EV Energy Partners Announces Second Quarter 2016 Results

HOUSTON, Aug. 09, 2016 (GLOBE NEWSWIRE) -- EV Energy Partners, L.P. (NASDAQ:EVEP) today announced results for the second quarter of 2016 and the filing of its Form 10-Q with the Securities and Exchange Commission. 

Second Quarter 2016 Results

For the second quarter 2016, EVEP reported a net loss of $29.0 million, or $(0.58) per basic and diluted weighted average limited partner unit outstanding compared to a net loss of $29.0 million, or $(0.58) per basic and diluted weighted average limited partner unit outstanding for the first quarter of 2016.  Included in net loss for the second quarter of 2016 were the following items:

• $54.8 million of non-cash losses on commodity and interest rate derivatives,
• $47.7 million of gain on early extinguishment of debt related to repurchases of Senior Notes at a discount to par,
• $2.0 million of impairment charges related to the write down of certain oil and natural gas properties primarily due to a change in development plans,
• $1.4 million of non-cash costs contained in general and administrative expenses, and
• $0.8 million of dry hole and exploration costs.

For the second quarter of 2015, EVEP reported net income of $164.1 million, or $3.25 per basic and diluted weighted average limited partner unit outstanding.  Net income for the second quarter of 2015 included a $246.7 million gain related to the sale of its interest in Utica East Ohio, which was partially offset by $48.3 million of impairment charges.

Production for the second quarter of 2016 was 13.0 Bcf of natural gas, 313 Mbbls of oil and 585 Mbbls of natural gas liquids, or 201.5 million cubic feet equivalent per day (Mmcfe/day). This represents flat production versus the first quarter of 2016 production of 201.4 Mmcfe/day and a 24 percent increase over the second quarter of 2015 production of 162.8 Mmcfe/day.  The increase over the second quarter of 2015 was primarily due to the addition of producing properties acquired on October 1, 2015. 

Adjusted EBITDAX for the second quarter of 2016 was $26.5 million, a 31 percent increase over the first quarter of 2016 Adjusted EBITDAX of $20.2 million and a 50 percent decrease from the second quarter of 2015 Adjusted EBITDAX of $53.4 million.  EVEP reported Distributable Cash Flow of $5.5 million for the second quarter of 2016, compared to $(1.2) million for the first quarter of 2016 and $26.2 million for the second quarter of 2015.  The increases in Adjusted EBITDAX and Distributable Cash Flow over the first quarter of 2016 were primarily attributable to lower operating expenses and higher realized oil and natural gas liquids prices, partially offset by lower realized natural gas prices.  The decreases in Adjusted EBITDAX and Distributable Cash Flow from the second quarter of 2015 were primarily attributable to lower realized oil and natural gas prices, lower realized hedge gains and the sale of EVEP's interest in Utica East Ohio in the second quarter of 2015, partially offset by the addition of producing properties acquired on October 1, 2015. Adjusted EBITDAX and Distributable Cash Flow are Non-GAAP financial measures and are described in the attached table under “Non-GAAP Measures.”

“We continue to focus on reducing leverage and operating costs.  We recently completed our Senior Note repurchase program, increasing our total repurchases for 2016 to $82.7 million of Senior Notes for $35.0 million of cash.  At the end of the second quarter our total debt was $623 million, and we had over $170 million of liquidity between balance sheet cash and available borrowing base capacity," said Michael Mercer, President and CEO.

Special Meeting of Common Unitholders

A special meeting of EVEP’s common unitholders has been called by the board of directors to be held at our offices located at 1001 Fannin, Suite 800, Houston, Texas 77002, on August 30, 2016, at 8:00 a.m., local time. At the special meeting, EVEP’s common unitholders will be asked to consider and vote upon the following proposals:

• a proposal (the “LTIP Proposal” ) to approve the EV Energy Partners, L.P. 2016 Long Term Incentive Plan (the “2016 LTIP” ) to replace the existing Long Term Incentive Plan (the “2006 LTIP”), with a maximum number of units issuable equal to 5,000,000 and a term of no more than ten years;
• a proposal (the “Auditor Proposal” ) to ratify the appointment of Deloitte & Touche LLP as EVEP’s independent registered public accounting firm for the fiscal year ending December 31, 2016; and
• a proposal (the “Adjournment Proposal” ) to approve the adjournment of the special meeting to a later date or dates, if deemed necessary or appropriate by EVEP’s general partner, to solicit additional proxies if there is not a quorum or sufficient votes at the time of the special meeting to approve the 2016 LTIP.

The record date for this meeting was July 7, 2016.  Common unitholders as of the record date should have received notice and are entitled to vote.  Additional information may be found in “Definitive Proxy Statement” and “Definitive Additional Proxy Materials” filed July 20, 2016 with the Securities and Exchange Commission at https://www.sec.gov or through the Investor Relations/SEC Filings section of the EVEP website at http://www.evenergypartners.com.

“Your vote is very important.  Our board of directors unanimously recommends a vote “FOR” each of the proposals.  Even if you plan to attend the special meeting, we urge you to authorize your proxy or direct your vote by internet, telephone or mail pursuant to the instructions included on the proxy card,” said Nicholas Bobrowski, Vice President and CFO.

Important Additional Information

In connection with the special meeting, EVEP filed a definitive proxy statement with the SEC in connection with the solicitation of proxies (the “Proxy Statement”) on July 20, 2016.  EVEP, its general partner, directors and certain of its executive officers will be participants in the solicitation of proxies from the common unitholders in respect of the special meeting.  Common unitholders may obtain information regarding EVEP and its directors and executive officers in EVEP's Annual Report on Form 10-K for the year ended December 31, 2015, which was filed with the SEC on February 29, 2016 and the Proxy Statement. EVEP has made available or mailed a copy of the Proxy Statement to common unitholders of record on the record date.  Common unitholders may obtain a free copy of the Proxy Statement and other documents filed with the SEC by EVEP at the SEC’s website at http://www.sec.gov or by directing a written request to:  EV Management at 1001 Fannin, Suite 800, Houston, Texas, 77002, Attn: Secretary, or sendmaterial@proxyvote.com. COMMON UNITHOLDERS ARE URGED TO READ THE PROXY STATEMENT AND THE OTHER RELEVANT MATERIALS BEFORE MAKING ANY VOTING OR INVESTMENT DECISION WITH RESPECT TO THE MATTERS TO BE VOTED ON AT THE ANNUAL MEETING BECAUSE THEY CONTAIN IMPORTANT INFORMATION.

Quarterly Report on Form 10-Q

EVEP’s financial statements and related footnotes are available on our second quarter 2016 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 25, 2016, EV Energy Partners, L.P. will host an investor conference call on August 9, 2016, at 9 a.m. Eastern Daylight Time (8 a.m. Central).  Investors interested in participating in the call may dial 1-888-724-9493 (quote conference ID 7843664) at least 5 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 on the Internet at http://www.evenergypartners.com.

(code #: EVEP/G)

Forward Looking Statements

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, future plans, our reserve quantities and the present value of our reserves, estimates of maintenance capital and production amounts 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 EVEP. These statements are based on certain assumptions made by EVEP based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances.  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, exploration and development activities, the availability and cost of financing, the returns on our capital investments and acquisition strategies, the availability of sufficient cash flow to 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 EVEP with the Securities and Exchange Commission.  You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. 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 (loss) income plus income from discontinued operations, EBITDAX from discontinued operations, income taxes, interest expense, net, cash settlements of matured interest rate swaps, depreciation, depletion and amortization, accretion expense on obligations, amortization of volumetric production payment (VPP), loss (gain) on derivatives, net, cash settlements of matured derivative contracts, non-cash equity-based compensation, impairment of oil and natural gas properties,  non-cash inventory write down expense, dry hole and exploration costs, loss (gain) on sales of oil and natural gas properties, gain on settlement of contract, gain on early extinguishment of debt, and loss on sale of investment in unconsolidated affiliates, contained in Other income (expense), net. 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. We believe these financial measures may indicate to investors whether or not we are generating cash flow at a level that can sustain or support quarterly distributions. 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.