- Announces Strong Performance on 2008 Program HOUSTON, May 8
/PRNewswire-FirstCall/ -- Constellation Energy Partners LLC
(NYSE:CEP) today reported first quarter results, announced strong
performance on its 2008 program for newly drilled wells and
recompletions, and reaffirmed the Adjusted EBITDA, net production,
and capital spending forecast for 2008. The company produced 4,043
MMcfe for the first quarter, up 230 percent from first quarter
2007, resulting in Adjusted EBITDA of $17.5 million, an increase of
142 percent over first quarter 2007. Net income on a generally
accepted accounting principles (GAAP) basis for first quarter 2008
was $2.5 million, up 9 percent from first quarter 2007. During the
first quarter, the company worked on 97 wells and recompletions out
of the 200 to 230 planned for its 2008 program. The company
completed 29 wells and 11 recompletions. An additional 57 wells and
recompletions were in progress, which are expected to flow to sales
by the end of the third quarter. "Our program performance for the
first quarter was very strong. We completed the 2008 program in the
Black Warrior Basin and have now turned our focus to preparing for
2009," said Stephen Brunner, chief executive officer of
Constellation Energy Partners. "Our efforts in the Cherokee Basin
were equally as impressive considering the extreme inclement winter
weather and subsequent recovery efforts, which delayed our program
at the beginning of the year. Our ability to bring production back
to pre-storm levels is a significant achievement. Our activities in
the first quarter establish a solid foundation for the remainder of
the year." The company reaffirmed the 2008 Adjusted EBITDA forecast
range of $94 million to $105 million, an increase of 79 percent to
100 percent over 2007 results. The company also reaffirmed the 2008
net production forecast range of 17 Bcfe to 20 Bcfe and forecast
capital spending of $44.5 million. The company revised the 2008
Operating Expense forecast range to $54.5 million to $57.5 million,
up from the original forecast range of $47.5 million to $57.5
million. The revision was driven by higher than expected one-time
Lease Operating Expenses (LOE) related to field realignment, the
extreme impact of last winter's weather and subsequent recovery
costs, and an accumulation of other smaller charges such as the
true up for the Newfield transition services agreement. The company
estimates LOE for the remainder of the year will return to an
estimated run rate of $1.90 to $2.10 per Mcfe. "Our first quarter
performance has positioned us well to achieve our full year
forecast for Adjusted EBITDA, net production and capital spending
and we are comfortable that our new operating expense forecast is
both appropriate and achievable," said Brunner. "As we look to the
remainder of the year, we are optimistic about our efforts to drive
cash flow stability through our producing asset base and hedging
program. We also are targeting potential additional value through
horizontal drilling, operational efficiencies and partnership
opportunities. We are progressing well with each of these areas and
believe our efforts will further enhance cash flow stability and
drive future value." Non-GAAP Measures We present Adjusted EBITDA
and Distributable Cash Flow 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;
long-term incentive plan expense; accretion of asset retirement
obligation; unrealized (gain) loss on natural gas derivatives; and
realized (gain) loss on cancelled natural gas derivatives.
Distributable Cash Flow is defined as Adjusted EBITDA less
maintenance capital expenditures and cash interest expense.
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.
Adjusted EBITDA and Distributable Cash Flow 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. Adjusted EBITDA and Distributable Cash Flow are
also used as quantitative standards 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 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 forecast in terms of Adjusted
EBITDA. We are unable to reconcile our forecast 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. SEC Filings CEP intends to file its Form
10-Q for the quarter ended March 31, 2008, on or about May 9, 2008.
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 2008. To
participate, analysts, investors, media and the public in the U.S.
may dial (888) 322-9245 shortly before 9:00 a.m. (CDT). 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) 375-1053 or (203)
369-0293 (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. 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 March 31, 2008 2007 Net Production:
Total production (MMcfe) 4,043 1,227 Average daily production
(Mcfe/day) 44,429 13,633 Average Net Sales Price per Mcfe: Net
realized price, including hedges $7.73 (a) $9.22 (a) Net realized
price, excluding hedges $7.62 $6.97 (a) Excludes impact of
mark-to-market losses and net of cost of sales. Net Wells Drilled
and Completed 29 8 Net Recompletions 11 - Constellation Energy
Partners LLC Condensed Consolidated Statements of Operations Three
Months Ended March 31, 2008 2007 ($ in thousands) Oil and gas sales
$32,388 $11,307 Gain/(Loss) from mark-to-market activities (2,956)
(2,782) Total Revenues $29,432 $8,525 Operating expenses: Lease
operating expenses 9,064 1,595 Cost of sales 1,148 - Production
taxes 1,665 459 General and administrative 3,335 1,619 (Gain)/Loss
on sale of equipment (211) 95 Depreciation, depletion and
amortization 9,533 1,959 Accretion expense 101 36 Total operating
expenses 24,635 5,763 Other expenses: Interest (income) expense,
net 2,319 508 Other (income) expense 14 - Total expenses 26,968
6,271 Net income (loss) $2,464 $2,254 Adjusted EBITDA $17,511
$7,237 EPS - Basic $0.11 $0.20 EPS - Basic Units Outstanding
22,347,682 11,320,300 EPS - Diluted $0.11 $0.20 EPS - Diluted Units
Outstanding 22,351,672 11,320,300 Constellation Energy Partners LLC
Condensed Consolidated Balance Sheets March 31, December 31, 2008
2007 ($ in thousands) Current assets $40,756 $45,873 Natural gas
properties, net of accumulated depreciation, depletion and
amortization 695,083 643,653 Other assets 15,321 17,129 Total
assets $751,160 $706,655 Current liabilities $48,572 $20,551 Debt
212,000 153,000 Other long-term liabilities 32,779 16,702 Total
liabilities 293,351 190,253 Class D Interests 6,667 7,000 Common
members' equity 495,167 505,178 Accumulated other comprehensive
income (44,025) 4,224 Total members' equity 451,142 509,402 Total
liabilities and members' equity $751,160 $706,655 Constellation
Energy Partners LLC Reconciliation of Net Income to Adjusted EBITDA
to Distributable Cash Three Months Ended March 31, 2008 2007 ($ in
thousands) Net income $2,464 $2,254 Add: Interest expense/(income),
net 2,319 508 Depreciation, depletion and amortization 9,533 1,959
Accretion of asset retirement obligation 101 36 (Gain)/Loss on sale
of asset (211) 95 Loss from mark-to-market activities 2,956 2,782
Long-term incentive plan 98 - Unrealized (gain)/loss on natural gas
derivatives/hedge ineffectiveness 251 (397) Adjusted EBITDA (1)
$17,511 $7,237 Maintenance capital (2) 6,750 1,238 Drilling fund
(1,500) - Interest expense (cash) 3,500 424 Distributable Cash
$8,761 $5,575 (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: -- 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; --
long-term incentive plan expense; -- accretion of asset retirement
obligation; -- unrealized (gain) loss on natural gas derivatives;
and -- realized loss (gain) on cancelled natural gas derivatives
(2) 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.
DATASOURCE: Constellation Energy Partners CONTACT: Media, Lawrence
McDonnell, +1-410-470-7433; Investors, Tonya Cultice,
+1-410-470-5619 Web site:
http://www.constellationenergypartners.com/ Company News On-Call:
http://www.prnewswire.com/comp/084087.html
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