Evolve Transition Infrastructure (SNMP) 8-K Constellation Energy Partners Reports

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)