- CEP’s net oil and liquids production
increased 24% in the first quarter 2014
- Oil and liquids production accounted
for 22% of CEP’s total production in the first quarter 2014
- CEP reports that it acquired producing
assets in LaSalle Parish, Louisiana and executed oil hedges in
April 2014
Constellation Energy Partners LLC (NYSE MKT: CEP) today reported
first quarter 2014 results.
The company produced 372 MBOE during the first quarter 2014 for
average net production of 4,131 BOE per day for the quarter, which
is an increase of 11% compared to the first quarter 2013 production
from continuing operations. Net oil and liquids production for the
first quarter 2014, which accounted for approximately 22% of the
company’s total production during quarter, was 907 barrels per day,
which represents an increase in net oil and liquids production of
approximately 24% over the prior quarter and 71% over the first
quarter of 2013.
Revenue of $11.7 million for the first quarter 2014 includes
revenue from sales of $15.0 million, of which approximately 44% was
from oil and liquids sales and 56% was from natural gas sales. The
balance of the company’s first quarter 2014 revenue came from hedge
settlements ($0.9 million), services provided to third parties
($0.8 million), and losses on mark-to-market activities ($5.0
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 $25.18 per BOE in the first
quarter 2014, a 5% increase when compared to first quarter 2013
operating costs of $23.98 per BOE, adjusted for non-recurring
items.
Adjusted EBITDA for the first quarter 2014 was approximately
$7.0 million, which is a 17% improvement when compared to results
from continuing operations, adjusted for non-recurring items, for
the first quarter 2013.
The company completed 7 net wells and recompletions using $2.7
million in cash flow from operations during the first quarter 2014.
Drilling activities in 2014 continue to focus on oil potential in
the company’s existing asset base as well as capital efficient
recompletions. The company finished the first quarter 2014 with one
net well in progress.
“The first quarter of this year was about building on positive
momentum,” said Stephen R. Brunner, President and Chief Executive
Officer of Constellation Energy Partners. “After a pivotal year in
2013, we successfully resolved the PostRock Litigation at the end
of the first quarter 2014. This was key to setting up a number of
initiatives that we have planned for the remainder of the year, and
has resulted in further progress on our business plans since the
end of the quarter. We look forward to continuing to build on this
momentum, always with an eye toward returning value to our
unitiholders.”
Reserve-Based Credit Facility and Hedging Update
The company currently has approximately $52.0 million in debt
outstanding under its reserve-based credit facility, which has a
borrowing base of $70.0 million.
In April 2014, the company executed oil swaps with a lender in
its reserve-based credit facility on 52 MBbls of 2014 oil
production at $98.01 per Bbl, 83 MBbls of 2015 oil production at
$91.07 per Bbl, and 149 MBbls of 2016 oil production at $85.70 per
Bbl.
Asset Acquisition
The company also reported that it acquired non-operated working
interests in 9 producing wells (1.8 net producing wells) and other
assets located in LaSalle Parish, Louisiana in April 2014. The
assets were acquired at auction for less than $1.4 million and, as
of late April, produced approximately 17 BOPD of oil. The wells are
operated by Sanchez Oil & Gas Corporation.
Financial Outlook for 2014
The company forecasts capital spending of between $20.0 million
and $22.0 million in 2014. The company forecasts maintenance
capital of $23.0 million in 2014.
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 the remainder of 2014, the company has hedged approximately
4.8 Bcfe of its Mid-Continent natural gas production at an
effective NYMEX fixed price of $5.75 per Mcfe with basis hedges on
3.3 Bcfe of this amount at an average differential of $0.39 per
Mcfe. Including the oil hedges executed in April 2014, the company
also has hedges in place on approximately 214 MBbl of its 2014 oil
production at a fixed price of $95.53 per barrel.
Additional detail on the company’s 2014 forecast can be found in
the tables included with the company’s fourth quarter and full year
2013 news release dated March 25, 2014.
Conference Call Information
The company will host a conference call at 10:00 a.m. (CDT) on
Monday, May 19, 2014 to discuss first quarter 2014 results.
To participate in the conference call, analysts, investors,
media and the public in the U.S. may dial (800) 857-0653 shortly
before 10:00 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 (888) 296-6943 or (402)
998-0533 (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.
SEC Filings
The company intends to file its first quarter 2014 Form 10-Q on
or about May 15, 2014.
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 Mar. 31,
2014 2013 Net Production in MBOE and MMcfe:
Total production (MBOE) 372 335 Average daily production (BOE/day)
4,131 3,724 Total production (MMcfe) 2,231 2,010 Average
daily production (Mcfe/day) 24,784 22,333
Average Net
Sales Price per BOE and Mcfe: BOE Net realized price, including
hedges $ 44.06
(a)
$ 41.67
(a)
BOE Net realized price, excluding hedges $ 41.57
(b)
$ 27.63
(b)
Mcfe Net realized price, including hedges $ 7.34
(a)
$ 6.95
(a)
Mcfe Net realized price, excluding hedges $ 6.93
(b)
$ 4.61
(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 4 12
Net Recompletions 3 5
Developmental Dry Holes - -
Net Wells and Net
Recompletions in Progress 1 4
Constellation
Energy Partners LLCCondensed Consolidated Statements of
Operations Three Months Ended
Mar. 31, 2014 2013 ($ in thousands)
Oil and gas sales $ 16,738 $ 14,385 Gain/(Loss) from mark-to-market
activities (4,997 ) (9,285 ) Total revenues 11,741
5,100 Operating expenses: Lease operating expenses 5,120
4,236 Cost of sales 360 420 Production taxes 772 487 General and
administrative 3,571 4,404 (Gain)/Loss on sale of assets (7 ) (6 )
Depreciation, depletion and amortization 4,050 4,798 Asset
impairments 149 - Accretion expense 150 123
Total operating expenses 14,165 14,462 Other
expenses: Interest (income) expense, net 525 1,352 Other (income)
expense (10 ) (68 ) Total expenses 14,680 15,746
Income (loss) from continuing operations (2,939 ) (10,646 )
Discontinued operations - (2,686 ) Net income
(loss) $ (2,939 ) $ (13,332 ) Adjusted EBITDA $ 7,026
$ 5,307
Loss per unit Loss from continuing
operations per unit Class A units - Basic and diluted $ (0.04 ) $
(0.44 ) Class B units - Basic and diluted $ (0.10 ) $ (0.44 )
Discontinued operations per unit Class A units - Basic and diluted
$ - $ (0.11 ) Class B units - Basic and diluted $ - $ (0.11 ) Net
loss per unit Class A units - Basic and diluted $ (0.04 ) $ (0.55 )
Class B units - Basic and diluted $ (0.10 ) $ (0.55 ) Weighted
Average Units Outstanding Class A units - Basic and diluted
1,615,017 484,396 Class B units - Basic and diluted 28,214,104
23,766,266
Constellation Energy Partners
LLCCondensed Consolidated Balance Sheets
Mar. 31, Dec. 31, 2014 2013 ($ in
thousands) Current assets $ 25,702 $ 23,260 Current
assets from discontinued operations - - Oil and natural gas
properties, net of accumulated depreciation, depletion and
amortization 143,276 144,995 Other assets 3,988 6,278 Long-term
assets from discontinued operations - -
Total assets $ 172,966 $ 174,533 Current
liabilities, including short-term debt $ 16,095 $ 14,017 Current
liabilities from discontinued operations - - Long-term debt 50,700
50,700 Other long-term liabilities 11,079 10,911 Other long-term
liabilities from discontinued operations -
Total liabilities 77,874 75,628 Common members' equity
95,092 98,905 Accumulated other comprehensive income -
- Total members' equity 95,092
98,905 Total liabilities and members' equity $
172,966 $ 174,533
Constellation Energy Partners
LLCReconciliation of Net Income (Loss) to Adjusted
EBITDA
Three Months Ended Mar. 31,
2014 2013 ($ in thousands)
Reconciliation of Net Income (Loss) to Adjusted
EBITDA: Net income (loss) $ (2,939 ) $ (13,332 ) Add: Interest
(income) expense, net 525 1,352 Depreciation, depletion and
amortization 4,050 4,798 Asset impairments 149 - Accretion expense
150 123 (Gain)/Loss on sale of assets (7 ) (6 ) Unit-based
compensation programs 101 401 (Gain)/Loss from mark-to-market
activities 4,997 9,285 (Gain)/Loss from discontinued operations
- 2,686 Adjusted EBITDA(1) $ 7,026
$ 5,307
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 (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) 847-0009General
Inquiries: (877)
847-0008www.constellationenergypartners.com
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