First quarter losses at Houston-based EV Energy Partners LP (EVEP) grew from a year ago while production declined on decreased drilling activity.
EVEP reported a first quarter net loss of $50.8 million (minus $1.01/unit), compared with a net loss of $29 million (minus 58 cents) in the year-ago quarter.
Production for the first quarter was 10.4 Bcf of natural gas, 335,000 bbl of oil and 512,000 bbl of natural gas liquids, or a combined 171.6 MMcfe/d. This represents a 15% decrease from first quarter 2016 production of 201.4 MMcfe/d and a 1% decrease from fourth quarter production of 173.6 MMcfe/d.
The declines were mainly due to “significantly” lower drilling activity in 2016 and the divestiture of producing properties completed on Dec. 1, partially offset by the addition of Karnes County, TX, Eagle Ford Shale producing properties acquired on Jan. 31.
“First quarter results were in-line with guidance, and we expect to maintain production levels for the remainder of the year as our capital spending ramps up,” said CEO Michael Mercer. “We were happy to close the Karnes County acquisition during the first quarter and are pleased with the initial well results.”
In a recent redetermination, the company’s borrowing base was cut to $375 million from $450 million, partially because of lower commodity prices compared with those used in the last redetermination.
“As a reminder, the Barnett natural gas property we sold in December had a very high percentage proved developed reserves,” said Executive Chairman John Walker. “The oil-weighted Karnes County property, which has a lot of upside that we acquired in January, was only 22% proved developed. In general, banks risk proved and developed reserves higher than proved developed reserves and therefore assigned less borrowing base value to them.
“As we continue to execute our development program in Karnes County, we expect to receive more and more borrowing base credit and increase cash flows. However, even with the decrease in our borrowing base, we still have over $100 million in liquidity.”