- 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
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 LLCOperating
Statistics
Three Months Ended Sep. 30, Nine Months Ended Sep.
30, 2013 2012 2013 2012 Net
Production in MBOE and MMcfe: Total production (MBOE) 335 337
978 1,029 Average daily production (BOE/day) 3,642 3,662 3,583
3,757 Total production (MMcfe) 2,011 2,022 5,870 6,177
Average daily production (Mcfe/day) 21,853 21,978 21,502 22,544
Average Net Sales Price per BOE and Mcfe: BOE Net
realized price, including hedges $48.21
(a)
$39.01 (a) $43.74
(a)
$39.46 (a) BOE Net realized price, excluding hedges $36.46
(b)
$20.50
(b)
$31.75
(b)
$20.39 (b) Mcfe Net realized price, including hedges $8.03
(a) $6.50 (a) $7.29 (a) $6.58 (a) Mcfe Net realized price,
excluding hedges $6.08
(b)
$3.42 (b) $5.29
(b)
$3.40 (b)
(a) Excludes impact of mark-to-market
gains (losses)
and net cost of sales.
(b) Excludes all hedges, the impact of
mark-to-market
gains (losses) and net cost of sales.
Net Wells Drilled
and Completed 20 7 46 28
Net Recompletions - 7 13 34
Developmental Dry Holes - - - -
Net Wells and Net
Recompletions in Progress 20 55 20 55
Constellation Energy Partners LLC Condensed Consolidated
Statements of Operations
Three Months Ended Sep. 30, Nine Months Ended Sep.
30, 2013 2012 2013 2012 ($ in
thousands) ($ in thousands) Oil and gas sales $
16,476 $ 13,435 $ 43,903 $ 41,543 Gain/(Loss) from mark-to-market
activities (4,345 ) (10,158 ) (11,284 )
(8,453 ) Total revenues 12,131 3,277 32,619 33,090 Operating
expenses: Lease operating expenses 5,191 4,869 13,332 14,727 Cost
of sales 323 287 1,122 923 Production taxes 731 374 1,840 1,141
General and administrative 3,015 4,014 11,156 11,555 (Gain)/Loss on
sale of assets 31 - 8 - Depreciation, depletion and amortization
5,491 2,373 15,056 7,078 Asset impairments - - - 107 Accretion
expense 163 116 409
345 Total operating expenses 14,945 12,033 42,923
35,876 Other expenses: Interest (income) expense, net 420
1,534 2,636 4,590 Other (income) expense 23 (21 ) (149 ) (114 )
Total expenses 15,388 13,546 45,410
40,352 Income (loss) from continuing operations (3,257 )
(10,269 ) (12,791 ) (7,262 ) Gain/(Loss) from discontinued
operations - (894 ) (2,686 )
(3,026 ) Net income (loss) $ (3,257 ) $ (11,163 ) $ (15,477 ) $
(10,288 ) Adjusted EBITDA $ 7,412 $ 4,410 $
17,430 $ 14,474 EPU - Basic ($0.12 ) ($0.46 )
($0.62 ) ($0.43 ) EPU - Basic Units Outstanding 26,888,303
24,169,012 24,840,502 24,171,669 EPU - Diluted ($0.12 )
($0.46 ) ($0.62 ) ($0.43 ) EPU - Diluted Units Outstanding
26,888,303 24,169,012 24,840,502 24,171,669
Constellation Energy Partners LLCCondensed Consolidated
Balance Sheets Sep. 30, Dec. 31,
2013 2012 ($ in thousands) Current
assets $ 24,123 $ 26,848 Current assets from discontinued
operations - 1,886 Oil and natural gas properties, net of
accumulated depreciation, depletion and amortization 149,994
120,122 Other assets 9,378 11,793 Long-term assets from
discontinued operations - 67,373 Total
assets $ 183,495 $ 228,022 Current
liabilities, including short-term debt $ 9,767 $ 59,595 Current
liabilities from discontinued operations - 1,578 Long-term debt
50,700 34,000 Other long-term liabilities 11,278 8,891 Other
long-term liabilities from discontinued operations -
7,692 Total liabilities 71,745 111,756 Common
members' equity 111,750 116,266 Accumulated other comprehensive
income - - Total members' equity
111,750 116,266 Total liabilities and members'
equity $ 183,495 $ 228,022
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 (loss) $ (3,257 ) $ (11,163 ) $ (15,477 ) $
(10,288 ) Add: Interest (income) expense, net 420 1,534 2,636 4,590
Depreciation, depletion and amortization 5,491 2,373 15,056 7,078
Asset impairments - - - 107 Accretion expense 163 116 409 345
(Gain)/Loss on sale of assets 31 - 8 - Unit-based compensation
programs 219 498 828 1,163 (Gain)/Loss from mark-to-market
activities 4,345 10,158 11,284 8,453 (Gain)/Loss from discontinued
operations - 894 2,686
3,026 Adjusted EBITDA (1) $ 7,412 $ 4,410
$ 17,430 $ 14,474
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 (loss) $ 1,112 $ (5,010 ) $ (12,220 ) $ 875
Add: Interest (income) expense, net 864 1,437 2,216 3,056
Depreciation, depletion and amortization 4,767 2,318 9,565 4,705
Asset impairments - - - 107 Accretion expense 123 115 246 229
(Gain)/Loss on sale of assets (17 ) (4 ) (23 ) - Unit-based
compensation programs 208 385 609 665 (Gain)/Loss from
mark-to-market activities (2,346 ) 4,897 6,939 (1,705 ) (Gain)/Loss
from discontinued operations - 1,331
2,686 2,132 Adjusted EBITDA (1) $ 4,711
$ 5,469 $ 10,018 $ 10,064
(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.
Constellation Energy Partners LLCInvestor
Contact:Charles C. Ward, (877)
847-0009orGeneral Inquiries: (877)
847-0008www.constellationenergypartners.com
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