8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 15, 2007

Constellation Energy Partners LLC

(Exact name of registrant as specified in its charter)

Delaware	001-33147	11-3742489
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

111 Market Place Baltimore, Maryland	21202
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (410) 468-3500

Not Applicable

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On February 15, 2007, Constellation Energy Partners LLC (the “Company”) issued a press release announcing its financial results for the quarter and year ended December 31, 2006. A copy of the press release is furnished as a part of this current report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference in its entirety.

The press release is being furnished pursuant to Item 2.02, Results of Operations and Financial Condition. The information furnished is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, is not subject to the liabilities of that section and is not deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

Item 7.01. Regulation FD Disclosure.

Furnished herewith as Exhibit 99.2 is a slide presentation utilized by the Company during a public conference call and webcast on February 15, 2007.

The slide presentation is being furnished pursuant to Item 7.01, Regulation FD Disclosure. The information furnished is not deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, is not subject to the liabilities of that section and is not deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number	Description
Exhibit 99.1	Press release dated February 15, 2007, publicly announcing fourth quarter and year-end 2006 financial results.
Exhibit 99.2	Slide presentation utilized during the February 15, 2007 public conference call and webcast.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Constellation Energy Partners LLC
Date: February 15, 2007	By:	/s/ Angela A. Minas
	Angela A. Minas Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
Exhibit 99.1	Press release dated February 15, 2007, publicly announcing fourth quarter and year-end 2006 financial results.
Exhibit 99.2	Slide presentation utilized during the February 15, 2007 public conference call and webcast.

EX-99.1

Exhibit 99.1

	News Release
	Media Line: 410 470-7433 www.constellationenergypartners.com

Media Contact:	Lawrence McDonnell
	410 470-7433
Investor Contacts:	Kevin Hadlock
	410 783-3647
	Tonya Cultice
	410 783-3383

Constellation Energy Partners Reports

Fourth Quarter and Full-Year 2006 Results

BALTIMORE, Feb. 15, 2007—Constellation Energy Partners LLC (NYSE Arca: CEP) today reported fourth quarter and full-year 2006 results in line with company expectations, and highlighted completion of a successful drilling program and increased production volumes from its assets in the Black Warrior Basin of Alabama.

The company produced 4.6 Bcf during the year, resulting in adjusted EBITDA of $23.0 million and net income of $16.0 million on a generally accepted accounting principles (GAAP) basis for 2006. Fourth quarter 2006 production was 1.25 Bcf, resulting in adjusted EBITDA of $7.1 million and net income of $5.7 million on a GAAP basis. In addition to strong operating results, fourth quarter results benefited from the hedging program implemented to maintain cash flow stability. The company drilled and completed 31 wells during 2006 with a 100 percent success rate. During the last six months of 2006, production increased substantially. Proved reserves increased approximately 7.4 percent to 120.3 Bcfe.

The company previously announced a cash distribution of $0.2111 per common unit for the period, commencing on Nov. 20, 2006 – the date of the closing of its initial public offering (IPO) – and ending Dec. 31, 2006, which was paid on Feb. 14, 2007 to unitholders of record on Feb. 7, 2007.

“This is the first earnings report for Constellation Energy Partners and illustrates we are off to a strong start,” said Felix Dawson, chief executive officer. “We delivered results in line with our expectations,

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completed a successful drilling program and demonstrated our ability to manage and improve upon the performance of our assets.

“Our success in 2006 allowed us to deliver an initial distribution to unitholders, also in line with forecast,” said Dawson. “We were pleased with the results of our IPO, as we priced at the high end of the range and experienced strong demand for our units from both retail and institutional investors. Our 2006 unit price appreciation was 21 percent.

“Our current forecast is consistent with the 2007 forecast that was represented in our prospectus,” Dawson said. “We’ve drilled 14 wells this year and the 2007 drilling program should be completed by the end of the second quarter. Overall, this is a successful start to what we believe will be a very successful company.”

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 2006 Annual Report on Form 10-K on or about Feb. 28, 2007.

2

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 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 (866) 443-1209 or (203) 369-1089 (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 (www.constellationenergypartners.com). The call will also be recorded and archived on the site.

CEP was formed – and is 54 percent owned – by Constellation Energy (NYSE: CEG), an energy company with a $13 billion market capitalization.

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

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related midstream assets. Its assets consist primarily of producing and non-producing coalbed methane natural gas reserves located in the Black Warrior Basin of Alabama.

2006 Summary Stats

Constellation Energy Partners LLC

Operating Statistics

	Successor				Successor		Combined Predecessor and Successor*
	Three Months Ended December 31,				Year Ended December 31,
	2006		2005		2006		2005
Net Production:
Total production (MMcf)		1,250		1,148		4,641		4,495
Average daily production (Mcf/day)		13,587		12,478		12,715		12,315
Average Sales Price per Mcf:
Net realized price, including hedges	$	8.61	$	13.09	$	7.95	$	5.23
Net realized price, excluding hedges	$	6.78	$	13.09	$	7.43	$	8.64
Net Proved Reserves:
Proved developed (Bcf)						97.4		89.3
Proved Undeveloped (Bcf)						22.9		22.7
Total Proved (Bcf)						120.3		112.0
Wells Drilled and Completed						31		18

Constellation Energy Partners LLC

Condensed Consolidated Statements of Operations

	Successor				Successor			Combined Predecessor and Successor*
	Three Months Ended December 31,				Year Ended December 31,
	2006		2005		2006			2005
	($ in thousands)
Total Revenues	$	10,763	$	15,032	$	36,917		$	23,526
Operating expenses:
Lease operating expenses		1,913		2,392		7,234			6,944
Production taxes		443		900		1,783			2,076
General and administrative		1,128		853		4,573			4,778
Depreciation, depletion and amortization		1,457		1,947		7,444			5,859
Accretion expense		35		35		141			124
Total operating expenses		4,976		6,127		21,175			19,781
Other expenses:
Interest expense, net		114		1		(247	)		2,440
Total expenses		5,090		6,128		20,928			22,221
Net income (loss)	$	5,673	$	8,904	$	15,989		$	1,305
Adjusted EBITDA	$	7,106	$	10,887	$	23,025		$	24,993

* Combined Predecessor and Successor statement of operation presented for the year ended Dec. 31, 2005 is a non-GAAP financial measure. CEP acquired the Robinson’s Bend Field from Everlast on June 12, 2005. This combined statement represents the sum of Everlast’s financials from Jan. 1 to June 12, 2005 and our financials from Feb. 7, 2005 (inception) to Dec. 31, 2005. We believe this presentation is useful for investors to evaluate 2005 financial results for the Robinson’s Bend Field. The results were presented in our audited financial statements included in our Registration Statement on Form S-1 (File No. 333-134995) which was declared effective in November 2006.

4

Constellation Energy Partners LLC

Condensed Consolidated Balance Sheets

	December 31, 2006		December 31, 2005
	($ in thousands)
Current assets	$	25,726	$	20,928
Natural gas properties, net of accumulated depreciation, depletion and amortization		171,639		165,211
Other assets		5,971		—
Total Assets	$	203,336	$	186,139
Current liabilities	$	8,646	$	13,895
Debt		22,000		63
Other long-term liabilities		2,730		3,014
Class D Interests		8,000		—
Common members’ equity		148,847		169,167
Accumulated other comprehensive income		13,113		—
Total members’ equity		161,960		169,167
Total liabilities and members’ equity	$	203,336	$	186,139

Constellation Energy Partners LLC

Reconciliation of Net Income to Adjusted EBITDA

	Successor					Successor			Combined Predecessor and Successor
	Three Months Ended December 31,					Year Ended December 31,
	2006			2005		2006			2005
	($ in thousands)
Reconciliation of Net Income to Adjusted EBITDA:
Net income	$	5,673		$	8,904	$	15,989		$	1,305
Add:
Interest expense/(income), net		114			1		(247	)		2,440
Depreciation, depletion and amortization		1,457			1,947		7,444			5,859
Accretion of asset retirement obligation		35			35		141			124
Unrealized (gain)/loss on natural gas derivatives		(173	)		—		(302	)		15,265
Adjusted EBITDA	$	7,106		$	10,887	$	23,025		$	24,993

5

Constellation Energy Partners LLC

Reconciliation of Combined Total Income for the Year Ended December 31, 2005

	Year Ended December 31, 2005
	Successor		Predecessor			Combined Predecessor and Successor
	($ in thousands)
Total Revenues	$	25,957	$	(2,431	)	$	23,526
Operating expenses:
Lease operating expenses		4,175		2,769			6,944
Production taxes		1,400		676			2,076
General and administrative		4,184		594			4,778
Depreciation, depletion and amortization		4,176		1,683			5,859
Accretion expense		78		46			124
Total operating expenses		14,013		5,768			19,781
Other expenses:
Interest expense, net		3		2,437			2,440
Total expenses		14,016		8,205			22,221
Net income (loss)	$	11,941	$	(10,636	)	$	1,305

Constellation Energy Partners LLC

Reconciliation of Combined Total Income and Production for the Year Ended December 31, 2005

	Year Ended December 31, 2005
	Successor		Predecessor			Combined Predecessor and Successor
	($ in thousands)
Total Revenues	$	25,957	$	(2,431	)	$	23,526
Operating expenses:
Lease operating expenses		4,175		2,769			6,944
Production taxes		1,400		676			2,076
General and administrative		4,184		594			4,778
Depreciation, depletion and amortization		4,176		1,683			5,859
Accretion expense		78		46			124
Total operating expenses		14,013		5,768			19,781
Other expenses:
Interest expense, net		3		2,437			2,440
Total expenses		14,016		8,205			22,221
Net income (loss)	$	11,941	$	(10,636	)	$	1,305
Adjusted EBITDA	$	16,198	$	8,795		$	24,993
Reconciliation of Net Income to Adjusted EBITDA:
Net income	$	11,941	$	(10,636	)	$	1,305
Add:
Interest expense, net		3		2,437			2,440
Depreciation, depletion and amortization		4,176		1,683			5,859
Accretion of asset retirement obligation		78		46			124
Unrealized loss on natural gas derivatives		—		15,265			15,265
Adjusted EBITDA	$	16,198	$	8,795		$	24,993
Net Production:
Total production (MMcf)		2,525		1,970			4,495
Average daily production (Mcf/day)		12,500		12,100			12,315
Net realized price, including hedges	$	10.28	$	(1.23	)	$	5.23
Net realized price, excluding hedges	$	10.28	$	6.54		$	8.64

6

The following table summarizes, for the periods indicated, our hedges currently in place through Dec. 31, 2009. Currently, we use fixed-price swaps as our mechanism for hedging commodity prices. Our derivative positions at Feb. 14, 2007 were:

	For the quarter ended (in MMBtu)
	March 31		June 30		Sept 30		Dec 31		Total
	MMBtu	$/MMBtu	MMBtu	$/MMBtu	MMBtu	$/MMBtu	MMBtu	$/MMBtu	MMBtu	$/MMBtu
2007	974,999	9.22	1,074,999	9.13	1,074,999	9.17	1,074,999	9.25	4,199,996	9.19
2008	875,001	8.91	875,001	8.91	875,001	8.91	875,001	8.91	3,500,004	8.91
2009	825,000	8.40	825,000	8.40	825,000	8.40	825,000	8.40	3,300,000	8.40
									11,000,000 Total MMBtu

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EX-99.2

Constellation Energy Partners LLC

Earnings Presentation

February 15, 2007

Exhibit 99.2

2

Forward-looking Statements Disclaimer

This presentation contains forward–looking statements that are subject to a number of risks and

uncertainties, many of which are beyond our control, which may include statements about our:  the

volatility of realized natural gas prices; discovery, estimation, development and replacement of oil and

natural gas reserves; business and financial strategy; drilling locations; technology; cash flow, liquidity and

financial position; the impact on us of termination of the sharing arrangement before December 31, 2012;

production volumes; lease operating expenses, general and administrative costs and finding and

development costs; availability of drilling and production equipment, labor and other services; future

operating results; prospect development and property acquisitions; marketing of oil and natural gas;

competition in the oil and natural gas industry; the impact of weather and the occurrence of natural

disasters such as fires, floods and other catastrophic events and natural disasters; governmental regulation

of the oil and natural gas industry; developments in oil-producing and natural gas producing countries; and

strategic plans, objectives, expectations and intentions for future operations.  In some cases, you can

identify

forward–looking

statements

by

terminology

such

as

“may,”

“could,”

“should,”

“expect,”

“plan,”

“project,”

“intend,”

“anticipate,”

“believe,”

“estimate,”

“predict,”

“potential,”

“pursue,”

“target,”

“continue,”

the negative of such terms or other comparable terminology.

The forward–looking statements contained in this presentation 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 presentation 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

presentation.

We

do

not

intend

to

publicly

update

or

revise

any

forward–looking

statements

as

a

result

of

new

information,

future

events

or

otherwise.

3

Use of Non-GAAP Financial Measures

EBITDA, Adjusted EBITDA and Distributable Cash Flow are non-GAAP financial measures that are reconciled to their most

comparable GAAP financial measure under Reconciliation of Non-GAAP Financial Measures in this presentation.  The

reconciliations are only intended to be reviewed in conjunction with the oral presentation to which they relate. 

EBITDA 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; and realized loss (gain) on cancelled natural gas derivatives.  Adjusted EBITDA is

defined as EBITDA plus unrealized (gain) loss on natural gas derivatives.  Distributable Cash Flow is defined as Adjusted

EBITDA less interest expense and Class D distribution.

These financial measures are 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, these financial measures indicate 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.  These financial measures are 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. EBITDA, Adjusted

EBITDA, and Distributable Cash Flow are not intended to represent cash flows for the period, nor are they 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.  We also provide our earnings guidance in terms of Adjusted

EBITDA.  We are unable to reconcile our guidance to GAAP net income or operating income because we do not predict the

future impact of adjustments to net income (loss), such as (gains) losses on gas derivatives, and equity investments or asset

impairments, due to the difficulty of doing so.

Overview

Felix Dawson

Chief Executive Officer

5

CEP Overview

•

Growth-oriented oil & gas company

–

Executed IPO in November 2006

–

Focused on acquisitions of long-lived, low-risk and predominantly

proved developed properties

•

Company profile

–

120 Bcf proved reserves

–

24 year average reserve to production ratio

–

Sponsor relationship with Constellation Energy

Focused on maximizing total unitholder return

•

Maintain stable cash flow

•

Increase distributions through accretive acquisitions

6

CEP and E&P MLP Sector Performance

•

CEP 2006 performance

–

Produced 4.6 Bcf

–

Delivered adjusted EBITDA of $23.0 million

–

Successfully drilled and completed 31 wells

–

Increased reserve base by 8 Bcf

–

Delivered first distribution payment of $0.2111 per common unit

–

Unit price appreciated by 21% from IPO to year-end

•

MLPs creating competitive advantage in E&P sector

–

Yields have traded down substantially, reflecting market

acceptance

–

Sellers structuring properties for sale to MLPs

CEP is well positioned to be an active leader in the emerging E&P MLP sector

See appendix

7

Constellation’s Upstream Gas Business

•

Growing emphasis in upstream natural gas in 2007

–

Increased capital spending

•

Investment strategy is complementary with that of CEP

–

Focus on lower production risk, long-lived reserves

–

Monetization of investments once proved

•

CEP should benefit from Constellation’s increased focus on

its upstream gas business

–

Additional resources and effort in the acquisition market should

lead to greater deal flow

–

Growing inventory of future drop down opportunities

CEP is integral to Constellation’s upstream gas business growth

8

Constellation’s Upstream Gas Portfolio

Constellation Energy Partners

unconventional

conventional

Black Warrior Basin CBM (AL)

Woodford shale (OK) (2)

Gulf Coast CBM (LA)

South Texas tight sands

Wyoming tight sands

Fayetteville shale (AR)

Williston Basin shale (MT)

Shallow GOM (AL)

South East Texas carbonates

Current Portfolio Investments

Potential drop down to CEP within the next 12 months

•

Constellation’s portfolio represents

226 Bcf of proved reserves

(including interest in CEP)

Asset Lifecycle

Asset Life

Operations Risk

Geological/ Geophysical Risk

Early Stage

Development

Mature

Engineering  Risk

9

Growth Outlook

•

Maximize returns to our unitholders

•

Be a leader in our sector in distribution growth

Growth Objectives

Acquisition

Parameters

•

Incremental acquisitions in the $50-150

million range

•

Transformational acquisitions in the $300-500

million range

•

Prepared to execute several transactions over

the next 12-18 months if right opportunities

arise

Focus will be on acquiring a suitable set of transformational assets

supplemented by incremental acquisitions

•

Increased deal activity

•

Commodity prices helping bridge buyer and

seller expectations

•

Deals being structured for MLPs

Market Outlook

2006 Results

and

Outlook

Angela Minas

Chief Financial Officer

11

Financial Results

19

Earnings and distributable cash were in line with expectations

(1)

Combined predecessor and CEP results

See appendix

Full Year

Fourth Quarter

$0.2111

Distribution

$7,105

Distributable Cash Flow

$24,993

$23,025

$10,887

$7,106

Adjusted EBITDA

1125%

$1,305

$15,989

(36%)

$8,904

$5,673

Net Income (Loss)

2,440

(247)

1

114

Net Interest Expense

27%

5,983

7,585

(25%)

1,982

1,492

DD&A

140%

$9,728

$23,327

(33%)

$10,887

$7,279

EBITDA

(2%)

13,798

13,590

(16%)

4,145

3,484

Operating Expenses

57%

$23,526

$36,917

(28%)

$15,032

$10,763

Revenue

$7.43

$6.78

Average Price without

Hedges

$7.95

(34%)

$13.09

$8.61

Average Price with Hedges

3%

4,495

4,641

9%

1,148

1,250

Production (MMcf)

Variance

Combined

2005

(1)

CEP 2006

Variance

2005

2006

($ in 000’s except hedge price and

distribution)

12

Operating Statistics

Operating statistics reflect solid performance and positive trends

Variance

2005

2006

7.1%

0.9%

9.1%

7.4%

72%

(4.6%)

3.2%

436

467

Net Producing Wells

22.7

22.9

Proved Undeveloped

89.3

97.4

Proved Developed

112.0

100%

18

3.07

4,495

120.3

Net Proved Reserves (Bcf)

100%

Success Ratio

31

Well Drilled

2.93

Operating Expense ($/Mcf)

4,641

Production (MMcf)

13

Hedging Program

•

We use a high level of hedging to maintain cash flow and distribution

stability

–

Up to 80% of expected production for up to five years

–

Generally use swaps due to expense

•

Hedging approach for 2007

–

Opportunistically hedge additional unhedged volumes for 2007 to 2009

–

Add duration to hedges beyond 2009

–

Similarly hedge production associated with acquisitions

Hedge Positions

8.40

8.91

9.19

Weighted Average Sales Price     

$/MMBtu

3,300,000

2009

3,500,000

2008

4,200,000

2007

MMBtu Hedged

14

2007 Forecast

Business outlook remains robust and CEP affirms forecast

$1.85

Distribution per Unit

$31,000 -

$34,200

Adjusted EBITDA

$12,700 -

$14,000

Operating Expense

20

Wells Drilled

4,800 –

5,300

Net Production (MMcf)

2007

($ in 000’s)

See appendix

15

Key Takeaways

•

2007 forecast is in line with forecast provided in

November 2006

•

Growing emphasis by Constellation in upstream natural

gas should continue to support CEP’s growth objectives

•

Our outlook for the acquisition market is positive

Question and Answer

Appendix

18

Balance Sheet

$186,139

$203,336

Total Liabilities and Member’s Equity

169,167

161,960

Total Member’s Equity

-

8,000

Class D Interests

$16,972

$33,376

Total Liabilities

3,014

2,730

Other Long-term Liabilities

63

22,000

Debt

$13,895

$8,646

Current Liabilities

Liabilities and Member’s Equity

$186,139

$203,336

Total Assets

-

5,971

Other Assets

165,211

171,639

Net PP&E

$20,928

$25,726

Current Assets

12/31/2005

Assets

12/31/2006

($ in 000’s)

19

Summary of Non-GAAP Measures

22

GAAP Income for

Predecessor plus GAAP

Income for Company

11, 12

Combined 2005 Results

21

Net Income

6, 11, 14

Adjusted EBITDA

Slide Containing

Reconciliations

Most Comparable

GAAP Measure

Slide(s) Where Used

in Presentation

Non-GAAP Measure

20

Reconciliation of Non-GAAP Financial Measures

-

15,265

(302)

-

(173)

Unrealized Loss (Gain)

on Derivatives

$16,198

$8,795

$23,025

$10,887

$7,106

Adjusted EBITDA

Fourth Quarter

N.A.

N.A.

N.A.

N.A.

$7,105

Distribution Cash Flow

1

Interest Expense (Cash)

$16,198

($6,470)

$23,327

$10,887

$7,279

EBITDA

3

2,437

(247)

1

114

Interest Expense

4,254

1,729

7,585

1,982

1,492

DD&A

$11,941

($10,636)

$15,989

$8,904

$5,673

Net Income (Loss)

CEP

2005

Predecessor

2005

Fiscal Year

2006

2005

2006

($ in 000’s)

21

Reconciliation of Combined Results to Predecessor and CEP

$24,993

$16,198

$8,795

Adjusted EBITDA

15,265

0

15,265

Unrealized Loss (Gain) on

Derivatives

2,440

3

2,437

Net Interest Expense

5,983

4,254

1,729

DD&A

$1,305

$11,941

($10,636)

Net Income (Loss)

2,440

3

2,437

Net Interest Expense

4,254

16,198

9,759

$25,957

2,525

CEP      

2005

5,983

1,729

DD&A

9,728

(6,470)

EBITDA

13,798

4,039

Operating Expenses

$23,526

($2,431)

Revenue

4,495

1,970

Production (MMcf)

Combined

2005

Predecessor

2005

($ in 000’s)