OilVoice - Encore Energy Partners LP Announces Third Quarter 2009 Results

Encore Energy Partners LP Announces Third Quarter 2009 Results

Thursday, October 29, 2009

Encore Energy Partners LP (NYSE: ENP) (the “Partnership” or "ENP") announces its third quarter 2009 distribution amount of $0.5375 per unit, or $2.15 per unit on an annualized basis, and unaudited third quarter 2009 results.

Distribution
On October 26, 2009, the Board of Directors of ENP’s general partner approved a distribution of $24.6 million to be paid on or about November 13, 2009 to unitholders of record on November 9, 2009. The distribution is based on a distribution rate of $0.5375 per unit for the quarter ended September 30, 2009, or $2.15 per unit on an annualized basis.

Third Quarter 2009 Results
Adjusted EBITDAX totaled $38.9 million for the third quarter of 2009 and distributable cash flow totaled $34.4 million. Adjusted EBITDAX and distributable cash flow are non-GAAP financial measures, which are defined and reconciled to their most directly comparable GAAP measures in the attached financial schedules.

ENP’s third quarter results include a non-cash net derivative fair value loss related to future periods of $5.0 million, non-cash unit based compensation of $0.1 million, and net income attributable to owners prior to the third quarter drop-down acquisitions from Encore Acquisition Company (“EAC”) accounted for as poolings. Excluding these amounts, net income for the quarter was $11.1 million ($0.25 per diluted common unit). ENP's net income for the third quarter of 2009 was $7.5 million ($0.13 per diluted common unit). Net income excluding certain items is a non-GAAP financial measure, which is defined and reconciled to its most directly comparable GAAP financial measure in the attached financial schedules.

Average daily production for the third quarter of 2009 was 6,289 Bbls of oil per day and 18,077 Mcf of natural gas per day, for a combined 9,301 barrels of oil equivalent per day (“BOE/D”).

Jon S. Brumley, Chief Executive Officer and President of ENP’s general partner, stated, “The first nine months of 2009 have been excellent for our partnership. The Partnership’s production is staying relatively flat with minimal CAPEX, allowing ENP to maintain a robust distribution while also reducing debt. Our hedging strategy has worked, enabling our investors to reap the benefits of higher oil prices while at the same time being protected to the downside. Because of our acquisition program, we were able to increase our distribution by five percent over our second quarter’s distribution. We have weathered the commodity price storm and have emerged with a solid balance sheet and a better partnership.”

For the third quarter of 2009, the Partnership’s average realized wellhead oil price was $60.98 per Bbl, and the average realized wellhead natural gas price was $3.40 per Mcf. During the third quarter of 2009, the Partnership’s oil and natural gas differentials to NYMEX averaged a negative 11 percent ($7.26 per Bbl) and zero percent ($0.00 per Mcf), respectively. The average NYMEX oil price was $68.24 per Bbl in the third quarter of 2009, and the average NYMEX natural gas price was $3.40 per Mcf.

Lease operating expense for the third quarter of 2009 was $9.0 million ($10.54 per BOE).

General and administrative (“G&A”) expense for the third quarter of 2009 was $2.9 million ($3.40 per BOE).

Depletion, depreciation, and amortization (“DD&A”) expense for the third quarter of 2009 was $14.5 million ($16.89 per BOE).

Operations Update
The Partnership invested $1.6 million in its capital program during the third quarter of 2009, completing four gross wells (1.6 net), three of which (0.6 net) were successful.

Acquisitions
During August 2009, the Partnership closed its previously announced acquisition of oil and natural gas producing properties in the Rockies and Permian Basin from EAC for $186.8 million in cash. The acquisition was effective April 1, 2009. The transaction was immediately accretive to ENP's distributable cash flow per unit.

Liquidity Update
At September 30, 2009, ENP had $260 million outstanding under its revolving credit facility and $115 million of remaining availability. The amount outstanding under the revolving credit facility increased $65 million during the third quarter of 2009 due to the acquisition of properties for approximately $186.8 million, partially offset by $129.2 million in net proceeds from a common unit offering.

The syndicate of lenders underwriting ENP’s revolving credit facility agreed to increase the Partnership’s borrowing base from $240 million to $375 million in conjunction with the closing of the acquisition of properties from EAC in the third quarter of 2009. The next borrowing base redetermination for the Partnership is scheduled for November 2009.