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Ohio Utica Shale

EV Energy Partners sells portion of its Eagle Ford holdings

By Bob Downing Published: August 11, 2014

From EV Energyu Partners today:

HOUSTON, Aug. 11, 2014 /PRNewswire/ -- EV Energy Partners, L.P. (NASDAQ: EVEP) announced results for the second quarter 2014 and filed its Form 10-Q with the Securities and Exchange Commission. EVEP also provided an update on midstream guidance for the remainder of 2014, an update on its commodity hedge positions, and an agreement to sell certain Eagle Ford formation rights.

Agreement to Sell Eagle Ford Formation Rights

EVEP announced that it, along with certain institutional partnerships managed by EnerVest, Ltd., has signed an agreement to sell certain deep rights in the Eagle Ford formation in Burleson, Brazos and Grimes Counties to an undisclosed buyer for net proceeds to EVEP of $30 million ($218 million for all EnerVest-affiliated entities combined). EVEP and EnerVest institutional partnerships will retain all non-Eagle Ford formation rights, including the Austin Chalk formation and corresponding production. The transaction is expected to close by October 15th and is subject to customary closing conditions and purchase price adjustments.

Mark Houser, President and CEO said, "With the development of the East Texas Eagle Ford under our Austin Chalk acreage and the rapid build-up of drilling rigs and capital requirements, we decided to capitalize on the opportunity and have entered into an agreement to sell our Eagle Ford formation rights in three of the counties where there has been significant activity to date. We plan to redeploy the proceeds in acquiring longer-life, high PDP content reserves. Our remaining position in Lee, Fayette and Washington Counties will be retained until more drilling activity has occurred to assess the potential in these counties."

Second Quarter 2014 Results

Adjusted EBITDAX for the second quarter of 2014 was $54.4 million, a 3 percent increase over the second quarter of 2013, and a 3 percent decrease from the first quarter of 2014. Distributable Cash Flow for the second quarter of 2014 was $26.4 million, a 1 percent increase over the second quarter of 2013 and an 8 percent decrease from the first quarter of 2014. Adjusted EBITDAX and Distributable Cash Flow are Non-GAAP financial measures and are described in the attached table under "Non-GAAP Measures." The quarter over quarter decrease in adjusted EBITDAX and distributable cash flow is primarily attributable to lower realized NGL and natural gas prices, partially offset by an increase in midstream EBITDAX and a decrease in cash general and administrative expenses.

Production for the second quarter of 2014 was 11.0 Bcf of natural gas, 255 MBbls of oil and 571 MBbls of natural gas liquids, or 174.9 MMcfe/day. This represents a 2 percent increase over second quarter 2013 production of 172.3 MMcfe/day and flat to first quarter 2014 production of 174.7 MMcfe/day.

EVEP reported a net loss of $9.0 million, or $(0.19) per basic and diluted weighted average limited partner unit outstanding, for the second quarter of 2014. Included in net loss were the following items:

  • $12.4 million of non-cash losses on commodity and interest rate derivatives,
  • $6.6 million of non-cash costs contained in general and administrative expenses,
  • $1.1 million of non-cash leasehold impairment charges, and
  • $1.7 million of dry hole and exploration costs.

For the first quarter of 2014, EVEP reported a net loss of $6.3 million, or $(0.14) per basic and diluted weighted average limited partner unit outstanding. For the second quarter of 2013, EVEP reported a net income of $32.9 million, or $0.74 per basic and diluted weighted average limited partner unit outstanding.

Updated Midstream Guidance

Due to the timing of connection of volumes into the Cardinal Gas Services gathering system and the related throughput volumes into the Utica East Ohio processing and fractionation facilities, we are adjusting third and fourth quarter guidance ranges for Utica Shale midstream and overriding royalty interest EBITDAX as follows:

($ in Millions)
3Q 2014 $7 - $10
4Q 2014 $9 - $12

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