GHS 100 Energy Conference. June 24, 2014

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Transcription:

GHS 100 Energy Conference June 24, 2014

Forward-Looking Statement Statements made in this presentation that are not historical facts are forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. These statements include information about the sale of our Utica Shale assets, our midstream investments, future plans our reserve quantities and the present value of our reserves, estimates of maintenance capital and other statements which include words such as anticipates, plans, projects, expects, intends, believes, should, and similar expressions of forward-looking information. Forward-looking statements are inherently uncertain and necessarily involve risks that may affect the business prospects and performance of EV Energy Partners, L.P. Actual results may differ materially from those discussed in this presentation. Such risks and uncertainties include, but are not limited to, changes in commodity prices, changes in reserve estimates, requirements and actions of purchasers of properties (including the Utica Shale), changes in the metrics and procedures used to value midstream assets, exploration and development activities in the Utica Shale and elsewhere, the availability and cost of financing, the returns on our capital investments and acquisition strategies, the availability of sufficient cash flow to pay distributions and execute our business plan and general economic conditions. Additional information on risks and uncertainties that could affect our business prospects and performance are provided in the most recent reports of EV Energy Partners with the Securities and Exchange Commission. All forward-looking statements included in this presentation are expressly qualified in their entirety by the foregoing cautionary statements. 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. 2

EVEP Overview Upstream MLP created in September 2006 Experienced General Partner (GP) Ownership EnerVest & Management (76.25%) EnerVest established in 1992 EnCap (23.75%) EnCap established in 1988 48.6 million outstanding units EVEP management and Board own ~ 9% $3.0 billion enterprise value Current yield of 8.0% Note: Current yield based on $0.772/unit 1Q14 distribution paid on May 15, 2014. Unit price as of June 18, 2014. Bank Debt at March 31, 2014. 3

Why Invest in EVEP? Solid, long-lived asset base Potential upside in Barnett, Eagle Ford, and Mancos Shales Significant Utica Shale upside potential Utica acreage Midstream investments Overriding royalty interests Hedging strategy reduces cash flow volatility Strong long-term performance and growth Synergistic relationship with EnerVest 4

Relationship with EnerVest EnerVest Private Equity Funds Total SEC Proved Reserves: 3.3 Tcfe (1) Daily Production: Over 500 Mmcfe (2) Advantages for EVEP Dropdown capability Along-side acquisitions Asset concentration EnerVest P.E. Funds EV Energy Partners (1) Year-end 2013 SEC proved reserves (2) Current daily production, pro forma for announced acquisitions and divestitures not yet closed 5

Outlook for 2014 Utica Shale opportunities Midstream ramp-up and increase in EBITDAX Midstream expansion increases wet gas window productivity Continued opportunistic acreage sales Increased volatile oil window drilling Ongoing organic drilling program Principally Barnett Shale and Austin Chalk Upside potential in Eagle Ford Shale (underneath Austin Chalk) and Mancos Shale (San Juan Basin) Ongoing assessment of accretive acquisitions Focus on restoring 1.0x coverage 6

Long-lived, Diverse Asset Base Total Proved Reserves: 1,192 Bcfe (1) Percent Developed: 68% Percent Gas: 69% 2013 Avg. Production: 169 Mmcfe/d Reserve-Life Index: 19 years Michigan Proved Reserves: 40.7 Bcfe 2013 Production: 6.2 Mmcfe/d San Juan Basin Proved Reserves: 50.1 Bcfe 2013 Production: 8.0 Mmcfe/d Mancos Shale Permian Basin Proved Reserves: 34.4 Bcfe 2013 Production: 5.6 Mmcfe/d Mid-Continent Proved Reserves: 65.4 Bcfe 2013 Production: 22.2 Mmcfe/d Utica Shale Appalachian Basin Proved Reserves: 111.1 Bcfe 2013 Production: 24.8 Mmcfe/d Monroe Field Proved Reserves: 56.2 Bcfe 2013 Production: 6.9 Mmcfe/d Barnett Shale Proved Reserves: 781.5 Bcfe 2013 Production: 80.9 Mmcfe/d Eagle Ford Shale Central and East Texas Proved Reserves: 52.2 Bcfe 2013 Production: 14.3 Mmcfe/d (1) Year-end 2013 SEC proved reserves 7

2013 Proved Reserves & Metrics 2013 SEC Proved Reserves: 1,192 Bcfe Reported Price Neutral (1) Includes Acquisitions Reserves Replacement Ratio 565% 268% Reserves Replacement Cost (per Mcfe) $0.48 $1.01 Excludes Acquisitions Reserves Replacement Ratio 456% 156% Reserves Replacement Cost (per Mcfe) $0.36 $1.06 (1) Does not include reserves added as a result of SEC price revisions 8

($ Millions) 2014 Capital Spending Exploration & Production Capital $95 - $115 Million CapEx Guidance (Midpoint) $180 $160 $140 $120 $100 $80 $60 $40 $20 $0 1Q 2Q-4Q Midstream Exploration & Production Note: Does not include incremental capital for recently announced UEO expansion 9

Barnett Shale (EVEP 31% Ownership) Top 5 producer with EnerVest institutional funds EVEP production: ~ 89 MMcfe/d Ongoing two rig program 5-6 well pad sites Increasing lateral lengths Drilled 16 wells and brought 12 wells online in first quarter 2014 Likely increase to three rigs in 2H 2014 Existing Acreage Acquisition Acreage Dry Gas Wet Gas Oil 10

Austin Chalk (EVEP ~ 14% Ownership) CLAYTON WILLIAMS ANADARKO HALCON APACHE SM Energy EV/EnerVest Leasehold Permitted Wells Austin Chalk horizon Ongoing horizontal multi-stage drilling program Horizontal multi-stage re-entry program Eagle Ford Shale potential ~ 400K gross acres 50/50 joint venture with Apache ~ 20K net acres to EVEP EVEP/EnerVest expects to participate in over 40 gross wells in 2014 Primarily in Brazos County EVEP/EnerVest to drill in Lee County during 2Q Early results encouraging Completed Wells 11

San Juan Basin Mancos Shale EVEP Acreage EnerVest Acreage Encana WPX Over 20,000 EVEP net acres may be prospective for Mancos Shale Both oil and wet gas windows Nearby 2014 activity announced by other operators Over $500 million in capital Over 70 wells 700+ well inventory Plan to launch joint venture partner search this year 12

Drilling in the Utica Shale Black Oil Wells 8 Drilled 3 Producing 11 Total Wells Black Oil Black Oil Volatile Oil Volatile Oil Wet Gas Wet Gas Dry Gas Dry Gas EVEP WI Acreage CHK/Total/EV JV Wet Gas Wells 415 Drilled 348 Producing 763 - Total Wells Volatile Oil Wells 15 Drilled 16 Producing 31 Total Wells Dry Gas Wells 76 Drilled 37 Producing 113 - Total Wells Total Utica Wells: 513 Drilled 404 Producing 917 Total Wells Note: Sourced from Ohio Department of Natural Resources (ODNR) as of May 15, 2014. Drilled wells includes all wells currently drilling, waiting on completion, or completed and waiting on pipeline. 13

Utica Shale Activity Update Expect significant increase in wet gas window productivity and production in 2014 Should help clarify type curves and potentially enhance technical understanding EVEP/EnerVest continues to drill with CHK JV and other operators Position in wet gas window becoming more traditional producing asset Increase in volatile oil window drilling Third party drilling 1-2 EVEP/EnerVest operated wells in 2014 Processing and fractionation constraints being addressed Gathering and compression constraints being addressed Ethane (high-btu) constraints being addressed ATEX pipeline in service Harrison Hub de-ethanizers in service 14

EVEP Utica Shale Position Acreage Position 173,000 net working interest acres ~48,000 wet gas window ~81,000 volatile oil window Black Oil Black Oil Volatile Oil Volatile Oil Wet Gas Wet Gas Dry Gas Dry Gas EVEP WI Acreage CHK/Total/EV JV Overriding Royalty Interests 880,000 gross acres EVEP/EnerVest Participation in CHK/Total/EV Joint Venture Approximately 500 wells drilled within JV Approximately 300 wells online 186 wells planned for 2014 Mostly wet gas window CHK/EV/TOT Joint Venture Midstream Investments Utica East Ohio Cardinal Gas Services 15

Volume (MMcf/d) Cardinal Gas Services (EVEP 9% Ownership) Production & Capacity 700 600 500 400 300 200 100 Low-pressure gathering and compression of wet gas from JV production into Utica East Ohio infrastructure JV firm drilling schedule calls for 540 wells by year end 2014 Plans for ~ 4,600 gross wells over 18 years Over 300 wells connected to date Production averaged ~500 MMcf/d in May 0 Upside potential as development drilling expands Compression Capacity Production 16

Utica East Ohio (EVEP 21% Ownership) Gather, process and fractionate wet gas from CHK/Total/EV JV production 800 MMcf/d of processing at Kensington and Leesville 600 MMcf/d in service 200 MMcf/d expected to start-up 3 rd quarter 2014 135 MBbl/d of fractionation 90 MBbl/d in service 45 MBbl/d expected to start-up in 2014 Onsite working storage of ~870 MBbls of purity components ~ 1 million dedicated working interest acres Upside potential as development drilling expands 17

UEO Midstream Capacity Processing constraints for CHK JV wells being addressed Initial UEO de-ethanizer & ATEX pipeline online Processing Fractionation 18

UEO Expansion Base Proc & Frac AMI Expansion Proc & Frac AMI AEP - Utica AMI Additional acreage commitment from CHK JV (CHK/Total/EV) American Energy Partners Utica acreage commitment 145,000 acre area of mutual interest (AMI) Expansion plans Additional 200 MMcf/d processing train at Leesville facility Extension of high pressure pipeline from Harrison Hub to Cardinal compression facility Downstream liquids interconnect and expanded propane and butane storage at Harrison Hub Provide gathering, compression and dehydration services to American Energy Partners Utica 19

UEO Kensington April 2014 Processing Train 2 Processing Train 3 Future Processing Train 4 Processing Train 1 Condensate Stabilizer Compression Facility Sub-station 20

UEO Harrison Hub April 2014 (2) 60,000 barrel floating roof C5+ tanks (2) 200,000 bbl refrigerated C3 tanks (2) 125,000 bbl refrigerated C4 tanks (4) 750 bbl C5+ tanks Fractionation train 1 Fractionation train 3 Fractionation train 2 50,000 barrel pressurized C4 sphere (20) 90,000 gallon C3 & C4 bullet tanks 21

Midstream Capital & EBITDAX Stable, long-term cash flow stream UEO has fee structure defined by contract CGS has cost-of-services arrangement with fixed IRR Midstream Capital Range Midstream EBITDAX Range Note: Does not include incremental capital or EBITDAX for recently announced UEO expansion 22

Capital Structure ($ millions) Bank Debt @ 3/31 $ 547 Senior Notes Due 2019 $ 500 Equity Market Capitalization $ 1,907 Enterprise Value $ 2,954 Note: Equity market capitalization based on unit price at June 18, 2014. Bank debt at March 31, 2014. 23

Commodity Hedging Gas Volume Hedged (MMcf/d) Oil Volume Hedged (Bbl/d) $4.70 108.8 5,000 $4.94 $91.19 99.5 $4.17 30.0 4,000 3,000 2,000 1,000 0 $89.56 4,158 3,000 2014 2015 2016 24

Strategy Going Forward Continue to manage and enhance base business Continue to build out UEO midstream infrastructure Growth in production and EBITDAX will increase strategic optionality Further realize value of Utica acreage Continue to assess strategic acquisition opportunities Focus in existing high PDP areas Evaluate existing Eagle Ford Shale acreage potential 25

GHS 100 Energy Conference June 24, 2014

2014 Guidance 2014 Guidance ($ in Millions) 1st Qtr 2014 2nd - 4th Qtr 2014 Full Year 2014 Net Production: Natural Gas (MMcf) 10,500-10,900 31,500-34,400 42,000-45,300 Crude Oil (MBbls) 250-260 770-840 1,020-1,100 Natural Gas Liquids (MBbls) 550-560 1,720-1,880 2,270-2,440 Total Mmcfe 15,300-15,820 46,440-50,720 61,740-66,540 Average Daily Production (Mmcfe/d) 170.0-175.8 168.9-184.4 169.2-182.3 Average Price Differential vs NYMEX Natural Gas (% of NYMEX Natural Gas) 90% - 94% 90% - 94% 90% - 94% Crude Oil (% of NYMEX Crude Oil) 94% - 99% 94% - 99% 94% - 99% Transportation Margin (a) $0.2 - $0.4 $0.7 - $1.1 $0.9 - $1.5 Expenses: Operating Expenses: LOE and other $25.0 - $27.0 $77.0 - $85.0 $102.0 - $112.0 Production Taxes (as % of revenue) 3.5% - 4.0% 3.5% - 4.0% 3.5% - 4.0% General and administrative expense (b) $6.5 - $8.5 $15.0 - $18.0 $21.5 - $26.5 Utica Shale Midstream and ORRI EBITDAX (c) $3.0 - $4.5 $30.5 - $35.5 $33.5 - $40.0 E&P Capital Expenditures (d) $19.0 - $25.0 $76.0 - $90.0 $95.0 - $115.0 Midstream Investment $40.0 - $46.0 $75.0 - $89.0 $115.0 - $135.0 (a) Represents estimated transportation and marketing-related revenues less cost of purchased natural gas. (b) Excludes non-cash general and administrative expense, of which non-cash unit based compensation is a part, also excludes any amounts for future acquisition related due diligence and transaction costs. (c) Quarterly Utica Shale Midstream and ORRI EBITDAX guidance is $7.5 - $10.0 million for 2Q14, $10.0 - $13.0 million for 3Q14, and $11.0 - $14.0 million for 4Q14. (d) Represents estimates for drilling and related capital expenditures. Does not include any amounts for acquisitions of oil and gas properties. 27

Utica Working Interest Acreage & Overriding Royalty Interest Net Working Interest Acres (In Thous) Wet Gas Vol. Oil Other Total Total OH 41 79 38 158 Total PA 7 2 6 15 Total 48 81 44 173 Overriding Royalty Interest Average 2.7% ORRI on ~ 415,000 operated gross acres Average 1.3% ORRI on ~ 465,000 non-operated gross acres Significant future cash flow potential as Utica acreage is developed; timing will depend on drilling activity Note: The total combined EnerVest and EVEP net acreage is 725K in Ohio and 111K in Pennsylvania. 28