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

HOUSTON, TX--(Marketwire - August 10, 2009) - 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 Six Months Ended June 30, 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, December 31, 2009 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 Six Months Ended June 30, 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 Six Months Ended Ended June 30, June 30, 2009 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/ (Mmmbtu/ (Mmmbtu Mbbls) Mbbls) /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