- CEP’s total production levels
essentially unchanged year-on-year with oil production up 84% in
2013
- Oil production provided 51% of CEP’s
total revenue from sales in 2013
- CEP’s 2014 forecast calls for capital
spending of between $20.0 million and $22.0 million, with drilling
aimed at oil potential in the company’s asset base
Constellation Energy Partners LLC (NYSE MKT: CEP) today reported
fourth quarter and full year 2013 results, which exclude results
for the Robinson’s Bend Field assets divested by the company in a
transaction that closed in Feb. 2013.
The company produced 387 MBOE during the fourth quarter 2013 for
average net production of 4,201 BOE per day for the quarter, which
was up 15% from the third quarter 2013. For the full year 2013, the
company produced 1,365 MBOE, which is essentially unchanged from
full year 2012 production from continuing operations. Net oil
production for the fourth quarter 2013, which accounted for
approximately 17% of the company’s total production during the
quarter, was 730 barrels per day, which is up 6% from the third
quarter 2013. Net oil production for the full year 2013 was 606
barrels per day, which is an increase of approximately 84% compared
to full year 2012 results from continuing operations.
Revenue totaled $11.5 million during the fourth quarter and
$44.1 million for the full year 2013. Included in total revenue for
the full year 2013 is revenue from sales of $42.5 million, of which
approximately 49% was from natural gas sales and 51% was from oil
sales. During 2012, approximately 57% of the company’s sales
revenue from continuing operations was from natural gas sales and
43% was from oil sales. The balance of the company’s full year 2013
total revenue came from hedge settlements ($15.8 million), services
provided to third parties ($3.1 million), and losses on
mark-to-market activities ($17.3 million), which is a non-cash
item.
Operating costs, which include lease operating expenses,
production taxes and general and administrative expenses, net of
certain non-cash items, averaged $44.31 per BOE in the fourth
quarter 2013. Adjusting for charges recorded in connection with the
PostRock Litigation, operating costs averaged $23.51 per BOE in the
fourth quarter 2013. For the full year 2013, excluding employee
severance charges in the first and second quarters of 2013 and
charges recorded in connection with the PostRock Litigation in the
fourth quarter of 2013, which are “non-recurring items,” operating
costs averaged $24.69 per BOE, which is down 4% compared to
operating costs for continuing operations in full year 2012.
Adjusted EBITDA for the fourth quarter 2013 was approximately
$45,000. For the full year 2013, Adjusted EBITDA was $17.5 million,
down approximately 7% compared to full year 2012. Adjusting for the
non-recurring items noted above, Adjusted EBITDA for the full year
2013 was $26.4 million, which is a 41% improvement when compared to
results from continuing operations for the full year 2012.
On a GAAP basis, the company recorded a net loss of $13.1
million for the fourth quarter 2013 and a net loss from continuing
operations of $25.9 million for the full year 2013.
During the fourth quarter 2013 the company completed 20 net
wells and recompletions using $3.1 million in cash flow from
operations. For the full year 2013, the company completed 79 net
wells and recompletions with capital spending of $15.7 million. The
company finished 2013 with 6 net wells and recompletions in
progress. Drilling activities in 2013 focused on oil potential in
the company’s existing asset base as well as capital efficient
recompletions.
“Last year was a pivotal year for us,” said Stephen R. Brunner,
President and Chief Executive Officer of Constellation Energy
Partners. “In 2013, we deleveraged the balance sheet, amended our
credit facility, increased oil production and reserves, and
acquired assets along the Gulf Coast with an eye toward meaningful
cost savings, business development, and growth opportunities for
many years to come. While our successful efforts were met with some
new headwinds late in the year, we responded to these challenges
head-on with the goal of positioning the company for future growth.
We believe 2014 provides us with excellent opportunities to enhance
unitholder value, which is always our top priority.”
Reserve-Based Credit Facility
Borrowings outstanding under the company’s reserve-based credit
facility currently total $50.7 million, leaving the company with
$4.3 million in borrowing capacity at the company’s current
borrowing base of $55.0 million. The next borrowing base
redetermination under the company’s reserve-based credit facility
is scheduled to begin at the end of the first quarter 2014, with
the result of that process expected in the second quarter 2014.
The company had $4.9 million in cash and cash equivalents as of
Dec. 31, 2013.
Financial Outlook for 2013
The company forecasts capital spending of between $20.0 million
and $22.0 million in 2014. Of this amount, $23.0 million is
maintenance capital.
Net production is forecast to range between 1,346 MBOE and 1,552
MBOE for 2014, with operating costs forecast to range between $33.3
million and $37.3 million for the year.
For 2014, the company has hedged approximately 6.4 Bcfe of its
natural gas production at an effective NYMEX fixed price of $5.75
per Mcfe with Mid-Continent basis hedges on 4.4 Bcfe of this amount
at an average differential of $0.39 per Mcfe. The company also has
hedges in place on approximately 222 MBbl of its oil production at
a fixed price of $94.70 per barrel. The company’s 2014 hedges
provide price certainty on approximately 77% of the company’s 2014
midpoint oil production forecast and 94% of the company’s 2014
midpoint natural gas production forecast.
Additional detail on the company’s 2014 forecast can be found in
the tables included with this news release.
Conference Call Information
The company will host a conference call at 8:30 a.m. (CDT) on
Wednesday, March 26, 2014 to discuss fourth quarter and full year
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. (CDT). 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 (866) 498-1470 or (203)
369-1790 (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 Dec. 31, Twelve Months Ended
Dec. 31, 2013 2012 2013
2012 Net Production in MBOE and MMcfe: Total
production (MBOE) 387 339 1,365 1,368 Average daily production
(BOE/day) 4,201 3,689 3,739 3,738 Total production (MMcfe)
2,319 2,028 8,188 8,205 Average daily production (Mcfe/day) 25,207
22,043 22,433 22,418
Average Net Sales Price per BOE and
Mcfe: BOE Net realized price, including hedges $ 33.76 (a) $
25.11 (a) $ 32.32 (a) $ 21.58 BOE Net realized price, excluding
hedges $ 44.30 (b) $ 39.18 (b) $ 43.90 (b) $ 39.43 Mcfe Net
realized price, including hedges $ 7.38 (a) $ 6.57 (a) $ 7.32 (a) $
6.57 Mcfe Net realized price, excluding hedges $ 5.63 (b) $ 4.21
(b) $ 5.39 (b) $ 3.60 (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 18 22 64 50
Net
Recompletions 2 16 15 50
Developmental Dry Holes - - - -
Net Wells and Net Recompletions in Progress 6 18 6 18
Constellation
Energy Partners LLCCondensed Consolidated Statements of
Operations Three Months Ended Dec. 31,
Twelve Months Ended Dec. 31, 2013 2012
2013 2012 ($ in thousands) ($ in
thousands) Oil and gas sales $ 17,455 $ 13,690 $ 61,358
$ 55,233 Gain/(Loss) from mark-to-market activities (5,997 )
(253 ) (17,281 ) (8,706 ) Total revenues
11,458 13,437 44,077 46,527 Operating expenses: Lease
operating expenses 5,526 4,684 18,858 19,411 Cost of sales 333 376
1,455 1,299 Production taxes 761 505 2,601 1,646 General and
administrative 11,058 4,192 22,214 15,747 (Gain)/Loss on sale of
assets (4 ) 7 4 7 Depreciation, depletion and amortization 3,916
4,654 18,972 11,732 Asset impairments 2,357 2 2,357 109 Accretion
expense 110 114 519
459 Total operating expenses 24,057 14,534 66,980
50,410 Other expenses: Interest (income) expense, net 514
1,143 3,150 5,733 Other (income) expense (47 ) (40 ) (196 ) (154 )
Total expenses 24,524 15,637 69,934
55,989 Income (loss) from continuing operations (13,066 )
(2,200 ) (25,857 ) (9,462 ) Gain/(Loss) from discontinued
operations - (74,055 ) (2,686 )
(77,081 ) Net income (loss) $ (13,066 ) $ (76,255 ) $ (28,543 ) $
(86,543 ) Adjusted EBITDA $ 45 $ 4,307 $
17,475 $ 18,781
Loss per unit Loss from
continuing operations per unit Class A units - Basic and diluted $
(0.16 ) $ (0.09 ) $ (0.55 ) $ (0.39 ) Class B units - Basic and
diluted $ (0.45 ) $ (0.09 ) $ (1.01 ) $ (0.39 ) Discontinued
operations per unit Class A units - Basic and diluted $ - $ (3.06 )
$ (0.06 ) $ (3.19 ) Class B units - Basic and diluted $ - $ (3.06 )
$ (0.10 ) $ (3.19 ) Net loss per unit Class A units - Basic and
diluted $ (0.16 ) $ (3.15 ) $ (0.61 ) $ (3.58 ) Class B units -
Basic and diluted $ (0.45 ) $ (3.15 ) $ (1.11 ) $ (3.58 ) Weighted
Average Units Outstanding Class A units - Basic and diluted
1,615,017 483,412 933,613 483,564 Class B units - Basic and diluted
28,457,577 23,687,625 25,210,106 23,687,946
Constellation Energy Partners
LLCCondensed Consolidated Balance Sheets
Dec. 31, Dec. 31, 2013 2012 ($ in
thousands) Current assets $ 23,260 $ 26,848 Current
assets from discontinued operations - 1,886 Oil and natural gas
properties, net of accumulated depreciation, depletion and
amortization 144,995 120,122 Other assets 6,278 11,793 Long-term
assets from discontinued operations - 67,373 Total
assets $ 174,533 $ 228,022 Current liabilities, including
short-term debt $ 14,017 $ 59,595 Current liabilities from
discontinued operations - 1,578 Long-term debt 50,700 34,000 Other
long-term liabilities 10,911 8,891 Other long-term liabilities from
discontinued operations - 7,692 Total liabilities
75,628 111,756 Commitments and Contengencies - - Common members'
equity 98,905 116,266 Accumulated other comprehensive income
- - Total members' equity 98,905 116,266 Total
liabilities and members' equity $ 174,533 $ 228,022
Constellation Energy Partners LLC
Reconciliation of Net Income (Loss) to Adjusted
EBITDA Three
Months Ended Dec. 31, Twelve Months Ended Dec. 31,
2013 2012 2013 2012 ($ in
thousands) ($ in thousands) Reconciliation of
Net Income (Loss) to Adjusted EBITDA: Net income (loss)
$ (13,066 ) $ (76,255 ) $ (28,543 ) $ (86,543 ) Add: Interest
(income) expense, net 514 1,143 3,150 5,733 Depreciation, depletion
and amortization 3,916 4,654 18,972 11,732 Asset impairments 2,357
2 2,357 109 Accretion expense 110 114 519 459 (Gain)/Loss on sale
of assets (4 ) 7 4 7 Unit-based compensation programs 221 334 1,049
1,497 (Gain)/Loss from mark-to-market activities 5,997 253 17,281
8,706 (Gain)/Loss from discontinued operations -
74,055 2,686 77,081
Adjusted EBITDA(1) $ 45 $ 4,307 $ 17,475 $
18,781
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
(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
LLC2014 Forecast
Forecast Component
2014 Forecast Total Capital Spending
$20.0 MM – $22.0 MM Total Net Production 1,346 MBOE – 1,552
MBOE Production Mix: Oil 270,000 – 305,000 Bbls Liquids
26,000 – 30,000 Bbls Natural Gas 6.3 – 7.3 Bcf Sales Revenue
(Excludes Hedges) Oil & Liquids / Natural Gas 55% / 45%
WTI Hedges Oil 222 MBbl at $94.70 per Bbl NYMEX Hedges
Natural Gas 6.4 Bcfe at $5.75 per Mcfe Basis Only Hedges
Mid-Con Basis – Natural Gas 4.4 Bcfe at ($0.39) per Mcfe
Hedges as a % of Oil Production(1) 77% Hedges as a % of
Natural Gas Production(1) 94% Pricing Assumptions: Oil
Marketing/Basis ($/Bbl) $0.75 Natural Gas Liquids (% WTI) 45%
Natural Gas Basis ($/Mcf) ($0.26) Natural Gas Gathering ($/Mcf)
($0.43) Operating Costs: LOE(2) $19.0 MM – $21.0 MM
Production Taxes $2.7 MM – $3.3 MM G&A – Corporate and Field
Level(2) $11.6 MM – $13.0 MM Total $33.3 MM – $37.3 MM
Margin from Third Party Sales/Services $1.4 MM – $1.9 MM
Adjusted EBITDA(2) $26.7 MM – $29.9 MM Interest Expense $2.0
MM Maintenance Capital $23.0 MM
(1) Calculated at the mid-point of the
range of production provided in CEP’s 2014 Forecast.
(2) Excludes unit-based compensation
program expenses, which is a non-cash item.
(3) We are unable to reconcile our
forecast range of Adjusted EBITDA to GAAP net income (loss) or
operating income (loss) because we do not predict the future impact
of adjustments to net income (loss), such as (gains) losses from
mark-to-market activities and equity investments or asset
impairments due to the difficulty of doing so, and we are unable to
address the probable significance of the unavailable
reconciliation, in significant part due to ranges in our forecast
impacted by changes in oil and natural gas prices and reserves
which affect certain reconciliation items.
Constellation Energy Partners LLCInvestor
Contact:Charles C. Ward, (877) 847-0009General
Inquiries: (877)
847-0008www.constellationenergypartners.com
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