loss were the following items:

• $49.6 million of impairment charges primarily related to the write-down of certain oil and natural gas properties due to the effects of commodity prices on expected future net cash flows,
• $16.7 million of non-cash gains on commodity and interest rate derivatives, and
• $1.2 million of non-cash costs contained in general and administrative expenses.

For the first quarter of 2016, EVEP reported a net loss of $29.0 million, or $(0.58) per basic and diluted weighted average limited partner unit outstanding.

Production for the first quarter of 2017 was 10.4 Bcf of natural gas, 335 Mbbls of oil and 512 Mbbls of natural gas liquids, or 171.6 million cubic feet equivalent per day (Mmcfe/day). This represents a 15 percent decrease from first quarter 2016 production of 201.4 Mmcfe/d and a 1 percent decrease from fourth quarter 2016 production of 173.6 Mmcfe/day.  The decreases were primarily due to significantly lower drilling activity in 2016 and the divestiture of producing properties completed on December 1, 2016, partially offset by the addition of Karnes County, TX producing properties acquired on January 31, 2017.

Adjusted EBITDAX for the first quarter of 2017 was $22.0 million, a 9 percent increase over the first quarter of 2016 and a 23 percent decrease from the fourth quarter of 2016.  Distributable Cash Flow for the first quarter of 2017 was $3.9 million, an increase over the first quarter of 2016 and a 50 percent decrease from the fourth quarter of 2016.  The increases in Adjusted EBITDAX and Distributable Cash Flow over the first quarter of 2016 were primarily attributable to higher realized oil, natural gas and natural gas liquids prices, lower operating expenses, and lower cash general and administrative expenses, primarily offset by realized hedge losses and lower natural gas and natural gas liquids production.  The decreases in Adjusted EBITDAX and Distributable Cash Flow from the fourth quarter of 2016 were primarily due to realized hedge losses, partially offset by higher realized oil, natural gas and natural gas liquids prices and lower cash general and administrative expenses.  Adjusted EBITDAX and Distributable Cash Flow are Non-GAAP financial measures and are described in the attached table under “Non-GAAP Measures.”

Credit Facility and Liquidity Update

As of March 31, 2017, EVEP had total debt of $612 million, which includes $343 million in outstanding Senior Notes due 2019.  Effective May 8, 2017 the borrowing base under the credit facility was reduced from $450 million to $375 million.  Liquidity from borrowing base capacity and cash on hand is currently over $100 million.  EVEP’s next semi-annual borrowing base redetermination is scheduled for October 2017.  For more information regarding EVEP’s debt and liquidity, please review EVEP’s Quarterly Report on Form 10-Q filed today with the Securities and Exchange Commission.

“First quarter results were in-line with guidance, and we expect to maintain production levels for the remainder of the year as our capital spending ramps up. We were happy to close the Karnes County acquisition during the first quarter and are pleased with the initial well results.  Given the undeveloped nature of the Karnes County properties relative to the Barnett properties we sold in December and the reduction in bank lender future commodity price assumptions, we expected our borrowing base to decline.  However, we still have over $100 million of liquidity, which we believe is sufficient to meet our near-term capital needs," said Michael Mercer, President and CEO.

Quarterly Report on Form 10-Q

EVEP’s financial statements and related footnotes are available on our first quarter 2017 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 April 19, 2017, EV Energy Partners, L.P. will host an investor conference call on May 10, 2017, at 9 a.m. Eastern Time (8 a.m. Central).  Investors interested in participating in the call may dial 1-888-811-5421 (quote conference ID 1577305) 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://www.evenergypartners.com. 

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)

Forward Looking Statements

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 future plans, liquidity, our reserve quantities and the present value of our reserves, estimates of maintenance capital and production amounts, 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 EVEP. 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.  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, exploration and development activities, 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 EVEP with the SEC.  You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. 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. 

Non GAAP Measures

We define Adjusted EBITDAX as net loss plus income taxes, interest expense, net, depreciation, depletion and amortization, accretion expense on obligations, amortization of volumetric production payment (VPP), (gain) loss on derivatives, net, cash settlements of matured commodity derivative contracts, non-cash equity-based compensation, impairment of oil and natural gas properties, non-cash inventory adjustment, dry hole and exploration costs, gain on sales of oil and natural gas properties, gain on settlement of contract, and Other income, net.  Distributable Cash Flow is defined as Adjusted EBITDAX less 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 quarterly distributions.  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.