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HUNTING

EV Energy Partners posts loss in 2013

Shane Hoover
shane.hoover@cantonrep.com

EV Energy Partners expects its pipeline and processing assets to grow in capacity and value in the coming months, and continues to explore its acreage in the Utica Shale’s volatile oil window, company officials told investors Monday.

The Houston, Texas, company posted losses in its full-year and fourth quarter earnings, but noted increases in production and reserves of natural gas and oil.

“We do believe that we’re entering a very important period for not only EVEP but for the industry in the Utica,” Executive Chairman John B. Walker said. “We're optimistic this will be a very good year for us.”

EV Energy Partners is active in the Utica Shale through driller EnerVest, the Utica East Ohio processing system and the Cardinal system of gathering pipelines.

DRILL PLANS

Through a joint venture, EnerVest participates in most of the wells drilled by Chesapeake Energy, which plans to drill about 180 wells this year, said EVEP President and CEO Mark Houser.

“To date, EnerVest has participated in 252 wells in 11 counties, providing great insight into the Utica play,” he said.

The company is closely monitoring drilling in the Utica’s volatile oil window by EQT, Halcon and Chesapeake. EVEP still intends to form a joint venture to explore the volatile oil window and expects to participate in eight to 10 wells in that area, with several of them operated by EnerVest, Walker said.

On the midstream side, officials said they expect the processing bottleneck to resolve by April.

EnerVest has a 9 percent interest in the Cardinal gathering system, which is hooked to 300 wells, with another 80 waiting to connect, Houser said.

The company also has a 21 percent interest in the Utica East Ohio system that comprises processing plants in Kensington and Leesville and a fractionator in Scio.

Utica East Ohio has 400 million cubic feet per day of processing and 45,000 barrels per day of fractionation capacity, and expects to add 400 million cubic feet per day of processing and 90,000 barrels per day of fractionation capacity in the second and third quarters of this year.

Commitments to the system could reach 1.3 billion cubic feet per day of natural gas equivalent, officials said.

“As midstream capacity from UEO and others continues to increase, we believe the midstream constraints on Utica production that have existed over the past year will be eliminated and there will be much clearer visibility of the productive capacity of the wells in the Utica,” Walker said.

EV Energy Partners will pursue sales of acreage in the wet gas and volatile oil windows, and the company believes its midstream assets also are valuable, he said.

THE NUMBERS

The company reported a net loss of $76.2 million or $1.76 per partner unit for the year. The loss for the quarter was $50.2 million or $1.06 per basic partner unit.

EVEP’s fourth quarter production hit 10.8 billion cubic feet of natural gas, 240,000 barrels of oil and 580,000 barrels of natural gas liquids. That works out to a daily rate of 170.5 million cubic feet equivalent of natural gas per day and a 3 percent increase year over year.

Production increases due to drilling activity and purchases were partially offset by the effects of bad weather, the company said.

Total production for the year increased 3 percent to 42.7 billion cubic feet of natural gas, 1,027,000 barrels of oil and 2,146,000 barrels of natural gas liquids, or a rate of 169 million cubic feet of natural gas equivalent per day.

The company projects 2014 production to be in the range of 61.7 billion to 66.5 billion cubic feet of natural gas equivalent.

EVEP ended the year with net proved reserves of 1.19 trillion cubic feet equivalent of natural gas, up 32 percent from 2012. The reserves are 69 percent natural gas, 25 percent natural gas liquids and 6 percent oil.

The company's $76.2 million loss in 2013 follows a $16.3 million loss in 2012.

EVEP’s stock closed down $1.11 a share at $33.97.

Reach Shane Hoover at 330-580-8338

On Twitter: @shooverREP