BALTIMORE, Nov. 8 /PRNewswire-FirstCall/ -- Constellation Energy
Partners LLC (NYSE: CEP) today reported third quarter 2007 performance in
line with company expectations, and updated its 2007 forecast to include
the recently closed acquisition of properties from Newfield Exploration
Mid-Continent, Inc. in the Cherokee Basin in Oklahoma.
The company produced 3,158 MMcfe during the quarter, resulting in
adjusted EBITDA of $15.8 million and net income of $6.9 million on a
generally accepted accounting principles (GAAP) basis. The company produced
6,181 MMcfe for the nine months ended September 30, 2007, resulting in
Adjusted EBITDA of $32.9 million and net income of $11.3 million on a GAAP
basis.
The company increased its 2007 forecast to a range of $53.5 million to
$58.5 million of Adjusted EBITDA from a range of $48 million to $55 million
of Adjusted EBITDA, and increased its 2007 production forecast to a range
of 10,100 MMcfe to 11,100 MMcfe from a range of 9,300 MMcfe to 10,300
MMcfe, reflecting its newly acquired Newfield properties. The acquisition
from Newfield is the latest of three complementary acquisitions in the
Cherokee Basin and establishes CEP as the second largest producer in the
basin.
"We delivered results in line with expectations," said Felix Dawson,
chief executive officer. "Production in the quarter was up 165 percent due
to the success of our drilling programs and the addition of our Cherokee
Basin assets. Increased production plus higher realized commodity prices
drove up our gas sales by 175 percent.
"The properties acquired from Newfield in the Cherokee Basin fit in
well with our acquisition profile, and advance our strategy of acquiring
strong producing properties that are stable and long-lived. While it's too
early to fully assess the results of our newly acquired Cherokee assets,
integration and operations continue to go well and we remain optimistic
about the long-term growth potential in the Cherokee Basin.
"It has been a little less than a year since our IPO and CEP continues
to perform well. We've made significant progress on our acquisition and
growth strategies, and delivered on our core objective of increasing cash
distributions to our unitholders. The 22 percent increase in distribution
for the third quarter, which we announced in late October, reflects that
our assets are performing well, we're integrating acquisitions efficiently
and we're doing a good job of maintaining cash flow stability.
"Our performance continues to be encouraging and supports the strong
underlying business fundamentals of the MLP sector. We're optimistic about
our prospects in the growing sector and believe our company is positioned
well to deliver long-term distribution growth for our unitholders," Dawson
said.
Non-GAAP Measures
We present Adjusted EBITDA in addition to our reported net income in
accordance with GAAP. Adjusted EBITDA is a non-GAAP financial measure that
is defined as net income (loss) plus interest (income) expense;
depreciation, depletion and amortization; write-off of deferred financing
fees; impairment of long-lived assets; (gain) loss on sale of assets;
(gain) loss from equity investment; accretion of asset retirement
obligation; unrealized (gain) loss
on natural gas derivatives; and realized (gain) loss on cancelled
natural gas derivatives.
Adjusted EBITDA is used by management to indicate (prior to the
establishment of any cash reserves by our board of managers) the cash
distributions we expect to pay our unitholders. Specifically, this
financial measure indicates to investors whether or not we are generating
cash flow at a level that can sustain or support an increase in our
quarterly distribution rates. Adjusted EBITDA is also 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.
SEC Filings
CEP intends to file its Form 10-Q for the quarter ended Sept 30, 2007,
on or prior to November 14, 2007.
Forward-Looking Statements
We make statements in this news release that are considered
forward-looking statements within the meaning of the Securities Exchange
Act of 1934. 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.
Conference Call Information
The company will host a conference call today at 10:00 a.m. ET to
review its financial results and discuss its business outlook for 2007 and
beyond.
To participate, analysts, investors, media and the public in the U.S.
may dial (888) 322-9245 shortly before 10:00 a.m. (ET). The international
phone number is (773) 756-0253. The conference password is PARTNERS.
A replay will be available approximately one hour after the end of the
call by dialing (888) 567-0475 or (402) 998-1829 (international).
A live audio webcast of the conference call, presentation slides and
the earnings press release will be available on the Investor Relations page
of Constellation Energy Partners' Web site
(http://www.constellationenergypartners.com).
A webcast replay, as well as a replay in downloadable MP3 format will
also be available on the site approximately one hour after the completion
of the call.
CEP was formed -- and is partly owned -- by Constellation Energy (NYSE:
CEG), a Fortune 125 energy company with 2006 annual revenues of $19.3
billion.
Constellation Energy Partners LLC,
(http://www.constellationenergypartners.com), is a limited liability
company focused on the acquisition, development and exploitation of oil and
natural gas properties, as well as related midstream assets.
Constellation Energy Partners LLC
Operating Statistics
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
Net Production:
Total production (MMcfe) 3,158 1,191 6,181 3,391
Average daily
production (Mcfe/day) 34,326 12,946 22,641 12,422
Average Sales Price
per Mcfe:
Net realized price,
including hedges $7.25 (a) $7.18 $7.99 (a) $7.71
Net realized price,
excluding hedges $5.63 $7.07 $6.46 $7.67
(a) Excludes impact of
mark-to-market losses.
Net Wells Drilled
and Completed 34 6 54 25
Net Recompletions 17.5 0 20.5 0
Constellation Energy Partners LLC
Condensed Consolidated Statements of Operations
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
($ in thousands) ($ in thousands)
Oil and gas sales $23,536 $8,549 $50,033 $26,154
Gain/(Loss) from
mark-to-market
activities 2,635 - (2,766) -
Total Revenues $26,171 $8,549 $47,267 $26,154
Operating expenses:
Lease operating
expenses 5,077 1,826 9,822 5,321
Cost of sales 656 - 656 -
Production taxes 992 431 2,136 1,340
General and
administrative 2,667 714 6,057 3,445
Loss on sale of
equipment (8) - 86 -
Depreciation,
depletion and
amortization 7,619 2,176 13,162 5,987
Accretion expense 98 35 211 106
Total operating
expenses 17,101 5,182 32,130 16,199
Other expenses:
Interest (income)
expense, net 2,216 (164) 3,906 (361)
Other (income)
expense (29) - (99) -
Total expenses 19,288 5,018 35,937 15,838
Net income (loss) $6,883 $3,531 $11,330 $10,316
Adjusted EBITDA $15,832 $5,578 $32,946 $16,048
EPS - Basic $0.37 $0.31 $0.79 $0.91
EPS - Basic Units
Outstanding 18,398,146 11,320,300 14,289,600 11,320,300
EPS - Diluted $0.37 $0.31 $0.79 $0.91
EPS - Diluted Units
Outstanding 18,400,709 11,320,300 14,292,163 11,320,300
Constellation Energy Partners LLC
Condensed Consolidated Balance Sheets
September 30, December 31,
2007 2006
($ in thousands)
Current assets $46,693 $26,087
Natural gas properties, net of accumulated
depreciation, depletion and amortization 649,126 171,639
Other assets 20,495 5,971
Total assets $716,314 $203,697
Current liabilities $23,538 $9,007
Debt 147,000 22,000
Other long-term liabilities 10,699 2,730
Total liabilities 181,237 33,737
Class D Interests 7,333 8,000
Common members' equity 515,003 148,847
Accumulated other comprehensive income 12,741 13,113
Total members' equity 527,744 161,960
Total liabilities and members' equity $716,314 $203,697
Constellation Energy Partners LLC
Reconciliation of Net Income to Adjusted EBITDA (2)
Three Months Ended Nine Months Ended
September 30, September 30,
2007 2006 2007 2006
($ in thousands) ($ in thousands)
Reconciliation of Net Income
to Adjusted EBITDA:
Net income $6,883 $3,531 $11,330 $10,316
Add:
Interest expense/(income),
net 2,216 (164) 3,906 (361)
Depreciation, depletion
and amortization 7,619 2,176 13,162 5,987
Accretion of asset
retirement obligation 98 35 211 106
Loss on sale of asset (8) - 86 -
Loss from mark-to-market
activities (2,635) - 2,766 -
Long-term incentive plan 22 22
Unrealized (gain)/loss on
natural gas
derivatives/hedge
ineffectiveness 1,637 (129) 1,463 (129)
Adjusted EBITDA $15,832 $5,449 $32,946 $15,919
Maintenance capital (1) 3,314 1,238 6,071 3,713
Drilling fund (1,134) - (1,134) -
Interest expense (cash) 1,680 - 2,590 -
Distributable Cash $11,972 $4,211 $25,419 $12,206
(1) Maintenance capital expenditures are capital expenditures that we
expect to make on an ongoing basis to maintain our asset base
(including our undeveloped leasehold acreage) at a steady level over
the long term. These expenditures include the drilling and completion
of additional development wells to offset the expected production
decline during such period from our producing properties, as well as
additions to our inventory of unproved properties or proved reserves
required to maintain our asset base.
(2) 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;
-- depreciation, depletion and amortization;
-- write-off of deferred financing fees;
-- impairment of long-lived assets;
-- (gain) loss on sale of assets;
-- (gain) loss from equity investment;
-- accretion of asset retirement obligation;
-- unrealized (gain) loss on natural gas derivatives; and
-- realized loss (gain) on cancelled natural gas derivatives
SOURCE Constellation Energy Partners (CEP)
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CONTACT:
Media, Lawrence McDonnell, +1-410-470-7433,
or Investors, Tonya Cultice, +1-410-470-5619
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