Harvest Oil & Gas (HRST) 8-K EV Energy Partners Announces Second Quarter 2009 Results and Additional Commodity Price Hedges

EV Energy Partners Announces Second Quarter 2009 Results and Additional Commodity Price Hedges

HOUSTON, August 10, 2009 (MARKETWIRE) — EV Energy Partners, L.P. (Nasdaq:EVEP) today announced results for the second quarter 2009 and filed its Form 10-Q with the Securities and Exchange Commission. EVEP has also recently entered into additional commodity price hedge agreements as described below.

Second Quarter 2009 Results

Adjusted EBITDA for the quarter was $33.1 million, an 8% increase over the second quarter of 2008 and a 6% increase versus the first quarter of 2009. Distributable Cash Flow for the quarter was $18.0 million, a 2% decrease over the second quarter of 2008 and a 7% increase versus the first quarter of 2009. Adjusted EBITDA and Distributable Cash Flow are described in the attached table under “Non-GAAP Measures”.

EVEP reported a net loss of $31.6 million, or ($1.93) per basic and diluted weighted average unit outstanding, for the second quarter of 2009. Included in net income were $44.5 million of non-cash net unrealized losses on commodity and interest rate derivatives and $0.7 million of non-cash costs contained in general and administrative expenses. For the second quarter of 2008, net loss was $99.5 million, or ($6.58) per basic and diluted weighted average unit outstanding, which included $118.1 million of non-cash net unrealized losses on commodity derivatives and $0.8 million of non-cash costs contained in general and administrative expenses. For the first quarter of 2009, net income was $38.3 million, or $2.23 per basic and diluted weighted average unit outstanding, which included $26.7 million of non-cash net unrealized gains on commodity and interest rate derivatives.

The $44.5 million non-cash net unrealized losses on derivatives for the second quarter of 2009 was primarily due to the significant increase in future oil prices at June 30, 2009 as compared to those at March 31, 2009, partially offset by the decline in natural gas prices as of such dates, and the effect of such price changes on EVEP’s commodity price hedges.

For the quarter ended June 30, 2009, EVEP produced 4.0 Bcf of natural gas, 127 MBbls of crude oil and 186 MBbls of natural gas liquids, or 5.9 Bcfe. Second quarter 2009 production of 5.9 Bcfe represents a 23% increase over second quarter 2008 production of 4.8 Bcfe, primarily due to acquisitions made during 2008. Production slightly declined from first quarter 2009 production of 6.0 Bcfe.

Additional Commodity Hedge Positions

EVEP uses oil and natural gas commodity contracts to hedge a significant portion of its anticipated oil and natural gas production against the risk of commodity price volatility. In addition to hedges entered into in conjunction with the previously announced Austin Chalk add-on acquisition, EVEP has added the following commodity price hedges to its portfolio since July 1, 2009. A complete schedule of EVEP’s updated commodity price hedge positions is included at the end of this release, including the hedges detailed below.

	Swap		Swap
	Volume		Price
	(Mmmbtu/Mbbls)
Natural Gas
NYMEX
2010		365	$	6.41
2011		365	$	6.41
2012		293	$	6.88
2013		1,825	$	7.02
Jan - Aug 2014		1,215	$	7.06
Crude Oil
NYMEX
2010		58.4	$	78.70
2011		43.8	$	80.80
2012		36.6	$	82.35
2013		182.5	$	83.38
Jan - July 2014		106.0	$	84.60

Quarterly Report on Form 10-Q

EVEP’s financial statements and related footnotes are available on our second quarter 2009 Form 10-Q, which was filed today and is available through the Investor Relations/SEC Filings section of the EVEP web site at http://www.evenergypartners.com.

Conference Call

As announced on August 5, 2009, EV Energy Partners, L.P. will host an investor conference call Tuesday, August 11, 2009 at 9:00am (Eastern Time).  Investors interested in participating in the call may dial (480) 629-9692 and ask for conference ID 4135815 at least 5 minutes prior to the start time, or may listen live over the internet through the Investor Relations section of the EVEP web site at http://www.evenergypartners.com ..

EV Energy Partners, L.P., is a master limited partnership engaged in acquiring, producing and developing oil and gas properties. More information about EVEP is available on the internet at http://www.evenergypartners.com ..

(code #: EVEP/G)

This press release may include "forward-looking statements" as defined by the Securities and Exchange Commission. All statements, other than statements of historical facts, included in this press release that address activities, events or developments that the partnership expects, believes or anticipates will or may occur in the future are forward-looking statements. These statements are based on certain assumptions made by EVEP based on its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of EVEP, which may cause our actual results to differ materially from those implied or expressed by the forward-looking statements. These include risks relating to financial performance and results, availability of sufficient cash flow to pay distributions and execute our business plan, prices and demand for natural gas and oil, our ability to replace reserves and efficiently develop our current reserves and other important factors that could cause actual results to differ materially from those projected as described in the EVEP's reports filed with the Securities and Exchange Commission.

Any forward-looking statement speaks only as of the date on which such statement is made and EVEP undertakes no obligation to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.

Operating Statistics

	Three Months Ended June 30,				Six Months Ended June 30,
	2009		2008		2009		2008
Production data:
Oil (MBbls)		127		97		254		190
Natural gas liquids (MBbls)		186		135		400		259
Natural gas (MMcf)		4,017		3,403		7,980		7,020
Net production (MMcfe)		5,893		4,797		11,903		9,712
Average sales price per unit (1):
Oil (Bbl)	$	54.16	$	121.72	$	44.15	$	108.97
Natural gas liquids (Bbl)		27.95		67.57		25.81		64.26
Natural gas (Mcf)		3.26		10.63		3.71		9.16
Mcfe		4.27		11.91		4.30		10.47
Average unit cost per Mcfe:
Production costs:
Lease operating expenses	$	1.61	$	1.99	$	1.74	$	1.93
Production taxes		0.21		0.54		0.22		0.48
Total		1.82		2.53		1.96		2.41
Depreciation, depletion and amortization		2.16		1.63		2.22		1.68
General and administrative expenses		0.69		0.74		0.70		0.72

(1) Prior to $21.2 and $(12.2) million of net hedge gains (losses) for the three months ended June 30, 2009 and June 30, 2008, respectively, and prior to $40.7 and ($14.4)  million of net realized hedge gains (losses) for the six months ended June 30, 2009 and June 30, 2008, respectively.

Unaudited Condensed Consolidated Balance Sheets

(in $ thousands)

	June 30, 2009		December 31, 2008
ASSETS
Current assets:
Cash and cash equivalents	$	24,040	$	41,628
Accounts receivable:
Oil, natural gas and natural gas liquids revenues		10,687		17,588
Related party		3,331		1,463
Other		1,253		3,278
Derivative asset		45,140		50,121
Prepaid expenses and other current assets		734		1,037
Total current assets		85,185		115,115
Oil and natural gas properties, net of accumulated depreciation, depletion and amortization; June 30, 2009, $96,308; December 31, 2008, $69,958		745,684		765,243
Other property, net of accumulated depreciation and amortization; June 30, 2009, $302; December 31, 2008, $284		161		180
Long-term derivative asset		82,244		96,720
Other assets		3,431		2,737
Total assets	$	916,705	$	979,995
LIABILITIES AND OWNERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	9,610	$	14,063
Deferred revenues		-		4,120
Derivative liability		490		2,115
Total current liabilities		10,100		20,298
Asset retirement obligations		35,210		33,787
Long-term debt		352,000		467,000
Other long-term liabilities		1,016		1,426
Commitments and contingencies
Owners’ equity		518,379		457,484
Total liabilities and owners' equity	$	916,705	$	979,995

Unaudited Condensed Consolidated Statements of Operations

(in $ thousands, except per unit data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2009			2008			2009			2008
Revenues:
Oil, natural gas and natural gas liquids revenues	$	25,156		$	57,136		$	51,163		$	101,664
Gain on derivatives, net		-			604			-			662
Transportation and marketing–related revenues		1,832			3,309			5,050			6,480
Total revenues		26,988			61,049			56,213			108,806
Operating costs and expenses:
Lease operating expenses		9,507			9,552			20,654			18,714
Cost of purchased natural gas		975			2,803			2,451			5,415
Production taxes		1,216			2,606			2,643			4,628
Asset retirement obligations accretion expense		570			308			1,014			606
Depreciation, depletion and amortization		12,737			7,811			26,369			16,355
General and administrative expenses		4,098			3,571			8,351			7,024
Total operating costs and expenses		29,103			26,651			61,482			52,742
Operating (loss) income		(2,115	)		34,398			(5,269	)		56,064
Other (expense) income, net:
Realized gains (losses) on mark-to-market derivatives, net		19,037			(12,155	)		36,760			(14,378	)
Unrealized losses on mark–to–market derivatives, net		(44,500	)		(118,734	)		(17,832	)		(159,087	)
Interest expense		(3,968	)		(3,069	)		(6,844	)		(6,827	)
Other (expense) income, net		(52	)		94			(44	)		162
Total other (expense) income, net		(29,483	)		(133,864	)		12,040			(180,130	)
(Loss) income before income taxes		(31,598	)		(99,466	)		6,771			(124,066	)
Income taxes		(32	)		(58	)		(57	)		(130	)
Net (loss) income	$	(31,630	)	$	(99,524	)	$	6,714		$	(124,196	)
General partner’s interest in net (loss) income, including incentive distribution rights	$	1,063		$	(981	)	$	3,183		$	(831	)
Limited partners’ interest in net (loss) income	$	(32,693	)	$	(98,543	)	$	3,531		$	(123,365	)
Net (loss) income per limited partner unit (basic and diluted)	$	(1.93	)	$	(6.58	)	$	0.21		$	(8.24	)
Weighted average limited partner units outstanding:
Basic and Diluted		16,926			14,982			16,572			14,979

Unaudited Condensed Consolidated Statements of Cash Flows

(in $ thousands)

	Six Months Ended			Six Months Ended
	June 30, 2009			June 30, 2008
Cash flows from operating activities:
Net income (loss)	$	6,714		$	(124,196	)
Adjustments to reconcile net income (loss) to net cash flows provided by operating activities:
Asset retirement obligations accretion expense		1,014			606
Depreciation, depletion and amortization		26,369			16,355
Equity–based compensation cost		1,300			1,261
Amortization of deferred loan costs		526			144
Unrealized losses on derivatives, net		17,832			158,425
Other, net		148			-
Changes in operating assets and liabilities:
Accounts receivable		7,057			(19,099	)
Prepaid expenses and other current assets		114			300
Other Assets		(1	)		(5	)
Accounts payable and accrued liabilities		(1,796	)		3,183
Deferred revenues		(4,120	)		1,395
Other		35			-
Net cash flows provided by operating activities		55,192			38,369
Cash flows from investing activities:
Acquisitions of oil and natural gas properties		-			(17,491	)
Deposit on acquisition of oil and natural gas properties		(1,218	)		-
Development of oil and natural gas properties		(8,983	)		(13,597	)
Net cash flows used in investing activities		(10,201	)		(31,088	)
Cash flows from financing activities:
Debt borrowings		-			17,000
Repayment of debt borrowings		(115,000	)		-
Deferred loan costs		-			(125	)
Proceeds from public equity offering, net of underwriters' discount		78,649			-
Offering costs		(219	)		-
Contribution from general partner		1,641			-
Distributions paid to partners		(27,650	)		(19,869	)
Net cash flows used in financing activities		(62,579	)		(2,994	)
(Decrease) increase in cash and cash equivalents		(17,588	)		4,287
Cash and cash equivalents – beginning of period		41,628			10,220
Cash and cash equivalents – end of period	$	24,040		$	14,507

Non GAAP Measures

We define Adjusted EBITDA as net income (loss) plus income tax provision, interest expense, net, realized (gains) losses on interest rate swaps, depreciation, depletion and amortization, asset retirement obligation accretion expense, non-cash (gains) losses on derivatives, amortization of upfront premiums paid to enter into commodity price hedge agreements and non-cash equity compensation. Distributable Cash Flow is defined as Adjusted EBITDA less income tax provision, interest expense, net, realized (gains) losses on interest rate swaps, amortization of upfront premiums paid to enter into commodity price hedge agreements and estimated maintenance capital expenditures.

Adjusted EBITDA and Distributable Cash Flow are used by our management to provide additional information and metrics relative to the performance of our business, including (prior to the creation of any reserves) the cash available to pay distributions to our unitholders. 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 quantitative standards used throughout the investment community with respect to performance of publicly-traded partnerships. Adjusted EBITDA and Distributable Cash Flow should not be considered as alternatives to net income, operating income, cash flows from operating activities or any other measure of financial performance or liquidity presented in accordance with GAAP. Adjusted EBITDA and Distributable Cash Flow exclude some, but not all, items that effect net income and operating income and these measures may vary among companies. Therefore, our Adjusted EBITDA and Distributable Cash Flow may not be comparable to similarly titled measures of other companies.

Reconciliation of Net Income to Adjusted EBITDA and Distributable Cash Flow

(in $ thousands)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2009			2008			2009		2008
Net (loss) income	$	(31,630	)	$	(99,524	)	$	6,714	$	(124,196	)
Add:
Income taxes		32			58			57		130
Interest expense, net		3,927			2,989			6,728		6,678
Realized losses on interest rate swaps		2,125			-			3,974		-
Depreciation, depletion and amortization		12,737			7,811			26,369		16,355
Asset retirement obligation accretion expense		570			308			1,014		606
Non-cash losses on derivatives		44,500			118,131			17,832		158,425
Amortization of premiums on derivatives		116			-			190		-
Non-cash equity compensation expense		681			786			1,300		1,261
Adjusted EBITDA	$	33,058		$	30,559		$	64,178	$	59,259
Less:
Income taxes		32			58			57		130
Interest expense, net		3,927			2,989			6,728		6,678
Realized losses on interest rate swaps		2,125			-			3,974		-
Amortization of premiums on derivatives		116			-			190		-
Estimated maintenance capital expenditures (1)		8,840			9,115			18,440		18,455
Distributable Cash Flow	$	18,018		$	18,397		$	34,789	$	33,996

(1) Estimated maintenance capital expenditures are those expenditures estimated to be necessary to maintain the production levels of our oil and gas properties over the long term and the operating capacity of our other assets over the long term.

Hedge Summary Table (includes hedges added through 08/10/2009)

	Swap		Swap		Collar		Collar		Collar		Put		Put
	Volume		Price		Volume		Floor		Ceiling		Volume		Strike
	(Mmmbtu/Mbbls)				(Mmmbtu/Mbbls)						(Mmmbtu/Mbbls)
Natural Gas
2H 2009
NYMEX		1,656	$	8.05		184	$	7.50	$	8.80
NYMEX						736	$	7.75	$	9.15
NYMEX						368	$	8.00	$	10.55
NYMEX												920	$	4.00
Dominion Appalachia		1,178	$	9.03
El Paso Permian		644	$	7.80
Houston Ship Channel		1,243	$	7.60
MichCon Citygate		920	$	8.27
2010
NYMEX		5,950	$	8.00		548	$	7.50	$	10.00
Dominion Appalachia		2,044	$	8.65
El Paso Permian		913	$	7.68
Houston Ship Channel		360	$	5.96		1,278	$	7.25	$	9.55
MichCon Citygate		1,825	$	8.34
2011
NYMEX		5,585	$	8.19
Dominion Appalachia		913	$	8.69		1,095	$	9.00	$	12.15
El Paso Permian		913	$	9.30
Houston Ship Channel						1,278	$	8.25	$	11.65
MichCon Citygate						1,643	$	8.70	$	11.85
2012
NYMEX		5,527	$	8.63
Dominion Appalachia						1,830	$	8.95	$	11.45
El Paso Permian		732	$	9.21
Houston Ship Channel						1,098	$	8.25	$	11.10
MichCon Citygate						1,647	$	8.75	$	11.05
2013
NYMEX		3,285	$	7.23
El Paso Permian		1,095	$	6.77
El Paso San Juan		1,095	$	6.66
Jan - Aug 2014
NYMEX		1,215	$	7.06
Crude Oil
(NYMEX)
2H 2009		327.6	$	93.10		23.0	$	62.00	$	73.90
2010		688.0	$	89.80
2011		219.0	$	103.66		401.5	$	110.00	$	166.45
2012		205.0	$	104.05		366.0	$	110.00	$	170.85
2013		365.0	$	77.94
Jan - July 2014		106.0	$	84.60

Interest Rate Swap Agreements:

	Notional		Fixed			Floating
	Amount		Rate			Rate
	(in $ mill)
July 2009 - July 2012	$	200		4.163	%	1mo LIBOR
July 2009 - Sept 2012	$	40		2.145	%	1mo LIBOR

SOURCE: EV Energy Partners, L.P.EV Energy Partners, L.P., Houston

Michael E. Mercer, 713-651-1144

http://www.evenergypartners.com