EV Energy Partners Announces First Agreement to Sell Utica Shale Acres and Reports Second Quarter 2013 Results

HOUSTON, Aug. 9, 2013 /PRNewswire/ -- EV Energy Partners, L.P., (Nasdaq: EVEP) today announced that it, along with certain institutional partnerships managed by EnerVest, Ltd., has signed an agreement to divest certain acreage in Ohio's Utica Shale for $284.3 million to an undisclosed buyer.  The total acreage associated with this sale includes 22,535 acres in Guernsey, Harrison and Noble counties.  Of that total, EVEP is selling 4,345 acres for approximately $56 million, net to its ownership interest.  EVEP will retain its overriding royalty interests in these acres.  The transaction is expected to close by the end of the third quarter and is subject to customary closing conditions and purchase price adjustments.  

A map depicting the acreage location is available on the Investor Relations page under Presentations on the EVEP website at http://www.evenergypartners.com.  As previously disclosed, Jefferies LLC is advising EVEP as it continues to market its Utica acreage. 

"This is a good first step in our revised Utica acreage sale process," said John B. Walker, EVEP Chairman.  "The value of this sale averages $12,900 per acre.  We look forward to announcing additional deals as they occur."

In addition to the acreage sale, EVEP is pleased to announce the opening of the Utica East Ohio (UEO) midstream facilities, which started processing gas in July.  The facility is processing more than 85 mmcf/d of wet gas, has a capacity of 200 mmcf/d, and throughput is expected to increase steadily over the next few weeks as additional wells are turned in line.  With UEO and other processing facilities now available, more Utica wells are being turned in line, which is increasing the flow of gas through the Cardinal Gas gathering system. Increased volumes and cash flow are anticipated for the rest of this year and into 2014.

Recently, EVEP entered into an amendment to its credit facility to change the senior secured debt to EBITDAX ratio to be no greater than 3.5 to 1 through March 30, 2015 and to include certain updates related to the Dodd-Frank Act eligibility requirements for guarantors of hedging transactions.

Second Quarter 2013 Results

EVEP also announced results for the second quarter 2013 and filed its Form 10-Q with the Securities and Exchange Commission. 

Adjusted EBITDAX for the quarter was $52.6 million, a 9 percent increase over the first quarter of 2013 and a 20 percent decrease from the second quarter of 2012.  Distributable Cash Flow for the quarter was $26.1 million, a 20 percent increase over the first quarter of 2013 and a 24 percent decrease from the second quarter of 2012.  The changes in Adjusted EBITDAX and Distributable Cash Flow, which are described in the attached table under "Non-GAAP Measures," are primarily attributable to the decreases in realized gains in commodity derivatives and in sales price per unit of natural gas liquids, partially offset by an increase in natural gas production.

Production for the second quarter of 2013 was 11.1 Bcf of natural gas, 245 MBbls of crude oil and 526 MBbls of natural gas liquids, or 172.3 Mmcfe/day.  This represents a 4 percent increase over the first quarter 2013 production of 165.2 Mmcfe/day and a 6 percent increase over second quarter 2012 production of 162.9 Mmcfe/day.

For the second quarter of 2013, EVEP reported a net income of $32.9 million, or $0.74 per basic and diluted weighted average limited partner unit outstanding.  Included in net income were:

• $30.3 million of unrealized gains on commodity and interest rate derivatives,
• $0.5 million of non-cash realized losses related to terminated interest rate swaps,
• $0.9 million of dry hole and exploration costs,
• $2.8 million of non-cash leasehold impairment charges,
• $0.2 million of non-cash deferred income taxes, and
• $4.3 million of non-cash costs contained in general and administrative expenses. 

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.  For the second quarter of 2012, EVEP reported net income of $15.0 million, or $0.35 and $0.34 per basic and diluted weighted average limited partner unit outstanding, respectively.

Mark Houser, President and CEO, said, "Our base business is running strong, and UEO is coming online as scheduled. We are pleased with our first Utica acreage sale and are gaining traction on other potential sales as we continue our marketing process."

Quarterly Report on Form 10-Q

EVEP's financial statements and related footnotes are available on our second quarter 2013 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 July 31, 2013, EV Energy Partners, L.P. will host an investor conference call Friday, August 9, 2013 at 9 a.m. EDT.  Investors interested in participating in the call may dial (877) 941-9205 (quote conference ID 4634241) at least five 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 gas properties. More information about EVEP is available 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, future plans 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.

Non-GAAP Measures

We define Adjusted EBITDAX as net income (loss) plus income taxes, interest expense, net, realized losses on interest rate swaps, depreciation, depletion and amortization, asset retirement obligations accretion expense, non-cash realized losses on derivatives, unrealized (gains) losses on derivatives, non-cash equity compensation expense, impairment of oil and natural gas properties, non-cash inventory write down expense, and dry hole and exploration costs. 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. 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 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.

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EV Energy Partners, L.P., Houston
Michael E. Mercer
713-651-1144
http://www.evenergypartners.com

SOURCE EV Energy Partners, LP