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): May 15, 2013
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.) |
1801 Main Street, Suite 1300 Houston, TX |
77002 | |
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (832) 308-3700
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 May 15, 2013, Constellation Energy Partners LLC (the Company) issued a press release announcing its financial results for the quarter ended March 31, 2013. The Company will hold a webcast conference call to discuss those results on May 17, 2013. A copy of the press release is furnished as a part of this Current Report on Form 8-K as Exhibit 99.1 but is not deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934. The webcast conference call will be available for replay on the Companys website at www.constellationenergypartners.com.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number |
Description | |
Exhibit 99.1 | Press release dated May 15, 2013, publicly announcing first quarter 2013 financial results. |
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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: May 15, 2013 |
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By: | /s/ Charles C. Ward | |||||
Charles C. Ward | ||||||
Chief Financial Officer and Treasurer |
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EXHIBIT INDEX
Exhibit Number |
Description | |
Exhibit 99.1 | Press release dated May 15, 2013, publicly announcing first quarter 2013 financial results. |
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Exhibit 99.1
News Release | ||||||
General Inquiries: (877) 847-0008 www.constellationenergypartners.com |
Investor Contact: | Charles C. Ward | |||||||
(877) 847-0009 |
Constellation Energy Partners
Reports First Quarter 2013 Results
| CEPs net oil production increases 34% in the first quarter 2013 |
| Oil production accounts for 50% of CEPs revenue from sales |
| CEPs drilling efforts continue to target oil in the Mid-Continent asset base |
HOUSTON(BUSINESS WIRE)May 15, 2013Constellation Energy Partners LLC (NYSE MKT: CEP) today reported first quarter 2013 results from continuing operations, which exclude results for the Robinsons Bend Field assets divested by the company in a transaction that closed in Feb. 2013.
The company produced 335 MBOE during the first quarter for average net production of 3,722 BOE per day for the quarter. Net oil production for the first quarter, which accounted for approximately 14% of the companys total production during quarter, was 531 barrels per day, which represents an increase in net oil production of approximately 34% over the prior quarter and 64% over the first quarter of 2012.
Revenue of $5.1 million for the first quarter 2013 includes revenue from sales of $8.7 million, of which approximately 50% was from oil sales and 50% was from natural gas sales. The balance of the companys first quarter 2013 revenue came from hedge settlements ($4.7 million), services provided to third parties ($0.9 million), and losses on mark-to-market activities ($9.2 million), which is a non-cash item.
Operating costs, which include lease operating expenses, production taxes and general and administrative expenses, net of certain non-cash items and a one-time employee severance charge of $0.7 million, averaged $23.98 per BOE for the first quarter 2013. Including the one-time employee severance charge, operating costs were $26.04 per BOE.
Adjusted EBITDA for the first quarter 2013, excluding the one-time employee severance charge, was $6.0 million. Including the one-time employee severance charge, Adjusted EBITDA was $5.3 million, which is a 23% increase over the fourth quarter 2012 and a 15% increase over the first quarter 2012. On a GAAP basis, the company recorded a net loss of $10.6 million for the quarter.
The company completed 17 net wells and recompletions using $2.5 million in cash flow from operations during the first quarter 2013. Drilling activities in 2013 continue to focus on oil potential in the companys existing asset base as well as capital efficient recompletions. The company finished the first quarter 2013 with four net wells and recompletions in progress.
Were seeing meaningful contributions from our focus on the oil opportunities in our Mid-Continent asset base, said Stephen R. Brunner, President and Chief Executive Officer of Constellation Energy Partners. Our first quarter results were right on target relative to our forecast for 2013, and we look forward to continuing success from our drilling efforts for the remainder of the year.
Reserve-Based Credit Facility and Hedging Update
The company completed the first quarter 2013 with $34.0 million in debt outstanding under its reserve-based credit facility, leaving the company with $3.5 million in borrowing capacity under the facility. The company maintained $9.7 million in cash and cash equivalents as of Mar. 31, 2013.
The company noted that it is working to complete an amendment to its reserve-based credit facility and expects to complete that amendment during the second quarter 2013. In anticipation of the amendment, the company added NYMEX hedges that cover approximately 3.7 Bcfe of its natural gas production in the 2015 and 2016 timeframe.
Financial Outlook for 2013
The company forecasts capital spending of between $19.0 million and $21.0 million in 2013. Of this amount, $21.0 million is maintenance capital.
Net production is forecast to range between 1,267 MBOE and 1,433 MBOE for 2013, with operating costs forecast to range between $31.4 million and $34.2 million for the year.
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For the remainder of 2013, the company has hedged approximately 5.1 Bcfe of its Mid-Continent natural gas production at an effective NYMEX fixed price of $6.17 per Mcfe with basis hedges on 3.8 Bcfe of this amount at an average differential of $0.39 per Mcfe. The company also has hedges in place on approximately 107 MBbl of its Mid-Continent oil production at a fixed price of $96.31 per barrel.
Additional detail on the companys 2013 forecast can be found in the tables included with the companys fourth quarter and full year 2012 news release dated Mar. 5, 2013.
Conference Call Information
The company will host a conference call at 8:30 a.m. (CDT) on Friday, May 17, 2013 to discuss first quarter 2013 results.
To participate in the conference call, analysts, investors, media and the public in the U.S. may dial (800) 857-0653 shortly before 8:30 a.m. (CDT). The international phone number is (773) 799-3268. The conference password is PARTNERS.
A replay will be available beginning approximately one hour after the end of the call by dialing (888) 568-0664 or (203) 369-3203 (international). A live audio webcast of the conference call, presentation slides and the earnings release will be available on Constellation Energy Partners Web site (www.constellationenergypartners.com) under the Investor Relations page. The call will also be recorded and archived on the site.
About the Company
Constellation Energy Partners LLC is a limited liability company focused on the acquisition, development and production of oil and natural gas properties, as well as related midstream assets.
SEC Filings
The company intends to file its first quarter 2013 Form 10-Q on or about May 15, 2013.
Non-GAAP Measures
We present Adjusted EBITDA in addition to our reported net income (loss) in accordance with GAAP. Adjusted EBITDA is a non-GAAP financial measure that is defined as net income (loss) adjusted by interest (income) expense, net; depreciation, depletion and amortization; write-off of deferred financing fees; asset impairments; accretion expense; (gain) loss on sale of assets; exploration costs; (gain) loss from equity investment; unit-based compensation programs; (gain) loss from mark-to-market activities; and unrealized (gain) loss on derivatives/hedge ineffectiveness.
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Adjusted EBITDA is 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.
Forward-Looking Statements
We make statements in this news release that are considered forward-looking statements within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended. 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, managements 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. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.
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Constellation Energy Partners LLC
Operating Statistics
Three Months Ended Mar. 31, | ||||||||
2013 | 2012 | |||||||
Net Production in MBOE and MMcfe: |
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Total production (MBOE) |
335 | 354 | ||||||
Average daily production (BOE/day) |
3,722 | 3,886 | ||||||
Total production (MMcfe) |
2,010 | 2,122 | ||||||
Average daily production (Mcfe/day) |
22,333 | 23,319 | ||||||
Average Net Sales Price per BOE and Mcfe: |
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BOE Net realized price, including hedges |
$ | 41.69 | (a) | $ | 38.54 | (a) | ||
BOE Net realized price, excluding hedges |
$ | 27.64 | (b) | $ | 21.41 | (b) | ||
Mcfe Net realized price, including hedges |
$ | 6.95 | (a) | $ | 6.42 | (a) | ||
Mcfe Net realized price, excluding hedges |
$ | 4.61 | (b) | $ | 3.57 | (b) | ||
(a) Excludes impact of mark-to-market gains (losses) and net cost of sales. |
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(b) Excludes all hedges, the impact of mark-to-market gains (losses) and net cost of sales. |
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Net Wells Drilled and Completed |
12 | 5 | ||||||
Net Recompletions |
5 | 12 | ||||||
Developmental Dry Holes |
| | ||||||
Net Wells and Net Recompletions in Progress |
4 | 38 | ||||||
Total Capital Spending ($ in thousands) |
$ | 2,483 | $ | 2,722 |
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Constellation Energy Partners LLC
Condensed Consolidated Statements of Operations
Three Months Ended Mar. 31, | ||||||||
2013 | 2012 | |||||||
($ in thousands) | ||||||||
Oil and gas sales |
$ | 14,385 | $ | 14,012 | ||||
Gain/(Loss) from mark-to-market activities |
(9,285 | ) | 6,602 | |||||
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Total revenues |
5,100 | 20,614 | ||||||
Operating expenses: |
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Lease operating expenses |
4,236 | 5,171 | ||||||
Cost of sales |
420 | 385 | ||||||
Production taxes |
487 | 402 | ||||||
General and administrative |
4,404 | 3,836 | ||||||
Exploration costs |
| | ||||||
(Gain)/Loss on sale of assets |
(6 | ) | 4 | |||||
Depreciation, depletion and amortization |
4,798 | 2,387 | ||||||
Asset impairments |
| 107 | ||||||
Accretion expense |
123 | 114 | ||||||
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Total operating expenses |
14,462 | 12,406 | ||||||
Other expenses: |
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Interest (income) expense, net |
1,352 | 1,619 | ||||||
Other (income) expense |
(68 | ) | (97 | ) | ||||
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Total expenses |
15,746 | 13,928 | ||||||
Income (loss) from continuing operations |
(10,646 | ) | 6,686 | |||||
Discontinued operations |
(2,686 | ) | (801 | ) | ||||
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Net income (loss) |
$ | (13,332 | ) | $ | 5,885 | |||
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Adjusted EBITDA |
$ | 5,307 | $ | 4,595 | ||||
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EPUBasic |
($0.55 | ) | $0.24 | |||||
EPUBasic Units Outstanding |
24,250,661 | 24,186,724 | ||||||
EPUDiluted |
($0.55 | ) | $0.24 | |||||
EPUDiluted Units Outstanding |
24,250,661 | 24,186,724 |
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Constellation Energy Partners LLC
Condensed Consolidated Balance Sheets
Mar. 31, | Dec. 31, | |||||||
2013 | 2012 | |||||||
($ in thousands) | ||||||||
Current assets |
$ | 26,828 | $ | 26,848 | ||||
Current assets from discontinued operations |
| 1,886 | ||||||
Oil and natural gas properties, net of accumulated depreciation, depletion and amortization |
116,564 | 120,122 | ||||||
Other assets |
11,473 | 11,793 | ||||||
Long-term assets from discontinued operations |
| 67,373 | ||||||
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Total assets |
$ | 154,865 | $ | 228,022 | ||||
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Current liabilities, including short-term debt |
$ | 41,522 | $ | 59,595 | ||||
Current liabilities from discontinued operations |
| 1,578 | ||||||
Long-term debt |
| 34,000 | ||||||
Other long-term liabilities |
10,193 | 8,891 | ||||||
Other long-term liabilities from discontinued operations |
7,692 | |||||||
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Total liabilities |
51,715 | 111,756 | ||||||
Common members equity |
103,150 | 116,266 | ||||||
Accumulated other comprehensive income |
| | ||||||
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Total members equity |
103,150 | 116,266 | ||||||
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Total liabilities and members equity |
$ | 154,865 | $ | 228,022 | ||||
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Constellation Energy Partners LLC
Reconciliation of Net Income (Loss) to Adjusted EBITDA
Three Months Ended Mar. 31, | ||||||||
2013 | 2012 | |||||||
($ in thousands) | ||||||||
Reconciliation of Net Income (Loss) to Adjusted EBITDA: |
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Net income (loss) |
$ | (13,332 | ) | $ | 5,885 | |||
Add: |
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Interest (income) expense, net |
1,352 | 1,619 | ||||||
Depreciation, depletion and amortization |
4,798 | 2,387 | ||||||
Asset impairments |
| 107 | ||||||
Accretion expense |
123 | 114 | ||||||
(Gain)/Loss on sale of assets |
(6 | ) | 4 | |||||
Exploration costs |
| | ||||||
Unit-based compensation programs |
401 | 280 | ||||||
(Gain)/Loss from mark-to-market activities |
9,285 | (6,602 | ) | |||||
Discontinued operations |
2,686 | 801 | ||||||
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Adjusted EBITDA (1) |
$ | 5,307 | $ | 4,595 | ||||
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Three Months Ended Dec. 31, | Twelve Months Ended Dec. 31, | |||||||||||||||
2012 | 2011 | 2012 | 2011 | |||||||||||||
($ in thousands) | ($ in thousands) | |||||||||||||||
Reconciliation of Net Income (Loss) to Adjusted EBITDA: |
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Net income (loss) |
$ | (76,255 | ) | $ | 15,127 | $ | (86,543 | ) | $ | 19,586 | ||||||
Add: |
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Interest (income) expense, net |
1,143 | 1,186 | 5,733 | 10,116 | ||||||||||||
Depreciation, depletion and amortization |
4,654 | 3,265 | 11,733 | 12,454 | ||||||||||||
Asset impairments |
2 | | 109 | 1,935 | ||||||||||||
Accretion expense |
114 | 156 | 459 | 483 | ||||||||||||
(Gain)/Loss on sale of assets |
7 | 1 | 7 | 19 | ||||||||||||
Exploration costs |
| | | 131 | ||||||||||||
Unit-based compensation programs |
334 | 309 | 1,497 | 1,285 | ||||||||||||
(Gain)/Loss from mark-to-market activities |
253 | (8,524 | ) | 8,706 | 39,422 | |||||||||||
Discontinued operations |
74,052 | 1,156 | 77,077 | 1,102 | ||||||||||||
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Adjusted EBITDA (1), (2) |
$ | 4,304 | $ | 12,676 | $ | 18,778 | $ | 86,533 | ||||||||
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(1) | 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:
| depreciation, depletion and amortization; |
| write-off of deferred financing fees; |
| asset impairments; |
| (gain) loss on sale of assets; |
| accretion expense; |
| exploration costs; |
| (gain) loss from equity investment; |
| unit-based compensation programs; |
| (gain) loss from mark-to-market activities; |
| gains (losses) on discontinued operations; |
| unrealized (gain) loss on derivatives/hedge ineffectiveness; and |
| interest (income) expense, net. |
(2) | Results for the twelve months ended Dec. 31, 2011, include $41.3 million in hedge settlements related to the companys June 2011 hedge restructuring. |
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